Exploring Virtual Integration as an Alternative Governance Mechanism to Supply Chain Integration

Based on the resource-based view and transaction cost theory, this study conceptualizes virtual integration as an alternative governance mechanism for supply chain integration and develops a model to examine the pivotal role virtual integration plays in improving manufacturing goals in the supply chain context. The results show that environmental uncertainty tends to discourage manufacturers from relying on normative contracts and virtual integration for supply chain coordination. On the contrary, specific supplier investments significantly facilitate the manufacturers´ manufacturing goals and tend to motivate them to rely on virtual integration to coordinate with suppliers for enhancing transaction value while controlling potential hazards