Journal of Purchasing and Supply Management 26 (2020) 100595

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Journal of Purchasing and Supply Management

journal homepage: www.elsevier.com/locate/pursup

The influence of the competitive landscape on cross-functional interactions T

between procurement and engineering
Bryan Ashenbauma, Cynthia Wallin Blairb,∗, Barry Brewerc
a
Supply Chain & Operations Management, Miami University, 3005 Farmer School of Business, Oxford, OH, 45056, USA
b
Global Supply Chain Management, Brigham Young University, Marriot School of Management, Provo, UT, 84602, USA
c
Decision Science, University of Wyoming, College of Business, 1000 E. University Ave. Laramie, WY, 82070, USA

A R T I C LE I N FO A B S T R A C T

Keywords: This study assesses the extent to which a firm's external environment shapes the cross-functional interactions
Procurement between procurement and engineering, utilizing an embedded multiple-case study methodology. In summary,
Supplier management we found that high environmental ambiguity discourages procurement-engineering mutual understanding. High
Cross-functional integration environmental uncertainty with moderate ambiguity, on the other hand, appears to foster both mutual under-
Case studies
standing and inter-functional collaboration. Overall, procurement personnel are more optimistic than en-
Qualitative data analysis
gineering personnel regarding the performance results stemming from cross-functional integration. Additionally,
increasing job tenure for procurement personnel leads to a higher level of perceived integration with en-
gineering, while engineers with longer job tenure report see less value in collaborating with procurement, often
creating an asymmetric power distribution with engineering taking a dominating role.

1. Introduction between procurement and engineering?

More than fifty years ago, a landmark study by Lawrence and Lorsch
(1967) documented what is now conventional wisdom: successful firms
rely upon functional personnel with highly differentiated knowledge
sets, who must also be able to integrate their efforts so that these
knowledge sets can be leveraged in support of the company's holistic
mission. In this study, we examine how two supplier-facing functions
deal with this inherent tension: procurement and engineering. Pro-
curement and engineering have much cause to work together, not least
because they are the ones most often tasked with supplier selection and
management (Burt et al., 2011; Engel, 2011; Moriarty, 2012; Putnam,
1985; Schiele, 2010; Tate, 2014). Procurement brings commercial ex-
pertise in negotiations, market knowledge, and contract management,
whereas engineering delivers the technical proficiency to define spe-
cifications. Given the risks associated with poor supplier selection or a
tenuous supplier relationship, how effectively these functions integrate
their efforts would seem a pressing issue for managers and academics
alike. Practitioner anecdotes are plentiful (e.g., Avery, 2011; Miller and
Fogle, 1998; Moriarty, 2012; Parts.io), but research efforts to under-
stand how these specific functions interact in the course of routine daily
activities are relatively sparse (Zimmermann and Foerstl, 2014). Hence,
the research question motivating this study is: how does a firm's ex-
ternal environment shape the routine cross-functional interactions
Given the relative scarcity of research specific to this area, and given
the relatively open-ended nature of our research questions, we followed
an abductive multiple-case study methodology to explore this research
question (Yin, 2014). In this study we take a theory elaboration case
study approach (Ketokivi and Choi, 2014). Specifically, we use In-
formation Richness Theory (IRT) and Contingency Theory (CT) to
sharpen our research questions and interview protocol. We have sought
to elaborate on these theories by focusing our study upon the oil and
gas industry, largely because its extended supply chain flows through a
wide variety of competitive business environments.
The following section provides an overview of the relevant func-
tional integration literature and introduces our guiding theoretical
lenses. We then review our data collection methodology, followed by a
presentation of within-case and cross-case analyses of the data, culmi-
nating in a set of research propositions. The paper concludes with a
discussion of contributions, limitations, and a call for future research.
2. Literature review and guiding theories
2.1. Functional integration
The majority of research that studies functional integration within a
firm has taken place in the context of research and development, with

∗
Corresponding author.
E-mail addresses: ashenbb@miamioh.edu (B. Ashenbaum), cindy.blair@byu.edu (C.W. Blair), bbrewer4@uwyo.edu (B. Brewer).

