Purchasing practices in small- to medium-sized enterprises: An examination of strategic purchasing adoption,supplier evaluation and supplier capabilities

The benefits that can be derived from effective purchasing have long been recognised in the management literature. Despite a growing body of research on purchasing practices in small- to medium-sized enterprises (SMEs), a number of key issues remain under-examined. We investigate SME purchasing practices in terms of (1) the degree to which purchasing is regarded as a ‘strategic’ activity by SMEs, (2) the use of supplier evaluation systems by SMEs and (3) the supplier capabilities emphasised by SME buyers. Through a survey of UK SME managers, we find that purchasing practices varied greatly across SMEs. Purchasing formality is generally low with limited evidence of purchasing being employed strategically and with many firms not undertaking formal supplier evaluations. In terms of supplier capabilities, we find that SMEs differ in the capabilities they prioritise, with three distinct groups evident. These groups are labelled ‘holistic’, ‘process’ and ‘logistics’ based on the supplier capabilities they emphasise. These three groups of firms also differed in terms of the emphasis they placed on strategic purchasing, supplier evaluation, technological focus and how they compete in their main markets, but not in terms of firm size or number of suppliers utilised. The implications of these findings are discussed and areas meriting future research are proposed.     

Making sense of the impact of the internet of things on Purchasing and Supply Management:A tension perspective

The Internet of Things (IoT) is transforming how industries operate. It impacts on firms’ supply networks, business processes and business models. This article describes how the IoT influences the Purchasing and Supply Management (PSM) function. Our findings based on interviews and workshop with more than 200 senior European purchasing managers from large corporations suggest that PSM has opportunities to support the development of IoT solutions within firms which are required to work with dynamic and complex markets. At the same time, the IoT supports the development of a more capable and efficient PSM organisation. As part of this early stage theory building effort, we outline scenarios for the future of the PSM function. This leads us to reflect on how PSM leaders manage IoT-related tensions by means of differentiation and integration tactics.     

Does purchasing recognition help or hinder purchasing quality performance in developing market SMEs? Effects of resource conditions

Prior studies contend that top managers’ ability to harness purchasing recognition to enhance purchasing quality performance is crucial for boosting competitive advantage. However, there are doubts about the universal benefits of purchasing recognition, particularly in developing market small and medium enterprises (SMEs). This research uses upper echelons theory (UET) to move the literature forward by suggesting that the purchasing recognition-purchasing quality performance link depends on varying conditions of financial resource and environmental munificence. Consistent with the study hypotheses, survey data from one hundred and thirty-eight SMEs in Ghana indicates that financial resource and environmental munificence positively moderate the relationship between purchasing recognition and purchasing quality performance. In particular, the study results show that, under low and high conditions of financial resource and environmental munificence, the link between purchasing recognition and purchasing quality performance is significantly negative and positive, respectively. Theoretical and practical implications alongside the limitations of the results are discussed.     

第三方物流的增值服务

当前国际市场第三方物流（3PL）有很高的竞争力。大多数的第三方物流供应商提供一些基本服务,如运输与仓储服务,但很少提供增值服务。研究课题的主要目标是将第三方采购（3PP）作为其第三方供应商的增值服务。3PL提供商应当增加其增值服务,是为了保持其核心的竞争优势。而同时3PP是一种可行的选择。许多我国当地的第三方物流供应商并没有意识到他们的增值服务,因为他们主要只提供基本的服务（运输和仓储）。另外,从买方的角度来看,中小型企业缺乏足够大的购买力,比如数量,所以他们的采购价格相对而言比大企业要高出很多。这个研究提出第三方采购作为其增值服务,一方面能够增加第三方供应商的核心竞争力,另一方面使得我国的中小型企业也能获得更多的利润。     

The impact of purchasing strategy-structure (mis)fit on purchasing cost and innovation performance

