JOURNAL OF BUSINESS LOGISTICS, Vol. 25, No.

2, 2004 65

LINKING STRATEGY, STRUCTURE, PROCESS,

AND PERFORMANCE IN INTEGRATED LOGISTICS

by

Alexandre M. Rodrigues
Michigan State University

Theodore P. Stank
The University of Tennessee

and

Daniel F. Lynch
Michigan State University

Supply chain management can create value by synchronizing logistical activities among par-
ticipants to reduce costs associated with duplication of effort and positioning the entire supply
chain to better serve key customers (Bowersox, Closs, and Stank 1999; Stank, Keller, and Closs 2001).
Cost effective and hard to replicate logistical capabilities involve a high degree of operational inte-
gration within the firm to link procurement, the inbound movement of raw materials, manufactur-
ing, delivery of products and services to end-users, and processing returns from customers, in a cost
effective manner. World-class firms expand the integrative concept by placing significant empha-
sis on collaborative planning and operations with selected customers and suppliers to extend the effec-
tive control of the enterprise (Stank, Keller, and Daugherty 2001).
Integrated operational processes are facilitated by infrastructure development to support the wide
variety of operational configurations needed to create supply chain solutions for specific customers
(Bowersox, Closs, and Stank 1999). Such infrastructure support encompasses the information and
measurement systems necessary to manage coordinated supply chain logistical operations. Integrated
information systems provide fingertip access to coordinated data and the software needed to process
it. Integrated measurement systems extend across the borders of internal functional areas and exter-
nal supply chain partners to provide timely feedback that enables management to take corrective action
and drive superior results.
Coordinated operational processes and control structures may benefit from a strategic frame-
work that facilitates cultivation of relationships necessary for maintaining a competence in logis-
tics integration (Bowersox, Closs, and Stank 1999; Chow, Heaver, and Henriksson 1995). A relational
strategy encourages identification of supply chain partners that share a common vision and are
66 RODRIGUES, STANK, AND LYNCH

pursuing parallel objectives to create structures and processes that improve cross-organizational behav-
ior. Relational strategy is closely associated with previous definitions of channels strategy, focus-
ing on a collaborative perspective to develop effective supply chain structures that align the
operational processes of multiple firms into an integrated supply chain system (Bowersox et al. 1989;
McGinnis and Kohn 1990, 1993).
Although logistics integration has been the subject of significant research activity (Bowersox,
Closs, and Stank 1999; Stank, Keller, and Closs 2001; Stank, Keller, and Daugherty 2001; Stock,
Greis, and Kasarda 2000), empirical research that comprehensively portrays the complex interre-
lationships among multiple elements of integration, as well as their relationships with perceived per-
formance, has been noticeably lacking. The purpose of the current research, therefore, is to present
and test a framework of supply chain logistics integration that synthesizes current logistics thought
with an established theory of organizational design that portrays performance as an outcome of
appropriate alignment between strategy, structure, and processes. In addition, the research presents
a test of measures used to portray supply chain logistics constructs to establish validity and facili-
tate possible use in future research.
In the following sections, relevant literature in logistics and organizational management is
reviewed, the constructs used in the research are defined, and a conceptual model is presented that
hypothesizes the interrelationships and links them to logistics performance. Next, methodology is
described and results are reported. Finally, implications and conclusions are drawn and limitations
and directions for future research are discussed.

LITERATURE REVIEW AND HYPOTHESES

Integrating operations across all facets of business flows within and across firms to obtain
competitive advantage has become known as supply chain management (SCM) (Bowersox, Closs,
and Cooper 2002). Logistics, traditionally a boundary-spanning discipline, is uniquely positioned
to contribute to the vision of integrating supply chain components. Researchers responding to the
increased emphasis of integration requirements have focused on understanding the integrated logis-
tics competencies and skills needed to enhance customer value (Ellinger, Daugherty, and Keller 2000;
Lynch, Keller, and Ozment 2000; Morash, Dröge, and Vickery 1996; Stank, Keller, and Daugherty
2001; Wisner 2003).
The link between logistics competencies (e.g., process integration simplification, standardization,
flexibility, and responsiveness) and performance elements (e.g., pre- and post-sale customer service,
delivery speed, delivery reliability, responsiveness to target markets, and logistics cost) has been estab-
lished in previous research (Bowersox, Closs, and Stank 1999; Daugherty, Stank, and Ellinger
1998; Ellinger, Daugherty, and Gustin 1997; Lynch, Keller, and Ozment 2000; Morash, Dröge,
and Vickery 1996; Stank, Keller, and Closs 2001; Stank, Keller, and Daugherty 2001). The inter-
relationships among logistics competencies, however, are still unclear. Previous frameworks have
conceptualized the relationships as flowing from strategic guidelines and policies towards structural
JOURNAL OF BUSINESS LOGISTICS, Vol. 25, No. 2, 2004 67

support to operational processes (Bowersox, Closs, and Stank 1999; Chow, Heaver, and Henriks-
son 1995). Little empirical research has been conducted to date, however, to support the frameworks.
Research in strategic management addresses the interrelationships among strategy, structure,
process, and performance. Chandler (1962) and Williamson (1970, 1975) related strategy to struc-
ture from the viewpoint of organizational design, economics, and sociology. This research argues
that strategic direction develops from an awareness of opportunities and needs that create new
administrative challenges, which may necessitate refashioned structures to operate the firm efficiently.
Much empirical work has been conducted to substantiate the aforementioned relationships, providing
general support of the hypothesis that structure aligned with strategy results in improved performance
(Chow, Heaver, and Henriksson 1995; Galbraith and Nathanson 1978; Rumelt 1974).
Galbraith and Nathanson extended the strategy-structure relationship, explicitly proposing
that a proper ‘‘fit’’ between strategy, structure, and operating processes yields the greatest improve-
ment in actual financial performance. They emphasized that structural design should serve to inte-
grate differentiated functions around the interdependencies determined by competitive requirements
of the industry. Processes, consisting of resource allocation, performance evaluation, and reward sys-
tems, should emerge from the structural design and reflect strategic interdependencies in order to
achieve high-level performance.
Chow, Heaver, and Henriksson (1995) presented a conceptual framework focused on the rela-
tionships among logistics strategy, design, and performance. They highlight findings in organiza-
tional science, which maintains that performance depends on the extent of fit, the alignment between
structural design and strategic choice (Dalton et al. 1980; Galunic and Eisenhardt 1994; Miller
1987). In this framework, strategic formulation dictates structural modification or adaptation to
meet strategic goals. Finally, they propose that processes built upon structural competencies are
expected to lead to increased performance. More recently, Bowersox, Closs, and Stank (1999) por-
trayed a relational flow that begins with relational integration, extends to structural components of
technology, planning and measurement integration, and ends with operational components of inter-
nal, customer, materials, and service suppliers.
Other logistics researchers have empirically tested elements of the conceptual frameworks.
Fawcett and Clinton (1996) compared managerial responses of a baseline group of companies with
the responses from a group of high performing companies and gained insights into seven organizational
strategy, structure, and process factors that can influence a firm’s performance (as perceived by respon-
dents). The results indicated that a combination of all factors contributed to performance. Stank and
Traichal (1998) tested the relationships between a firm’s logistics strategy, the organizational design
dimensions used to implement the strategy, and the perceived performance outcome experienced as
a result of strategy and design. The results confirmed a relationship between organizational design
and performance but failed to find a link between strategic choice and design. Table 1 summarizes
the evolution of significant research focused on the strategy-structure-process-performance
relationship.
 TABLE 1 68

