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Research paper

Using e-procurement applications to achieve


integration: what role does firm size play?
Dawn H. Pearcy
Eastern Michigan University, Ypsilanti, Michigan, USA, and
Larry C. Giunipero
Florida State University, Tallahassee, Florida, USA

Abstract
Purpose – The purpose of this research is to empirically investigate the role of firm size in the use of e-procurement applications that vary in their
ability to facilitate supply chain integration.
Design/methodology/approach – The sample was drawn from members of the Institute for Supply Management (ISM). Purchasing professionals
employed in 33 different industries completed a self-administered questionnaire.
Findings – A total of 128 useable surveys were received. The data revealed a significant relationship between firm size and e-procurement application.
Specifically, larger firms were more likely to use integrative types of e-procurement.
Research limitations/implications – The study was limited in that it excluded purchasing professionals employed in the service sector. In addition, it
only focused on the relationship between a single variable and e-procurement application.
Practical implications – This research provides support for studies that suggest that firm size is related to IT use. In addition, it tests the framework
developed in a previous research study conducted on supply chain IT. Finally, previous research has linked supply chain process integration with
operational agility, lower costs, superior product/service design, and enhanced profitability. The findings of this research might prompt decision-makers
to ask themselves if their firms forgo such potential benefits when integrative forms of e-procurement are not used.
Originality/value – This research contributes to the understanding of an emerging phenomenon by investigating firm size as an explanatory variable
in the e-procurement application decision. In addition, evidence is still lacking with regard to the prevalence of actual implementation of e-procurement
in firms. This study examines actual usage of 13 different e-procurement applications across various industries. Finally, this research focuses on the use
of e-procurement in achieving integration. This is important to practitioners, as effective supply chain integration has been linked to enhanced business
performance.

Keywords Procurement, Supply chain management, Companies, Electronic commerce

Paper type Research paper

Introduction E-procurement continues to grow and was projected to


reach $3 trillion in transactions in 2004, up from $75 billion
Firms in diverse industries use electronic procurement in 2002 (Verespej, 2002). Presutti (2003) refers to a Deloitte
(e-procurement) in an attempt to increase the efficiency of the Consulting survey of 200 multi-national firms, which suggests
purchasing/supply management function and to reduce costs. the use of e-procurement is growing. Approximately
Presutti (2003, p. 221) defined e-procurement as “a technology 30 percent of firms in the sample had at least a basic
solution that facilitates corporate buying using the internet.” e-procurement system in place. A total of 61 percent of the
Min and Galle (2003) defined e-procurement as “business-to- sample had planned to implement e-procurement systems or
business purchasing practice that utilizes electronic commerce were at least considering it (Presutti, 2003).
to identify potential sources of supply, to purchase goods and While many firms adopt e-procurement in an attempt to
services, to transfer payment, and to interact with suppliers”. achieve the proposed benefits of lower costs and improved
E-procurement is part of a broader concept called information efficiency, it should be noted that the use of e-procurement
technology (IT), which the American Heritage Dictionary (2005) does guarantee positive outcomes for buyers or suppliers. For
defines as “the development, installation, and implementation example, Emiliani and Stec’s (2005) study of reverse auction
of computer systems and applications”. use in the wood pallet industry found that suppliers realized
few, if any benefits from participation, suppliers engaged in
The current issue and full text archive of this journal is available at retaliatory pricing when the opportunity presented itself,
www.emeraldinsight.com/1359-8546.htm buyers encountered unanticipated costs, and less-than-
optimal buyer-supplier relationships resulted. Some
additional challenges associated with the effectiveness
Supply Chain Management: An International Journal of e-procurement include information sharing within and
13/1 (2008) 26– 34
q Emerald Group Publishing Limited [ISSN 1359-8546]
across firms, overcoming the “silo mentality” within the firm,
[DOI 10.1108/13598540810850292] sharing proprietary information with supply chain members,