The organizational design literature strongly supports the notion of “structure follows strategy”, and suggests that a misfit between the two has a negative effect on performance. Building on this line of argument, we examine to what extent the (mis)fit between purchasing strategy and purchasing structure impacts purchasing performance. We focus on cost and innovation purchase category strategies, and examine how the deviation from an ideal purchasing structure defined along three dimensions (centralization, formalization, and cross-functionality) impacts purchasing performance. Analysing data collected from 469 firms in ten countries, we demonstrate that a strategy-structure misfit negatively impacts purchasing performance in both cost and innovation strategies. We also find that purchasing proficiency is a mediator in this relationship between misfit and performance. Our findings aid managerial decision making by empirically validating the necessity of having the right purchasing structure for successfully executing different purchasing strategies.     

Business orientations and innovation in small and medium sized enterprises

The capability of Small and Medium Enterprises (SMEs) to drive and shape markets is one path to competitive advantage. Firms that drive markets do so by leveraging radical and disruptive innovation to shape the needs of current and future customers, thereby altering market structure. In the current study, we find that firms with an entrepreneurial orientation are more likely to develop both driving markets and market driven innovations, while firms with a market orientation are more likely to develop market driven innovations.     

Analyzing internationalization configurations of SME's: The purchaser's perspective

This article focuses on the international purchasing behavior of small- and medium-sized industrial firms in Denmark. Based on taxonomy of internationalization configurations defined by the import and the export share of firms, the article explores the differences in these configurations seen from a purchasing perspective. The taxonomy reveals four internationalization configurations: international sourcers, globals, locals, and international sellers. Based on the taxonomy, the researchers diagnose the differences between firms in each of the configurations and find that psychic distance, risk, and control are unimportant factors compared to conventional findings. On the other hand, close cooperation between the firm and the international partners is important when explaining differences in internationalization configurations. The paper concludes by recommending possibilities for future research and by advising managers as to increase their success.     

Intra-organizational legitimization strategies used by purchasing managers

This paper addresses the issue of how purchasing managers can develop the purchasing department's legitimacy within an organization. A qualitative exploratory approach based on six cases has been used since: (1) there has not yet been a research performed on this topic; and (2) an analysis of internal legitimization strategies must take into consideration the context and the nature of the relationships among departments. Our analysis shows that in order to create, maintain or increase the purchasing department's internal legitimacy, purchasing managers have to do very well about two complementary strategic orientations: (1) identify and attract the best suppliers; (2) identify and implement collaborative processes and coordination mechanisms that cannot be duplicated by competitors. In fact, supply managers actually develop legitimization strategies based internally and externally, since a higher level of internal legitimacy can also be supported partially by external stakeholders, who then influence the other departments' and top management's perceptions.Our study also shows that the strategies used by purchasing managers take different forms depending which legitimacy dimension (cognitive, pragmatic, or moral legitimacy) they are trying to influence. Moreover, a purchasing department's legitimacy strategy is developed based on a few important factors: (1) where the purchasing department stands at a given time in terms of the contribution perceived, similar to a "balance sheet" evaluation; (2) the purchasing personnel's technical and relational competencies; and (3) the extent of their implication in the strategic choices leading to the development of a competitive advantage for the organization they work for. It seems that any effort to take steps based on coherent legitimization strategies could help improve both a purchasing department's legitimacy level and its development level. From this standpoint, this study also shows that the purchasing department's internal legitimacy is a crucial driver of purchasing practices.     

