The Effect of Internal Integration on Operational Performance with Supply Chain Capability Mediation

The rapid growth of the coffee shop industry in the Special Region of Yogyakarta has increased competition and requires MSMEs to have efficient and adaptive operational performance. This situation calls for integrated internal process management and supply chain capabilities that are responsive. The setting of this inquiry is coffee shop micro, small, and medium enterprises in the Special Region of Yogyakarta, and it investigates the manner in which internal integration shapes operational performance, positioning supply chain capability as an intervening (mediating) variable. An explanatory quantitative design was adopted, executed through a cross-sectional survey. Two hundred respondents were handpicked via purposive sampling, comprising proprietors, supervisors, and staff members who are personally engaged in operational and supply chain undertakings. Information was gleaned by means of a structured questionnaire and then processed with Partial Least Squares Structural Equation Modeling (SEM-PLS) through the SmartPLS application. The evaluation began with the measurement model, appraised via convergent validity, discriminant validity, and construct reliability, and proceeded to the structural model, which was examined through R-square coefficients and a bootstrapping procedure. According to the empirical findings, internal integration favorably and significantly affects both supply chain capability and operational performance. Supply chain capability, in turn, positively and significantly impacts operational performance and simultaneously functions as a partial mediator connecting internal integration to operational performance. Such outcomes corroborate that fortifying internal integration, buttressed by adaptable supply chain capability, constitutes an indispensable strategy for durably elevating the operational performance of coffee shop MSMEs.