Journal of Operations Management 20 (2002) 221240

The integration of manufacturing and marketing/sales decisions:

impact on organizational performance
Scott W. OLeary-Kelly a, , Benito E. Flores b,1
a

Information Systems Department, Sam M. Walton College of Business, University of Arkansas, Fayetteville, AR 72701, USA
b Department of Information and Operations Management, Lowry Mays College of Business, Texas A&M University,
College Station, TX 77843, USA

Abstract
Research in the areas of both manufacturing and marketing/sales have advocated the integration of several important
interrelated decisions between the two functions (i.e. product development, process development, marketing/sales planning,
and manufacturing planning decisions). The process of managing the strategic alignment between a firms business strategy,
external environment, and the integration of manufacturing and marketing/sales decisions is very complex phenomenon that
requires a level of analysis that has not occurred previously. This study examined the moderating effects of business strategy
and demand uncertainty on the relationship between the integration of manufacturing and marketing/sales-based decisions
and organizational performance. The study found general support for the proposed model, suggesting that the impact of the
integration of manufacturing and marketing/sales decision on organizational performance is moderated by a firms business
strategy and demand uncertainty. 2002 Elsevier Science B.V. All rights reserved.
Keywords: Marketing/operations integration; Operations strategy; Empirical research

1. Introduction
The integration of key decision areas between manufacturing and marketing/sales is widely cited as a
means for gaining a competitive advantage in the marketplace (e.g. Shapiro, 1977; Wheelwright and Hayes,
1985; Nemetz and Fry, 1988; Konijnendijk, 1994).
Although there is anecdotal support that integration
of decisions between these two functions may lead
to increased organizational performance, there is little
empirical research to support this claim. In addition,
most anecdotal studies tend to ignore the substantial
Corresponding author. Tel.: +1-501-575-4035;
fax:+1-501-575-4168.
E-mail addresses: solearykelly@walton.uark.edu
(S.W. OLeary-Kelly), b-flores@tamu.edu (B.E. Flores).
1 Tel.: +1-409-845-4248.

costs associated with decision integration, such as the

costs resulting from added structural and infrastructural mechanisms necessary for high levels of integration (Galbraith, 1973; McCann and Galbraith, 1981;
Thompson, 1967; Adler, 1995).
Therefore, it currently is not clear whether the benefits of integration always will exceed the costs. The
basic premise of this study is that it may not be beneficial to integrate decisions between manufacturing
and marketing/sales under all circumstances. Instead,
the benefits will depend on the manufacturing and
marketing/sales decision area (e.g. product development as opposed to manufacturing planning), and the
strategic and environmental context within which the
firm is competing. This proposition is supported by
an organizational contingency-based principle that
organizational performance is dependent on the fit
between an organizations strategy, structure (e.g.

0272-6963/02/$ see front matter 2002 Elsevier Science B.V. All rights reserved.
PII: S 0 2 7 2 - 6 9 6 3 ( 0 2 ) 0 0 0 0 5 - 0

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integration), and environment (Lenz, 1980, 1981;

Miller, 1988). Specifically, this study will examine
the moderating effects that both a firms business
strategy and environmental uncertainty have on the
relationship between the integration of manufacturing and marketing/sales decisions and organizational
performance.

2. Contingency perspective and functional

integration
A contingency perspective is based on the principle that organizational performance is dependent on
the fit between an organizations strategy, structure,
and environment (Preston, 1977; Lenz, 1980, 1981;
Miller, 1988; Venkatraman, 1989a). That is, in order
to achieve high levels of organizational performance,
certain business strategies require specific structural
forms, or specific environmental conditions necessitate certain structural designs. The contingency perspective rejects the premise of simple, unconditional
associations between an organizations strategy, structure, or environment, and organizational performance
(Lenz, 1980, 1981; Miller, 1988). Cross-functional integration among different departments represents an
important aspect of organizational structure in terms
of the types of lateral relationships and the degree
of collaboration and participation that exists between
the different functions (Lawrence and Lorsch, 1967;
Galbraith, 1973; Khandwalla, 1973; Hrebiniak and
Joyce, 1984). Previous research supports the premise
that the relationship between functional integration
and organizational performance is moderated by a
firms strategy and environment.
For example, the interaction between the level of
integration and a firms business strategy is thought to
influence performance (Miles and Snow, 1978; Porter,
1985; Miller, 1988). Miller (1988) argued that for
firms stressing product innovation as a means of competing, functional integration would be strongly and
positively associated with organizational performance.
Alternatively, he hypothesized that for firms focused
on low cost as a means of competing in the market, functional integration would be negatively associated with organizational performance. Millers study,
which included 89 service and manufacturing firms,
showed general support for these hypotheses.

Similarly, Lawrence and Lorsch (1967) found that

the need to integrate different functions varied from
one competitive environment to another. For example, in organizations where on-time delivery was
critical, it was imperative that manufacturing and
marketing/sales be closely integrated as opposed, e.g.
marketing and engineering. In their study, the companies that were able to integrate specific functions, as
necessitated by their competitive environment, outperformed those companies that did not. These findings
are consistent with other work that has suggested that
the need for functional integration is contingent on an
organizations strategy and environmental uncertainty
(Miles and Snow, 1978; Lenz, 1981; Porter, 1985).

3. Key decision areas between manufacturing and

marketing/sales
Several decisions often are cited as benefiting from
a high level of integration between manufacturing and
marketing/sales (see Table 1). These decisions are
highly interrelated, in that the decisions made by one
function will have a direct impact on the decisions
and actions of the other function (Shapiro, 1977; Hill,
1989; Wheelwright and Clark, 1992).
Product development decisions pertain to the development of new products, as well as to modifications
of existing product designs. These decisions often
place unique requirements on the capabilities of a
firms production system. For example, when General Electrics dishwasher product line underwent a
change from metal to plastic tub-liners, this simple
change required an entirely new type of production
process capability. Critical to the successful change in
this products design was the inclusion of the manufacturing function early in the product design decision
process (Wheelwright and Clark, 1992). Similarly,
process development decisions pertain to the development and/or acquisition of new production processes,
as well as modifications to existing production systems. Process development decisions impact the marketing/sales function, in that these decisions either
can constrain or open new avenues of product design.
Marketing/sales planning decisions involve managing product demand. These decisions include longterm demand forecasting, determination of sales
targets, and timing of product/sales promotions.