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Using e-procurement applications to achieve integration Supply Chain Management: An International Journal
Dawn H. Pearcy and Larry C. Giunipero Volume 13 · Number 1 · 2008 · 26 –34

and intellectual property matters. Astute decision-makers Themistocleous and Love, 2004). Patterson et al. (2003)
recognize that successful implementation of e-procurement noted, “integration of supply chain activities and the
applications relies not only on the capabilities of the technologies to accomplish it have become competitive
application itself, but also on non-technical factors such as n e c e s s i t i e s i n m o s t i n d u s t r i e s ” . I f I T, i n c l u d i n g
realignment of the procurement function, integration of the e-procurement has the potential to play a pivotal role in
e-procurement system with other relevant systems, redesign of business outcomes and competitiveness, it is critical for
the procurement process, realignment of the purchasing managers to understand which e-procurement applications
organization, and integrating suppliers at an early stage (see best suit their firms’ goals in achieving intra – and inter-firm
Puschmann and Rainer, 2005). integration. In addition, some purchasing/supply managers
A wide variety of Internet-based technologies are available might simply employ e-procurement in an attempt to achieve
to firms attempting to improve their business position (e.g. the proposed benefits of reduced administrative and
on-line catalogs, on-line auctions). Internet-based purchasing costs. By considering the different types of
technologies vary in many respects, including the ability to e-procurement applications investigated in this study,
facilitate process integration within and across firms. managers might also recognize a need within their firm to
According to the American Heritage Dictionary (2005), to employ e-procurement applications that make the task of
integrate is to “make into a whole by bringing all parts integration easier. Finally, this research provides information
together; to unify or to make part of a larger unit”. Some that allows managers to compare the type(s) of e-procurement
firms adopt technologies that involve applications within a used in their firms to e-procurement use in firms of
single function (e.g. electronic requisitions), while others use comparable size.
e-procurement applications that provide for process In order to examine this topic, a review of the existing
integration across multiple functions within a single firm literature is presented along with the research hypothesis.
(e.g. enterprise resource planning systems (ERP)), yet others This is followed by an explanation of the methodology, results
use e-procurement applications that facilitate integration of the research, and a discussion of the findings. The paper
across organizations (e.g. electronic data interchange (EDI)). concludes with managerial implications, limitations, and
opportunities for future research.
Purpose
Literature review
The fact that firms adopt e-procurement applications that
differ in the ability to facilitate supply chain integration The importance of supply chain integration
prompted the researchers to examine a possible explanatory The integration of key business processes is essential to
variable in the e-procurement adoption decision, namely effective supply chain management (see Lambert et al., 1998)
firm size. Therefore, the purpose of this study is to and the extent to which e-procurement applications facilitate
empirically investigate the role of firm size in the adoption integration is an important focus of this study. The
of e-procurement applications that vary with respect to their importance of integration in supply chain management
ability to facilitate supply chain integration. The underlying (SCM) can only be fully appreciated with an understanding
research question is as follows: “Is there a significant of how SCM has been conceptualized. The term became
relationship between firm size and the type (more or less popular in the early 1980s and interest in SCM on the part of
integrative) of e-procurement application adopted?” academicians and practitioners has grown over the last two
decades. Themistocleous and Love (2004) indicated that
SCM involves the integration of businesses, information
Significance of the research
flows, and people. Metz (1998) described SCM as “a process-
Researchers’ interest in the factors that impact adoption of oriented, integrated approach to procuring, producing, and
innovations/technology has spanned several decades, with delivering products and services to customers . . . .” Finally,
Rogers (1967) providing the foundation for later study. In an Lambert and Cooper (2000, p. 66) defined SCM as “the
attempt to explain e-procurement adoption decisions, integration of key business processes from end user through
previous research has examined factors such as original suppliers that provides products, services, and
organizational readiness (Min and Galle, 2003), supplier information that add value for customers and other
support (Deeter-Schmelz et al., 2001), degree of stakeholders”. While different definitions exist, it is clear
centralization (Moon, 2005), competitive environment (Wu that integration is a key aspect of SCM.
et al., 2003), and the firm’s technical capabilities (Zahay and Intra- and inter-firm integration of processes is imperative
Handfield, 2004). Clearly, developing an understanding of because it can increase the overall performance of individual
the factors that impact e-procurement adoption decisions is firms and the supply chain (Vickery et al., 2003; Spekman
important, and strides have been made in the academic et al., 1998; Gattorna, 1998). Internal integration is achieved
literature. However, e-procurement is an emerging technology when firms effectively coordinate multiple processes on an
and much remains to be discovered about additional factors enterprise-wide basis. Narasimhan and Kim (2002) noted the
impacting adoption. This research contributes to the ability of distinct functions working together to create
academic literature in that it investigates a potential seamless interfaces across processes is fundamental to the
explanatory variable (firm size) in e-procurement adoption success of the firm and the supply chain. To achieve
decisions. integration across enterprises (external integration), firms
This study is important to practitioners because previous must recognize the importance of suppliers as an integral part
research suggests that supply chain integration has the of the supply chain and engage in collaborative efforts with
potential to positively impact operational efficiency, revenue them (Narasimhan and Kim, 2002). Some potential benefits
growth, coordination, and collaboration (Rai et al., 2006; of effective supply chain integration include efficiency in