EVOLUTION OF THE STRATEGY-STRUCTURE-PROCESS-PERFORMANCE LITERATURE

Key Authors Topic/Summary of Research

Chandler (1962)
Williamson (1970, 1975)
Rumelt (1974)
Galbraith and Nathanson (1978)
STRATEGY-STRUCTURE RELATIONSHIP
• Reported on the history of the evolution of large US firms from 1850 - 1950
• Studied four companies in depth (GM, du Pont, Standard Oil, Sears)
• Determined that a strategy of product diversification strongly corresponded with deployment of divisional
organizational structure
• Several other researchers replicated Chandler’s work, particularly looking at the strategy-structure relationship
in other domestic environments in Europe.
STRATEGY-STRUCTURE-PERFORMANCE (SSP) RELATIONSHIP
• Researched large multidivisional corporations (M-forms)
• Hypothesized that M-forms would outperform functionally structured firms as product differentiation increases
• First to demonstrate a relationship between strategy-structure and performance. Researched performance of
200+ Fortune 500 companies over a 20-year period (1949 - 1969)
• Defined nine firm strategy-structure forms; determined that firms showed strongest performance when they
combined a strategy of diversification into related areas with a product-division structure. These firms
outperformed firms diversifying into unrelated fields, as well as those that were vertically integrated and had
limited ability to diversify
OTHER ELEMENTS AFFECTING THE SSP RELATIONSHIP
• Several organizational design factors should be considered when implementing strategy, including structure,
processes, rewards, and people
• Financial performance is enhanced through the achievement of congruence among all organization design factors
RODRIGUES, STANK, AND LYNCH

EVOLUTION OF THE STRATEGY-STRUCTURE-PROCESS-PERFORMANCE LITERATURE
Key Authors
Miller (1987)
Dalton et al. (1980)
Galunic and Eisenhardt (1994)
Chow, Heaver, and Henriksson
(1995)
Fawcett and Clinton (1996)
Stank and Traichal (1998)
Bowersox, Closs, and Stank
(1999)
TABLE 1 (CONT.)
Topic/Summary of Research
OTHER ELEMENTS AFFECTING THE SSP RELATIONSHIP (CONT,)
• Researched US, Canadian, and Australian firms looking at strategy, structure, and environmental conditions.
• Determined that industry structure influences strategy and strategy can influence environment, causing a firm to
gravitate toward customers with particular preferences, and inviting retaliation in kind from competitors
• Causal relationship between strategy and structure flows in both directions, interacting in an iterative, dynamic
process: strategy defines particular niches of the environment; on the other hand the environment, through
customer needs and competitors’ challenges, requires a firm to strategically adapt.
• Argue that traditional views of strategy-structure-performance are too simplistic
• Executives often pursue multiple strategies simultaneously
• Other influences include environment (economic and competitive), technology, leadership, work force
LOGISTICS APPLICATIONS OF SSP FRAMEWORK
• Conceptual article highlighting the organizational science and strategy literature that maintains that performance
depends upon alignment between structural design and strategic choice
• Postulate that logistics structural adaptation should be aligned with business strategy and that processes built
upon such structural competencies are expected to lead to increased performance
JOURNAL OF BUSINESS LOGISTICS, Vol. 25, No. 2, 2004
• Compared managerial responses of baseline companies to high performing companies to gain insight into seven
organizational strategy, structure, and process factors that influence firm performance
• Determined that combination of all factors contributed to performance
• Empirically tested relationships among logistics strategy, organizational design dimensions used to implement
strategy, and performance outcomes
• Confirmed relationship between organizational design and performance; did not find link between strategic
choice and design or performance
• Conceptual and exploratory research that portrays relational flow between strategic, structural, and process
dimensions of integration
• Infers an influence of achievement of high levels of competence in each area with improved performance
69
70 RODRIGUES, STANK, AND LYNCH

The current research extends previous investigations, portraying relational strategy, informa-
tion systems, measurement systems, internal operations, and external operations as elements of
firm logistics strategy, structure, and process. Relational strategy is portrayed as the antecedent of
information and measurement systems, which are in turn antecedents of internal and external oper-
ations. Internal and external operations are portrayed as being directly related to logistics performance.
A brief discussion of each concept follows in the hypotheses section.

Hypotheses
Bowersox et al. (1989) examined the concept of logistics strategy in their evaluation of lead-
ing edge firms. The three types of logistics strategy included process, market, and channel. The dis-
tinction between the strategies is the context of the logistics effort. Process logistics strategy deals
internally within a single organization, requiring logistics managers to work closely with other
functional areas within a single firm to ensure logistics efficiencies are achieved. Market strategy
calls for logistics managers to consider other business units and their logistics activities to make deci-
sions that benefit the entire corporation and present a more unified ‘‘face’’ to the customer. Chan-
nel strategy expands the logistics manager’s scope and entails coordination with other supply chain
members. It calls for firms to work closely with suppliers and customers as well as internal activi-
ties to achieve logistics efficiencies and effectiveness. McGinnis and Kohn (1990, 1993) developed
a set of strategies closely related to the process-market-channel strategies.
The current conceptualization of relational strategy is, therefore, closely aligned with the con-
cept of channel strategy. Relational strategy entails a willingness on the part of supply chain part-
ners to create structures, frameworks, and metrics that encourage cross-organizational behavior. This
includes sharing strategic planning and operational information as well as creating financial link-
ages that make firms dependent upon mutual performance. Suppliers, manufacturers, third-party
providers, and customers are encouraged to identify and partner with firms that share a common vision
and/or are pursuing parallel objectives pertaining to partnership interdependence and the principles
of collaboration. Efforts must focus on providing the best end-customer value, regardless of where
along the supply chain the necessary competencies exist. This strategic relational perspective facil-
itates developing effective supply chain structures that align the functional operations of multiple
firms into an integrated system (Bowersox, Closs, and Stank 1999).
Information systems are the first structural component of integrated logistics that will be
investigated. Information systems integration focuses on the development of systems capable of sup-
porting the wide variety of operational configurations needed to create supply chain solutions for
specific customers (Bowersox, Closs, and Stank 1999). Such systems provide the input needed for
short-, mid-, and long-term plans, which translate strategic goals and objectives into action and
work to guide each operating area. Effective information systems provide thorough, accurate, and
timely information from customers, material and service suppliers, and internal functional areas regard-
ing current and expected conditions. This information is necessary to facilitate strategic goals and
objectives as well as action plans. Managers, therefore, with access to data throughout the supply
chain and the hardware and software needed to process it are better positioned to gain rapid insight
into demand patterns and trends. Such accessibility allows integrated operational decisions to be made
JOURNAL OF BUSINESS LOGISTICS, Vol. 25, No. 2, 2004 71

in complex global supply chains (Bowersox, Closs, and Stank 1999; Goldhar and Lei 1991; Ross
2002; The Global Logistics Research Team at Michigan State University 1995; Williams et al.
1997). Therefore, it is hypothesized that:
H1a: Relational strategy is positively related to development of information systems.
Integrated measurement systems represent another key structural element of coordinated logis-
tical operations. Developing measurement systems that can track performance across the borders
of internal functional areas and external supply chain partners enables managers to monitor key dimen-
sions of individual firm and supply chain operations (Bowersox, Closs, and Stank 1999). Inte-
grated measurement systems form the basis for calibrating the many parts of the supply chain by
providing timely feedback on strategic initiatives so that management can take corrective action to
ensure that goals and objectives are met (The Global Logistics Research Team at Michigan State
University 1995). Therefore:
H1b: Relational strategy is positively related to development of measurement systems.
Internal operations comprise dimensions that reflect a firm’s ability to seamlessly link logis-
tics activities across internal functional areas (Bowersox, Closs, and Cooper 2002; Stank, Keller,
and Daugherty 2001). This concept calls for the components of logistics to be managed holistically,
as parts of an interconnected system, in order to achieve synergies that lead to better performance
in meeting customer requirements. Internal integration is achieved by linking operations into a
seamless, synchronized operational flow, encouraging front-line managers and employees to use their
own discretion, within policy guidelines, to make timely decisions. Empowered employees have
the authority and information necessary to do a job and they are trusted to perform work without
intense over-the-shoulder supervision. Having strong information and measurement systems in
place facilitate the initiatives that drive integrated operations. The next hypotheses address these
relationships:
H2a: Development and maintenance of integrated information systems positively influence
internal operations integration.
H3a: Development and maintenance of integrated measurement systems positively influ-
ence internal operations integration.
The need to reduce redundancies, achieve greater economies of scale, and leverage differen-
tiated core competencies in logistics operations is not limited to internal activities alone. External
integration synchronizes the core competencies of selected supply chain participants to jointly
achieve improved service capabilities at lower total supply chain cost (Bowersox, Closs, and Cooper
2002; Forza 1996; Stank, Keller, and Daugherty 2001; Vargas, Cardenas, and Matarranz 2000).
One goal of external integration is to outsource specialized activities that previously were developed
and performed internally to external supply chain partners that can perform an activity or process
more cost effectively. External integration ensures that operational interfaces between firms are syn-
chronized to reduce duplication, redundancy, and dwell time (the ratio of days that inventory sits idle
in the supply chain relative to the days it is productively being used). Synchronization ensures that
72 RODRIGUES, STANK, AND LYNCH