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223

Table 1
Key decision areas between marketing/sales and manufacturing
Decision area

Functional domain
Manufacturing

Marketing/sales

Process and product development

Determining changes to existing production

process capabilities
Development of new production processes
capabilities

Determining changes in product design

specifications
Developing new product design
specifications

Manufacturing and marketing/

sales planning

Determining long-term capacity requirements

(resource planning)
Developing long-term production plans
(production planning)

Developing long-range demand forecast

Manufacturing planning decisions, on the other hand,

pertain to decisions involving capacity planning and
production scheduling. Decisions in this area directly
impact marketing/sales ability to carry out their
marketing/sales plan. For example, Braham (1987)
relates the story of a company that geared up for a
major sales promotion. However, the marketing/sales
department was uninformed that the production plant
was scheduled to be shutdown for the month prior to
the promotion and as a result the company incurred
heavy losses.

Developing sales plans

Determining the timing of product
promotions

3.1. Literature reviewthe integration of

manufacturing and marketing/sales decisions
This section examines the literature that directly
addresses the integration of the four manufacturing
and marketing/sales decisions identified in the previous section (see Table 2 for a summary). Although
this topic has drawn substantial attention over the past
couple of decades, very little research has directly focused on the integration of decision areas involving
the manufacturingmarketing interface. In addition,

Table 2
The integration of manufacturing and marketing/sales decisions: previous research
Decision areas

Type of research
Conceptual

Analytical

Process and product

development

Blois (1980)
Fitzsimmons et al. (1991)
Hayes and Wheelwright (1979)
Hill (1988)
Konijnendijk (1994)
Nemetz and Fry (1988)
Shapiro (1977)
Stalk and Hout (1990)
Utterback and Abernathy (1975)
Wheelwright and Clark (1992)
Wheelwright and Hayes (1985)

Kim et al. (1992)

Manufacturing and
marketing/sales planning

Spencer and Cox (1994)

Konijnendijk (1994)
Palmatier and Shull (1989)
Powers et al. (1988)
Shapiro (1977)
Shapiro et al. (1992)
Vollmann et al. (1997)

Crittenden (1992)
Damon and Schramm (1972)
Leitch (1974)

Empirical

Van Dierdonck and Miller (1980)

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S.W. OLeary-Kelly, B.E. Flores / Journal of Operations Management 20 (2002) 221240

the majority of the work in this area focuses on the

project or department level of an organization.
The conceptual research in this area implies that
increased integration of the key decisions in manufacturing and marketing/sales leads to increased organizational performance (e.g. Shapiro, 1977; Stalk and
Hout, 1990; Spencer and Cox, 1994). This suggests
the presence of a universal law governing the relationship between integration and performance. However, as previously noted, this perspective has ignored
the costs associated with integration (e.g. coordinating mechanisms, such as expensive computer information systems, administrative time and overhead)
which, when taken into account, would suggest that
increasing the level of integration may not always be
beneficial to overall performance (Adler, 1995).
Several studies have utilized analytical approaches
for examining the relationships between manufacturing and marketing/sales decision integration and organizational performance. The findings in several of
these studies cast doubt on the existence of a universal law. Studies by Damon and Schramm (1972)
and Leitch (1974) utilized linear program models to
examine the relationship between the level of integration of production planning decisions and organizational performance. In their studies, they found that
decision integration was positively related to organizational performance. Although their findings support
the notion of a universal relationship between integration and performance, caution is warranted when
generalizing their results, as they were based on deterministic models in which both the demand and production requirements were known with certainty.
However, Crittenden (1992), utilizing a simulation
approach, demonstrated that the relationship between
the level of integration of manufacturing planning
decisions and organizational performance was moderated by production environmental conditions. The
results of this study indicated that under conditions
of constrained long-term capacity, the level of decision integration was positively related to organizational performance. In contrast, firms operating under
conditions of excess long-term capacity showed no
relationship between the level of integration and organizational performance. The general findings of
this study support a contingency-based relationship
between the level of integration of manufacturing
planning decisions and organizational performance.

Another analytical study by Kim et al. (1992)

examined the moderating effects of a firms environment on the relationship between integration of
manufacturing and marketing/sales product-process
decisions and the firms performance. The authors
tested their model under stochastic conditions with
respect to product demand using mathematical programming and simulation. They explored three separate dimensions of a firms environment: complexity,
uncertainty, and tightness. They modeled environmental complexity as a function of the degree of product
and process variety exhibited by an organization. Environmental uncertainty was depicted as the degree of
forecasting accuracy, and environmental tightness was
characterized as the average contribution margin for
a firms products. In support of a contingent relationship, they found that a firms level of environmental
complexity moderated the relationship between the
level of integration and firm performance. Firms operating in very complex environments and engaged in
highly integrated decision making with regard to product and process development decisions outperformed
those that were not integrating decisions. With regard
to firms operating in environments characterized by
low levels of complexity, no significant performance
differences were found between high and low levels
of decision integration. This study also provides evidence of a moderated relationship between the degree
of decision integration and firm performance.
One of the only empirical studies in this area of
research was by Van Dierdonck and Miller (1980). In
their study, they examined the influence of a firms
environment on the level of integration of decisions
related to production planning. They hypothesized
that the degree of environmental complexity and uncertainty surrounding the production planning process
would influence the need to integrate production planning decisions. Their results indicated that the degree
of environmental uncertainty was positively associated
with the level of integration and that environmental
complexity was not related to integration. It is important to note that in their study, the level of integration
of production planning decisions was measured across
all functions and not just manufacturing and marketing/sales. However, given the high degree of interdependence between manufacturing and marketing/sales
functions with respect to this decision area, one could
safely assume that to a large degree the level of

S.W. OLeary-Kelly, B.E. Flores / Journal of Operations Management 20 (2002) 221240

integration between these two functions was reflected

in their measure.
In summary, very little systematic (empirical or
analytical) research has examined the relationship
between the integration of manufacturing and marketing/sales decisions and organizational performance.
However, results of several of these studies raise
serious questions regarding the validity of an unconditional relationship between integration and organizational performance (e.g. Van Dierdonck and Miller,
1980; Crittenden, 1992; Kim et al., 1992). In addition, unlike most of the previous studies, we examine the impact of the level of integration regarding
manufacturing and marketing/sales decisions at the
organizational level. That is, the impact of integration
between manufacturing and marketing/sales functions is to be assessed across strategic business units
(SBUs), which include independently operated firms,
including those owned by a parent company and joint
ventures, and individual divisions of corporations for
which independent financial measures were reported.
4. Theoretical framework
The theoretical framework depicted in Fig. 1 represents the contingent relationships that are examined
in this study. This framework is consistent with the
findings of research from a contingency perspective
in the areas of strategic management and organization theory. It indicates that the relationship between