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Using e-procurement applications to achieve integration Supply Chain Management: An International Journal
Dawn H. Pearcy and Larry C. Giunipero Volume 13 · Number 1 · 2008 · 26 –34

interaction among supply chain members, increased supply and sales departments). The fourth category, labeled
chain visibility, and operational efficiency (see Rai et al., 2006; “enterprise integration process” includes IT, which is used
Power, 2005). Sanders (2005) asserted that the advent and to integrate business processes across the entire organization
growth of various forms of IT (including e-procurement) has (e.g. ERP systems). The final category identified by Wang
played a vital role in allowing supply chain members to et al. (2004) was “B2B integration/collaborative business”. IT
achieve inter-firm coordination and integrate business systems in this category span firms and allow communication,
processes. The use of IT has the potential to promote collaboration, and integration among multiple supply chain
supply chain integration by providing efficient, timely, and members, including suppliers and customers.
transparent business information to the appropriate parties
(Cagliano et al., 2003). The relationship between firm size and IT adoption in
It should be noted that integration within and across firms the SCM literature
alone does not guarantee improved overall supply chain Patterson et al. (2003) developed a conceptual model of the
performance. A key factor contributing to enhanced supply factors impacting adoption of supply chain technologies. The
chain performance is strategic fit. A firm should seek to build model included key environmental and organizational factors,
supply chain capabilities (including the selection of various e- including firm size. The authors noted that larger firms not
procurement applications) that support the overall corporate only have access to greater financial resources, but are also
strategy (Wisner et al., 2005). Without this consistency, better positioned to assume the risk of investing in various
improved performance cannot be achieved. According to technologies and to take advantage of the benefits of
Wisner et al. (2005), additional factors that impact supply economies of scale from adoption (e.g. Grover and Gosler,
chain performance include decisions in the areas of facilities 1993). Patterson et al. (2003) further cited previous research
(location, number, capacity), inventory (economies of scale, that has consistently revealed a positive relationship between
ability to meet demand), and transportation (mode, network). firm size and the adoption of technology (e.g. Daugherty et al.,
While the use of e-procurement applications can assist firms 1995; Dawe, 1994; Germain, 1993; Rogers, 1990; Dewar and
in achieving integration, it also has the potential to impede Dutton, 1986). Consistent with previous research, Patterson
supply chain coordination, cooperation, or integration. In et al. (2003) hypothesized that a positive relationship exists
fact, a key concern about on-line reverse auction use among between firm size and the adoption of supply chain
practitioners and academicians (e.g. Emiliani and Stec, 2005; management technologies. The researchers did not test the
Brittan, 2001; Porter, 2000) is that suppliers might become proposed model. However, they developed a survey to
less cooperative because they view this e-procurement evaluate the adoption of supply chain technologies that
application as a means for the buyer to extract price ranged from basic to integrative (e.g. bar coding and ERP,
reductions, often to the detriment of their own profit respectively).
margins. For example, Pearcy et al. (2004) found under Lancioni et al. (2003) examined internet use in several
certain circumstances, the use of on-line reverse auctions was supply chain decision areas, including purchasing and
significantly related to a lack of supplier cooperation in procurement. While the Lancioni et al. (2003) study
assistance with designing processes that reduce cost, cycle considered seven purchasing and procurement applications,
time, and time to market. the current study investigates 13. Of the e-procurement
applications analyzed in the present research, only two were
Types of e-procurement applications also included in the Lancioni et al. (2003) study. Lancioni’s
This research focuses on the impact of firm size on the research involved data collection in two separate studies to
adoption of 13 e-procurement applications that vary in the compare changes in internet use by firm size over a two-year
ability to facilitate supply chain integration. Given the period. The survey data were collected from approximately
differences in e-procurement applications, a number of 190 Council of Logistics Management (CLM) members. The
researchers have developed taxonomies to classify them authors established firm size by considering the number of
based on differences in their characteristics, benefits, and employees and the firms’ annual sales. Firms with less than
goals of use (e.g. Frohlich and Westbrook, 2002; deBoer et al., 500 employees were considered small, while firms with more
2001; Kehoe and Boughton, 2001; Whitaker et al., 2001). than 500 employees were classified as large. Firms whose sales
The following describes a classification scheme that provides volume was under $250 million were considered small, those
for the categorization of e-procurement applications on the with sales exceeding $250 million were considered large. In
basis of integrative capacity. both the 1999 and 2001 studies, smaller firms (using sales
Wang et al. (2004) recognized that internet-based supply volume) were more likely to use the Internet to communicate
chain technologies vary in the ability to facilitate process with suppliers on finished goods inventory levels and on out-
integration. The researchers identified five categories of IT of-stock issues. Conversely, Lancioni et al. (2003) found that
adoption. The first category was labeled “essential functions”. larger firms used the internet to make on-line catalog
This category included IT that is used to carry out tasks such purchases and provide suppliers with evaluations of carriers’
as documentation using basic software packages. The second performance. In addition, the researchers found that larger
category was identified as “single department/operation firms (using employment figures) were more likely to use
process”. This category included computer-based Internet-based technologies to communicate with customers
information systems that are relevant to one particular on order status and to manage the outsourcing of customer
function or process (e.g. accounting information systems). service functions.
Wang’s third category of IT adoption was “cross departments/ The research of Wang et al. (2004) made a unique
multi-processes integration”. IT adoption at this level allows contribution to the understanding of the firm size-technology
firms to integrate processes across several functions or adoption relationship. The premise behind Wang et al.’s
departments (e.g. transportation, inventory management, (2004) research was that firm size impacts which type of

