The effects of supply chain integrity management, supply chain risk management, and competitive advantages on the performance of companies: A case study of the National South Oilfields Company of Iran

Introduction: One of the persistent and basic questions of the organizational research literature is why some organizations outperform others. The answer can be found in supply chain management. Given the new concepts of supply chain management and similar concepts that result in a higher cooperation and closer relationships between a firm and its suppliers, nowadays, suppliers and clients are no longer considered as competitors of the organization, but rather as members of a larger groups known as supply chain. Each member in the chain aims at maximizing the profitability and improving the total performance of the chain (Perez-Franco et al., 2016). Hatamifar et al. (2017) surveyed the effectiveness of integrated supply chains in hotels to achieve competitive advantages. The three factors of internal integrity, product integrity and customer integrity had positive functions. Santajo Mandal et al. (2017) surveyed the role of the capabilities and integrity of supply chains in the improvement of their flexibility. The risks and uncertainty of a supply chain have become important and interesting subjects for research over the past few years. Supply chain risk is a potential incident that might prevent the normal flow of materials and information within the chain. It is, therefore, a disruption in the function of the supply chain. The main feature of a supply chain is connectivity of its members so that the risk of one member can be transmitted to other members. When one supplier declares bankruptcy, for instance, not only its business but also all the other members of the supply chain are affected.
Methodology: A questionnaire was used for data gathering, and the collected data were analyzed based on partial least squares. Given that the structural equation model was used for the data analysis, the sample group size was determined based on the relevance between the number of the statements and respondents. The relevance was obtained based on the relationship 5 < A < 15. Taking into account that the questionnaire comprised of 83 statements, the sample group size was found to be 793, i.e. nine participants for each statement. A pilot study was also conducted with 20 participants based on which the reliability of the questionnaire was determined using Cronbach’s alpha. The structure of the questionnaire is presented in Table 1. 
To test the research model, a structural equations model was used based on the partial least square approach. Before interpreting the model, we needed to make sure that the model suited our objectives and its results would be reliable by confirming it generally in terms of measurement and structure. Therefore, Cronbach’s alpha, composite reliability, and convergent validity were used (Table 2). By making sure about the suitability of the measurement model, the reliability of the structural model was examined using cv.red and cv.com.
 




Table 1. Structure of the questionnaire




Variables


Number of statements


Cronbach’s alpha




Competitive advantage


13


0.824




Supply chain risk management


32


0.837




Integrity of the whole supply chain


32


0.892




Organization performance


6


0.799




 




Table 2. Total structure reliability and goodness of fit




Variables


AVE


C.R


Cronbach’s alpha


C.V RED


CV. COM




Competitive advantage


0.75


0.923


0.889


0.75


0.75




Supply chain risk management


0.648


0.916


0.648


0.647


0.647




Integrity of the whole supply chain


0.711


0.924


0.898


0.711


0.711




Organization performance


0.813


0.963


0.953


0.187


0.802




 
Finally, since the model was based on partial least square, the total goodness of fit was examined using the GOF index, which was higher than 0.3. So, the general goodness of fit of the model was supported. The index was obtained using the following formula:




GOF =  = 0.324


(1)




Having confirmed the goodness of fit for the model at the three levels of the structural equation model in Smart PLS, the hypotheses were examined.
Results and Discussion: The results indicated that an improvement in the risk management of a supply chain prepares the ground for the improvement of organizational performance (t = 8.417, β = 0.277). Undoubtedly and as noted, what affects organizational performance is the risk of the supply chain that may deter the improvement of the business performance of the organization and the optimized use of all the resources of the organization toward improved performance. When the risk of the supply chain as a whole increases, the organization fails to make decisions in uncertain situations, which may lead to the inefficiency of the decisions made by the organization and the efforts to steer the organization.
Conclusion: Needless to say, risks may cause loss of performance. On the other hand, the organization can perform more satisfactorily in implementing its decisions when the risk is managed effectively. In this regard, our results are consistent with the findings of Heidari et al. (2016). It was shown that the integrity of a supply chain can be effective in organizational performance (t = 5.966, β = 0.247).
The proposed model is a supply chain management model adjusted for the modern environment of the industry in Iran. The features and capabilities of the model make it more flexible and easy to expand so that it can be used in different companies in different industries with different management policies.