https://doi.org/10.1016/j.pursup.2019.100595
Received 23 April 2018; Received in revised form 1 November 2019; Accepted 5 December 2019
Available online 09 December 2019
1478-4092/ © 2019 Elsevier Ltd. All rights reserved.
B. Ashenbaum, et al.
Table 1
Cross-functional integration literature by functions studied.
Purchasing-Research and Development Burt and Soukup (1985)
Purchasing-Logistics Anklesaria and Burt (1987)
Purchasing-Manufacturing Dowlatshahi (1992)
Purchasing-Marketing Atuahene-Gima (1995)
Purchasing-Purchasing (centralized/ Birou and Fawcett (1994)
decentralized) Birou et al. (1997)
Marketing-Research and Development Ragatz et al. (1997)
McGinnis and Vallopra, 1999
Wynstra et al. (2000)
Lakemond et al. (2001)
Nijssen et al., 2002
Wynstra et al. (2003)
Tracey (2004)
Van Echtelt et al. (2008)
Van Poucke et al. (2009)
Schiele (2010)
Luzzini et al. (2015)
Arnette and Brewer (2017)
Gonzalez-Zapatero et al. (2017)
Mikkelsen and Johnsen (2018)
Ashenbaum and Terpend (2010)
Pagell and Krause (2002)
Pagell (2004)
Ellegaard and Koch (2012)
Rebolledo and Jobin (2013)
Ellegaard and Koch (2014)
Vallet-Bellmunt and Rivera-
Torres, 2013
Trautmann et al. (2009)
Kahn (1996)
Kahn and Mentzer (1998)
Lawrence and Lorsch (1967)
Reukert and Walker (1987)
Galbraith and Nathanson (1978)
Gupta et al. (1986), 1987
Gupta and Wilemon (1988)
Souder and Sherman (1993)
Carlsson (1991)
Song and Parry (1993)
Marketing-Logistics Lynagh and Poist (1984a), b
Voorhees et al. (1988)
Kahn and Mentzer (1996)
Murphy and Poist (1992)
Stank et al. (1999)
Ellinger et al. (2000)
Mollenkopf et al. (2000)
Daugherty et al. (2009)
Marketing-Manufacturing Rho et al. (1994)
Malhotra and Sharma (2002)
Logistics-Manufacturing Vastag et al. (1994)
Manufacturing-Engineering Dekkers et al. (2013)
marketing-logistics integration research a close second, and then fol-
lowed by smaller clusters of various functional configurations (see
Table 1). As our focus is the interaction between purchasing and en-
gineering, we paid particular attention to the literature that involved
these two groups, namely the purchasing-engineering integration that
takes place during new product development. Mikkelsen and Johnsen
(2018) note that the literature studying interaction between procure-
ment and R&D engineers has focused primarily on how procurement
facilitates supplier involvement in NPD, with the goal of improved in-
novation (e.g. Luzzini et al., 2015; Song and Di Benedetto, 2008), faster
time to market (e.g., Gonzalez-Zapatero et al., 2017; McGinnis and
Vallopra, 1999), and lower costs (e.g., Dowlatshahi, 1992; Ellinger
et al., 2000; Ellinger et al., 2000; Van Poucke et al., 2009). However,
this research has not delved into what facilitates the interaction be-
tween procurement and engineering. And there is a notable lack of
research examining the integration between procurement and en-
gineering in any other context, including the on-going need for routine
interaction (Zimmermann and Foerstl, 2014).
2
Journal of Purchasing and Supply Management 26 (2020) 100595
Researchers who study internal integration generally report a po-
sitive relationship between internal integration and performance (e.g.,
Ashenbaum and Terpend, 2010; Ellegaard and Koch, 2012, 2014; Flynn
et al., 2010; Germain and Iyer, 2006; Kahn, 1996; Kahn and Mentzer,
1996; Schoenherr and Swink, 2012). Several of the function-specific
studies further distinguish that the improved performance is a result of
not just integration, but the collaboration/cooperation that took place
between the specific functional areas (Ellinger et al., 2000; Kahn, 1996;
Kahn and Mentzer, 1996, 1998; Murphy and Poist, 1992; Stank et al.,
1999). Another common theme was a positive relationship between
internal integration and external integration (Murphy and Poist, 1992;
Zhao et al., 2011; Ellegaard and Koch, 2012).
2.1.1. Mechanisms for functional integration
According to Kahn and Mentzer (1998), functional integration is
“formally defined as a process of interdepartmental interaction and
interdepartmental collaboration that brings departments together into a
cohesive organization” (p.56). While research in this field notes the
existence of practices that connect functional areas and facilitate co-
operation, such as the use of cross-functional teams or different forms of
information technology as a measure of integration, the focus to date
has primarily been on the relationship between integration and per-
formance (Droge et al., 2004; Ellinger et al., 2000; Ettlie, 1995; Ettlie
and Reza, 1992; Kahn, 1996; Kahn and Mentzer, 1996, 1998; Murphy
and Poist, 1992; Parente et al., 2002; Stank et al., 1999; Swink and Nair,
2007; Swink et al., 2007; Turkulainen and Ketokivi, 2012). A notable
exception is the work of Pagell (2004), who explored the mechanisms of
integration between manufacturing, procurement and logistics func-
tions. In his case-study research, Pagell (2004) found that face-to-face
interactions were more important than information systems in devel-
oping a collaborative relationship between functional areas. Given both
the sparsity of research regarding the mechanisms that facilitate in-
tegration between functional areas within a firm, and the potential for
performance benefits when integration is successful, we believe this is
an important aspect of integration that deserves further exploration.
2.2. Information Richness Theory
We employed Information Richness Theory (IRT) (also referred to as
Media Richness Theory (MRT) in some studies) to inform our interview
protocol. IRT is a theoretical lens that helps to explain how commu-
nication mechanisms can enhance collaboration. In their seminal work,
Daft and Lengel (1984) found that the major problem in working to-
gether and processing information was not the lack of data, but rather a
lack of data clarity. They coined the term “media richness,” defined as
the potential for a particular information transfer mechanism to
transfer knowledge between two parties in order to reduce uncertainty
and/or clarify ambiguity, and more specifically “the ability of in-
formation to change understanding within a time interval” (p. 560).
Live media, such as face-to-face meetings, are thus of greater richness
than a written report, e.g., since within the meeting the participants can
change their understandings due to communicating in real-time with
others. Rich communication media are expected to facilitate better
understanding and information sharing, and thus enhance organiza-
tional integration, relationships and performance (Cousins et al., 2006;
Cousins and Menguc, 2006; Daft and Lengel, 1984; Hult et al., 2004;
Vickery et al., 2004). Lean media, on the other hand, are appropriate
for communicating routine activities (Choe, 2008; Vickery et al., 2004).
It is not surprising then that aspects of IRT have been used in prior
research to study inter-functional (e.g., Ambrose et al., 2008; Keller,
1994; Men, 2014) and inter-firm communication mechanisms (Choe,
2008; Cousins et al., 2006; Cousins and Menguc, 2006; Dyer and Singh,
1998; Hult et al., 2004; Vickery et al., 2004; Paulraj et al., 2008; Van
Poucke et al., 2009).
According to Daft and Lengel (1984), effective managers must
match the communication mechanisms to the specific task in the given
B. Ashenbaum, et al.
Fig. 1. Synthesis of CT, IRT and Function Integration Literature.
Elements from Contingency Theory are surrounded by a solid line
Elements from Information Richness Theory are surrounded by a dashed line
Elements from the Integration Literature are surrounded by a dotted line.
context, which is determined by the degree of uncertainty and ambi-
guity (also known as equivocality) present in the environment. Within
the IRT framework, uncertainty is defined as a lack of adequate in-
formation and the level of uncertainty is reduced as more information is
provided (Daft and Lengel, 1986). Ambiguity, on the other hand, refers
to a situation where a given amount of data has multiple interpretations
(Daft and Lengel, 1986; Daft and MacIntosh, 1981; Weick, 1969). In
such ambiguous situations, the “right” decision is not clear and an in-
crease in available information may only serve to confuse things fur-
ther.
One would therefore expect that the levels of uncertainty and am-
biguity faced by a firm would influence how personnel in different
functions cooperate and share information. Per Daft and Lengel (1984)
communication media occur in the following order of decreasing rich-
ness: a) face-to-face, b) telephone, c) personal documents, d) im-
personal documents, and e) numeric documents. The ability to com-
municate richness is classified in terms of the capability to provide
immediate feedback, the number of cues and channels used, persona-
lization, and language variety (Daft and Wigginton, 1979). The ranking
of media types has since been extended to include electronic commu-
nication forms (Huber and Daft, 1987; Markus, 1994; Trevino et al.,
1987; Zmud et al., 1990).
In applying the mechanisms of richness and media to the levels of
uncertainty and ambiguity, Daft and Lengel (1984) posit that when the
level of ambiguity is high, the structure should facilitate rich, personal
media to allow managers to exchange opinions and to clarify ambi-
guities. Whereas, when the level of uncertainty is high, the organiza-
tional structure should facilitate less rich, impersonal media to enable
the exchange of data to answer objective questions.
It is important to note, however, that IRT has been criticized in the
Information Systems literature for the underlying assumption that
processing data into information is primarily the job of technology
(hardware and software) rather than people, ignoring the organiza-
tional contexts in which the communication takes place (Markus, 1994;
Ngwenyama and Lee, 1997). In addition to context, researchers have
also recommended considering the social aspects of the interaction
(Markus, 1994; Ngwenyama and Lee, 1997; Stolze et al., 2015). Given
this limitation in the IRT literature, we attempted to incorporate aspects
of the social context within the firm in our study, as well as clearly
3
Journal of Purchasing and Supply Management 26 (2020) 100595
articulating the external context in which the functions interact, by
employing Contingency Theory as an additional guiding lens.
2.3. Contingency Theory
Contingency Theory (CT) addresses how organizational strategies
are influenced by their external environment (Galbraith and
Nathanson, 1978; Lawrence and Lorsch, 1967). Prior to the 1990s, CT
was used to study the links between the external environment and firm-
level strategies but paid little attention to functional areas (González-
Benito et al., 2010; Ward et al., 1995, 1996; Ward and Duray, 2000).
Since that time, attention has been given to the link between the ex-
ternal environment and strategies within the production function,
finding that external environments (and particularly hostile environ-
ments) affect process competencies (Das and Joshi, 2012; Sabherwal
and King, 1992), innovation activities (Calantone et al., 1997;
Koufteros et al., 2005), and manufacturing capabilities (Amoako-
Gyampah and Boye, 2001; Ward et al., 1995). However, we still lack
research into the link between the external environment and strategies
within the procurement function, despite the potential profit impact of
a firm's procurement strategies (González-Benito et al., 2010; Ward
et al., 1995, 1996; Ward and Duray, 2000). And we are not aware of
any research that examines the influence of the external environment
on the interaction between two functions within the firm.
In the CT literature, external environments that are characterized by
shrinking markets, high levels of regulation, intense competition, lim-
ited resources (including labor and raw materials), upswings and
downswings in the firm's principle industry (i.e., high levels of ambi-
guity), and high levels of uncertainty are frequently portrayed as hostile
(Calantone et al., 1997; González-Benito et al., 2010; Kach et al., 2016;
Kim and Kim, 2016; Miller and Friesen, 1983). These hostile environ-
ments can be difficult to predict and prepare for, leading to difficult
decision-making processes (Bsteiler. 2005; Kach et al., 2016).
2.4. Research model
The model in Fig. 1 brings together the research elements of interest
discussed above from the CT, IRT and functional integration literature.
The basis of CT is that the external environment has a direct effect on
B. Ashenbaum, et al.
how organizations function (Lawrence and Lorsch, 1967). This re-
lationship between the “external environment” and “internal functional
integration” is represented in Fig. 1 by the large boxes with solid, bold
lines, a relationship that has not been studied to date for purchasing and
engineering interactions in daily routine activities. IRT focuses on how
organizations work together through communication mechanisms, and
from that theory we learn that the external environment in this context
consists of ambiguity and uncertainty, with the degree of communica-
tion richness and mutual understanding directly affecting how well
functions collaborate (Daft and Lengel, 1984). We have identified the
research elements coming from IRT with dashed lines around the boxes
in Fig. 1, focusing specifically on the mechanisms used by purchasing
and engineering to interact in the context of routine supplier selection
and management. Lastly, from the functional integration literature, we
included the propensity to collaborate and relationship equity as they
have been shown in prior research to impact on how well functions
collaborate within an organization (Ellinger et al., 2000; Kahn, 1996;
Kahn and Mentzer, 1996, 1998; Murphy and Poist, 1992; Stank et al.,
1999). These research elements are surrounded by a dotted line in
Fig. 1.
3. Methodology
The relative scarcity of research specific to this area, and the open-
ended nature of our research questions, suggest an embedded multiple-
case study methodology (Yin, 2014). Information richness Theory (IRT)
and Contingency Theory (CT) were used to frame our research question
and to focus our interview protocol, following a theory elaboration case
study approach (Ketokivi and Choi, 2014). We conducted our study in
the oil and gas (O&G) industry due to the fact that its extended supply
chain flows through a wide variety of competitive business environ-
ments.
3.1. Case study approach and selected industry (oil & gas companies)
Our data collection follows the protocols recommended by Yin
(2014). Although the study is cross-sectional, the length of job tenure
held by many respondents provides a longitudinal perspective on the
questions asked and the derived research propositions, as these per-
sonnel are often able to assess the timing of events, and (in their mind)
consider the causal elements in some contexts (Guide and Ketokivi,
2015). The study utilizes a theory elaboration (abductive) approach;
wherein general theories (IRT and CT) are examined within a pre-
viously explored context (the O&G industry) without a priori hy-
potheses or anticipating empirical findings (Ketokivi and Choi, 2014;
Dekkers, 2017). The results of such an approach is called “middle
range” theorizing (MRT), in that it generalizes within specific contexts
and beyond unique cases but fails to reach the level of general theories
(Merton, 1968; Stank et al., 2017). Specifically, we are following a top
down MRT approach where the theory provides the initial framing of
constructs (see Fig. 1) and the resulting propositions are developed
within the specific context of study (Craighead et al., 2016).
We examine procurement and engineering integration in the oil and
gas (O&G) industry, an industry where engineering plays a dominant
role in well (all activities including drilling, hydraulic fracturing, and
preparing wells to produce), gas plant (cleans contaminants from nat-
ural gas), consolidating (connects wells to pipelines; dependent opera-
tors are part of well drilling firms and independent operators are often
associated with pipeline firms with no exploration and production af-
filiation), pipeline (long distance field to market transportation), gas
utility (residential and industrial natural gas delivery systems) and re-
finery (conversion of crude to consumer products) design and opera-
tions (See Fig. 2). Although our research takes place in a single industry,
the generalizability of our results extends beyond oil and gas to other
industries where engineers or technical experts enjoy similar dominant
positions. Examples include new product development (Dekkers et al.,
4
Journal of Purchasing and Supply Management 26 (2020) 100595
2013), manufacturing facility construction, ship building (Eriksson,
2015), and international construction projects (Pal et al., 2017). These
industries or engineering activities place engineering in a dominant role
where they play a strong procurement role.
The procurement-engineering relationship in the oil and gas (O&G)
industry is a particularly interesting context for the following reasons:
1. The procurement and engineering relationship remains substantial
in all phases of the supply chain. The industry faces regulation,
political pressure, changing technology, and frequent economic cy-
cles that create a high-end ambiguity environment in portions of the
supply chain. Engineers have critical roles in all parts of the supply
chain (i.e., upstream: drilling engineer, completions engineer; mid-
stream: integrity engineer, project engineer; downstream: process
engineer, design engineer). Whereas many industries may experi-
ence a diminished procurement-engineering relationship as one
moves down the supply chain from design to distribution, in the O&
G industry these roles require maintenance of an inter-functional
relationship throughout the supply chain.
2. The O&G supply chain covers a diverse range of competitive busi-
ness environments, from “upstream” exploration, drilling and op-
eration of wells, to “mid-stream” consolidating operations and pi-
peline transmission, to “downstream” refining, gas stations, and gas
utilities (see Fig. 2). This diversity of environments provides vari-
able contexts ripe for theory elaboration.
3. Highly technical products and services dominate the O&G compa-
ny's spend, driving the necessary on-going interaction of engineering
and procurement personnel. Additionally, O&G supply chains are
heavily dependent on suppliers to provide almost all products and
services. These products and services are often designed and closely
monitored by engineering, driving a critical, frequent interaction
requirement with suppliers and procurement (see Fig. 3 for func-
tional procurement roles in oil and gas).
3.2. Case sampling
A theoretical sampling method (Eisenhardt, 1989; Miles and
Huberman, 1994) was used to include cases that could provide varying
context for theory elaboration. As such, we selected firms from up-,
mid-, and downstream portions of the supply chain, as well as units of
varying size, specialization, and interconnectedness. See Table 2A, B, C,
and Fig. 2 for a description of the types of firms selected.
3.3. Data collection
A semi-structured interview protocol was developed and used for
data collection. Interviews were conducted in-person or by phone,
lasting 60–90 min. Engineers were interviewed separately from pro-
curement personnel to ensure independence of answers. Follow-up
questions were asked over email or telephone as needed. Secondary
data, in the form of organizational charts, were collected to further
understand relationships. All interviews were recorded and transcribed.
Informants were provided the transcript and asked to validate that it
correctly represented what they intended to communicate (Ellram,
1996).
Data were collected from 26 firms. Informants were chosen with job
titles appropriate to our research effort (VP/CPO, director, manager,
supervisor, to individual contributors), and with specific knowledge of
the constructs of interest (Kumar et al., 1993; Phillips, 1981). A total of
113 respondents represented the unique business environments, sec-
tors, sizes, and activities of interest (see Table 2A, 2B, 2C, and Fig. 2).
Each firm in a sector was treated as an individual case or experiment
(Yin, 2014) and all informants for a particular functional area were
combined to form a single perspective. Yin (2014) three principles of
data collection were employed: (1) develop a case study database (in-
terview transcripts), (2) use multiple evidentiary sources (separate
B. Ashenbaum, et al.
Fig. 2. Oil & gas supply chain and sample companies.
engineer and procurement interviews; secondary data), and (3) pre-
serve a chain of evidence by clearly indicating data collection proce-
dures.
3.4. Data analysis
Data analysis took an abductive approach (Ketokivi and Choi,
2014), which involved examining IRT and CT drivers in the context of
procurement-engineering interactions. We concurrently examined IRT
and CT variables within each case, while classifying the context of each
case to enable pattern matching during cross-case analysis. Assessments
for validity and reliability (Gibbert et al., 2008; Yin, 2014) can be found
in Table 3.
Fig. 3. Generic reference model for procurement-engineering procurement Process.
Adapted from Brewer et al., 2013.
5
Journal of Purchasing and Supply Management 26 (2020) 100595
Interview transcriptions formed the raw data for an Excel case study
database. The resulting product was separate worksheets containing
data on (1) company and respondent demographics, (2) the competitive
environment, and (3) inter-functional relationship constructs. This da-
tabase became the primary source of data and the focus of coding ac-
tivity.
The first step in coding was to create a coding scheme. Codes were
created for communication richness, mutual understanding, propensity
to collaborate, performance, competitive risk, technological change,
and supply base change. All questions in the research protocol were
open ended, eliciting responses that were qualitative in nature and
requiring that researchers make a judgement that reflected the coding
scheme (Campbell et al., 2013). As an example of the coding scheme,
B. Ashenbaum, et al. Journal of Purchasing and Supply Management 26 (2020) 100595