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Using e-procurement applications to achieve integration Supply Chain Management: An International Journal
Dawn H. Pearcy and Larry C. Giunipero Volume 13 · Number 1 · 2008 · 26 –34

e-procurement application is adopted. Specifically, Wang et al. applications (Table I contains a list of the survey items). The
(2004) hypothesized that firm size is positively related to the respondents assessed each item on a five-point Likert scale
implementation of more integrative types of IT. The data, from 1 ¼ strongly disagree to 5 ¼ strongly agree.
which were collected from a sample of 121 Taiwanese firms, The questionnaire was pre-tested on a group of supply
provided support for the research hypothesis. management professionals and academicians with experience
The present study of the relationship between firm size and in scale development. The survey was evaluated for
e-procurement application builds on previous research comprehensiveness and minor changes were made based on
including the classification framework of Wang et al.’s their recommendations.
(2004). Therefore, the following is hypothesized: A total of 1,025 surveys along with a cover letter explaining
H1. A significant relationship will exist between firm size the purpose of the study and a postage-paid envelope were
and e-procurement use. Specifically, larger firms will mailed to potential participants at the addresses listed with
be more likely to use integrative e-procurement ISM. In an attempt to maximize the response rate, follow-up
applications. postcards were sent to potential respondents two weeks after
the initial mailing.
Methodology
Results
Survey participants
The sampling frame consisted of members of the Institute for Response rate and sample demographics
Supply Management (ISM), an organization that is composed Of the 1,025 surveys mailed, a total of 128 useable surveys
of supply management professionals and academicians in the were received, resulting in a 12.5 percent response rate. The
US. The potential survey participants were drawn from 11 respondents possessed an average of nearly 12 years of
different standard industrial codes, including: food products, experience in the purchasing/supply management function
paper products, chemicals, petroleum, rubber, primary and were employed in 33 different industries including
metals, transportation equipment, fabricated metals, petroleum/gas, transportation, telecommunications,
computer equipment, measuring and analyzing instruments, pharmaceuticals, industrial equipment, and metals/mining to
and electrical equipment. name a few. The three most commonly reported lines of
The data used in the present study were collected as part of business were manufacturing (26 percent), food (12 percent)
a larger investigation of on-line reverse auction use. and auto parts (11 percent). The respondents held a variety of
Therefore, it was necessary to identify and select firms that positions, with purchasing manager being the most common
used the technology. The firms were identified by an extensive (18.8 percent), followed by senior buyer (20 percent) and
review of the trade literature, informal discussions with director of e-business (19 percent). Six of the seven most
individuals who were experienced with on-line reverse auction frequently reported position titles suggested that the
use (including reverse auction providers), and a review reverse purchasing/supply management professionals had significant
auction providers’ web sites that make reference to the names responsibilities (e.g. Director, Vice President). Annual
of their clients. revenues for the respondents’ business unit ranged from
$4.5 million to $45 billion, with a mean of $5.49 billion. The
Questionnaire and mailing dollar amount of purchases for which the respondents’ were
Previous studies have taken different approaches to measuring responsible ranged from $1 million to $17 billion, with a
firm size, including assessment of: total assets (e.g. Wang et al., mean of $57 million.
2004); number of purchasing employees (e.g. Min and Galle,
2003); purchase volume (Min and Galle, 2001); and the Hypothesis test
number of warehouses and factories (e.g. Daugherty et al., In order to make comparisons of e-procurement applications
1995). For the purpose of this study, firm size was established based on firm size, firms whose annual revenues exceeded the