225

the level of integration regarding manufacturing and

marketing/sales decisions and organizational performance is moderated by a firms business strategy and
the demand uncertainty faced in its environment. The
research variables and hypotheses relating to this conceptual framework are discussed in detail in the following sections.
4.1. Manufacturing and marketing/sales decision
integration
Integration has been characterized in terms of:
collaboration (Lawrence and Lorsch, 1967), cohesiveness (OReilly et al., 1989), cooperation (Thomas,
1976, 1992; Ettlie and Reza, 1992), coordination
(Wheelwright and Hayes, 1985; Sundstrom and
Altman, 1989; Ettlie and Reza, 1992), communication/information exchange/interaction (Thomas, 1976,
1992; Bonoma and Slevin, 1978; OReilly et al.,
1989; Sundstrom and Altman, 1989), and mutual
agreement/supportive actions (Thomas, 1976, 1992;
Bonoma and Slevin, 1978; Wheelwright and Clark,
1992). Collectively, these terms characterize integration as being comprised of both interaction and
agreement between two entities.
Similarly, Thomas (1976, 1992) described integration to be a function of the cooperation and assertiveness between two entities; whereas cooperation
corresponds to the agreement of both parties to support each others objectives, assertiveness relates to
the amount of effort extended by each party to achieve

Fig. 1. Decision integration contingency model.

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its own goals. The more assertive each party is, the
more they tend to interact. In this sense, a high level of
integration is characterized by a high degree of both
cooperation and interaction. Paralleling prior definitions, in this study, the level of integration refers to
the extent to which separate parties work together in
a cooperative manner to arrive at mutually acceptable
outcomes. Accordingly, this definition encompasses
constructs pertaining to the degree of cooperation,
coordination, interaction, and collaboration.
This study will investigate the contingency relationship regarding the integration of these four manufacturing and marketing/sales decisions previously
discussed: manufacturing planning decisions, marketing/sales planning decisions, product development
decision, and process development decisions.
4.2. Business strategy
A business strategy represents a pattern of decisions
regarding how an organization will compete in its
market. Research has strongly supported the proposition that a firms business strategy is comprised of
multiple dimensions. Numerous studies have assessed
an organizations business strategy by measuring the
competitive emphasis placed on several dominant
strategic dimensions (e.g. Miller, 1988; Venkatraman,
1989b; Zahra and Covin, 1993).
The following strategic variables have been identified in the literature as comprising important components of a firms business strategy: differentiation via
product innovation, cost leadership, superior product
quality, on-time delivery, and breadth of product-lines.
With the exception of on-time delivery, these strategic variables/dimensions have been used extensively
to gauge a firms overall business strategy (Hambrick,
1983; Porter, 1985; Miller, 1988; Zahra and Covin,
1993). These variables, along with their relationship
to the different manufacturing and marketing/sales decisions, are detailed below.
4.2.1. Differentiation via product innovation
Product innovation is widely recognized as a common approach that companies choose in order to compete in the marketplace. Companies that adopt this
approach tend to sell products that are on the cutting
edge of technology. They are characterized by their
extensive involvement in new product research and de-

velopment, and tend to be the first to market with

new product designs (Capon et al., 1992). Conceptual
research has identified the integration of both product
development and process development decisions as
an essential element for companies to succeed when
adopting a product innovation strategy (Wheelwright
and Hayes, 1985; Wheelwright and Clark, 1992;
Gerwin, 1993). It is proposed that firms that pursue a
product innovation-based strategy, and simultaneously
achieve high degrees of decision integration between
manufacturing and marketing/sales with respect to
product development and process development decisions, will outperform those that do not integrate
these decisions. Therefore, it is hypothesized that:
H1. For firms that adopt a business strategy of differentiation via production innovation, there will be a
positive association between the level of decision integration with respect to both product development and
process development decisions and firm performance.
For firms that do not adopt a strategy of differentiation via production innovation, there will not be an
association between integration and performance.
4.2.2. Cost leadership
Since the work of Porter (1980), cost leadership
has been recognized as an important alternative in the
set of strategic choices available to firms. Companies
that pursue a cost leadership strategy will emphasize
cost reduction as a primary means of competing in
the market place. Containing production costs is an
essential ingredient for manufacturing firms pursuing a cost leadership strategy (Porter, 1985; Zahra
and Covin, 1993). Effective manufacturing and marketing/sales planning is essential to maintaining an efficient production system. Studies show that increased
integration between manufacturing and marketing/
sales regarding both manufacturing and marketing/
sales planning decisions can improve production efficiency and, consequently, firm performance (Damon
and Schramm, 1972; Leitch, 1974; Shapiro, 1977).
Therefore, it is hypothesized that:
H2. For firms that adopt a business strategy of cost
leadership, there will be a positive association between
the level of decision integration with respect to both
marketing/sales planning and manufacturing planning
decisions and firm performance. For firms that do not

S.W. OLeary-Kelly, B.E. Flores / Journal of Operations Management 20 (2002) 221240

227

adopt a strategy of cost leadership, there will not be

an association between integration and performance.

ucts, both of which lead to increased organizational

performance. Therefore, it is hypothesized that:

4.2.3. On-time delivery

On-time delivery relates to the ability of a firm
to meet its delivery date commitments. Since 1988,
on-time delivery has been ranked among the top three
competitive priorities in the manufacturing futures survey, a comprehensive survey of senior executives in
leading US manufacturing firms (Kim, 1994). Companies that compete via on-time deliveries emphasize the
tracking of on-time delivery performance and utilize
this information in the evaluation of their firms overall
performance. A highly integrated relationship regarding manufacturing and marketing/sales planning decisions should enhance a firms ability to meet promised
delivery dates for their customers (Shapiro, 1977).
Consequently, it is hypothesized that:

H4. For firms that adopt a business strategy of superior product quality, there will be a positive association
between the level of decision integration with respect
to both product development and process development
decisions and firm performance. For firms that do
not adopt a strategy of superior product quality, there
will not be an association between integration and
performance.