Table 2A 4. Within-case analysis

Upstream firm demographics.
Firm 2013 Years in Number of Market Number Once the coding was complete, within-case analysis was conducted
Annual Business Employees Capitalization Interviewed to identify how each firm responded to its particular context in terms of
Revenue (Billions) Engineering/ IRT and CT constructs. The levels of competitive risk and the speed of
(Billions) Procurement technological change were used to estimate levels of environmental
1 $1-5 76–100 501-5000 $20.1–100 1/2
ambiguity and uncertainty, respectively (see Fig. 4). Table 4A (up-
2 $10.1–20 51–75 5001–10,000 $20.1–100 4/8 stream), 4B (mid-stream), and 4C (downstream) present the within-case
3 $10.1–20 > 100 501-5000 $20.1–100 2/1 results for each company. Typical case study research provides sum-
4 $20.1–100 76–100 10,001–20,000 $20.1–100 1/3 maries of individual cases, but the inclusion of 26 companies/SBUs
5 $1-5 26–50 501-5000 $5.1–10 1/2
makes this infeasible here. Instead, combined case summaries of similar
6 < $1 a 51–75 1–500 Private 1/1
7 < $1 1–25 1–500 < $1 10/2 firms (see Fig. 2 for commonly-established “sectors” denoted by their
8 > $100 > 100 > 20,000 > $100 1/2 place in the value stream) are presented in the paragraphs below.
9 > $100 > 100 > 20,000 > $100 5/6

a
4.1. Upstream well drilling and operations – high intensity environments
Estimated.