using business unit revenues. Firm revenues or sales were also median of $3.5 billion were placed in category I. Firms whose
used as an indicator of firm size in studies conducted by annual revenues were below the median were placed in
Wagner and Hansen (2005), Lancioni et al. (2003), Dresner category II. According to the Fortune 500 list, the firm which
et al. (2001), and Carr and Smeltzer (1999). The rationale holds the number one position (in terms of annual revenues)
behind the use of business unit revenues is that it provides an had revenues of $339.9 billion and the firm in the number
indicator of firm resources, which previous research has found 500 position had $3.9 billion in revenues (www.money.cnn.
to be related to the adoption and use of technology (e.g. com, April 17, 2006). Therefore, the firm holding the 500th
Zaheer and Venkatraman, 1994). Firm size was assessed by position had annual revenues approximately equal to the
asking the respondent to indicate (in millions of US dollars) sample median of $3.5 billion. Importantly, firms with
the approximate annual revenues of his/her business unit. revenues sufficient enough to be placed on the Fortune 500 list
The set of items used to assess “electronic-procurement exhibit common characteristics, including the fact that
use” was developed by the researchers. The survey items were academicians and practitioners scrutinize these firms to
developed using 13 different internet-based procurement learn about best (and sometimes worst) business practices.
applications as identified by Antonette et al. (2002). The Thus, it appears that a split at the sample median of $3.5
authors identified these e-procurement applications through billion is reasonable.
an extensive review of the trade and academic literatures as Testing the research hypothesis that larger firms are more
well as numerous in-depth case studies of firms operating in likely to use integrative e-procurement applications involved
widely diverse industries. Respondents were asked to respond two steps. The first step was to classify each application
to the following: “We use internet-based technologies to . . .” according to its ability to facilitate supply chain integration.
This statement was followed by a list of the 13 e-procurement The goal was to distinguish between more and less integrative

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Using e-procurement applications to achieve integration Supply Chain Management: An International Journal
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Table I T-test for equality of means category I firms vs category II firms


We use the internet-based technologies to . . . n Mean SD Mean Diff. t Sig.
Search for low-cost suppliers Category II 65 3.68 1.00 0.05 0.25 0.81
Category I 62 3.63 1.19
Visit suppliers web sites Category II 66 4.00 0.98 0.23 1.23 0.22
Category I 62 3.77 1.09
Participate in reverse auctions to reduce purchase prices Category II 66 4.37 0.91 20.07 20.59 0.56
Category I 62 4.44 0.91
Check suppliers’ financial status Category II 66 3.48 1.19 0.32 1.57 0.12
Category I 62 3.16 1.13
Place orders on suppliers’ web sites Category II 66 3.06 1.12 0.24 1.11 0.27
Category I 62 2.82 1.30
Access e-marketplaces Category II 66 3.48 1.12 0.29 1.49 0.14
Category I 62 3.19 1.19
Use software services of an e-purchasing provider Category II 66 3.50 1.23 0.13 0.63 0.52
solution Category I 62 3.37 1.06
Search for suppliers that will allow our firm to Category II 65 2.94 1.17 0.09 0.40 0.69
differentiate our offering from competitors Category I 62 2.85 1.19
Develop an integrated supply chain Category II 66 3.30 1.19 20.33 22.25 0.03 *
Category I 62 3.63 0.99
Plan and schedule production Category II 66 2.88 1.14 20.43 22.79 0.02 *
Category I 62 3.31 1.08
Collaborate with suppliers on product design issues Category II 66 2.79 1.21 20.36 22.24 0.03 *
Category I 62 3.15 1.17
Achieve cross-functional coordination Category II 66 2.76 1.00 20.64 26.56 0.001 *
Category I 62 3.40 1.16
Access suppliers’ on-line catalogs Category II 66 3.83 1.01 0.39 2.01 0.05 *a
Category I 62 3.44 1.22
Notes: Category I=annual revenues . $3.5 billion; Category II=annual revenues , $3.5 billion; 1=strongly disagree; 5=strongly agree; *Statistically
significant at a ¼ 0:05; aDifference not in hypothesized direction