all activities are conducted by the supply chain entity that best creates the service and cost config-
uration to meet customer requirements. It is facilitated by developing and maintaining information
and measurement systems that ensure the availability of timely and relevant information needed to
standardize interfirm processes and procedures. Therefore, the following hypotheses are offered:
H2b: Development and maintenance of integrated information systems positively influence
external operations integration.
H3b: Development and maintenance of integrated measurement systems positively influ-
ence external operations integration.
Internal and external integration focuses logistical resources on providing cost effective yet unique
and customer-valued product/service offerings that competitors cannot effectively match. Such
synchronization enhances overall firm performance (Stank, Keller, and Closs 2001). Logistics
performance is conceptualized as the ability of the firm to deliver specified value levels in a timely
manner and to do so consistently. Value delivery must be performed in a manner that best utilizes
the assets committed to accomplish service objectives. Therefore, it is hypothesized that:
H4: Integrated internal operations are positively related to perceived logistics performance.
H5: Integrated external operations are positively related to perceived logistics performance.
The conceptual framework and hypotheses are presented in FIGURE 1.

FIGURE 1

CONCEPTUAL MODEL AND HYPOTHESES

H2a
(+) Integrated
Information
Internal
H1a Systems H4
Operations
(+) H2b (+)
(+)
Relational Logistics
Strategy Performance

H3a
H1b (+) H5
(+) Integrated
Measurement (+)
External
Systems
H3b Operations
(+)
JOURNAL OF BUSINESS LOGISTICS, Vol. 25, No. 2, 2004 73

In the next section, the research design and data collection methodology are discussed. In
addition, the constructs utilized in this study are further explained along with establishing measurement
reliability and validity. Lastly, the key respondents utilized in the study and their demographics, e.g.,
job title, industry group, and geographic location, are examined.

METHOD
Data supporting this research were collected in late 1998 and early 1999 using a mail survey
sent to a national sample of top supply chain and logistics executives selected from the overall
population of the Council of Logistics Management (CLM) membership listing. Given the strate-
gic focus of the research, it was decided to focus the research on the senior logistics or supply chain
executive in each manufacturing, wholesale/distributing, and retail firm listed. Thus, the senior
manager for each firm or strategic business unit of a firm listed as a CLM member was selected. These
executives were chosen as key informants due to their expected frequent interactions with cus-
tomers and supply chain partners regarding logistical processes and performance outcomes. Exec-
utive compensation and promotions are highly dependent on reaching established logistics service
goals. Consequently, these executives are actively involved in tracking, understanding, and assess-
ing the logistical service achieved by the firm compared to their competitors. Such competence and
awareness suggests that the perceived evaluations of senior logistics and supply chain executives
are reasonably credible.
The questionnaire was developed using measures based on those developed for The Global Logis-
tics Research Team at Michigan State University (MSU) World Class Logistics best practices
research (1995). The MSU research utilized 3,693 responses from members of the Council of
Logistics Management and ten other logistics professional organizations to establish a baseline
characterization of logistics management competencies. In the current research, the measures estab-
lished in the World Class Logistics were refined through in-depth interviews with 26 manufactur-
ing, wholesaling, and retailing firms pre-judged to have a high potential to possess superior supply
chain competencies and capabilities. Final measures for the current research were developed and
pre-tested in conjunction with these interviews.
Respondents were asked to indicate agreement with statements concerning their firms’ supply
chain logistics integration activities and processes based on a five-point scale where 1 = Strongly
Disagree and 5 = Strongly Agree. Item purification of the original measurement items was conducted
through a qualitative assessment of nomological validity, that is, that the scale expresses the rela-
tionships shown to exist based upon previous research (Hair et al. 1998). This was followed by quan-
titative analysis consisting of correlation analysis, reliability evaluation (using item-to-total
correlations as well as Cronbach’s alpha), and principal component and confirmatory factor analy-
sis. Appendix A presents the correlation matrix among items included in this research. The scale items,
reliabilities, and principal component analysis results are listed in Appendix B. All items included
in the final research analysis are deemed reliable based upon Cronbach’s Alpha scores meeting or
exceeding 0.70. Nearly all items meet established standards for component validity (principal
74 RODRIGUES, STANK, AND LYNCH

component scores approaching 0.70 on components to which they are assigned and scores less
than 0.30 for components on which they are not assigned). Items that did not meet component
score criteria were included based upon the strength of face validity as well as the results of more
stringent testing using structural equations modeling to assess the measurement model. Five items
that did not meet the above criteria were deleted from the set, resulting in the 26 items on
Appendix B. The results of the measurement model assessment are described in the results section.
Relational strategy refers to a firm’s willingness to create structures, frameworks, and metrics
that encourage cross-organizational behavior. Four items adapted from previous research and mod-
ified based upon pre-test interviews were used to assess the construct. Information systems integration
pertains to the extent to which a firm has developed information systems and technology capable
of supporting the wide variety of operational configurations needed to create supply chain solutions
for specific customers. Three measures represent the construct. Measurement systems integration
reflects the extent to which systems and processes are in place to assess the operational and asset
performance of supply chain logistics activities. Five items make up this construct. Internal oper-
ations integration describes the extent to which a firm is able to seamlessly link logistics activities
across internal functional areas. A four-item scale is used to assess the construct. External operations
integration assesses the ability of a firm to synchronize logistical competencies with select supply
chain participants to jointly achieve improved service capabilities at lower total supply chain cost.
Four measures selected from previous research and modified according to comments made by the
pre-test interviewees are used to assess the construct.
To test the influence of the supply chain logistics integration capabilities on logistics perfor-
mance, the conceptual model also includes an assessment of performance outcomes. Respondents
were asked to indicate their perceptions of their firm’s logistics performance on six performance ele-
ments on a five-point scale where 1 = Worse than Competitors, 3 = Comparable with Competitors,
and 5 = Better than Competitors. The performance items were consistent with those introduced in
the Global Logistics Research Team at MSU World Class Logistics research (1995).
The questionnaire was mailed to a sample of the CLM membership listing that included the senior
logistics or supply chain executive listed from each manufacturing, wholesale/distribution, and
retailing firm listed. Thus, after non-manufacturing, wholesale/distribution, and retail firms as well
as duplicate company listings were eliminated from the overall CLM membership listing, the total
sample was 2,511 managers. Of these, 169 were returned as undeliverable, and 284 fully validated
responses were received for a response rate of 11.3%. Of these, three were classified as whole-
sale/distribution, 23 were retailers, and the remaining 258 were manufacturers. Unfortunately, time
and financial constraints prevented follow-up mailings to improve the response rate. This represents
one major limitation of the research.
The 11.3% response rate is partly related to the length and comprehensive nature of the ques-
tionnaire as well as the confidential nature of the information being requested. The response rate also
may have been influenced by the decision to only seek responses from the most senior executive in
the firms. Senior executives have the least amount of free time available and are typically inundated
JOURNAL OF BUSINESS LOGISTICS, Vol. 25, No. 2, 2004 75

