Risk, risk management practices, and the success of supply chain integration

Companies have reacted to the apparent opportunities and threats of globalization through various global production practices that have increased supply chain complexity and various forms of risk. Through increasing supply chain integration, companies have attempted to manage this increased level of complexity. Supply chain integration has been identified as a key practice to manage supply chains and achieve superior performance. The intent of this paper is to explore the role of risk and risk management practices in the success of supply chain integration in terms of their impact on cost and innovation performance. By applying the relational view and through cross‐country survey and secondary country data we explore differences in supply chain integration efficacy based on the risk of conducting business (measured in terms of the strength of a country's rule of law) and the mitigating effect of supply chain risk management practices. One of the main conclusions suggests that supplier integration is also effective in weak rule of law (i.e., high risk) environments. Furthermore, companies can complement and strengthen the performance impact of their supplier integration practices through supply chain risk management practices in risky environments.