The upstream competitive landscape is marked by high levels of

Table 2B
both ambiguity and uncertainty (Firms 1–9 in Tables 2A and 4A). The
Midstream firm demographics.
geological and resource unknowns are considerable, from the ideal
Firm 2013 Years in Number of Market Number place to sink a well to the availability of skilled labor. In addition, crude
Annual Business Employees Capitalization Interviewed
oil and natural gas prices frequently fluctuate in a global market. These
Revenue (Billions) Engineering/
(Billions) Procurement
firms also face on-going political and regulatory challenges as well as
rapid technological changes in hydraulic fracturing, automation, and
10 $1-5 76–100 501-5000 $20.1–100 1/2 tooling. Regarding the IPT and CT constructs, the majority of re-
11 $10.1–20 51–75 5001–10,000 $20.1–100 1/1 spondents in the upstream segment (5 firms) reported regularly using
12 $10.1–20 > 100 501-5001 $20.1–100 3/1
13 $1-5 1–25 501-5001 $1-5 1/1
both rich (live) and less rich (written) communication media. Two firms
14 $1-5 26–50 501-5000 $5.1–10 3/1 reported using primarily rich communication and one firm reported
15 $5.1–10 > 100 501-5000 $20.1–100 1/1 primarily using less rich communication. Interestingly, for one firm, the
16 $1-5 1–25 501-5000 $5.1–10 1/1 engineering respondents and procurement respondents disagreed on
17 $1-5 76–100 501-5000 $1-5 6/2
which type of communication media were most used, with procurement
18 $1-5 26–50 501-5000 $10.1–20 2/1
reporting rich communication while engineering reported the opposite.
a
Estimated. In response to how much mutual understanding existed between
functions in the upstream segment, only two firms indicated that they
Table 2C understood each other's jargon. Respondents from both procurement
Downstream firm demographics. and engineering in the other seven firms agreed that they did not un-
derstand each other well. Regarding the propensity to collaborate, all
Firm 2013 Years in Number of Market Number
Annual Business Employees Capitalization Interviewed but one firm indicated that procurement and engineering worked well
Revenue (Billions) Engineering/ together. Interestingly, related to decision making equity when they
(Billions) Procurement were working together, in eight of the nine firms engineering reported
that they had the final word in decisions. The procurement perspective
19 $5.1–10 a 76–100 5001–10,000 Private 1/1
20 $20.1–100 51–75 501-5001 $5.1–10 1/3 on decision-making equity was split, with four firms indicating that
21 $5.1–10 a 76–100 5001–10,000 Private 2/2 engineers had the final say in decisions, four reporting that decisions
22 > $100 76–100 > 20,000 > $100 3/3 were shared, and one that procurement made the decision.
23 > $100 > 100 > 20,000 > $100 1/2
24 > $100 > 100 > 20,000 > $100 1/2
25 $1-5 76–100 501-5001 $1-5 3/2
4.2. Midstream players – operators in “mixed” environments
26 $1-5 51–75 501-5001 $1-5 2/1
Midstream players come in greater variety, and perhaps unsurpris-
a
Estimated. ingly, their competitive landscapes are of mixed intensity. The mid-
stream oil consolidators (Firms 10–14 in Tables 2B and 4B) exhibited
the technological change scheme included three codes: high, medium, moderate levels of uncertainty alongside relatively high levels of am-
and low. One refinery responded, “Our technology is mature. Our biguity. These firms are subsidiaries of larger firms with upstream op-
processes produce cash cows. We constantly try to maximize our pro- erations, and as such are designated as midstream dependent operators
cesses.” The resulting code for that response was low for technological in this study. These dependent operators are directly tied to those up-
change. stream operations, and so they face some of the same risks and ambi-
Three researchers coded the data independently and discussed any guities. If wells dry up rapidly, the dependent midstream firm cannot
coding discrepancies until consensus was reached on the final code. The gather oil. On the other hand, technological change in oil consolidating
researchers’ initial inter-coder reliability was 96.1 percent. After dis- appears to be decidedly slower than in the upstream portion of their
cussion of coding disagreements, an inter-coder agreement of 100 firms, explaining medium levels of uncertainty.
percent was attained. Some of the success for inter-coder reliability and In contrast, pipeline and gas plant operators (Firms 15–18 in Tables
inter-coder agreement was achieved by unitizing the text and identi- 2B and 4B) faced competitive landscapes marked by high levels of
fying specific passages of the interviews to code each desired variable uncertainty and medium levels of ambiguity – in essence mirror images
(Campbell et al., 2013). Coded variables formed the basis for research of those faced by the oil consolidators. These pipeline and gas plant
findings, tables, and figures. operators are not tied to specific upstream partners, making them re-
latively independent of upstream ambiguity, and earning their desig-
nation as midstream independent operators. Their stated sources of
ambiguity lean more towards capital costs and the general competitive

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B. Ashenbaum, et al. Journal of Purchasing and Supply Management 26 (2020) 100595

Table 3
Validity and reliability.
Tests Case Study Tactic (from Yin, 2014) How Accomplished in this Study

Construct Validity Use multiple sources of evidence (1) Multiple, semi-structured interviews with personnel from both functions, (2) org charts and other archival data
Establish chain of evidence (CoE) used to support interview data
Have key informants review report CoE maintained from initial questions and the case study protocol, through the database, and into the individual case
draft study reports (see data collection section).
Individual case study reports sent to the respondents for review and comment, and were verified and corrected (if
necessary) prior to writing up the cross-case analysis.
Internal Validity Pattern matching Coded variables were examined by similar context and across contexts to identify patterns, to build explanations and
Explanation building logic models that present propositions that extend IRT and beyond our rival explanation that IRT holds in all of our
Address rival explanations research contexts.
Use logic models
External Validity Use replication logic in multiple case All cases conducted identically, as in multiple experiments. (interviews, then follow-up/respondent review)
studies
Reliability Use case study protocol Study protocol and chronology standardized for all respondents, see data collection section for chronological order of
Develop case study database steps.
Case study database developed and maintained throughout study; see data collection section for details.

Fig. 4. Ambiguity and uncertainty spectrum of oil and gas firms.

Table 4A
Upstream assessment of external environment for well drillers/operators.
Firm Competitive Environment Risk/Ambiguity Rate of Technological Change

1 High due to price variance and geology High overall

2 High due to price variance and resource scarcity High in automation and controls, and integration applications
3 High due to geology and political and regulatory issues High in automation and controls
4 High due to geology, political and regulatory issues, and capital cost High core technology change rate
5 High due to resource scarcity High in integration applications
6 High due to price variance, geology, and political and regulatory issues High in integration applications
7 High due to price variance and resource scarcity High in integration applications
8 High due to price variance, geology, and political and regulatory issues High overall
9 High due to price variance, political and regulatory issues, and capital cost High in automation and controls, and integration applications

Table 4B
Midstream assessment of external environment.
Firm Description Competitive Environment Risk/Ambiguity Rate of Technological Change

10 Oil Consolidator High due to price variance and geology High in automation and controls, integration
applications
11 Oil Consolidator High due to price variance and resource scarcity Medium overall
12 Oil Consolidator High due to price variance, geology, and resource scarcity Medium-Low overall.
13 Oil Consolidator Medium due to resource scarcity Medium-Low overall
14 Oil Consolidator High due to resource scarcity Medium overall
15 Gas Plant Operator Medium due to price variance, high capital cost, and competitive attractiveness High in automation and controls
16 Gas Pipeline Operator Medium due to high capital cost and competitive attractiveness High overall
17 Gas Pipeline Operator Medium-High due to price variance, political and regulatory issues, and competitive High in automation and controls
attractiveness
18 Gas Pipeline Operator Medium-High due to competitive attractiveness Medium overall

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B. Ashenbaum, et al. Journal of Purchasing and Supply Management 26 (2020) 100595

Table 4C
Downstream assessment of external environment.
Firm Description Competitive Environment Risk/Ambiguity Rate of Technological Change

19 Oil Refinery Low overall Medium-Low overall

20 Oil Refinery Low overall (some capital cost issues) Medium-Low overall (some dictated by regulatory changes)
21 Oil Refinery Low overall Medium-Low overall
22 Oil Refinery High due to price variation Low overall (some dictated by regulatory changes)
23 Oil Refinery Low overall Low overall (some dictated by regulatory changes)
24 Oil Refinery Low overall Medium overall
25 Gas Utility Low overall Medium overall (some dictated by regulatory changes)
26 Gas Utility Low overall; some capital cost issues Medium-Low overall

Table 5
Communication richness – representative quotes.
Upstream Midstream Downstream

ENGINEERING “They (procurement personnel) sit in our business
team business meetings each day and each week.”
“… there's a person in material sourcing group that
has a constant feed on what the drilling rigs are doing.
She's on the call every morning.”
PROCUREMENT “… they (procurement personnel) become one of
them (engineering team) and they participate in all
the meetings and see the guys face to face every day.”
“[Procurement colleague] is in our production team
of engineers every Monday. Monday through Friday
he's there, and throughout the day, there's multiple
touches.”
“It's daily and it's casual, so we're not having formal
procurement meetings, we're sending [Colleague] an
e-mail. But we also have a weekly project
teleconference.”
“I just contact them when I need something and then I
figure out what I need to give them, so almost an over
the wall method”
“It's a mix of both at this point.”
“It's just as needed informal.”
“Our interaction is probably, could be characterized
as fairly infrequent, on an ‘as needed’ basis.”
“I'll talk to my purchasers and buyers only when I'm
purchasing. It may be two weeks or a month in between
times when I will speak with them.”
“It's more arms' length now.”
“There could be months where if I don't have a need I
won't talk to them (procurement personnel).”
“Here in [Location] it's all email and some phone calls.”
“I'd say it's more arm's length.”
“You go there and mention a name and they look at you
like they've never heard of them before then they are
probably sending them emails and have really no idea
how they fit in.”

Fig. 5. Communication Richness.

