The effect of “Internet of Things” on supply chain integration and performance: An organisational capability perspective

Abstract

The Internet of things (IoT) is a next generation of Internet connected embedded ICT systems in a digital environment to seamlessly integrate supply chain and logistics processes. Integrating emerging IoT into the current ICT systems can be unique because of its intelligence, autonomous and pervasive applications. However, research on the IoT adoption in supply chain domain is scarce and acceptance of the IoT into the retail services in specific has been overly rhetoric. This study is drawn upon the organisational capability theory for developing an empirical model considering the effect of IoT capabilities on multiple dimensions of supply chain process integration, and in turn improves supply chain performance as well as organisational performance. Cross-sectional survey data from 227 Australian retail firms was analysed using structural equation modelling (SEM). The results indicate that IoT capability has a positive and significant effect on internal, customer-, and supplier-related process integration that in turn positively affects supply chain performance and organisational performance. Theoretically, the study contributes to a body of knowledge that integrates information systems research into supply chain integration by establishing an empirical evidence of how IoT-enabled process integration can enhance the performance at both supply chain and organisational level. Practically, the results inform the managers of the likely investment on IoT that can lead to chain’s performance outcome.