with requests to respond to surveys. As mentioned previously, the low response rate is also partly
due to the fact that only one mailing was used. Given the low response rate, analyses were conducted
to ensure that the respondents represented the overall sample without bias. Armstrong and Overton
(1977) recommend comparing respondent characteristics received from multiple mailings to the sam-
ple base to assess non-response bias. As this was not part of the data collection methodology,
another assessment was undertaken to ensure that non-response bias did not exist. Critical demo-
graphics, specifically industry group and job title of the respondents were compared with known char-
acteristics from the overall sample. This was accomplished using cross-tabulation of frequency
distributions of the responses versus data for the overall sample. The results revealed no significant
differences between the frequency distribution for respondent data and the distribution for the total
sample.Table 2 reports results of this analysis. Univariate skewness and kurtosis were also exam-
ined, with no evidence detected of significant violations of univariate normality. Multivariate nor-
mality, examined through Mardia’s Coefficients and Normalized Estimates (Mardia 1970, 1974),
was supported. In summary, we believe that the results of these analyses support the generaliz-
ability of the responses to the total sample.

TABLE 2

SAMPLE DEMOGRAPHICS

INDUSTRY* Total Sample Respondents

Appliances 1.4% 1.5%
Auto and Transport Equipment 5.8% 8.5%
Building Mats/Lumber 2.7% 5.8%
Chemicals and Plastics 9.2% 7.3%
Clothing and Textiles 4.9% 4.2%
Computer Hardware and Peripherals 3.9% .8%
Construction, Farm, and Garden Equipment 1.6% 1.5%
Dept Store and/or General Merchandise 8.9% 3.8%
Electronics and Related 5.7% 5.0%
Food and Beverage 2.2% 4.2%
Furniture 16.7% 20.8%
Hardware 1.2% 1.9%
Machine Tools and Machinery 1.8% 1.5%
Metal Products (fabricated) .6% .8%
Mining and Minerals 2.8% .0%
Office Equipment and Supplies (excluding paper) 1.3% 1.2%
Paper and Related Products 1.2% 2.7%
Petroleum and Petrochemicals 4.4% 2.7%
Pharmaceuticals, Drugs, and Toiletries 1.4% 1.5%
Primary Metals 8.2% 13.1%
Rubber Products and Related .8% 1.9%
Other 13.0% 9.3%

*No Significant Difference in Sample Distributions were Determined Using Kendall’s Tau-B, Kendall’s
Tau-C, and Gamma
76 RODRIGUES, STANK, AND LYNCH

TABLE 2 (CONT.)

SAMPLE DEMOGRAPHICS

TITLE** Total Sample Respondents

Corporate Officer 25.8% 32.2%
Director 36.2% 29.6%
Manager 35.6% 35.6%
Supervisor .9% 2.6%
Staff Specialist 1.1% .0%
Other .5% .0%

**No Significant Difference in Sample Distributions were Determined Using Kendall’s Tau-B, Kendall’s
Tau-C, and Gamma

RESULTS
The complete measurement model was tested using EQS software (Bentler 1998). Structural
equation modeling (SEM) in EQS was used to test the hypothesized structural model and assess the
structural path strengths (Hoyle 1995). As the data were normally distributed without skewness and/or
kurtosis, the maximum likelihood method was used to estimate parameters (Jöreskog 1967). A raw
data matrix was used to input data.
Table 3 reports the measurement model results (no figure associated). The Normal Theory
RLS Chi-Square (which we will simply call normalized chi-square) for the measurement model was
460.2 (284 degrees of freedom, p-value < 0.001). The chi-square measure is sensitive to sample size
and even slight departures from multivariate normality of the observed variables (Bollen 1989;
Jöreskog 1977). Larger sample sizes and departures from normality tend to increase chi-square
over and above what can be expected due to specification error in the model. The chi-square statistic,
therefore, should not be viewed as an absolute statistic but rather as a relative assessment of fit in
that large values correspond to bad fit and small values to good fit. Degrees of freedom (df) provide
a standard by which to judge whether chi-square is small or large. The relative chi-square, also
called normal chi-square or normed chi-square, is the chi-square fit index divided by degrees of free-
dom, in an attempt to make it less dependent on sample size. It should be in the 2:1 or 3:1 range for
an acceptable model (Carmines and McIver 1981; Kline 1998). In this case, the normed chi-square
was an acceptable 1.6:1. Other fit statistics including the Comparative Fit Index (CFI), Bentler-Bonnett
Nonnormed Fit Index (BBNNFI), and Bollen IFI all had values exceeding the 0.90 cutoff (Bagozzi
and Yi 1988; Hu and Bentler 1995). In addition, the root mean square error of approximation
(RMSEA) was acceptable at 0.054.
JOURNAL OF BUSINESS LOGISTICS, Vol. 25, No. 2, 2004 77

TABLE 3

MEASUREMENT MODEL RESULTS

GOODNESS OF FIT SUMMARY
INDEPENDENCE MODEL CHI-SQUARE = 2489.121 ON 325 DEGREES OF FREEDOM
INDEPENDENCE AIC = 1839.12057
INDEPENDENCE CAIC = 405.33560
MODEL AIC = -103.38202
MODEL CAIC = -1356.28950
CHI-SQUARE = 464.618 BASED ON 284 DEGREES OF FREEDOM
PROBABILITY VALUE FOR THE CHI-SQUARE STATISTIC IS LESS THAN 0.001
THE NORMAL THEORY RLS CHI-SQUARE FOR THIS ML SOLUTION IS 460.229
BENTLER-BONNETT NORMED FIT INDEX = 0.813
BENTLER-BONNETT NONNORMED FIT INDEX = 0.904
COMPARATIVE FIT INDEX (CFI) = 0.917
BOLLEN (IFI) FIT INDEX = 0.918
MCDONALD (MFI) FIT INDEX = 0.668
LISREL GFI FIT INDEX = 0.863
LISREL AGFI FIT INDEX = 0.831
ROOT MEAN SQUARED RESIDUAL (RMR) = 0.056
STANDARDIZED RMR = 0.059
ROOT MEAN SQ. ERROR OF APP. (RMSEA) = 0.054
90% CONFIDENCE INTERVAL OF RMSEA (0.044, 0.062)

The standardized lambda estimates showed that all measurement items loaded significantly on
their designated latent variables, demonstrating convergent validity (Anderson 1987). In addition,
the Wald test indicated that better model fit was not achievable by dropping a ‘‘trouble’’ item. The
Lagrange Multiplier (LM) test suggested 10 model respecifications, none of which represented
significant improvement in the chi-square fit statistic. The presence of significant factor loadings
as well as the acceptable fit statistics, however, indicates that the model as currently specified
demonstrates satisfactory convergent and discriminant validity. Nomological validity also sup-
ports the current specifications. The measurement model is, therefore, deemed acceptable for use
in subsequent structural model analyses.
The structural model analysis results are presented in FIGURE 2. The structural model includes
tests of significance of structural paths indicated between and among the exogenous and endoge-
nous constructs (essentially the hypotheses tests), while the measurement model assesses the degree
to which observable measures used to operationalize the constructs actually capture the constructs
to which they are assigned. It is common, therefore, to present statistics on each model separately.
For each path, three values are presented: (1) the hypothesis number, (2) the standard estimate for
the path, and (3) the t-value in parentheses. In each figure, supported hypotheses were reported as
bold and significant paths were represented as straight lines. Structural analysis shows that five of
78 RODRIGUES, STANK, AND LYNCH

eight parameter estimates between latent variables were significant. Hypothesis 2b, the relationship
between information systems and integrated external operations, was not supported. In addition,
Hypothesis 4, the relationship between integrated internal operations and logistics performance, was
not supported. Finally, the results did not support Hypothesis 5, the relationship between integrated
external operations and logistics performance. All other path strengths were highly significant,
supporting hypotheses 1a, 1b, 2a, 3a, and 3b.