Organizing IT purchases: Evidence from a global study

Information technology (IT) purchasing is covering an increasing part of companies’ expenditure. Scholars mainly investigated IT purchasing in terms of make or buy drivers from an IT perspective. Similarly, companies have been focusing on make or buy decisions and specifications definition in relation to technological characteristics. This often resulted in failures related to the goods/services purchased due to e.g. lack of negotiation skills, contracting, and suppliers’ relationship management. Accordingly, IT purchasing might require new structures and processes management.The purpose of the paper is to investigate what are the possible configurations for IT purchasing, and how these configurations are characterized in terms of purchasing process (i.e., strategic purchasing, sourcing and supply) and organization (i.e., roles involved, level of centralization, and span of control). Furthermore, the paper asks how IT relevance and purchasing maturity might affect these configurations. Through 12 case studies of leading international companies, four main configurations of the organization and the purchasing process for IT purchasing were identified, namely neutral (no specific approach is in place), IT oriented (the IT department takes the lead over the purchasing department), purchasing oriented (the purchasing department manages the whole IT sourcing process) and IT strategic (IT and purchasing departments jointly manage the IT purchasing process). The choice of the configuration is driven by IT strategic importance (low for neutral and purchasing oriented) and purchasing maturity of the company (low for neutral and IT oriented).     

Are supply chain management theories culturally constrained? An empirical assessment

Culture plays an increasingly important role in supply chain management as many manufacturing firms have linkages to suppliers and customers from various countries. In this paper we propose treating culture as an explanatory variable to test the assumption that existing theories are universally applicable. The primary research question was: Do purchasing theories built on samples from mainly North American companies with Anglo-Saxon cultures apply in other cultural contexts? We developed and tested a model where top management??s view of the purchasing function affects purchasing practices and manufacturing performance. The statistical results provide evidence that the engagement and efficacy of purchasing practices is highly dependent on culture. This finding has significant implications from the perspective of decision making in international supply chain management. Specifically, top managers across multiple cultures could decide to structure and evaluate the purchasing function similarly, but these decisions could lead to different practices and different outcomes depending on the culture.     

Firm financing and growth in the Arab region

This paper documents how firms in Arab countries use equity, corporate bond and syndicated loan markets to obtain financing and grow. Working with a new dataset on issuance activity in domestic and international markets and firm performance, the paper finds that capital raising through these markets has grown rapidly since the early 1990s and involved an increasing number of firms. Whereas the amounts raised in equity and loan markets (relative to gross domestic product) stand well relative to international standards, bond issuance activity lags behind. However, bond financing has gained importance over time. Equity issuances take place primarily in domestic markets, whereas bonds and loans are mostly issued internationally, display long maturities and entail low levels of credit risk. Issuing firms from the Arab region are very large compared to international standards. They also tend to be larger, faster growing and more leveraged than non-issuing firms in Arab countries.     

Purchasing orchestration practices – Introducing a purchasing-innovation framework

This research investigates the purchasing role in enhancing an organization's innovation performance. Taking a purchasing perspective, this research introduces a new purchasing-innovation framework and specific purchasing orchestration (PO) practices related to the acquisition, integration, re-configuration, and commercialization of critical resources to enhance innovation performance. A theory elaboration methodology is applied to broaden the scope of resource orchestration theory (ROT) and introduce PO practices as an essential enabler of innovation. Qualitative interviews with managers from different industries enrich the theory elaboration process. This research contributes to theory by developing the concept of PO and enhancing the theoretical understanding of its meaning. Based on theory and empirical data, this research elucidates the PO practices of resource structuring, bundling, and leveraging support. The purchasing innovation framework explains how open-mindedness and technological uncertainty influence purchasing orchestration practices and innovation performance. Purchasing managers benefit from this research by learning to identify and address potential PO capability gaps and take a holistic perspective on resource management, looking both upstream and downstream in the supply chain.     