H3. For firms that adopt a business strategy of on-time

delivery, there will be a positive association between
the level of integration with respect to both marketing/sales planning and manufacturing planning decisions and firm performance. For firms that do not adopt
a strategy of on-time delivery, there will not be an association between integration and performance.
4.2.4. Superior product quality
Companies that compete via superior product quality must devote a great deal of resources toward total quality management. This would involve a high
level of participation from both the workers and management, as well as significant interaction with suppliers and customers (Garvin, 1988; Saraph et al.,
1989). In addition, investment in organization-wide
employee training involving quality concepts would
be characteristic of these companies (Garvin, 1988;
Saraph et al., 1989).
Several studies have proposed that product quality
is directly enhanced through the development of close
relationships between manufacturing and marketing/
sales functions with regard to both product development and process development decisions (Hamilton,
1991; Wheelwright and Clark, 1992). Wheelwright
and Clark (1992) demonstrated that a close relationship between manufacturing and marketing/sales not
only leads to improved product designs, but also to
increased efficiency in the production of those prod-

4.2.5. Product breadth

Product breadth pertains to the number of different
products a firm sells in the marketplace. Firms make
a conscious choice whether to produce a narrow or
broad range of products. Take, e.g. a company like
HarleyDavidson that produces and sells a very narrow range of products, focusing almost exclusively
on heavyweight on-road motorcycles. Compare this to
one of their major competitors, Yamaha, that produces
a much wider variety of products; they not only produce both on- and off-road types of motorcycles, but
also four wheel recreation vehicles, water jet skis, as
well as snowmobiles.
A firm that competes by producing a wide variety
of products increases the complexity of the decisions
associated with both marketing/sales and manufacturing planning decisions. It is hypothesized that as a
company increases the variety of products it markets,
it will require greater integration of both manufacturing planning and marketing/sales planning decisions.
In line with this reasoning, it is hypothesized that:
H5. For firms that adopt a business strategy of producing a wider variety of products, there will be a positive association between the level of integration with
respect to both marketing/sales planning and manufacturing planning decisions and firm performance. For
firms that do not adopt a strategy of producing a wider
variety of products, there will not be an association
between integration and performance.
4.3. Perceived demand uncertainty
This study also focuses specifically on managements perceptions concerning their ability to accurately predict product demand in their market

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environment. The greater the level of uncertainty

faced by a company regarding product demand, the
more frequent the need to alter both manufacturing and marketing/sales plans to accommodate unexpected changes. For example, if marketing/sales
makes changes to its sales plans without consulting
manufacturing, this may have an adverse effect on
manufacturings performance and quite possibly on
overall organizational performance. In turn, the same
adverse effects can arise given the reverse situation,
where manufacturing is making changes to its production plans without consulting marketing/sales. It is
therefore postulated that, under conditions of greater
uncertainty, organizations that are highly integrated
with respect to either marketing/sales plans or manufacturing plans will outperform companies that are
not integrated.
H6. For firms that experience high levels of demand
uncertainty, there will be a positive association between the level of integration with respect to both
marketing/sales planning and manufacturing planning decisions and firm performance. For firms that
experience low levels of demand uncertainty, there
will not be an association between integration and
performance.

5. Research method
5.1. Data collection
The firms included in this study were sampled
across multiple industries (i.e. five two-digit SIC
codes). These industries included: primary metal,
fabricated metal products, industrial machinery and
equipment, electronic equipment, and transportation
equipment. Firms were selected from the Wards
Business Directory of US Private and Public Companies, and included only those that were located in the
central US and had more than 200 employees.
For each SBU, data was collected from three key
informants (a CEO level executive, a marketing/sales
executive, and a manufacturing executive) via a mailed
survey following the guidelines suggested by Dillman
(1978). A two-stage process was used to collect the
data. First, companies were contacted by a letter sent
to the head of each firm. Interested respondents were

asked to complete and return participation forms providing the information required to mail the surveys
to the appropriate individuals within the firm. Next,
a survey, a pre-paid return envelope, and a brief description of the study were mailed to the three informants within each company. The initial mailing of the
surveys was followed-up by two reminder cards sent
to non-respondents after the second and fourth weeks.
After 3 weeks, the initial contact letter, a second mailing was made to all non-respondents.
A total of 846 firms were contacted, of which 35
were unable to participate for restructuring reasons
(e.g. they were recently bought or sold, or they were
being consolidated with another division) and 22
non-deliverable letters were returned, providing an effective sample size of 789 firms. A total of 121 firms
returned usable surveys from all three informants.
This represents an effective response rate of 15.3%
which is comparable to other studies in which multiple high level respondents were used (e.g. Phillips,
1981; Phillips and Bagozzi, 1986). The vast majority
of informants held top level positions in their respective areas and had been with the firm on average for
over 13 years.
In order to assess whether a response bias was
present, a Chi-square goodness-of-fit test was used
to compare the study sample to the original mailing sample with regard to: (1) the type of business
unit, (2) sales levels, and (3) number of employees. All three tests failed to reject the null hypothesis of equal distributions at the 0.10 level. A
KolmogorovSmirnov one-sample test was also used
to compare the study and mailing sample regarding
both annual sales and the number of employees. Both
tests failed to reject the null hypothesis of equal distributions at the 0.05 level. Although these results
help establish our confidence in a lack of response
bias, they do not preclude biases related to other factors (e.g. firm performance) that were not tested due
to the lack of available data in the original mailing
sample.
5.2. Sample
The general profile of the study sample is outlined
in Table 3. In order to limit the influence of factors
external to our study, we examined several factors
that might influence a firms financial performance:

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Table 3
Organizational characteristics (n = 121)
Type of business unit
Private firm (%)
Public firm (%)
Subsidiary of firm (%)
Division of a firm (%)
Joint venture (%)

34.1
4.7
31.8
28.7
<0.1

Business product category

Consumer goods (%)
Capital goods (%)
Raw or semi-finished goods (%)
Components for other finished goods (%)
Supplies (%)

19.4
43.4
5.4
28.7
3.1

Sales range
$ 429 million (%)
$ 3050 million (%)
$ 5190 million (%)
$ 91158 million (%)
$ 159850 million (%)

17.8
23.2
20.2
20.2
18.6

Number of employees
200300 (%)
400500 (%)
600700 (%)
8001000 (%)
11004700 (%)

28.6
16.3
16.3
18.6
20.2

organizational size, type of industry, type of product

market, and type of firm.
The effect of firm size on the financial performance
of an organization is not well established. The most
compelling evidence against the existence of a relationship came in a meta-analytic study by Capon et al.
(1990). Their results indicated that firm size had no
significant impact on a firms financial performance.
In the present study, the association between firm
size (as measured by the reported number of employees) and performance (as measured by perceived
profitability) was assessed using correlation analysis.
The results indicated that there was no significant
association between firm size and performance in this
sample.
The type of industry in which a firm competes also
may have an impact on a firms performance. In this
study, firms were drawn from five different two-digit
SIC codes. The effect of industry type, as characterized by two-digit SIC codes, on a firms financial performance was analyzed using an unbalanced ANOVA
model. The results indicate that perceived profitability