FIGURE 2

HYPOTHESES TEST RESULTS

H2a*
.350
(3.667) Integrated
Information H4
H1a* Internal
Systems .422
.643 H2b Operations
(6.704) (1.346)
.089
(1.189)
Relational Logistics
Strategy Performance
H3a*
.673
H1b* (5.938) H5
.979 Integrated .106
Measurement
(8.705) External (.360) Fit Statistics:
Systems
Operations CHI-SQUARE =
H3b*
.941 468.140 (DF=291)
(7.946) BBNFI = 0.801
BBNNFI = 0.902
CFI = 0.913
IFI = 0.914
MFI = 0.653
HYPOTHESIS GFI = 0.854
Standard Estimate AGFI = 0.824
* p-value < 0.01 (T-Value) RMSEA = 0.054

DISCUSSION
The results confirm the existence of a flow of interrelationships among relational strategy,
information systems, measurement systems, internal operations, and external operations. Firms
that achieve relational strategies also appear to demonstrate high levels of structural development
in terms of information and measurement systems. The results also support the relationship between
high levels of information systems and high levels of internal operations integration, as well as
between measurement systems and internal and external operations integration. However, no rela-
JOURNAL OF BUSINESS LOGISTICS, Vol. 25, No. 2, 2004 79

tionship exists between information systems and external operations integration. Perhaps more
interestingly, no direct relationship was found between internal and external operations and
performance.
The lack of a relationship between information systems and external operations may be
explained to some extent by the nature of the measures for information systems integration. While
the measures adequately capture such internal information systems issues as the presence of inter-
nally integrated logistics operating and planning databases and information, the measures for exter-
nal information systems integration reflect a unilateral approach. That is, the measures assess a
firm’s investment in information systems designed to facilitate cross-organizational data exchange.
Effective cross-organizational information systems integration is at least a bilateral if not a multi-
lateral concept with possible involvement of multiple supply chain entities including shippers,
receivers, transportation and warehousing providers, and external information services provider (ISP).
Additional explanations for the lack of a direct relationship, beyond the difficulty in measuring
this construct, may also be that other issues not tested here are more important to logistics integra-
tion. For example, the work of McGinnis and Kohn (2002) points out that a process strategy may
play a larger role than any other logistics strategy in terms of process performance. That is, they pro-
pose that logistics objectives may be about maximizing efficiency, and to a lesser extent related to
a relational strategy. Information systems development, therefore, may be deemed less important
than other cost saving activities to external operations.
While the previous discussion may partially explain the lack of support for H2b, lack of sup-
port for H4 and H5 suggests the need for further investigation. It is generally agreed that both inter-
nal and external integration of operations is needed to influence improved performance. It is unclear,
however, whether internal integration must first be established before attempting to integrate with
external supply chain entities or if it is easier to integrate with external partners first and use this exter-
nal initiative to drive internal, cross-functional integration. This ‘‘chicken or egg’’scenario is supported
by previous research (Global Logistics Research Team at Michigan State University 1995; Stank,
Goldsby, and Vickery 1999; Stank, Keller, and Daugherty 2001). The equivocal nature of this rela-
tionship may, therefore, suggest a modification in the model in terms of simplification of these
constructs into a unified integrated operations construct. Further analyses, discussed below, were
conducted to investigate this modification.

Alternative Model
The internal and external integration constructs were combined to test this contention. The con-
struct was operationalized as a second-order factorial structure composed of the two original dimen-
sions of integration. A second-order construct is a latent variable whose indicators are themselves
latent variables. The latent variables directly influencing the observed variables may be influenced
by other latent variables that need not have direct effects on the measures. This means that the sec-
ond-order latent variable captures common characteristics of the first-order latent variables. The objec-
tive here is to have a higher-level construct that captures integrated operations efforts both internally
80 RODRIGUES, STANK, AND LYNCH

and externally in the company. The second objective is to simplify the model, therefore eliminat-
ing the unclear relationship among internal integration, external integration, and performance.
Therefore, we propose that:
HM3: Integrated operations are positively related to perceived logistics performance.
Table 4 reports the confirmatory factor analysis for the second-order factor that captures
the internal and external dimensions of integrated operations. The same set of observable mea-
sures presented in Appendix B was used to assess the Integrated Internal Operations and Integrated
External Operations constructs. These two latent constructs were then considered dimensions of a
higher-order latent construct that subsumes them both (Integrated Operations). The normalized
chi-square statistic for the measurement model was 22.1 (18 degrees of freedom, p-value = 0.152).
Other fit statistics including the Comparative Fit Index (CFI), Bentler-Bonnett Nonnormed Fit
Index (BBNNFI), and Bollen IFI all had values exceeding the 0.90 cutoff. In addition, the root
mean square error of approximation (RMSEA) was acceptable at 0.036.

TABLE 4

CONFIRMATORY FACTOR ANALYSIS FOR INTEGRATED OPERATIONS

CONSTRUCT
GOODNESS OF FIT SUMMARY
INDEPENDENCE MODEL CHI-SQUARE = 583.170 ON 28 DEGREES OF FREEDOM
INDEPENDENCE AIC = 527.16964
INDEPENDENCE CAIC = 398.62200
MODEL AIC = -11.90240
MODEL CAIC = -94.54017
CHI-SQUARE = 24.098 BASED ON 18 DEGREES OF FREEDOM
PROBABILITY VALUE FOR THE CHI-SQUARE STATISTIC IS 0.15186
THE NORMAL THEORY RLS CHI-SQUARE FOR THIS ML SOLUTION IS 22.105.
BENTLER-BONNETT NORMED FIT INDEX = 0.959
BENTLER-BONNETT NONNORMED FIT INDEX = 0.983
COMPARATIVE FIT INDEX (CFI) = 0.989
BOLLEN (IFI) FIT INDEX = 0.989
MCDONALD (MFI) FIT INDEX = 0.989
LISREL GFI FIT INDEX = 0.980
LISREL AGFI FIT INDEX = 0.959
ROOT MEAN SQUARED RESIDUAL (RMR) = 0.031
STANDARDIZED RMR = 0.031
ROOT MEAN SQ. ERROR OF APP. (RMSEA) = 0.036
90% CONFIDENCE INTERVAL OF RMSEA (0.000, 0.069)
JOURNAL OF BUSINESS LOGISTICS, Vol. 25, No. 2, 2004 81