Engineering's response Procurement's response (Circle size represents the number of respondents).

attractiveness of piping out of a specific area. Midstream independent
operators experience high technology change (and thus uncertainty),
mainly in controls and automation. This rapid change is driven by pi-
peline and gas plant technology, as companies attempt to undertake
more operations and maintenance remotely rather than having people
present at all locations.
In the midstream dependent segment, engineers and their procure-
ment counterparts did not agree on how they communicated, with two
engineers stating they used the entire richness spectrum and written
communication only, and two procurement groups saying they used the
spectrum and two written. In terms of mutual understanding, one
midstream dependent firm indicated they understood each other's
jargon, while three firms did not. Four of the five dependent midstream
firms indicated that they worked together well (i.e., propensity to col-
laborate). When it came to who made decisions all three engineering
respondents indicated engineers made the call, while two procurement
groups said engineering made the call and one said it was a shared
decision.
Procurement and engineering groups in midstream independent
firms seemed to work better together in some aspects. In response to
communication richness, three of four firms used the entire richness
spectrum and the other written communication. Two of four firms re-
ported understanding each other's jargon. And all four indicated that
they worked well together. Regarding decision-making, three en-
gineering groups said engineering makes the decision and one said it
was shared, while all for procurement groups said it was a shared de-
cision.
4.3. Downstream oil refineries and gas utilities – low intensity environments
At the other end of the supply chain, refineries (Firms 19–24) and
gas utilities (Firms 25–26) navigate business landscapes with relatively
low levels of ambiguity and uncertainty. This makes sense given their
supply chain position close to customers who regularly need power for
their cars and homes. In that sense, the ambiguities and uncertainties
have been largely absorbed by players further up the supply chain. For

8
B. Ashenbaum, et al. Journal of Purchasing and Supply Management 26 (2020) 100595

example, a well might be dry, but three others are not, and so one way

“I'm more than willing to back off in a meeting and say,

“When it comes to the large engineered projects that
“I would say it's weaker on our side to understand that

understand their language and they kind of understand

ones are quite 100%, but I think we at least the core

we're purchasing, a lot of times I just say, ‘I don't
quite a bit of experience, years of experience. So we

commercials terms in procurement and the technical

or another, product reaches the refinery or gas utility, dampening the

“Well, we are usually dealing with people who have

know what you're saying. I don't know what you're

“It's a pretty common conversation where we don't

things we are making decisions on, and those are

asking for. Let me get you over to the engineer.‘"
ambiguity around whether inputs will arrive. Likewise, the technology
understand that term or why is that important.”

kind of stuff. They understand me better than I

“I don't think the level of jargon between the

of oil refining or natural gas utilities is relatively stable, with changes

‘I'm not an engineer. I don't understand the

occurring more at the fringes.
For downstream firms, rich communication is less common, with
only one firm dyad indicating the entire richness spectrum was used.
When asked about mutual understanding, only two firms reported un-
derstanding each other's jargon. Half of the firms reported a propensity
to collaborate. Regarding relationship equity in decision-making, four
understand them.”

engineering groups said engineers had the final say, three engineering
our language.”

terminology’”
Downstream

groups said they shared decision-making power. In response to the

understood.”
same question, two procurement groups said that engineering had the
final say, five said decision-making was shared, and one said procure-
ment had the final say.
Tables 4A, 4B, and 4C show the indicated levels of competitive risk
“Probably somewhere between 60-80% both directions.”

“It works out pretty well. But there are times where we've
got to go through and kind of explain things. We tend to

“It's gotten better because we've managed to separate the

“They learn very quickly our jargon. Within the space of

technical from the process and the procurement stuff.”

me.” And it's fun. They're very open as far as sharing
we're not afraid to say, “Hey. What is that? Educate
“For the most part yes, but there's sometimes no just
because they're in their own little separate world but

(ambiguity) and technological change (uncertainty) for the respondent

something, they know what we're talking about.”
a year of supporting us they get it. When we say

sample. While the alignment is not perfect, the broad patterns distilled
from these responses allow us to map these dimensions onto the O&G
firm clusters. What we find is a reduction in ambiguity and uncertainty
talk really fast and use acronyms a lot.”

as one moves down the O&G supply chain from wells towards refineries
(see Fig. 2). While this progression is not perfectly smooth in the
midstream segment, the differences between midstream dependent and
independent firms enrich our findings.
their knowledge with us.”
Midstream Independent

5. Cross case analysis – research proposition development

This section utilizes cross-case analysis to search for patterns that

enable theory elaboration. IRT and CT are the “baseline” theories used
to guide initial inquiries and provide alternate explanations for our
findings. We develop working propositions detailing the way procure-
sometimes there is ignorance on the details of the work, or
“I think this can be a problem, particularly on a first of a

what are you talking about?’ ‘Well it's off on this on that

separate world but we're not afraid to say, ‘Hey. What is

“I wasn't quite following our lead engineer and I'm like, ‘So
kind order, or with less-experienced personnel who have

“You know sometimes, for the most part yes, but there's
“He's better than a lot of other procurement people I've
dealt with in the past. He might not understand what's

ment and engineering interact in this context.

understanding of responsibilities between the two, but

… ’ and I'm like, ‘Okay … you're way over my head

equipment for many projects. I think there is a basic
not been involved in specifying or procuring a lot of

sometimes no just because they're in their own little

5.1. Communication richness

Respondents were queried regarding the type and extent of com-

munications between engineering and procurement personnel. The in-
terviews attempted to assess whether communications were primarily
due to a difference in focus.”

written (meaning fixed-data media such as reports, written memos,

Midstream Dependent

emails), live (calls, 1:1 meetings, group meetings), or a mixture of both.

completely going on.”

that? Educate me.‘"

While assuming that all of these would be present, our intent was to
determine if communication media of greater “richness” (essentially
live interactions that can change in real time) predominated written
communication, given external circumstances that would warrant such.
there.‘"

Within the high intensity upstream environment, procurement and

engineering personnel largely indicated that communications between
I've been in at thirty-five years and, even the last time I

know what percentage you'd put that to in my mind, but

sat in there, they're using all kind of lingo that I've still

they are learning by being in touch with these engineers,

“As far as us knowing their language, I think it's spotty.

“I think it's a huge barrier. We have our own language,

never heard. And don't understand, so, I mean, I don't

them tended towards meetings and calls. This is in line with IRT tenets,
that, right? And these folks focus on supply chain, so
“I would say that there is a big disconnect right now,
“You sit it on one of those Tuesday drilling meetings,
that's just the way it is. We're so acronym heavy, it's

because, I mean an engineer went to school to learn

difficult to understand what in the world people are

as it indicates that high-ambiguity environments foster the use of “rich

media” communications. Likewise, the amount of information being
presented/processed at these meetings/calls was quite large, often re-
“I think it's weak in [company name].”

ferred as “overwhelming”. The meetings were typically weekly or daily

but there's still a there's a gap there.”

planning meetings with multiple engineers and covering the status of

Mutual understanding - representative quotes.

multiple projects.
Some people do, some don't.”

Midstream respondents tended to give more nuanced answers, in-

There's a lot I don't get.”

dicating a more even mix of live and static communication, whereas

downstream respondents indicated even more “separation” in inter-
talking about.”

functional communications, with fewer live interactions and only

needed information exchanged. Representative quotes from these
Upstream

functions in different environments are presented in Table 5, and a

visual representation of the responses is shown in Fig. 5. The overall
pattern supports the IRT framework in that as one moves from high
PROCUREMENT
ENGINEERING

ambiguity and uncertainty environments to those with lower levels of

both, communication media usage between procurement and en-
gineering becomes increasingly less rich, and frequency of commu-
Table 6

nication diminishes. Though we note that less rich media were also
present in high ambiguity contexts, consistent with findings by Markus