229

is not influenced by industry type. In addition, the effects related to both the type of products marketed by
firms and the type of firm also were examined using
an unbalanced ANOVA model. The results also indicate that perceived profitability is not influenced by
either product type or firm type.
5.3. The measures
The measures (except the self-reported ROI) used
to operationalize the constructs in the study were comprised of multiple items, each based on a seven-point
Likert scale. In addition, all constructs were measured
across multiple key informants. Key informants were
selected on the basis of their specialized knowledge
relevant to the study (Kumar and Stern, 1993). The
use of key informants to collect data is an effective
means for measuring organizational constructs and has
been used extensively in business strategy research
(Phillips, 1981; Kumar and Stern, 1993). In addition
to relying on previous research to ensure the content
validity of the measures, they also were reviewed by
several expert judges (e.g. current and previous managers with manufacturing experience) and adjustments
were made based on their recommendations.
5.3.1. Business strategy
Business strategy was operationalized via five dimensions: differentiation via product innovation, cost
leadership, superior product quality, on-time delivery,
and product breadth. The items used to measure a
firms business strategy are based on past research.
Specifically, differentiation via product innovation
captures the extent to which a firm competes on both
the number and rate of product innovations they introduce into the marketplace. The measurement items
used for this construct are based on the work of
Cooper (1987), Miller (1988), Capon et al. (1992),
and Zahra and Covin (1993).
The cost leadership variable stems from the work
of Porter (1980, 1985), which highlighted low cost as
a central strategic position that could be adopted by
a firm. The items used in this study were primarily
adopted from Zahra and Covins (1993) cost leadership scale. The items used to measure the superior
product quality variable are based on eight different
sub-dimensions associated with quality management
as identified by Saraph et al. (1989). The items used

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S.W. OLeary-Kelly, B.E. Flores / Journal of Operations Management 20 (2002) 221240

to measure on-time delivery draw upon the work of

Kumar and Sharman (1992) and Berry et al. (1990),
in which they identify several factors that are important for differentiating firms with regard to on-time
delivery. Finally, the composite measure for product
breadth was based on scales developed by both Miller
(1988) and Zahra and Covin (1993).
5.3.2. Perceived demand uncertainty
The perceived demand uncertainty measure is
largely based on work by Gerloff et al. (1991). Specifically, their items pertaining to the perceived state of
environmental uncertainty were adopted. They defined state of uncertainty as managements perception regarding the unpredictability of some element
in the environment, such as demand.
5.3.3. Decision integration between manufacturing
and marketing/sales
Several factors that are indicative of the level of integration between two groups are the level of cooperation (Ettlie and Reza, 1992), open communication
(OReilly et al., 1989; Sundstrom and Altman, 1989),
collaboration (Lawrence and Lorsch, 1967), and mutual agreement (Thomas, 1976, 1992). These indicators have been incorporated into the items used to
operationalize the level of integration between manufacturing and marketing/sales with respect to each
of the following decision areas: product development,
marketing planning, process development, and manufacturing planning.
5.3.4. Organizational performance
In this study, we collected both perceptual and
objective self-reported financial performance data.
For the objective ROI data there was a much lower
response rate across all three informants and the
sample size was significantly smaller. Therefore, we
used only the perceptual measure of profitability in
this study (analysis involving the smaller sample ROI
dataset did not support our hypotheses, perhaps due to
reduced levels of power). Past studies have shown that
perceptual measures are reliable and strongly correlate
with objective measures (Dess and Robinson, 1984;
Venkatraman and Ramanujam, 1987). The correlation
between the perceptual and objective ROI measures
for this study was 0.43 (significant at the 0.001 level)
and was comparable to those found in other studies

by Dess and Davis (1984) and Venkatraman and

Ramanujam (1987).
The items used to measure the perceived profitability of a firm were based on Venkatramans (1989b)
profitability measure. The informants were asked to
rate their organizations performance along several dimensions relative to the performance of their major
competitors. Venkatraman (1989b) concluded that the
items used in his perceived profitability measure satisfied the general measurement property requirements
at the mono-method level of analysis.
As in many studies, not all informants within a
firm were willing to provide performance data (Dess
and Robinson, 1984; Venkatraman and Ramanujam,
1987). This presented a problem in that if only firms
for which all three informants provided data were included, the sample size would have been substantially
reduced. On the other hand, using the ratings of only
a single informant might lead to measures that are biased. In order to avoid using measures based on a single informant and to limit the reduction of the sample
size, firms for which two or more informants reported
perceptual performance data were used in this study.
5.4. Construct refinement and validation
Although the use of both multiple items and multiple informants increases the reliability of the measures, it is necessary to assess both the convergent
validity and discriminant validity of the measures
(Malhotra and Grover, 1998; OLeary-Kelly and
Vokurka, 1998). When measures are comprised of
multiple informants (or methods), convergent and
discriminant validity should be assessed at both the
mono- and multi-method levels (Phillips and Bagozzi,
1986). The mono-method level of analysis assesses
properties within informants, whereas the multimethod level of analysis assesses properties across
informants.
5.4.1. Convergent validity
Convergent validity first must be established before
the discriminant validity of the measures may be assessed. At the mono-method level, convergent validity pertains to the degree to which measures are both
unidimensional and internally consistent (Phillips and
Bagozzi, 1986). Unidimensionality, which determines
that items are associated with only a single variable,

