Journal of Operations Management 21 (2003) 523–539 The effects of an integrative supply chain strategy on customer service and financial performance: an analysis of direct versus indirect relationships Shawnee K. Vickery a,∗ , Jayanth Jayaram b , Cornelia Droge a , Roger Calantone a a Department of Marketing & Supply Chain Management, The Eli Broad College of Business, Michigan State University, N370 North Business Complex, East Lansing, MI 48824-1121, USA b The Moore College of Business, University of South Carolina, Columbia, USA Received 10 May 2001; received in revised form 27 December 2002; accepted 10 February 2003 Abstract This study examines the performance implications of an integrated supply chain strategy, with customer service performance followed by financial performance as performance constructs. Two major components of an integrated supply chain strategy are identified and defined: (1) integrative information technologies, which is modeled antecedent to (2) supply chain integration. The research model was tested using data from a sample (n = 57) of the top 150 independent first tier automotive suppliers to the Big 3 in North America. The results showed positive direct relationships between (1) integrated information technologies and supply chain integration, (2) supply chain integration and customer service, and (3) customer service and firm performance. The relationship of supply chain integration to financial performance was indirect, through customer service; i.e., customer service was found to fully (as opposed to partially) mediate the relationship between supply chain integration and firm performance for first tier suppliers in the automotive industry. © 2003 Published by Elsevier B.V. Keywords: Supply chain management; Supply chain integration; Customer service performance; Financial performance; Structural equations modeling 1. Introduction Supply chain management takes a holistic perspec- tive regarding the various activities, functions, and systems required to bring a product or service to mar- ket: it advocates that the supply chain be strategically managed as a single entity or system in contrast to individually optimizing fragmented segments or sub- systems. This requires the integration of activities, ∗ Corresponding author. Tel.: +1-517-353-6381; fax: +1-517-432-1112. E-mail address: vickery@pilot.msu.edu (S.K. Vickery). functions, and systems throughout the supply chain. An integrative supply chain strategy recognizes that integrated business processes (not individual func- tions or systems) create value for the firm’s customers and that these processes reach beyond the boundaries of the firm by drawing suppliers and customers into the value creation process (see e.g., Stevens, 1989; Tan et al., 1998). The theoretical foundation for supply chain integra- tion can be traced to the Value Chain Model (Porter, 1980, 1985), and specifically, its notion of linkages. A “linkage” is the relationship between the way in which one value activity is performed and the cost or 0272-6963/$ – see front matter © 2003 Published by Elsevier B.V. doi:10.1016/j.jom.2003.02.002