forms of e-procurement. As previously noted, the Table II Classification of e-procurement applications using the
categorization used in this study builds on the work of taxonomy of Wang et al. (2004)
Wang et al. (2004). Table II illustrates the categorization using
Wang et al.’s (2004) taxonomy. Of the 13 e-procurement E-procurement application Category
applications examined in the research, nine were classified as Use of the internet to:
single department/operation processes (non-integrative) and
Search for low-cost sources of supply 2
four were classified as either enterprise integrative or B2B
Visit suppliers web sites 2
integrative/collaborative commerce (see table one). While not
Access suppliers’ on-line catalogs 2
specifically addressed in the research hypothesis, it is
Check suppliers’ financial status 2
notewor thy that the means for the non-integ rative
Place orders on supplier’s web sites 2
e-procurement applications were higher than those of the
Access e-marketplaces 2
integrative ones. This suggests that these applications were
Use software services of an e-purchasing solution
more widely used by the respondents overall.
provider 2
The next step in testing the research hypothesis was to
conduct t-tests between firms in category I (annual revenues Search for suppliers with offerings that will allow our
exceeding $3.5 billion) and category II (annual revenues less firm to differentiate our products/services from our
than $3.5 billion) for each of the 13 types of e-procurement competitors 2
applications. T-tests revealed significant differences in use Participate in reverse auctions to reduce purchase
across firm size in five of the 13 e-procurement applications. prices 2
Four of the five differences were in the hypothesized direction Plan and schedule production 4, 5
(i.e. the resulting mean for category I (larger) firms was higher Achieve cross-functional coordination 4
than that of category II firms). Significant differences in the Collaborate with suppliers on product/service design
hypothesized direction were identified in the use of Internet- issues 5
based technologies to: develop an integrated supply chain, Develop an integrated supply chain 5
plan and schedule production, collaborate with suppliers on Notes: 1 ¼ essential functions (documentation); 2 ¼ single department/
design issues, and achieve cross-functional coordination (see operation process; 3 ¼ cross departments/multi-process integration; 4 ¼
Table I). Importantly, each of the e-procurement applications enterprise integration process; 5 ¼ B2B integration/collaborative commerce
exhibiting significant differences across firms size were

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Using e-procurement applications to achieve integration Supply Chain Management: An International Journal
Dawn H. Pearcy and Larry C. Giunipero Volume 13 · Number 1 · 2008 · 26 –34