9
B. Ashenbaum, et al.
Fig. 6. Mutual understanding.
Numbers in parentheses indicate number of cases per category.
(1994) and others. As these findings are in line with IRT expectations,
there is little upon which to elaborate, and so no research propositions
are proposed. These findings perhaps serve as a “baseline” validation of
IRT as we turn our attention to other aspects of the theory and CT.
5.2. Mutual understanding
While the “mechanics” of inter-functional communication (fre-
quency, richness of format) are important, a related question of interest
is how well do personnel in different functions speak one another's
“language” or jargon? Jargon is a subset of natural language developed
to convey a limited range of concepts with high accuracy in groups with
common interest and experience (Daft and Wigginton, 1979). Engineers
tend to use highly technical jargon, especially in technology-intensive
industries such as O&G. Procurement, by contrast, uses commercial
language unique to business transactions within the supply chain. Be-
cause both commercial and technical concepts must be communicated
across functional boundaries, jargon can be an enabler of efficient
communication if understood, or a stumbling block if not. IRT proposes
that in high equivocal environments managers develop common defi-
nitions and grammar to reduce ambiguity, while low ambiguity en-
vironments even with high levels of uncertainty environments do not
require the same level of understanding, reducing the need to under-
stand jargon (Daft and Lengel, 1986).
Respondents were queried as to how well they understood the other
function's jargon, and vice versa. Higher environmental ambiguity
seemed to diminish this mutual understanding, with upstream and
midstream dependent firms indicating the lowest levels (see Table 6 for
sample quotes, and Fig. 6 for a breakdown of the various responses). It
may be that higher environmental ambiguity drives more frequent
change in engineering practices, driving an ever changing (and thus
more incomprehensible to outsiders) jargon. By contrast, lower ambi-
guity environments may foster more stability, and so procurement
personnel have more time to understand existing technical processes.
By contrast, the highest levels of mutual understanding appear in
high uncertainty (but moderate ambiguity) environments – namely the
mid-stream independent respondents. Uncertainty can (in theory) be
overcome with increased scanning and data collection. As such, it may
be that this increased uncertainty (framed here as the rate of techno-
logical change) forces both engineering and procurement to interact
more and make more effort to understand one another in order to keep
pace with the increase in data collection and analysis. The engineer
10
Journal of Purchasing and Supply Management 26 (2020) 100595
needs to understand the implications of a new piece of technology and
the commercial (cost, speed, quality) tradeoffs; her procurement
counterpart likewise needs to be up to speed on the specs in order to
successfully bid and select suppliers for it. Finally, the moderate level of
ambiguity may drive the need for a higher-level coordination and with
this higher level, higher understanding.
For downstream respondents, mutual understanding may not be as
necessary, with each function being able to attend to its tasks with less
need for cross-functional understanding. It is possible that downstream
procurement personnel become more conversant with engineering
jargon over time, while specialized engineers that are not challenged by
uncertainty do not need to probe the commercial aspects of their re-
spective procurement activity. Engineering provides the technical as-
pects of the procurement and relies on procurement personnel to
translate technical jargon into specifications, terms, and conditions
necessary to complete each contract.
In summary, it appears that the highest level of ambiguity does not
drive the level of understanding IRT would predict from enhanced co-
ordination. However, the combination of moderate ambiguity and high
uncertainty drives the highest level of understanding. Finally, low le-
vels of ambiguity and uncertainty produce relatively low levels of un-
derstanding.
Taken together, these findings imply:
Proposition 1. The highest levels of environmental ambiguity will tend to
prevent mutual understanding between procurement and engineering
personnel.
Proposition 2. Higher levels of environmental uncertainty with moderate
ambiguity tend to foster mutual understanding between procurement and
engineering personnel.
5.3. Propensity to collaborate
While firms would likely support the buildup of cross-functional
understanding, true collaboration across functions can often be elusive,
as we see in the integration literature (Ellinger et al., 2000; Kahn, 1996;
Kahn and Mentzer, 1996, 1998; Murphy and Poist, 1992; Stank et al.,
1999). Collaboration has been studied in the broader context of in-
tegration (Kahn, 1996), and has largely been defined in terms of actions
rather than mental states – e.g., serving on cross-functional teams or
working together towards common goals. IRT suggests that collabora-
tion is highest at higher levels of environmental ambiguity to enable
B. Ashenbaum, et al. Journal of Purchasing and Supply Management 26 (2020) 100595

cross functional teams to reduce ambiguity (Daft and Lengel, 1984). In

“We've got procurement people and let them do their job.”

important. I don't care what the rate is. Don't even talk to
lots of different presentations, bottom line I haven't seen
that space. So I've seen lots of people come through and

me about supplier relationship management. I need this.

strategy, don't talk to me about why a good contract is
options and then procurement is left to optimize within

“It felt like procurement was being viewed as strictly a

the context of this study, increased collaborative efforts between en-

“We will specify what we need and that dictates the

transactional function – ‘hey don't talk to me about

gineering and procurement personnel would be expected when the
urgency of successful integration (e.g., during supplier selection) in-

the underlying workings change too much”

tersects with the need for both commercial and technical know-how.
Respondents were queried about whether procurement and en-
gineering relationships had changed over time, specifically whether
they had become more or less collaborative. Table 7 shows sample
collaboration quotes. Fig. 7 shows the proportion of responses. The
highest proportion of collaborative relationships was reported in high
uncertainty sectors with high to moderate ambiguity (upstream and

Get a PO out.’”
midstream independent), with the lowest proportion in low ambiguity
Downstream

and uncertainty environments (downstream).1 The driver here appears

to be uncertainty combined with at least a moderate level of ambiguity.
Contrary to IRT it appears that high uncertainty combined with mod-
erate to high levels of ambiguity force greater levels of collaboration:
performance initiative … most people fully embraced the

manager. A plant maintenance manager. Pretty much all

“Back in the mid 90's (company] embarked on a supply

effort and we came together. We hammered out strategic

engineers and operations folks. Pipeline maintenance

Proposition 3. Higher levels of environmental uncertainty with moderate to

“And so we got seven people including a couple of

the people that were going to be impacted by the

management initiative which then evolved into a

high levels of ambiguity tend to foster greater procurement-engineering

collaboration efforts over time.
“Now, we have a truly teamed approach.”

5.4. Relationship equity

According to IRT, organizations are more likely to come together in

Midstream Independent

sourcing agreements.”

high ambiguity environments to overcome this ambiguity (Daft and

Lengel, 1984). However, IRT does not address how the power structure
that exists in the given context affects these interactions. The answer
may lie with how purchasing and engineering personnel perceive the
decision.”

importance, or at least relative autonomy, of their own function.

Table 8 contains typical statements offered by procurement and en-
gineering respondents in all supply chain sectors regarding who holds
priority. This trend has generally been viewed as positive

flexibility, because I've got the supplier base that follows

complex and bureaucratic - legal, indemnity, financing,

and generally been viewed as negative by engineers, who

by commercial types as it has increased their influence
“Right now we're still kind of building a procurement

the decision-making power in this relationship. We see from the quotes

In recent times Procurement has become a lot more

that engineering dominates decision making that touches both func-

engineering. Then I am the one that develops the
etc. Volume-leveraged buying has taken a higher

“The technical piece is pretty much set by the

tions. However, at the highest levels of ambiguity (upstream and mid-

stream dependent), both functions see almost complete engineering
dominance, and when ambiguity is reduced, shared decision making
becomes more frequent, although the functional dominance still tips
toward engineers.
may feel more constrained”

Rich communication and cross-functional collaboration interaction

program to some extent.”
Midstream Dependent

are generally assumed to be positive, and we do not suggest otherwise.

However, such harmony may arise from efforts between relative equals,
or it may arise from one group wielding most of the decision-making
power when duties overlap. Such a situation would explain the patterns
me …”

we observed in high-ambiguity firms. Procurement does not need to

develop an understanding of engineering's technical terms and mode of
thinking, if engineering by default sets the tone to which both functions
“There needs to be contract control, and procurement is

they're looking for, but we also do collaborative decision

“I can go to procurement and say ‘Hey, this is what I'm

engineers and with the field operations people, they can

making. We don't make the decision. They make a lot of

think it's getting much better. I think continuity helps.”

those decisions. But we give them the support to make

there are still times when there's a priority issue, but I

“Over the course of time as we've added more people,

put in place for a reason. I fully understand why, but

must ascribe. Likewise, this might account for a slightly lower sense of
more experience and gained confidence level with the
about to get. Do you have approved vendors, do you

“We're very responsive to them. We give them what

collaboration in high ambiguity environments. Perhaps collaboration is

perceived as something that relative equals do? We thus propose:
Proposition 4. Higher levels of environmental ambiguity tend to foster a
have any go buys that I could utilize?‘"

more asymmetrical relationship between procurement and engineering, with

see the added value that we bring.

procurement being the subordinate function.

Proposition 5. The asymmetrical relationship with more powerful
data driven decisions.”

engineers continues in lower ambiguity environments, but to a lesser degree.

Collaboration - representative quotes.

5.5. Collaboration performance

Upstream

IRT discusses how integration activities are implemented to reduce

ambiguity and uncertainty. However, it does not address performance
related to firm adoption. In an effort to extend IRT and to capture the
PROCUREMENT
ENGINEERING

1
Table 7

Fig. 7 shows that a high proportion across all respondents indicated a pro-
pensity to collaborate. We acknowledge that it is possible that this question in
particular had some social desirability bias.