The confirmatory model fit measures provide statistical evidence of both convergent validity
and unidimensionality. Further empirical support for acceptance of the higher-order factor structure
is found in the magnitude and significance of estimated parameters as well as the amount of vari-
ance explained by the structural equations. Appendix C presents the estimated parameters for the
second-order factorial structure. These parameter estimates are analogous to the reliabilities of
observed indicators to first level constructs. All standardized loadings were significant and considerably
high (over 0.5), and the proportion of variance explained by each second-order factor was above 0.8.
Alphas of 0.5 or higher are judged adequate for research purposes (Nunnally 1967). The results sug-
gest that a large amount of variance among the constructs is captured by the structural equations.
This supports convergent validity.
The Lagrange Multiplier (LM) test was used to check for discriminant validity. This test com-
pares the fit of a restrictive model in which the structural path between Internal Operations and Exter-
nal Operations is constrained to a value of 1.00 to a less restrictive model in which the structural path
is allowed to vary (Fornell and Larcker 1981). The test assesses how the model fit would improve
if additional paths or parameters were included. With this test, we can verify if any cross loading
between measured variables and latent factors indicate a problem regarding discriminant validity.
The cumulative multivariate statistics for the LM test indicated no problems with regards to dis-
criminant validity. The results support the portrayal of integrated operations as a single, second-order
construct.
The structural model analysis results of the modified conceptual model are presented in
FIGURE 3. Table 5 reports more detailed results of the modified conceptual model. The normalized
chi-square statistic for the measurement model was 289.6 (165 degrees of freedom, p-value
< 0.001). Other fit statistics including the Comparative Fit Index (CFI), Bentler-Bonnett Nonnormed
Fit Index (BBNNFI), and Bollen IFI all had values exceeding the 0.90 cutoff. In addition, the root
mean square error of approximation (RMSEA) was acceptable at 0.06. Therefore, hypothesis HM3
is supported. This adds credence to the idea that both internal and external operational integration
are essential in order to achieve firm performance.
82 RODRIGUES, STANK, AND LYNCH

FIGURE 3

REVISED HYPOTHESES TEST RESULTS

HM1a* Information HM2a*

.647 Systems .173
(6.766) (2.654)

Relational Integrated Logistics

Strategy Operations Performance

HM1b* HM2b* HM3*

.975 .882 .499
Measurement
(8.649) (9.650) (4.722) Fit Statistics:
Systems CHI-SQUARE =
288.595 (DF=165)
BBNFI = 0.850
BBNNFI = 0.918
CFI = 0.929
IFI = 0.930
MFI = 0.747
HYPOTHESIS GFI = 0.879
Standard Estimate AGFI = 0.846
* p-value < 0.01 (T-Value) RMSEA = 0.057
JOURNAL OF BUSINESS LOGISTICS, Vol. 25, No. 2, 2004 83

TABLE 5

REVISED MODEL RESULTS

GOODNESS OF FIT SUMMARY
INDEPENDENCE MODEL CHI-SQUARE = 1926.526 ON 190 DEGREES OF FREEDOM
INDEPENDENCE AIC = 1546.52609
INDEPENDENCE CAIC = 718.77470
MODEL AIC = -41.40499
MODEL CAIC = -760.24173
CHI-SQUARE = 288.595 BASED ON 165 DEGREES OF FREEDOM
PROBABILITY VALUE FOR THE CHI-SQUARE STATISTIC IS LESS THAN 0.001
THE NORMAL THEORY RLS CHI-SQUARE FOR THIS ML SOLUTION IS 289.598.
BENTLER-BONNETT NORMED FIT INDEX = 0.850
BENTLER-BONNETT NONNORMED FIT INDEX = 0.918
COMPARATIVE FIT INDEX (CFI) = 0.929
BOLLEN (IFI) FIT INDEX = 0.930
MCDONALD (MFI) FIT INDEX = 0.747
LISREL GFI FIT INDEX = 0.879
LISREL AGFI FIT INDEX = 0.846
ROOT MEAN SQUARED RESIDUAL (RMR) = 0.057
STANDARDIZED RMR = 0.061
ROOT MEAN SQ. ERROR OF APP. (RMSEA) = 0.060
90% CONFIDENCE INTERVAL OF RMSEA (0.048, 0.071)

The results of structural analysis on the alternative model provide strong support for the
simplified portrayal of operational integration. All hypothesized structural paths are positive and sig-
nificant, indicating that the proposed relational flow between strategy-structure-process-perfor-
mance is upheld. The implications of this finding will be discussed in the next section.

IMPLICATIONS AND CONCLUSION

The research provides useful implications for both academics and practitioners. Academics can
reference empirical support of the strategy-structure-process-performance paradigm in one spe-
cific logistics context. Such support enhances understanding of the complex interrelationships
inherent in the business logistics environment and provides clarification of a holistic model describ-
ing linkages among major components of that environment. The sequential relationship among
strategic determination, resource investment in systems infrastructure to support the strategy, use
of system output to make operating decisions consistent with overall strategy and improved logis-
tical performance has long been taught in academic classrooms and assumed to exist in practice.
Frameworks based upon this sequence have been evident in leading edge logistical thought for at
least fifteen years (Bowersox, Closs, and Stank 1999; Bowersox et al. 1989; Global Logistics
Research Team at Michigan State University). Empirical support for the sequence in its entirety, how-
ever, has been lacking. The results of this research demonstrate that the sequence of relationships
84 RODRIGUES, STANK, AND LYNCH

that have been assumed to exist both in academia and in practice can be empirically supported in
one specific context. Furthermore, the relationship has been found among data representing a
national sample that cuts across multiple industries. The measures used in this research were adapted
from earlier research, providing further evidence of measure validity, and, therefore, represent a sound
basis for future use. Further testing of the relationship in other settings and contexts is certainly pre-
scribed, however, before any claims as to the robustness of the theory is asserted.
The research also seeks better understanding of the comparative strength of relationships
between internal integration and performance and external integration and performance. Past
research has produced equivocal results regarding which of these must be implemented first. The
original conceptual model tested in this research was designed to provide insight into this issue. The
initial conceptualization of two distinct integrated operations constructs – one internally focused and
one externally focused – and that each was related to logistics performance improvement, however,
was not supported. Instead, and perhaps most interestingly, the research results did support an alter-
native model that portrayed internal and external operations as two dimensions of a single construct.
This infers that attainment of superior logistics performance involves simultaneous integration of
internal and external operational processes, neither of which are stand alone initiatives.

Managerial Implications
The results are also meaningful to logistics managers. In general, the results demonstrate the
importance of aligning operational policies, procedures, guidelines, training, etc. with high-level strat-
egy and supporting it with appropriate information and measurement systems. Practitioners may uti-
lize this knowledge to improve decision-making processes, incorporating the key findings to ensure
that important strategic, tactical, and operational decisions consider the linkages explored here and
understand the importance of aligning strategic, structural, and process elements of integration to
best influence performance. Specifically, they support the importance of relational strategies and inte-
grated operations to achieve logistical performance improvement. Further, they provide some jus-
tification for the extensive investment in information and measurement systems that many firms have
made in the last several years. The research also highlights the importance of information systems
that facilitate the exchange of information across functional and enterprise borders as a central dri-
ver of integrated operations. It also highlights measures that focus on the perspective of external sup-
ply entities (customers and suppliers) vs. internally generated metrics. For example, an appropriate
measure for on time delivery might be orders delivered according to customer specified timeframe
vs. orders delivered according to an internally generated performance metrics.
At a higher level, the research provides managers with a set of relevant questions useful in guid-
ing integration efforts. First, are the firm or business unit’s strategic objectives taken into consid-
eration when investing scarce resources in development of information and measurement systems
capabilities? Second, are the capabilities of the information and measurement systems used to
support integrated operational processes to their utmost extent? Lastly, are operational integration
JOURNAL OF BUSINESS LOGISTICS, Vol. 25, No. 2, 2004 85

initiatives simultaneously focused both internally and externally to influence perceived superior
performance?

