An Empirical Analysis of Supply Chain Integration and Firm Performance in Malaysian SMEs

Abstract

Global disruptions have exposed vulnerabilities in Small and Medium-sized Enterprises (SMEs), particularly in emerging economies like Malaysia, where empirical evidence on Supply Chain Integration (SCI) as a resilience strategy remains limited. This study addresses this gap by examining the impact of SCI’s three dimensions: internal, supplier, and customer integration, on SME performance. Employing a quantitative design, data from 200 Malaysian SMEs were analysed using Structural Equation Modelling (SEM) via SmartPLS. Results confirm a significant positive relationship between all SCI dimensions and performance, with customer integration showing the strongest effect, followed by supplier and internal integration. Theoretically, the findings extend the Resource-Based View theory by revealing the superiority of external integrations in resource-constrained contexts, offering novel insights into competitive advantage hierarchies. Practically, they provide actionable guidance for SME managers and policymakers to prioritise customer and supplier collaborations for enhanced resilience and growth amid volatility.