Background of the Study

A. Food Processing Industry in Malaysia

The food processing industry is considered as a part of the manufacturing process industry that involves transformation activities of raw materials into agro-based food products. It is based on mass and large-scale production and also capital and technology intensive in order to minimise the production costs and to enhance the value added to the food product. This industry is considered as one of the main contributors to the nation's economic growth [17], and its contribution in terms of labour employed and value-added creation is essential and is indisputable for the nation's industrial development. Furthermore, the emergence of a strong relationship between this industry and other sectors such as agriculture and the retailing sector will allow them to form business relationships that will be based on the concept of an effective supply chain management. Indirectly, the formation of this business relationship will help the food manufacturers to improve their business performance and subsequently increase the country's economic development as well.

Recognising the importance of this industry to the nation's growth, the Malay-

sian government has created various initiatives in order to ensure the sustainability of the local food processing sector. Most importantly, the government has identified that this industry has great potential to expand not only locally but also at the global level. This is due to the increased in awareness and consumer demand for halal processed food. Nevertheless, the government has also identified various problems that may hinder the continuous growth of this sector such as the dearth of raw materials, low technologies [18], operational logistics problems [19] and limited access to the export market [20]. Furthermore, local food processing firms are still relying on the imports of several critical raw materials, and substantially, this situation will lead to increased operational cost. As a consequence, the price of their finished products becomes expensive and uncompetitive.

An exploratory data collection through interviews with selected food producers found that they face the problems of how to improve and maintain their business performance as well as their position in the market. One critical factor influencing this is the intense competition that these manufacturers face from producers of neighbouring countries such as Indonesia, Thailand and China that offer relatively low product prices. This has affected the local food manufacturer's capability to compete locally and globally.

In the context of SCM in Malaysia, Ismail and Roslin [21] revealed that one of the vital relational elements that influence competitive advantage is the activity of integration. This provides more empirical evidence to support the significant linkages between SCI and business performance. Indeed, the adoption of effective and efficient integration in the entire chain of food processing activities is essential as it has a significant impact on the firm's performance. The whole chain of food processing industry includes agricultural production, the transformation process and the distribution of processed food to the end users. Therefore, a crucial and strong relationship between this industry and others such as agriculture and retailing sectors cannot be neglected.

Ismail and Roslin [21] also found that the higher the degree of integration among the chain members, the higher the degree of information sharing among them. When information is shared, integration is more visible as this is the link that indicates operational efficiency. Without information, supply chain members are unlikely to experience integration as the sharing denotes trust and cooperation in the execution of supply chain management. Therefore, this study adopts the understanding that the practice of supply chain integration is key in addressing the impact of the firm's performance improvement specifically in the context of food processing industry in Malaysia.

B. Problem Statement

Although the importance of SCI strategy has been acknowledged by academics and practitioners in the field of supply chain management, there is a limited number of strong empirical evidences that examine the impact of SC relational integration on performance [1]. As a result, there is a need of study that institutes the multidimensions of SC relational integration in a single model to enhance organisational performance [5]. This study will utilise quantitative methods for both stages such as data collection and data analysis as it is a quantitative study in nature.

 
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