Co-alignment of supplier quality management practices and cognitive maps – A neo-configurational perspective

Much of the previous research on the ‘purchasing practice–performance link’ rests on the notion of “net effects,” which assumes that specific practices independently of each other impact outcomes. This study challenges this core tenet by adopting a neo-configurational perspective, exploring how different combinations of factors (called “configurations”) affect outcomes. Another limitation of extant studies on the ‘purchasing practice–performance link’ is the narrow focus on practices; more recent behavioral supply management research finds the behavior of managers to be critically influenced by cognitive maps—the lenses through which managers perceive, simplify, and interpret the world. Focusing on supplier quality as a core aspect of the broader ‘purchasing practice–performance link’, this study explores how configurations of different supplier quality management (SQM) practices and SQM-related cognitive maps help firms to manage supplier quality. It uses fuzzy-set qualitative comparative analysis (fsQCA) to identify SQM configurations and a cognitive-linguistic approach for the computerized text analysis of purchasing managers’ cognitive maps in the context of Western companies sourcing from Chinese suppliers. The configurational fsQCA analysis identifies four different configurations associated with overcoming barriers to SQM in emerging markets. SQM-related cognitive maps prove to be a critical component in these four configurations.     

Sex and salary: A survey of purchasing and supply professionals

The purpose of this paper is to test a series of hypotheses, derived from compensation theory, on predictors of purchasing and supply management salaries. One of the hypotheses, on the effect of sex on salary, assesses competing theories, i.e. human capital versus discrimination. These hypotheses are tested using the results of a survey on purchasing and supply management salaries in Canada. Six variables were found to be significant predictors of salary. Purchasers with a professional designation, more education, more experience, greater spend responsibility, at larger organizations, and with greater share of compensation coming as a bonus reported larger salaries. In addition, after controlling for these human capital and organizational context variables, sex had a significant impact on salary. Male purchasing and supply managers reported earning significantly higher salaries than their female counterparts. The paper concludes with implications for purchasing employees and employers, along with discussion of future research opportunities.     

Buyer perceptions of supply disruption risk: A behavioral view and empirical assessment

As supply chains become more complex, firms face increasing risks of supply disruptions. The process through which buyers make decisions in the face of these risks, however, has not been explored. Despite research highlighting the importance of behavioral approaches to risk, there is limited research that applies these views of risk in the supply chain literature. This paper addresses this gap by drawing on behavioral risk theory to investigate the causal relationships amongst situation, representations of risk, and decision-making within the purchasing domain. We operationalize and explore the relationship between three representations of supply disruption risk: magnitude of supply disruption, probability of supply disruption, and overall supply disruption risk. Additionally, we draw on exchange theories to identify product and market factors that impact buyers’ perceptions of the probability and magnitude of supply disruption. Finally, we look at how representations of risk affect the decision to seek alternative sources of supply. We test our model using data collected from 223 purchasing managers and buyers of direct materials. Our results show that both the probability and the magnitude of supply disruption are important to buyers’ overall perceptions of supply disruption risk. We also find that product and market situational factors impact perceptions of risk, but they are best understood through their impact on perceptions of probability and magnitude. Finally, we find that decisions are based on assessments of overall risk. These findings provide insight into the decision-making process and show that all three representations of risk are necessary for fully understanding risky decision-making with respect to supply disruptions.     

Supply-management maturity, cost savings and purchasing absorptive capacity: Testing the procurement–performance link

The relationship between the development level a purchasing organisation has reached—maturity—and its impact on the performance of a firm has received only limited attention until now. We conducted extensive purchasing audits using a comprehensive tool to assess firms’ maturity level. These firms’ performance was then measured by their success in a purchasing cost-reduction programme. The results showed a highly significant relationship between purchasing's maturity level and cost-reduction results. Somewhat counter-intuitively, larger saving potential was identified in more developed firms. This finding may be explained by a new concept called “purchasing absorptive capacity”. If an organisation's maturity is too low, the introduction of best practices, such as an innovative cost-reduction method, may fail.     

