From Digital Integration to Performance: The Critical Role of Orchestration Capability and the Boundary Conditions of External Enterprise Systems Integration

Abstract

Although organizations have heavily invested in digital platforms to enhance supply chain
visibility and partner connectivity, many still struggle to respond rapidly and coherently during
disruptions. This study explains why enterprise systems integration does not automatically
generate agility or performance and identifies the organizational capability that activates the value
of digital systems. Drawing on dynamic capability theory, we conceptualize Supply Chain
Orchestration Capability (SCOC) as the coordinated decision-activation mechanism through
which digital integration is transformed into unified operational execution. We further propose that
External Enterprise Systems Integration (EESI) follows a nonlinear inverted U-shaped pattern,
whereby moderate external connectivity enhances orchestration, but excessive connectivity
generates information overload and coordination friction, weakening execution rather than
strengthening it. We position Supply Chain Agility (SCA) as the operational expression of
orchestration and theorize that the value of orchestration and agility is amplified under
Environmental Complexity (EC). Data were collected over three longitudinal waves from 268
manufacturing SMEs in the United States and Canada and analyzed using PLS-SEM, including
nonlinear and moderated mediation effects. The study advances understanding of digital supply
chain transformation by showing that enterprise systems create digital potential, but orchestration
unlocks that potential, and agility expresses it operationally. The insights offer strategic guidance
for firms seeking to convert digital investments into sustained performance advantages.