The influence of strategic networks and logistics integration on firm performance among small and medium enterprises

Abstract

Background: In order to stay competitive in business and improve performance, small and medium enterprises (SMEs) need to make use of business networking and logistics integration. Strategic networking and logistics integration in business have become critical as they allow supplier partnering, exchange of vital information or access to valuable resources allowing innovation, gaining access to additional resources, sharing risks and costs, which is required for enhancing firm performance. Strategic networks and logistics integration across partnering firms have therefore become paramount to supply chain management as they are critical to firm performance. Most studies in this subject matter have focussed on larger firms. It became imperative for this study to focus on SMEs.

Objectives: The purpose of this study was to examine the influence of strategic networks and logistics integration on firm performance in SMEs in the Vaal Triangle.

Method: A quantitative research design was adopted in this study. The owners and managers of 137 SMEs completed the survey questionnaire. Confirmatory factor analysis (CFA) was conducted to assess the psychometric properties of the measurement scales. Path modelling techniques were used to test the proposed hypotheses.

Results: The results indicate that strategic networks had a positive and significant influence on logistics integration and firm performance. Furthermore, logistics integration had a strong positive and significant influence on firm performance.

Conclusion: This study sheds light on the possibility of enhancing the overall performance of SMEs by establishing and empirically testing the relationships between logistics integration and strategic networks and firm performance. Moreover, the findings of the study provide useful insights into how SMEs should benefit from business networking and logistics integration to improve their performance.