S.W. OLeary-Kelly, B.E. Flores / Journal of Operations Management 20 (2002) 221240

must first be established before the internal consistency of a measure may be assessed. Because the
constructs were measured across multiple informants
within each firm, the added burden of establishing that
the measures are the same (i.e. have the same factor
weights) across all informants also must be met.
Unidimensionality was assessed using a confirmatory factor analysis (CFA) model. In order to establish
standard-unidimensional measures across all three
informants, it was necessary to re-specify several
of the measures. In order for a construct to be unidimensional, the factor loadings for all items associated
with the construct must be significant and the model
must be correctly specified, as indicated by acceptable
goodness-of-fit values (Gerbing and Anderson, 1988;
OLeary-Kelly and Vokurka, 1998). Following the
suggestions of Anderson and Gerbing (1982, 1988),
items that did not have significant factor loadings
across all three informants were eliminated. Although
this approach yields a set of standard measures for
analysis, the limitation is that the set of measures may
be less generalizable.
The next step involved establishing that the constructs were based on identically weighted items
(same item factor loadings) across all informants. This
was accomplished by testing the hypothesis that factor
items were equal across informants, using LISRELs
multi-sample analysis (Jreskog and Sorbom, 1989).
The results of this analysis indicated strong support
for equal factor weights across all informants and further demonstrates that the informants are providing
ratings of the same construct.
Cronbachs (1951) coefficient and Werts et al.
(1974) composite coefficient of reliability ( c ) were
used to assess the reliability of the measures. Although
there are no definitive rules regarding reliability, scales
with of 0.70 or higher (Nunnally, 1978), and c of
0.50 or higher are generally considered to be reliable
(Werts et al., 1974). Expect for the cost leadership
scales, all of the measures had a Cronbachs (1951)
and a composite reliability above 0.7 (values ranged
from 0.71 to 0.92). For the cost leadership scales, both
of the reliability coefficients ranged from 0.49 to 0.55.
Although these values are low, Van de Ven and Ferry
(1980) have argued that for broader measures, those
comprised of several conceptually distinct terms (as
in the case of the cost leadership measure), values
around 0.50 are acceptable.

231

Convergent validity at the multi-method level of

analysis refers to the degree of agreement between informants with respect to a particular construct. This
can be assessed by partitioning the variance of the observed measures into the variance due to the traits (or
the underlying constructs being measured), the method
of measurement (or the different key informants), and
random error. The assessment of convergent validity
involves testing a series of nested CFA models to determine whether informant bias significantly impacts the
construct measures. It is beyond the scope of this paper
to provide a detailed discussion of this methodology,
but the interested reader may refer to OLeary-Kelly
and Vokurka (1998) for a thorough discussion of this
approach.
Because of the limited sample size and consistent
with other studies (e.g. Phillips and Bagozzi, 1986),
the individual informants weighted factor scores for
each construct were used as the indicators in the CFA
model. In addition, the exogenous variables were split
into two groups: moderating variables (business strategy variables and demand uncertainty) and predictor variables (decision integration variables) and were
evaluated separately. The performance (endogenous)
variables also were evaluated separately against the
ROI data collected in the study.
The partitioned variance and the respective significance levels are reported in Table 4. With regard to
the moderating variables, all trait variances across informants were significant at the 0.005 level, indicating
strong support for convergent validity (Bagozzi et al.,
1991). It is worth noting that several of the strategy
variables display relatively large method (informant
bias) and error variances, however, there does not appear to be any systematic pattern across variables that
would lead to the conclusion that one informant is better than another. Under these circumstances, there are
no clear guidelines for combining measures. What is
clear, is that using the ratings of a single informant
will increase the degree of informant bias (Phillips
and Bagozzi, 1986). Therefore, given that all trait factors were significant for the moderating variables (and
performance variables), and that no systematic bias
or error patterns were discernable across informants,
the measures were combined across informants for the
moderating variables (Phillips and Bagozzi, 1986).
The results involving the integration measures provide a very different picture (see Table 4). For these

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S.W. OLeary-Kelly, B.E. Flores / Journal of Operations Management 20 (2002) 221240

Table 4
Partitioning of variance due to trait, method (informant), and error
Measure (informant)

Variance components
Trait

Method

Error

Moderating
Product innovation (CEO)
Product innovation (marketing)
Product innovation (manufacturing)
Cost leadership (CEO)
Cost leadership (marketing)
Cost leadership (manufacturing)
Superior quality (CEO)
Superior quality (marketing)
Superior quality (manufacturing)
On-time delivery (CEO)
On-time delivery (marketing)
On-time delivery (manufacturing)
Product breadth (CEO)
Product breadth (marketing)
Product breadth (manufacturing)
Demand uncertainty (CEO)
Demand uncertainty (marketing)

0.42
0.61
0.40
0.53
0.30
0.42
0.28
0.14
0.35
0.58
0.35
0.33
0.64
0.25
0.21
0.38
0.51

0.06
0.09
0.07
0.01
0.00
0.00
0.37
0.53
0.46
0.22
0.22
0.18
0.00
0.01
0.01
0.12
0.03

0.52
0.30
0.53
0.46
0.70
0.58
0.35
0.33
0.19
0.20
0.43
0.49
0.36
0.74
0.78
0.50
0.46

Integration variables
Product development decisions (marketing)
Product development decisions (manufacturing)
Marketing planning decisions (marketing)
Marketing planning decisions (manufacturing)
Process development decisions (marketing)
Process development decisions (manufacturing)
Manufacturing planning decisions (marketing)
Manufacturing planning decisions (manufacturing)

0.03
0.76
0.07
0.61
0.30
0.02
0.46
0.05

0.48
0.20
0.65
0.26
0.45
0.70
0.40
0.66

0.49
0.04
0.28
0.13
0.25
0.28
0.14
0.29

Performance variables
Perceived profitability (CEO)
Perceived profitability (marketing)
Perceived profitability (manufacturing)

0.51
0.86
0.54

0.07
0.05
0.07

0.42
0.09
0.39

variablesa

As noted by Campbell and Fiske (1959), only traits with the same informants should be tested together. Because the demand
uncertainty variable was not measured by the manufacturing informant, a separate set of models were tested using only the CEO and
marketing/sales informant. The results reported for demand uncertainty are based on this separate set of tests (it should be noted that the
variance for the other constructs were all within one standard error of the models ran for the strategy variables using all three informants).
Significant at the 0.05 level.
Significant at the 0.01 level.

measures, the criterion for convergent validity (significant trait factors across informants for a given measure) was not met, thus, indicating a significant lack
of agreement between the two informants (manufacturing and marketing/sales). The one exception is with
respect to the marketing/sales planning decision integration measure, where the trait factors are significant
for both informants. However, the trait factor for the
marketing/sales respondent is only marginally signifi-

cant and accounts for only 6% of the measures total

variance; therefore, little support for convergent validity is evident.
Based on the lack of convergent validity, there is no
basis for combining measures across the marketing/
sales and manufacturing informants. Instead, it is
necessary to assess the measures for the two respondents separately. With regard to the manufacturing
respondent, the trait variances for the two marketing/