11
B. Ashenbaum, et al.
Fig. 7. Propensity to Collaborate.
Numbers in parentheses indicate number of cases per category.
impact of collaboration we collected data from respondents on their
performance resulting from enhanced collaboration.
Key to every firm's success is the achievement of performance me-
trics. Metrics should drive activity that results in successful im-
plementation of strategy, supporting activity, and achievement of value
propositions. Supply chain organizations traditionally measure cost,
quality, on-time-delivery, flexibility, and innovation (Chen and Pulraj,
2004; González-Benito, 2006). Their contribution to these operational
performance measures provide evidence of supply chain activities
supporting firm strategies and their potential to impact firm perfor-
mance.
In our interviews, we asked respondents how they perceived per-
formance had been impacted by closer procurement-engineering col-
laboration. Questions were open-ended, and respondents were not
asked to address specific metrics. Table 9 shows representative quotes
from respondents on this question, while Fig. 8 captures responses re-
presenting the percentage of respondents indicating various perfor-
mance improvements. Ketokivi and Schroeder (2004) indicate that
perceptual measures of performance satisfy reliability and validity re-
quirements, but recommend against single informant studies that could
lead to bias. Our performance data were collected from both procure-
ment and engineering (in many cases we had multiple informants for
both functions). It is possible that both functions responded in a biased
manner, but their responses frame the collaboration related perfor-
mance on a high and low end as demonstrated below.
Interestingly, procurement personnel tend to view the performance
improvements resulting from cross-functional interactions as more po-
sitive than engineering personnel do. Procurement personnel felt
strongly they had contributed to reducing procurement costs. Only
midstream independent engineers perceived a corresponding level of
cost reductions. The engineers in other supply chain sectors reported
perceived cost savings that were 25–50% lower than their procurement
counterparts. For OTD (on-time-delivery) of goods and services, all
engineer perceptions were 20–100% lower than their procurement
counterparts. There was more parity in the perception of quality.
Downstream and midstream independent engineers, rated quality im-
provement equal to procurement, while upstream engineers reported
results that were 50% lower than procurement. Only upstream pro-
curement saw improvements in flexibility, while engineers saw none.
Second, the only exception to procurement performance perceptions
exceeding engineers is WLR (workload reduction), where engineers
identified a better ability to focus on their engineering job because of
collaboration. Only downstream and midstream dependent procure-
ment saw the performance improvement, while engineers observed
12
Journal of Purchasing and Supply Management 26 (2020) 100595
more time to focus on their job at all supply chain levels. Third, pro-
curement and engineering did not establish metrics that were mutually
accepted and captured on a recurring basis. The performance disparity
perception between the two functions clearly indicates a need for mu-
tually agreed upon metrics.
Proposition 6. Procurement personnel tend to see greater performance
improvements over time attributable to cross-functional collaboration than
do engineering personnel.
5.6. Impact of job tenure
As part of the semi-structured interview process, we gathered basic
demographic data for each respondent, including the extent of their
experience within their job function, the company and industry in
general. As we analyzed the coded data against job tenure, we found a
correlation between the respondents’ experience in their job function
and their perception of the cross-function interaction. Perhaps this
should be expected, as past research suggests that increasing job te-
nure/experience is correlated with an increased resistance to organi-
zational change (Iverson, 1996; Niessen et al., 2010; Ellinger et al.,
2000; Van Dam et al., 2008). And the oil and gas industry is currently
experiencing considerable change internally in terms of moving
(slowly) towards supply management best practices. However, the
impact of job tenure predicted by prior studies held only for engineers in
this research. For procurement personnel, the effect was in the opposite
direction; with longer-tenured individuals tending to have more opti-
mistic assessments of their interactions with engineering colleagues.
There may be a number of explanations for this. Procurement personnel
may feel overwhelmed until they ramp up on technical jargon, some-
thing that comes with time and experience. Junior engineers may be
more open to notions of functional integration and collaboration as best
practices. Perhaps engineers feel the organizational changes more
acutely, and so react negatively in proportion to how comfortable they
were with prior habits.
In any event, this apparent gap was common across respondents in
all O&G sectors. As such, we consider that job tenure possibly plays a
moderating role its influence on perceptions of cross-functional inter-
action, an assessment consistent with its use as a variable in a number
of multivariate studies. We therefore propose:
Proposition 7. As procurement function personnel job tenure increases,
perceptions of engineering-procurement interactions improve. As engineering
function personnel job tenure increases, perceptions of these same
B. Ashenbaum, et al. Journal of Purchasing and Supply Management 26 (2020) 100595

interactions deteriorate.

“They'll put the quotes in what you'd call a bid tab

“So, I think if it's critical, engineering or liability is

review. Send that file to us, then we have to review

“And it became more of a “purchasing has to be a

“Then we'll show the normalized pricing across the
it and then we make the selection of which vendor
to make that decision, I wouldn't say it's exclusively
“I think they do give us the majority of the weight

managers, we basically come to a joint decision."

board and we'll come to a consensus decision on

“It's kind of a between my group and the project
6. Discussion and implications

which company we should select.”

“We have more of a say, yes.”
This research contributes to the supply chain body of knowledge by
examining IRT and CT within the oil and gas supply chain.

going to make that call.”

“Joint most of the time”
Additionally, our study of procurement and engineering interactions
provides a rare look at procurement and engineering integration in the
our decision.”

course of on-going, routine, business and the influence of the external

Downstream

gets picked.”

part of this."
competitive environment. We selected the oil and gas industry as our
context because these firms traverse competitive environments ranging
from high to low levels of ambiguity and uncertainty. Therefore, our
results provide broad insights for researchers and managers, and future
into what it is. And believe me, engineering is the one
“In selection of contractors, we've put a lot of thought

[procurement] puts all the bid tabs together and then

research opportunities.
him and the PM sit down and they make a dual

“I think it's generally a meeting of the minds.”

“Well what happens, in all seriousness is he
“The final decision does actually rest with

6.1. Contributions to theory

who decides who we're going to take.”
“we generally do make the decisions”

Our findings make important contributions to the functional in-

decision as to who to select.”

tegration literature. First, our research elaborates IRT and CT within

Midstream Independent

context of the O&G supply chain. This context places IRT and CT in an
environment of extreme ambiguity. This is made apparent by one en-
gineer's statement on risk, “NASA is high risk but they tend to get to see
engineering.”

everything.” Add to this the cyclical nature of the commodity market,

ever more stringent government regulations and highly charged poli-
tical climates (positive and negative), and it is hard to imagine a higher
level of ambiguity. Most industries experience some level of stability
“it's the individual project managers [engineers] that are

“who makes the decisions, at least in [company], and likely

superior and also based on delivery and price.” Not always

after the means of production are determined. O&G is different in that

whatever reason and they're 20 grand higher or 30 grand,
“We let them have the final say so. If they've got a reason
business, because without the technical piece I wouldn't be

recommendation and say, “We can recommend so and so

why they would rather use Mark steel on a separator for

they can justify it and their manager will sign off on it.‘"

“Fair to characterize the P&E relationship as more of an
many of the other independents, it's usually the regional

engineering piece because of the technical nature of the

every well has unique geology not to mention that building each one is
based on they are technically acceptable or technically
“Well yeah, it's us together [P&E]. They can give us a

equivalent to building a new factory. This extreme ambiguity leads to

equal partnership? Probably a little heavier on the

several IRT and CT elaborations. At this highest level of ambiguity,

delivery and price, we try to save money, too.”

companies are not able to develop a common grammar, instead pro-

curement and engineering personnel struggle with each other's terms.
Also unique to this context is the finding that the highest level of col-
asset teams [led by engineers],”

laboration occurs at moderate level of ambiguity, not the highest as IRT

would predict. This result can be explained by procurement's inability
to enter into true collaboration at this high level of ambiguity. At the
Midstream Dependent

making the decision.”

highest level, some collaboration is limited by the need to blindly serve

very successful.‘"

engineering. This is further supported by engineering's asymmetrical

power in decision-making throughout the oil and gas supply chain, but
particularly focused in the upstream and midstream dependent firms.
This context may be generalizable to some other engineering domi-
nated contexts like factory development and new product development
“In my business, it's engineering. Supply chain is a huge piece
“They all have a department, but for the most part similar in

“The drilling engineers pretty much determine in the services

[that] they create the experience [that] engineering was the

“If we can talk frack jobs for a minute. We have most of the

“We'll then put an award recommendation together and the

commercial area. In between the two of us make a decision.”

in fast life-cycle industries. These contexts are difficult to study because

of this, but at the end of the day, we are the ones spending

award recommendation is a combination of input from the

“In the organization, technical ultimately ends making the

for at the well site, like fuels and disposables and services

of the short-term nature of their activities and need for confidentiality.

“They probably would pretty much have the final say.

Second, our study identifies the need for functions to determine and
technical area as well as supply chain, which is the

measure shared metrics of collaborative performance. Too frequently,

and directional drilling, those sort of things.”

collaboration is touted as the solution to many firm deficiencies.

They're the ones that have to live with it.”

Although this may be true, there is a need capture the true costs and
benefits of these higher intensity relationships.
Decision making equity - representative quotes.

