Strategic analysis of supplier integration and encroachment in an outsourcing supply chain

•This paper studies the supplier integration strategy and encroachment strategy in an outsourcing supply chain.•We find that without integration, the OEM could adjust the outsourcing allocation proportion to prevent the capable supplier from encroachment.•While with integration, though the OEM has to outsource all the production tasks to the integrated supplier, the supplier may be less likely to encroach the market.•In addition, we find that the two competitive suppliers, the OEM and the entire supply chain can achieve a win–win–win outcome under supplier integration and encroachment case.•Our results could provide useful strategy advices for outsourcing supply chain members.