classified as integrative according to the taxonomy of Wang classification schemes for e-procurement applications (e.g.
et al. (refer to Table II). Therefore, the research hypothesis Antonette et al., 2002; deBoer et al., 2001) by examining
was supported by the data. adoption patterns across different types of e-procurement
applications. While Antonette et al. (2002) conducted case
Discussion and conclusions studies to develop their framework, the present study provides
survey data across industries about actual usage of a variety of
Given the significant difference in use across the integrative e-procurement applications. Third, this study contributes to
e-procurement applications, the data suggest that firms in an important stream of literature that examines the
category II (with revenues less than $3.5 billion) are not as relationship between e-procurement use and supply chain
likely to use integrative e-procurement applications as firms in integration, but does not examine the role of firm size in this
category I. Consequently, these firms might forego the relationship (e.g. Rai et al., 2006). Finally, Wang et al. (2004)
potential benefits of integrative types of e-procurement such e x a m i n e d t h e r o l e o f fi r m s i z e i n t h e a d o p t i o n o f
as operational agility, lower costs, superior product/service e-procurement applications that varied in their ability to
design, and enhanced profitability (Folinas et al., 2004). The integrate supply chain processes. However, the researchers
literature provides overwhelming support for the notion that examined this relationship only within the IT and
effective SCM relies heavily upon integration and manufacturing sectors in Taiwan. This research examines
coordination across functions and enterprises (see Vickery the relationship between firm size and the adoption of
et al., 2003; Narasimhan and Kim, 2002; Spekman et al., e-procurement applications that differ with respect to their
1998). Now more than ever, firms rely on internet-based ability to facilitate integration in a sample of US-based firms
technologies to achieve this integration. Ultimately, firms who operating in widely diverse industries.
fail to adopt integrative e-procurement applications might The prevalence of on-line reverse auction use in this sample
find themselves competitively disadvantaged. Wang et al. is not surprising. Garcia-Dastugue and Lambert (2003) noted
(2004) supports this view when the authors asserted that that the ease of use and potential to provide lower purchase
disparate levels of IT adoption and integration capabilities in prices make the reverse auction a popular e-procurement
the supply chain contributes to “gaps” across firms’ borders. application among managers. In most instances, the reverse
Furthermore, Wang et al. (2004, p. 86) cite the work of Pant auction is used in a transactional manner; that is to engage in
and Ravichandran (2001) and state, “implementing supply a one-time business interaction for a good or service at a
chain management requires a higher level of IT adoption specific price. Garcia-Dastugue and Lambert (2003) refer to
(adoption of integrative forms), computer applications and this e-procurement application as a market mechanism.
infrastructure that leverage inter- and intra-firm process and Garcia-Dastugue and Lambert (2003) classified another
systems integration”. group of e-procurement applications as coordination flows.
While the potential benefits of e-procurement use have
Coordination flows, on the other hand, are implemented to
generated substantial interest on the part of practitioners and
facilitate ongoing relationships. With coordination flows,
scholars, Cagliano et al. (2003) noted that evidence is still
managers have already made purchasing decisions and the
lacking with regard to the prevalence of actual
goal is to share information that will ensure the flow of
implementation of e-procurement in firms. This research
products (e.g. production planning or product development).
examines differences in actual usage patterns across a widely
The distinction is made here because managers who prefer
diverse sample of firms and provides valuable information to
e-procurement applications that provide for price bargaining
both academicians and purchasing/supply management
must recognize that they are achieving “situational” or
professionals regarding the state of e-procurement use.
temporary integration. When market mechanisms are used,
Over the years, researchers have sought to explain adoption
the concept of integration or “to make whole by bringing all
patterns across various supply chain technologies (e.g. EDI).
parts together; to unify or make part of a larger unit” occurs
Given the emerging nature of e-procurement, research on the
factors impacting its adoption is still growing. This study on a temporary basis for the single transaction. After the
contributes to the understanding of the adoption of a wide transaction has been completed the buyer and supplier are no
range of e-procurement applications by examining the role of longer unified. Conversely, implementation of coordination
firm size. The findings also provide support for previous flows allows managers to achieve integration on a sustainable
research indicating that a significant relationship exists basis.
between firm size and technology adoption.
This study contributes to the knowledge base of Managerial implications
e-procurement use in the academic literature and differs from
previous research in a number of ways. First, this research With increasing emphasis on improving firm performance
empirically examines the role of firm size in the adoption of 13 through effective supply chain management, purchasing
different e-procurement applications, whereas previous professionals continually search for ways to cut costs, reduce
research resulted in the development of a conceptual model cycle time, and improve product/service quality. Although this
(e.g. Patterson et al., 2003), investigated fewer types of supply study did not test outcomes of e-procurement use, it
chain technologies (e.g. Daugherty et al., 1995), or did not highlights the importance of supply chain integration, the
focus on the ability of e-procurement tools to facilitate use of integrative e-procurement applications, and the
integration (e.g. Lancioni et al., 2003). One similarity differences in e-procurement use patterns. Purchasing
between the present study and Lancioni et al. (2003) is that professionals who make e-procurement adoption decisions
both studies revealed that smaller firms were more likely to might consider this research and contemplate how (more)
access or make purchases from suppliers’ on-line catalogs. integrative e-procurement applications could be used to
Second, this work extends previous research that developed potentially improve the performance of their supply chains.