Conclusion
The analysis provides empirical support for the strategy-structure-process-performance link-
ages hypothesized in previous logistics research (Bowersox, Closs, and Stank 1999; Chow, Heaver,
and Henriksson 1995; Stank and Traichal 1998). The sequential model has not been tested or sup-
ported in its entirety in the past. The current research, therefore, makes a contribution toward a
better understanding of the chain of events that occur in translating strategic objectives into per-
formance improvements. Specifically, within the context of logistics, the research supports the
contention that a firm that pursues a relational strategy, develops information and measurement
structures to support relational processes, and then uses these tools to implement and execute inte-
grated operations will experience high levels of logistical performance.
The research does have some limitations, however. First, it examines the strategy-structure-
process-performance linkages in the context of one strategy only, that is, a relational strategy. It would
be interesting to see if the linkages are as robust with other strategic objectives. Second, the link-
ages were examined using a database consisting of U.S. firms only, and only one mailing was sent
to each firm. Future research should be extended to an international sample to ascertain the gener-
alizability of the model. Methods that reduce non-respondent bias also should be employed. In so
doing, the measures utilized in this study could be further refined by additional empirical research,
especially on a global basis. Furthermore, additional research methodologies such as case studies
and/or other qualitative research techniques might be utilized in order to gain further insight into these
complex interrelationships. Qualitative methodologies, in combination with innovative data collection
media such as email and Internet based surveys, also may provide an appropriate means to overcome
the trend of decreasing response rates to mail survey research.

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ABOUT THE AUTHORS

Alexandre M. Rodrigues (M.Sc. Federal University of Rio de Janeiro, Brazil) is a Doctoral
Candidate in Operations Management and Logistics in the Department of Marketing and Supply Chain
Management at Michigan State University. His research interests focus on modeling the impact of
supply chain planning and operational initiatives on logistical performance.
Theodore P. Stank (Ph.D. The University of Georgia) is John H. Dove Distinguished Professor
of Logistics at The University of Tennessee. He is co-author of 21st Century Logistics: Making
Supply Chain Integration a Reality, and has published numerous articles in the areas of logistics
strategy, customer relevance, and internal and external integration in various journals including
Business Horizons, Journal of Business Logistics, Journal of Operations Management, Management
Science, Supply Chain Management Review, and Transportation Journal.
Daniel F. Lynch (Ph.D. The University of Arkansas) is an Assistant Professor of Marketing and
Supply Chain Management at the Eli Broad College of Business at Michigan State University. His
publications have appeared, or are forthcoming in the Journal of Strategic Marketing, Business
Horizons, Journal of Business Logistics, Journal of International Marketing, Industrial Marketing
Management, Marketing Education Review, and numerous conferences. Research interests include:
e-commerce capabilities, logistics and supply chain strategy, and resource-based theories of
competition.
 APPENDIX A 90

X22 X59 X64 X120 X24 X25 X73 X16 X55 X57 X70 X76 X4
X22 1 .362(**) .338(**) .479(**) .407(**) .379(**) .331(**) .490(**) .301(**) .399(**) .421(**) .363(**) .262(**)
X59 .362(**) 1 .478(**) .525(**) .201(**) .241(**) .260(**) .462(**) .294(**) .402(**) .492(**) .400(**) .359(**)
X64 .338(**) .478(**) 1 .436(**) .255(**) .318(**) .310(**) .330(**) .217(**) .320(**) .411(**) .407(**) .288(**)
X120 .479(**) .525(**) .436(**) 1 .295(**) .307(**) .312(**) .543(**) .303(**) .459(**) .466(**) .469(**) .354(**)
X24 .407(**) .201(**) .255(**) .295(**) 1 .677(**) .354(**) .393(**) .274(**) .339(**) .419(**) .387(**) .321(**)
X25 .379(**) .241(**) .318(**) .307(**) .677(**) 1 .471(**) .360(**) .218(**) .323(**) .400(**) .408(**) .310(**)
X73 .331(**) .260(**) .310(**) .312(**) .354(**) .471(**) 1 .285(**) .215(**) .223(**) .356(**) .317(**) .279(**)
X16 .490(**) .462(**) .330(**) .543(**) .393(**) .360(**) .285(**) 1 .428(**) .506(**) .516(**) .472(**) .368(**)
X55 .301(**) .294(**) .217(**) .303(**) .274(**) .218(**) .215(**) .428(**) 1 .519(**) .391(**) .370(**) .331(**)
X57 .399(**) .402(**) .320(**) .459(**) .339(**) .323(**) .223(**) .506(**) .519(**) 1 .478(**) .451(**) .398(**)
X70 .421(**) .492(**) .411(**) .466(**) .419(**) .400(**) .356(**) .516(**) .391(**) .478(**) 1 .554(**) .352(**)
X76 .363(**) .400(**) .407(**) .469(**) .387(**) .408(**) .317(**) .472(**) .370(**) .451(**) .554(**) 1 .307(**)
X4 .262(**) .359(**) .288(**) .354(**) .321(**) .310(**) .279(**) .368(**) .331(**) .398(**) .352(**) .307(**) 1
X10 .330(**) .305(**) .269(**) .345(**) .308(**) .215(**) .213(**) .427(**) .331(**) .345(**) .383(**) .348(**) .361(**)
X40 .339(**) .363(**) .362(**) .385(**) .350(**) .400(**) .304(**) .413(**) .276(**) .357(**) .336(**) .391(**) .369(**)
X47 .289(**) .385(**) .314(**) .383(**) .466(**) .465(**) .307(**) .364(**) .239(**) .310(**) .395(**) .449(**) .401(**)
X7 .455(**) .362(**) .474(**) .456(**) .350(**) .376(**) .298(**) .497(**) .303(**) .359(**) .412(**) .345(**) .323(**)
X34 .553(**) .482(**) .393(**) .516(**) .428(**) .359(**) .307(**) .606(**) .362(**) .413(**) .389(**) .385(**) .349(**)
X44 .441(**) .371(**) .354(**) .526(**) .366(**) .376(**) .280(**) .514(**) .292(**) .406(**) .366(**) .415(**) .365(**)
X119 .380(**) .492(**) .352(**) .596(**) .256(**) .306(**) .323(**) .512(**) .309(**) .454(**) .437(**) .362(**) .317(**)
Z2C .149(*) .256(**) .236(**) .300(**) .216(**) .227(**) 0.093 .221(**) .157(*) .228(**) .368(**) .263(**) .193(**)
Z2D .158(*) .186(**) .204(**) .235(**) .178(**) .252(**) 0.115 .181(**) .135(*) .237(**) .283(**) .265(**) .242(**)
Z2E .167(*) .177(**) .140(*) .278(**) .159(*) .222(**) 0.121 0.113 .186(**) .132(*) .201(**) .234(**) .329(**)
Z2G .241(**) .174(**) 0.091 .228(**) .245(**) .206(**) .185(**) .174(**) .289(**) .224(**) .235(**) .234(**) .281(**)
Z2K .132(*) .179(**) .225(**) .276(**) .208(**) .198(**) 0.044 .236(**) .161(*) .189(**) .284(**) .259(**) 0.129
Z2L .233(**) .209(**) .189(**) .283(**) .271(**) .299(**) .217(**) .235(**) .320(**) .285(**) .296(**) .341(**) .289(**)
RODRIGUES, STANK, AND LYNCH
 APPENDIX A CONT.)