S.W. OLeary-Kelly, B.E. Flores / Journal of Operations Management 20 (2002) 221240

sales-based decisions (product development and marketing/sales planning) are significant. Similarly, with
regard to the marketing/sales respondent, the trait
variances for the two manufacturing-based decisions
(process development and manufacturing planning)
are significant. Based on these strong results, we used
the manufacturing-based responses to measure the
level of integration regarding product development
and marketing/sales planning decisions. Likewise, we
used the marketing/sales-based responses to measure
the level of integration regarding process development
and manufacturing planning decisions.
The results for the integration variables are not altogether unexpected. Other studies have found similar results for marketing/sales and R&D functions,
leading researchers to conclude that members of these
functions often do not share the same perceptions regarding the level of integration between the two functions (Gupta et al., 1985; Saghafi et al., 1990; Souder
and Sherman, 1993). For example, because marketing/sales tends to have greater control over the outcome of product development decisions, they may
have more of a biased view regarding their own willingness to cooperate and involve (i.e. integrate) manufacturing into the decision process.
Finally, the analysis of the perceived performance
measures strongly support the attainment of convergent validity. Specifically, all trait variances across informants were significant at the 0.005 level, while the
methods variances were all near zero, strongly indicating a lack of informant bias. Based on these results,
it was deemed appropriate for the perceived performance measures to be combined across informants.
5.4.2. Discriminant validity
Discriminant validity refers to the extent to which
the different measures are unique. Two methods were
used to assess discriminant validity at both the monoand multi-method level. First, discriminant validity
was assessed by measuring the correlation between
all constructs and evaluating whether they were different from 1.0 (OLeary-Kelly and Vokurka, 1998).
All variables included in the study were determined
to be significantly different from 1.0. This model was
then compared to one in which the correlation coefficient ( ij ) was constrained to 1.0 (representing
unity between constructs). A Chi-square difference
test between the values obtained for the constrained

233

and unconstrained models was used to assess discriminant validity. A significantly lower Chi-square
value for the unconstrained model provides support for
discriminant validity (Anderson and Gerbing, 1988).
All Chi-square difference tests were significant at the
0.005 level, indicating strong support for discriminant
validity at the mono-method level. Second, a more
conservative test of discriminant validity requires that
the average variance extracted for each construct exceed the squared correlation between that construct
and all others in the model (Fornell and Larcker, 1981).
All of the constructs met this criteria, providing additional evidence of acceptable discriminant validity
among the constructs.
In summary, all construct measures were determined to exhibit acceptable levels of convergent and
discriminant validity at the mono-method level of analysis. With the exception of the integration variables,
all independent variable measures were determined
to have sufficient levels of convergent and discriminant validity at the multi-method level of analysis.
Based on these results, the average summated scores
(i.e. the average of the item scores for each variable)
were used as a composite measure for each construct
(Hair et al., 1992).
With regard to the integration variables, which did
not meet the convergent validity criteria at the multimethod level of analysis, the composite measures for
each integration variable were based on a single informant. That is, the measures of process development
and manufacturing planning decision integration were
derived from the data provided by the marketing/sales
informant. Likewise, the measures of product development and marketing/sales planning decision integration were derived from the data reported by the
manufacturing informants. Summary statistics for the
final variables are reported in Table 5.
5.5. Data analysis
Moderator median split regression analyses (MMSRA) were used to analyze the data (Arnold, 1982).
MMSRA involves splitting the sample into two
sub-samples (high and low) with respect to the median value of the moderating variable. The criterion
variable (perceived profitability) is then regressed on
the predictor variable (e.g. product development decision integration or manufacturing planning decision

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S.W. OLeary-Kelly, B.E. Flores / Journal of Operations Management 20 (2002) 221240

S.W. OLeary-Kelly, B.E. Flores / Journal of Operations Management 20 (2002) 221240

integration) for each sample. A significant difference

between the slope of the predictor variable in each of
the sub-samples indicates the existence of an interaction effect. This was tested using the difference t-test
outlined by Jaccard et al. (1990).
To control for the influence of a firms business
strategy and demand uncertainty on organizational
performance, these variables also were included in the
linear regression model in addition to the predictor
variable.

235

development decision integration were associated

with higher performance as measured by perceived
profitability. Higher performance also was associated
with higher marketing/sales decision integration for
those firms facing higher levels of demand uncertainty (H6a). We found no support for a relationship
between marketing/sales decision integration and firm
performance for firms pursuing a strategy of cost
leadership (H2a) or product breadth (H5a).
6.2. Effects of integrating manufacturing-based
decisions

6. Results
The results for the moderated median split regression analyses are reported in Table 6. Included are the
coefficients of the integration variable (i.e. predictor variable) pertaining to each hypothesis, the significance of the coefficient, and the P-values associated
with the difference t-test of the coefficients in each
sub-sample. Support for a hypothesis exists when the
analysis provides evidence of both a significant coefficient in the predicted direction and a significant
difference t-test. Partial support for a moderated relationship exists when one of the coefficients is significant, but the difference between the two sub-samples
is non-significant.
6.1. Effects of integrating marketing/sales-based
decisions
Marketing/sales-based decisions include both product development and marketing/sales planning (highlighted by the shaded areas in Table 6). The results
involving the marketing/sales based decisions mostly
support the hypotheses, i.e. a moderated relationship
between the level of decision integration and performance. Specifically, four of the six hypotheses were
strongly supported, indicating that the effect of marketing/sales based decision integration on performance
is dependent on the business strategy and demand uncertainty faced by the firm.
For example, for firms pursuing a strategy of either
product innovation (H1a) or superior quality (H4a),
increasing the level of integration with regard to
product development decisions yielded improved performance. Likewise, for firms that pursued a strategy
of on-time delivery (H3a), higher levels of product

Manufacturing-based decisions involve both process development decisions and manufacturing planning decisions. These results also tend to support
a moderated relationship between the level of decision integration and performance, however, they were
not in the predicted form. For example, the results
demonstrated that for firms emphasizing a strategy
of product innovation (H1b), higher levels of process
development decision integration were not associated
with improved firm performance. Instead, we found
that for the those firms that did not focus on product
innovation, a higher level of process development decision integration was associated with improved firm
performance. Similarly, for firms that competed via
on-time delivery (H3b), or that emphasize a strategy
of product breadth (H5b), higher levels of integration
regarding manufacturing planning decisions were not
associated with higher firm performance; instead, we
again found that for those firms that did not focus
on either on-time delivery or product breadth, higher
levels of integration were associated with higher firm
performance.
Finally, there was partial support in the opposite
direction regarding the moderating effects of demand
uncertainty (H6b) on the relationship between the
integration of manufacturing planning decisions and
firm performance. In this case, for those firms that
faced lower levels of demand uncertainty, the level of
integration was significantly associated with higher
firm performance, but higher levels of integration
were not associated with higher firm performance
for those firms facing higher levels of demand uncertainty. However, there was only partial support
for an integrationperformance relationship, in that
the coefficients across the two sub-samples (high

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S.W. OLeary-Kelly, B.E. Flores / Journal of Operations Management 20 (2002) 221240

S.W. OLeary-Kelly, B.E. Flores / Journal of Operations Management 20 (2002) 221240

and low demand uncertainty) were not significantly

different.