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Using e-procurement applications to achieve integration Supply Chain Management: An International Journal
Dawn H. Pearcy and Larry C. Giunipero Volume 13 · Number 1 · 2008 · 26 –34

Purchasing professionals interested in maximizing the asserted that supply chain integration efforts are optimized by
benefits of increased supply chain integration through an appropriate combination of information transfer,
e-procurement use could first consider their firm’s existing streamlined physical logistics, and collaboration among
state of e-procurement adoption. Use of a classification supply chain members. It should be further noted that
system such as Wang et al. (2004) would assist managers in effective intra- and inter-firm supply chain integration also
the assessment of current e-procurement practices. relies heavily upon the implementation of sound corporate
The next step would be to decide which type of strategies and policies as well as the day-to-day practices of
e-procurement application is most appropriate for each decision-makers and front-line personnel. While this research
business situation. According to Garcia-Dastugue and explores e-procurement as an important aspect of supply
Lambert (2003), some of the bases for selecting the “right” chain integration, managers are cautioned that
e-procurement application include asset specificity, implementation of any technology alone is not a panacea for
transaction risk, operational performance risk, frequency of achieving integration nor does it ensure enhanced supply
purchase, and item value. chain performance.
Finally, managers must ascertain whether the use of
integrative e-procurement applications has been inhibited by
factors such as difficulty of use, required financial Limitations
commitment, and/or (perceived) risk. Non-integrative types The study was limited with respect to the types of respondents
of e-procurement such as accessing on-line catalogs, placing that were included. Purchasing/supply management
orders on suppliers’ web sites, and searching for low-cost professionals employed in the service sector were not
suppliers are simple to employ and do not require significant surveyed, which somewhat limits the generalizability of the
financial investments. This would explain why the data. In addition, the scope of the research was relatively
present study revealed no significant differences in use of narrow. The focus was strictly the role of firm size in
these e-procurement applications across firm size and the fact e-procurement tool adoption. Finally, use of a random sample
that firms were more likely to use them than integrative in academic research is ideal. However, the survey was not
applications. Firms of any size with access to the Internet can relevant to firms who did not engage in e-procurement.
easily engage in these inexpensive, low-risk e-procurement Therefore, the researchers concluded that use of a judgment
activities. Conversely, the use of e-procurement applications sample was a practical and valid method to collect the data
to achieve inter- or intra-firm integration poses more while maximizing the response rate.
challenge and risk (e.g. collaborating with suppliers on
product/service design issues).
As previously noted, some of these challenges associated Directions for future research
with the adoption and effectiveness of e-procurement
applications include information sharing within and across It is important for academicians and practitioners to
firms, overcoming the “silo mentality” within the firm, understand the role that e-procurement plays in vital
sharing proprietary information with supply chain members, business outcomes. This research could be extended by
and intellectual property matters. Decision-makers plans to investigating whether differences in outcomes such as cost
overcome these and other challenges should include effective savings, profitability, and product/service quality exist
methods to: garner top management support, provide between firms that use integrative e-procurement
employee training, secure the necessary financial resources, applications and those who use less integrative ones. In
address security issues, and encourage trading partners to addition, an examination of a broader range of variables
invest in the required technologies. in e-procurement adoption such as characteristics of the
This research addresses actual implementation of 13 technology, environmental factors, individual adopter factors,
different e-procurement applications. The findings of this and organizational factors such as innovativeness, company
research are also valuable to suppliers of e-procurement policies, corporate strategy, and management behaviors would
solutions (e.g. A.T. Kearney Procurement, Procuri, provide additional insight in this area. Finally, the survey
Commerce One). Given firms whose revenues are less than respondents in this research were purchasing/supply
$3.5 billion annually (category II firms) are not as likely to management professionals. Supply-side practitioners could
adopt integrative forms of e-procurement as larger firms; this also provide valuable insight into the implementation of e-
category of firms represents a market growth opportunity for procurement. Specifically, it is important to ascertain whether
suppliers of e-procurement applications. While revenues in suppliers find that various e-procurement applications
category II firms are less than those of category I firms, this facilitate coordination flows (sustained integration), market
category still includes companies with substantial revenues mechanisms (bargaining), or both.
and associated resources. Therefore, these companies might
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Corresponding author
Whitaker, J., Murphy, M., Haltzel, A. and Dik, R. (2001), Dawn H. Pearcy can be contacted at: dawn.pearcy@
“Private exchanges: the smart path to collaboration”, emich.edu

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