The combined effects of internal and external supply chain integration on product innovation

Abstract

This research examines the individual and combined effects of internal integration (II) and external integration (EI) on product innovation. Two combined effects - balanced integration and complementary integration - are examined. Based on ambidexterity theory, the combined effects of II and EI are theorised to facilitate exploration and exploitation of external and internal knowledge, and subsequently improve product innovation. Our analysis of survey data from the Thai automotive industry ascertains that EI and complementary integration are positively associated with product innovation, but II and balanced integration are not associated with product innovation. This research is the first to provide novel insights into how exploration and exploitation of external and internal knowledge can be facilitated by internal and external integrations, and their complementary effects on product innovation, which was previously less understood. Our findings provide managerial insights for firms involved in supply chain integration implementation.