Third, we operationalize ambiguity and uncertainty for future

supply chain research. Our study will assist researchers to better use
IRT and CT to successfully differentiate between ambiguity and un-
certainty, a difficult task given their likely correlation. In addition, the
graphical representation of some of our findings hints at possible in-
decision maker.”

say in that.”

teraction effects between ambiguity and uncertainty. Future research

the money.”
Upstream

decision.”

could assess these constructs in a manner treatable by statistical ap-

proaches.
Finally, although frequently requested, our paper is one of very few
that use dyadic data to analyze supply chain relationships for theory
PROCUREMENT
ENGINEERING

elaboration, in this case procurement and engineering respondents

within a the same organization. It demonstrates methods to manage and
Table 8

frame the dyadic data. We hope our research expands the breadth of
SCM research environments.

13

Table 9
Performance - representative quotes.
Upstream
ENGINEERING “So I don't see in this, here I don't necessarily see an
improvement in quality or so forth, what I do see is the
offset of somebody else's time to do other tasks.”
“There were some cost objectives that we have not met
and whether those cost objectives were not thoroughly
vetted and realistic.”
“That's a great question and, quite frankly, no. I don't
think, just because we have a good organization, that
automatically equate to dollar savings.”
“It's just much more structured. I think it's better. We're
saving more money.”
14
PROCUREMENT “I don't know if I'd say that we're tracking. I think, on
the sourcing, we have savings.”
“We have had hard metrics and cost savings that has
dramatic compared to where we were.”
“Inventory reduction is money that's on the ground. And
if you can reduce your inventory by ten million dollars
that gives you enough money to drill another well.
Timely delivery has improved.”
“I think the positives, first and foremost, are the costs:
what we have been able to do in terms of controlling
escalations and even dragging out costs has been
significant. We're matching up what's being delivered by
contracting that out with what is actually needed and
with flexibility to adjust that scope.”
Midstream Dependent
“If vendors are late then they get involved and they also
do inventory, which is huge.”
“We're not chasing down materials all day long. We're
focused on managing projects and reviewing designs,
that kind of engineer work.”
“While recent trends have generally resulted in better
pricing and or commercial terms, occasionally it can be
a barrier to creativity or to utilizing new technology or
newer products from small vendors or new companies
and may ironically in the long run “stifle competition”
and raise cost as technology improvements generally
trump commercial fine tuning in terms of improved cost,
capability and performance.”
“Going out to bid. Saving money there. More on time
and stop losing time and rework time."
“Save ten or fifteen percent.”
Midstream Independent
“I think we choose the right vendor more often today
than we did before.”
“I'll put a positive spin on this answer with trying to
deliver some negative news, but we have not been good
at tracking benchmarks or metrics about where we've
come from and I know there's a lot of interest in doing
that now.”
“Getting better costs. Better costs and better service.”
“If there's any changes, for me at least, it's because I've
learned something. Not necessarily that they've
changed. I've learned how they work and so I've
tailored the way I do things in order to facilitate their
job.”
“Yes, we're more on time.”
“It took all the surprises away, having everything there
when they're ready to start working.”
“I think so because we see more performance from our
engineering contractors as more of a standard today.
And where, you know, if we're in there it's more visible.
We're asking for deliverables.”
B. Ashenbaum, et al.
Downstream
“I don't know if it's impacted us much. Understanding their
system and ultimately results have yielded better
documentation for them.”
“It hasn't gotten worse.”
“Yes, Mostly on cost. In some cases, they have been able to
influence the decision at the site just by helping the site in
realizing the value there is in volume and in certain
commonalities.”
“Downstream performance has indeed improved as
procurement matured. The downstream financial results
speak for themselves. And, this is verified via external
benchmarks, improved reliability (up-time) of downstream
assets through improved supply chains.”
“I'd say, looking at the whole cycle, it's gotten better and
that's from first requesting your materials, to getting the
best pricing, to having it in the warehouse and knowing
where it goes.”
“I think we're getting better savings. I think we're especially
leveraging across sites. I think that our process has
improved so that it's a little more efficient. We're not using
three or four people to do the same job”
Journal of Purchasing and Supply Management 26 (2020) 100595
B. Ashenbaum, et al.
Fig. 8. Functional View of Performance Resulting from Engineer and Procurement Collaboration.
Numbers in parentheses indicate number of cases per category (Labels defined: Cost—cost reduction; OTD—on-time delivery; Quality—product or service quality;
WLR—work load reduction; Flex—supplier flexibility).
6.2. Contributions to practice
The research findings should also aid managers as they pursue value
co-creation between their procurement and engineering functions.
First, we provide insight into understanding the dynamic nature of this
relationship based on the complexity and risk in the business environ-
ment. There are many barriers that may prevent effective internal in-
tegration, such as engineering's technical nature, the use of jargon, and
the level of ambiguity and uncertainty in the operating environment.
Procurement personnel and engineers should understand that each
function can deliver technical or commercial competence that, in col-
laboration, could provide a superior outcome. High ambiguity may
drive either of the functions to dominate decision making, potentially
resulting a less than optimum outcome. Managers that can bridge the
natural gap between the two functions may holistically drive higher
levels of performance, thus contributing to a competitive advantage.
Second, collaboration without proper metrics masks the value of
what was achieved. Procurement personnel are more optimistic about
the enhanced performance achieved from collaboration than are en-
gineers. Engineers only saw the achievement of work-load-reduction
more positively than procurement (see Fig. 7). Naturally, the two
functions measure outcomes differently; however, managers can moti-
vate the right functional collaboration by enabling selection of metrics
that both functions understand and value. The data for these metrics
must be collected, and the results must be reviewed by the functions
and upper management to determine the value of collaboration. Seeing
eye-to-eye on accomplishments will enable the right collaboration.
Third, managers should be thoughtful about how the tenure and
experience levels of their procurement personnel might match up (or be
at odds) with the tenure of their engineers. A new buyer in particular
might struggle to get a tenured engineer to see the potential benefits
from collaborating on item specification or supplier selection decisions.
Especially if meaningful performance metrics are not in place to
15
Journal of Purchasing and Supply Management 26 (2020) 100595
validate the positive outcomes of the interaction. A purchasing manager
who is attempting to initiate a higher level of functional integration
with engineering might consider starting with some of the less experi-
enced engineers who may be more open to those interactions and who
would be more likely to recognize the performance benefits.
6.3. Limitations, future research and conclusion
Our research collected data from 26 firms in the oil and gas in-
dustry. Like all case studies, statistical generalizability, and its findings
are most indicative of the studied industry. Given the process used to
find patterns in qualitative data, the findings are limited by the efforts
and imagination of the principal researchers – a different set of in-
vestigators may have asked different questions or assessed the data set
in different ways.
Additionally, while construct validity was maintained by using
multiple sources of evidence (in particular, multiple perspectives on the
relationship in question from procurement and engineering personnel),
there were some cases in which only a single respondent from either the
engineering or procurement function provided data. While the dyadic
nature of the study helped overcome this, it is still a limitation for a fair
amount of the data collected, as these respondents become, in those
cases, the single “voice’ of their respective function.
We previously noted the critiques of IRT as an explanatory lens, and
as such the use of IRT can be considered a limitation of this study. Our
inclusion and synthesis of a contingency perspective to sharpen the
social contexts has hopefully helped to mitigate the limits inherent in
using IRT.
Given our single industry focus, future research should examine our
resulting propositions in industries where ambiguity may be less ex-
treme, and thereby test the boundaries of ambiguity and uncertainty in
new environments. To develop more statistically generalizable results,
we suggest testing these propositions via deductive approaches.
B. Ashenbaum, et al.
Additionally, we saw asymmetry in the procurement-engineering re-
lationship in all levels of the O&G supply chain. Future research could
examine if engineering always dominates the procurement-engineering
relationship or if this dominance is restricted to O&G, or if any other
functions influence the decision-making process, such as finance or
manufacturing. There would also be merit in future research that fo-
cused on a causal model of cross-functional interactions. The order in
which we introduce our constructs was intentional as it likely that
cross-functional interactions tend to follow a pattern: communication
frequency/richness, leading to mutual understanding, leading to a
propensity to collaborate and resulting performance improvement.
Given the context and design of this study there is no way to be sure,
but future studies could grapple with how to assess these constructs in a
longitudinal approach. Future research could also consider additional
contextual variables, such as firm size, geography, or industry.
In conclusion, our study identified situations of ambiguity and un-
certainty that drove results that are contrary to what would be expected
from IRT and CT. Additionally, in contexts where more ambiguity ex-
ists, we found that engineering is the dominant function in the pro-
curement-engineering relationship. Our research opens the door for
future studies to examine the purchasing-engineering relationship and
to determine whether this dominance holds in other contexts.
Unicited reference
Bstieler, 2005.
Declaration of competing interest
The authors declare that they have no known competing financial
interests or personal relationships that could have appeared to influ-
ence the work reported in this paper.
Acknowledgements
This research was funded in part by a $15,000 grant titled, “The
Anadarko Fellowship for Excellence in Energy Scholarship,” from the
Anadarko Petroleum Company.
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