X10 X40 X47 X7 X34 X44 X119 Z2C Z2D Z2E Z2G Z2K Z2L
X22 .330(**) .339(**) .289(**) .455(**) .553(**) .441(**) .380(**) .149(*) .158(*) .167(*) .241(**) .132(*) .233(**)
X59 .305(**) .363(**) .385(**) .362(**) .482(**) .371(**) .492(**) .256(**) .186(**) .177(**) .174(**) .179(**) .209(**)
X64 .269(**) .362(**) .314(**) .474(**) .393(**) .354(**) .352(**) .236(**) .204(**) .140(*) 0.091 .225(**) .189(**)
X120 .345(**) .385(**) .383(**) .456(**) .516(**) .526(**) .596(**) .300(**) .235(**) .278(**) .228(**) .276(**) .283(**)
X24 .308(**) .350(**) .466(**) .350(**) .428(**) .366(**) .256(**) .216(**) .178(**) .159(*) .245(**) .208(**) .271(**)
X25 .215(**) .400(**) .465(**) .376(**) .359(**) .376(**) .306(**) .227(**) .252(**) .222(**) .206(**) .198(**) .299(**)
X73 .213(**) .304(**) .307(**) .298(**) .307(**) .280(**) .323(**) 0.093 0.115 0.121 .185(**) 0.044 .217(**)
X16 .427(**) .413(**) .364(**) .497(**) .606(**) .514(**) .512(**) .221(**) .181(**) 0.113 .174(**) .236(**) .235(**)
X55 .331(**) .276(**) .239(**) .303(**) .362(**) .292(**) .309(**) .157(*) .135(*) .186(**) .289(**) .161(*) .320(**)
X57 .345(**) .357(**) .310(**) .359(**) .413(**) .406(**) .454(**) .228(**) .237(**) .132(*) .224(**) .189(**) .285(**)
X70 .383(**) .336(**) .395(**) .412(**) .389(**) .366(**) .437(**) .368(**) .283(**) .201(**) .235(**) .284(**) .296(**)
X76 .348(**) .391(**) .449(**) .345(**) .385(**) .415(**) .362(**) .263(**) .265(**) .234(**) .234(**) .259(**) .341(**)
X4 .361(**) .369(**) .401(**) .323(**) .349(**) .365(**) .317(**) .193(**) .242(**) .329(**) .281(**) 0.129 .289(**)
X10 1 .344(**) .263(**) .363(**) .406(**) .268(**) .382(**) .196(**) 0.116 .151(*) 0.088 .187(**) 0.115
X40 .344(**) 1 .391(**) .326(**) .448(**) .352(**) .373(**) .178(**) .134(*) .141(*) .184(**) .225(**) .227(**)
X47 .263(**) .391(**) 1 .345(**) .411(**) .371(**) .347(**) .234(**) .156(*) .130(*) .198(**) .165(*) .266(**)
JOURNAL OF BUSINESS LOGISTICS, Vol. 25, No. 2, 2004

X7 .363(**) .326(**) .345(**) 1 .456(**) .385(**) .352(**) .307(**) .213(**) .220(**) .182(**) .285(**) .161(*)
X34 .406(**) .448(**) .411(**) .456(**) 1 .517(**) .470(**) .194(**) 0.124 0.106 .132(*) .198(**) .230(**)
X44 .268(**) .352(**) .371(**) .385(**) .517(**) 1 .451(**) .196(**) .177(**) .138(*) .152(*) .207(**) .269(**)
X119 .382(**) .373(**) .347(**) .352(**) .470(**) .451(**) 1 .144(*) 0.05 0.056 .157(*) .170(*) .166(*)
Z2C .196(**) .178(**) .234(**) .307(**) .194(**) .196(**) .144(*) 1 .326(**) .347(**) .216(**) .383(**) .304(**)
Z2D 0.116 .134(*) .156(*) .213(**) 0.124 .177(**) 0.05 .326(**) 1 .640(**) .341(**) .203(**) .426(**)
Z2E .151(*) .141(*) .130(*) .220(**) 0.106 .138(*) 0.056 .347(**) .640(**) 1 .540(**) .230(**) .531(**)
Z2G 0.088 .184(**) .198(**) .182(**) .132(*) .152(*) .157(*) .216(**) .341(**) .540(**) 1 .272(**) .512(**)
Z2K .187(**) .225(**) .165(*) .285(**) .198(**) .207(**) .170(*) .383(**) .203(**) .230(**) .272(**) 1 .355(**)
Z2L 0.115 .227(**) .266(**) .161(*) .230(**) .269(**) .166(*) .304(**) .426(**) .531(**) .512(**) .355(**) 1
91

**Correlation is significant at the 0.01 level (2-tailed).

*Correlation is significant at the 0.05 level (2-tailed).
 APPENDIX B 92
PC = Principal Component
Item-To-
Total Alpha if
PC Scores Correlation item deleted
Relational X22 My firm has supply chain arrangements with suppliers and customers 0.691 0.467 0.715
Strategy that operate under principles of shared rewards and risks.
(alpha = 0.7360) X59 My firm believes that the strategic direction, role, and performance of 0.789 0.572 0.650
our supply chain partners are critical to achieving our success.
X64 My firm is willing to share strategic information with selected 0.713 0.488 0.699
suppliers and/or customers.
X120 My firm actively pursues and shares a common set of expectations 0.800 0.595 0.639
with supply chain partners.
Information X24 Logistics operating and planning databases are integrated across 0.847 0.615 0.640
Systems applications within my firm.
(alpha = 0.7563) X25 My firm maintains an integrated database and access method to 0.889 0.696 0.540
facilitate information sharing.
X73 My firm has invested in technology designed to facilitate cross- 0.717 0.460 0.806
organizational data exchange.
Measurement X16 My firm has developed performance measures that extend across 0.795 0.646 0.753
Systems supply chain relationships.
(alpha = 0.8068) X55 My firm utilizes a formal program to measure customer satisfaction 0.682 0.517 0.793
in addition to internal customer service statistics.
X57 My firm benchmarks performance metrics. 0.778 0.629 0.758
X70 My firm extensively measures logistics performance in terms of 0.747 0.581 0.773
cost, productivity, customer service, asset management, and quality.
X76 My firm provides objective feedback to employees regarding 0.755 0.594 0.770
integrated logistics performance.
RODRIGUES, STANK, AND LYNCH
 APPENDIX B (CONT.)
PC = Principal Component
Item-To-
Total Alpha if
PC Scores Correlation item deleted
Integrated X4 My firm extensively utilizes cross-functional work teams for 0.747 0.507 0.610
Internal managing day-to-day operations.
Operations X10 My firm has extensively redesigned work routines and processes 0.676 0.431 0.656
(alpha = 0.6928) over the past three years.
X40 The orientation of my firm has shifted from managing functions to 0.743 0.500 0.617
managing processes.
X47 My firm effectively shares operational information between 0.723 0.478 0.628
departments.
Integrated X7 My firm effectively shares operational information externally with 0.697 0.476 0.719
External selected suppliers and/or customers.
Operations X34 My firm has increased operational flexibility through supply 0.804 0.600 0.646
(alpha = 0.7429) chain collaboration.
X44 My firm successfully integrates operations with customers and/or 0.784 0.574 0.664
suppliers by developing interlocking programs and activities.
X119 My firm is actively involved in initiatives to standardize supply 0.722 0.499 0.704
chain practices and operations.
JOURNAL OF BUSINESS LOGISTICS, Vol. 25, No. 2, 2004

Logistics Z2C Low Logistics Cost: The ability to achieve the lowest total cost of 0.56 0.42 0.760
Performance logistics through efficient operations, technology, and/or scale economies.
(alpha = 0.7703) Z2D Delivery Speed: The ability to reduce the time between order receipt 0.71 0.52 0.734
and customer delivery to as close to zero as possible.
Z2E Delivery Dependability: The ability to meet quoted or anticipated 0.83 0.67 0.695
delivery dates and quantities on a consistent basis.
Z2G Order Fill Capacity: The ability to provide desired quantities on 0.69 0.51 0.738
a consistent basis.
Z2K Inventory Turns: The ratio of cost of goods sold divided by the 0.53 0.38 0.771
average investment in inventory during a time period.
Z2L Customer Satisfaction: The global judgment regarding the extent to 0.77 0.61 0.715
which perceived logistics performance matches customer expectations.
93
94 RODRIGUES, STANK, AND LYNCH

APPENDIX C
Integrated Operations: Confirmatory Factor Loadingsa
Integrated Internal Integrated External Integrated
Item/ Factor Operations Operations Operationsb
X4 0.588
X10 0.552
X40 0.643
X47 0.606
X7 0.593
X34 0.748
X44 0.662
X119 0.634
Integrated Internal Operations 1.000
Integrated External Operations 0.922
aStandardized solution. All parameter estimates statistically significant (p < 0.05)
bSecond-order Factor