A contingency-configurational view of purchasing operations: The mediating role between supplier relationship and firm performance

The literature has considered purchasing and supply management activities from a strategic perspective, but the tactical role of purchasing operations has yet to be explored. Purchasing operations represent the internal modus operandi for transactions with suppliers, comprising three main activities – purchasing transactions, purchasing document management, and purchasing assessment – and supportive activities like purchasing knowledge management. Following the contingency theory, we hypothesize that these internal activities mediate between external supplier relationship management and firm performance (financial, customer and delivery performance). Complementarily, we adopt the configurational theory to hypothesize that this link between external and internal activities can be combined to increase firm performance. To test this contingency-configurational view of purchasing operations, we conducted a quantitative survey with 234 companies. The regression results of the contingency analysis show that purchasing operations activities have a full mediation role in most relationships between supplier relationship management and firm performance, while knowledge management positively moderates the association between purchasing assessment and customer performance. Moreover, the cluster analysis for the configurational analysis shows that supplier relationship management and purchasing operations follow maturity levels of joint implementation of internal and external activities. Our findings shed light on the purchasing operations by defining the activities representing this concept and showing their role in supply management. We also contribute to practice by proposing an integrative system that helps managers organize the firm's purchasing and supply management activities.     

Editorial: Purchasing and innovation: Past,present and future of the field of research

This paper introduces the special topic forum (STF) on purchasing and innovation. Presenting the findings from a systematic literature review, we take stock of the current state of the field, delineating themes, theories and methods, and identifying key trends over time. Our study shows a take-off in research on purchasing and innovation during the last decade. This has predominantly focused on private sector manufacturing firms although a recent expansion into public sector research is evident. Large-scale surveys and case studies are still the dominant research methods where the unit of analysis is typically the ‘firm’ or ‘project’. The findings also show how in the past the field was driven by questions on how purchasing can facilitate different types of innovation projects, seeking to derive practical implications, and rarely making explicit statements regarding theories applied; this still characterises much of the research but we find an increasing focus on theory development. We also see a shift in the type of technological innovation being investigated: past studies tended to focus on the role of purchasing in new product development (NPD) projects, which reflected a relatively low degree of technological uncertainty, but we see a trend towards innovation projects facing technological uncertainty. Research shows how this requires new ways of sourcing innovations and therefore new ways for purchasing to facilitate innovation sourcing. On the basis of the review, we offer our guidance for future research avenues to 1) carry out more research on procurement of innovation in the public sector; 2) consider new theories and research methods, and 3) go beyond firm-level or dyadic analysis to research networks and ecosystems. We conclude by introducing the papers in the STF.     

SMEs and the Potential for A Collaborative Path to Environmental Responsibility

Globally, the potential for small and medium‐sized enterprises (SMEs) to collectively impact negatively on the environment is great. Therefore, the adoption, and maintenance, of environmentally responsible practices by this group of firms is especially critical. Studies of environmental practices successfully implemented by small firms have revealed that relationships with other firms, or other organizations, can contribute to greater awareness of the benefits of such activities and, therefore, enhance the possibility of environmental engagement. Collaborative relationships may provide opportunities for SMEs to overcome some of the barriers to implementing environmental initiatives associated with their size, and/or associated characteristics. This paper focuses on attitudes of SME owner‐managers to a variety of environmental issues (including regulation and voluntary standards), and to collaborating with other firms (in either a formal or informal sense). The data this paper draws upon are from two waves of an ongoing longitudinal survey of New Zealand SMEs. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment     

Localized capabilities and the internationalization of manufacturing activities by SMEs

In this paper it is argued that the internationalization of production through foreign direct investment (FDI) by small and medium-sized enterprises (SMEs) is influenced by local level idiosyncracies. Although SMEs suffer from inherent constraints to international growth (due to the scarce availability of financial and managerial resources), the presence of qualified localized capabilities strengthen and complement their competitive/ownership advantages, thus favouring their internationalization. These capabilities are related to the advanced specialized services available to the firms, the existence of a ‘marshallian atmosphere’, and an environment conducive to innovation and learning. However, it is argued that negative externalities stemming from protectionism-oriented public intervention discourage the international growth of firms and negatively influence the propensity of SMEs to internationalize. Empirical support for these premises is provided by this study of the Italian case over the decade 1986–1995.