7. Discussion
The results of this study support the principal argument guiding this paper, that is the relationship
between the integration of manufacturing and marketing/sales decisions and firm performance is
moderated by a firms business strategy and by environmental uncertainty. An interesting finding of this
study was the differentiated results regarding the form
of the moderated relationship. Specifically, the results were found to vary with respect to both the type
of decision being analyzed (marketing/sales-based
versus manufacturing-based decisions), and the key
informant used to measure integration (manufacturing
respondent versus marking/sales respondent).
In regard to the former, the results supporting the
hypothesized form of the moderating relationships
all involved marketing/sales-based decisions (product
development and marketing/sales planning), and those
that were in the opposite form than hypothesized in
the study all involved manufacturing-based decisions
(process development and manufacturing planning).
One possible explanation is the time differential that
exists between marketing/sales and manufacturing
decisions, in that marketing/sales-based decisions are
typically a source of input for the manufacturing-based
decisions. For example, in a typical marketing/sales
manufacturing planning cycle, the marketing/sales
planning decisions serve as a primary input for the
manufacturing planning decisions which then follow
(see Fig. 2) (Vollmann et al., 1997). Here, it is more
advantageous for decision integration to occur at the
marketing/sales planning stage. If manufacturing has
a greater opportunity to review and identify potential

237

problems for the manufacturing plan, this should lead

to more efficient and effective planning overall. On
the other hand, if a firm waits to integrate at the manufacturing planning stage, then manufacturing has
less lead-time available to make changes in response
to the marketing/sales plan. In addition, it is likely
that the firm already would have started to implement
the marketing/sales plan, and this would leave little or
no opportunity for implementing suggested improvements by manufacturing. Consequently, it is likely that
this would lead to less efficient and effective plans.
This same framework applies to the decisions made
regarding product development and process development. In many situations, changes to the production
process are in response to changes made in the product design phase (Wheelwright and Clark, 1992). Integration at the product design stage offers a couple of
important advantages over integration at the process development stage. First, it gives manufacturing
greater lead-time to make the required changes in
the production process. Second, it enables manufacturing to provide critical input at the initial phase of
new product designs, thereby giving marketing/sales
enough time to incorporate the changes into the final
design. Numerous studies have shown that it is both
costly and time consuming to change the product design at later points in the development process (e.g.
Wheelwright and Clark, 1992). The implication is that
for firms emphasizing product innovation or superior
quality, integrating product development decisions is
more effective than integrating process development
decisions.
These findings offer important insights for management. Specifically, integrating marketing/sales-based
decisions (as opposed to manufacturing-based decisions) provided the clearest benefits when coupled
with specific strategies and degrees of demand uncertainty. For example, it was shown that for firms

Fig. 2. Marketing/salesmanufacturing planning cycle.

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S.W. OLeary-Kelly, B.E. Flores / Journal of Operations Management 20 (2002) 221240

engaged in a strategy based on product innovation,

integrating product development decisions between
manufacturing and marketing/sales improved firm
performance. However, for these companies, integrating process development decisions did not lead to
improved performance. Similarly, for firms that focused on a strategy of on-time delivery, increasing the
level of marketing/sales planning decision integration
led to improved firm performance, whereas increasing manufacturing planning decision integration did
not.
As previously noted, the results of the study also
systematically varied with regard to the informant used
to assess integration. Specifically, the results supporting the hypothesized form of the moderating relationships all involved integration measures provided
by the manufacturing respondent (regarding the integration of marketing/sales-based decisions), whereas
those that were in the opposite form hypothesized in
the study all involved integration measures provided
by the marketing/sales respondent (regarding the integration of manufacturing-based decision).
The fact that there were significant differences in
perceptions involving the level of integration across
informants is instructive regarding the systematic
differences in the results reported in this study. It
may be that these results are related to differences in
perceptual anchors across the two groups of respondents. Specifically, the decision integration measures
required each respondent to rate a series of questions
on a seven-point Likert scale anchored by strongly
disagree and strongly agree. As an example, one
of the items was manufacturing and marketing/sales
frequently discuss the details surrounding product
development decisions. In response to this question,
a respondent will have a preconceived notion as to
what constitutes frequently. This preconceived notion serves as a perceptual anchor. If the respondents
in each group (manufacturing and marketing/sales)
have different conceptions as to what constitutes
frequently, this could lead to systematic differences
in the results, such as those reported in this study.
Unfortunately, we do not have the data to examine
this potential cause, but it is an area that should be
examined closely in future studies.
However, these findings may have important managerial implications with regard to the ability of firms
to effectively monitor the degree to which they have

successfully achieved decision integration. In trying

to assess the level of integration for the different decision areas, managers should not expect to get similar
responses across the two functional areas. Rather,
the marketing/sales and manufacturing functions are
likely to have very different opinions when it comes
to evaluating the levels of achievement regarding decision integration. Perhaps the most reliable approach
to monitoring the level of integration is to rely on
the outside function to gauge the level of decision
integration achieved across the two functions. That
is, manufacturing informants should be used to gauge
the level of integration regarding both marketing/sales
planning and product development decisions. Likewise, marketing/sales informants should be relied
upon to provide an assessment of the level of integration regarding manufacturing planning and process
development decisions.

8. Concluding remarks
Overall, this study has challenged conventional
thinking regarding the impact of decision integration
between manufacturing and marketing/sales on organizational performance. The results clearly demonstrate that the effect of decision integration between
manufacturing and marketing/sales on firm performance is much more complex than has been suggested
previously. Second, the results indicate that marketing/sales and manufacturing respondents have very
different perceptions regarding the level of integration
for decision areas that they traditionally control; this
has important implications for both researchers and
managers who desire to assess the level of decision
integration. Finally, this study found very different
forms of moderating effects associated with decision
integration for the two functional areas. Although, it
presently is impossible to attribute these differences
to a specific factor, some suggestions for a potential
starting point for future research into this interesting
phenomenon were presented.
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