Examining The Impact Of Supply Chain Integration On Organization Structure And Operational Performance in Oil and Gas Supply Chains: A Contingency Approach

Abstract
This study adopts a contingency approach in order to analyze the mediating role of internal, customer and supplier integration on the relationship between organization structure (OS) (centralization, formalization and hierarchical relationship) and operational performance. Using a global sample from the oil and gas industry, this research examines the direct relationship between the dimensions of organization structure (centralization, formalization and hierarchical relationship) and operational performance. In addition the direct relationship between the dimensions of supply chain integration (SCI) and operational performance is also examined. A quantitative approach using structural equation modeling is used to test the research hypotheses. Data was collected using a questionnaire survey and explored using statistical techniques. Findings revealed that centralization, formalization, and hierarchical relationship negatively impact operational performance of oil and gas supply chains, and that SCI dimensions positively affect operational performance. By further testing for the mediation this study found that by increasing internal and external SCI, oil and gas companies can mitigate the negative effect of high centralization, formalization and hierarchical relationship, on operational performance. More specifically by classifying OS into the “structuring” and “structural” aspects, this research provides evidences on which of the two (the physical or the process) has a stronger negative impact on operational performance. From a practical point of view, it may be a difficult and daunting task for oil and gas companies to restructure and reform their OS (physical aspect), since this process might be timely and expensive to implement. Therefore oil and gas companies by investing in higher internal and external integration create more inter and intra collaboration and communication which could ultimately encourage organizational restructuring and the move towards organic structures. Therefore instead of viewing organizational theory (OS) and operations management (SCI) in isolation, this study endorses a combined approach (OS and SCI) to improve the operational performance of the oil and gas supply chains. Theoretical contributions to the field of operations management and organizational studies are provided.