Journal of Purchasing and Supply Management 25 (2019) 100560

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Journal of Purchasing and Supply Management

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

Attention-based view on achieving ambidexterity in purchasing and supply T

management
Harri Lorentza,∗, Sini Laaria, Janne Engbloma, Kari Tanskanenb
a
Turku School of Economics, University of Turku, P.O. Box 20014, Finland
b
Aalto University School of Science, P.O. Box 15500, 00076, Aalto, Finland

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

Keywords: The focus of purchasing and supply management (PSM) is no longer just on short-term cost savings, but is also on
Purchasing long-term goals such as innovation and renewal. Because of this new dual role PSM needs to balance the short-
Ambidexterity term goals referred to as exploitation, and the long-term strategic goals referred to as exploration. However,
Attention-based view developing in-depth knowledge of the supply markets in order to achieve PSM ambidexterity is challenging, as it
Structural equation modelling
requires much managerial attention that is limited in nature. This research draws on the attention-based view
(ABV) to study the antecedents of ambidexterity in PSM. Based on a survey of 154 Finnish manufacturing firms,
a set of hypotheses was tested using structural equation modeling. The results indicate that bottom-up supply
market attention has a stronger association than top-down supply market attention with all three PSM goals:
exploitation, exploration and ambidexterity. PSM status is positively associated with both bottom-up and top-
down supply market attention. Top management should support activities aimed at capturing supply market
opportunities by ensuring that the PSM staff is not overburdened and have enough time to focus on supply
market intelligence gathering and analyses. This research is among the first to study the role and enablers of
attentional mechanisms that underpin ambidexterity in PSM. A contribution to the ABV theory is made by
suggesting operationalizations of managerial attention constructs.

1. Introduction
Since the share and importance of purchased products and services
has grown during recent decennia, both managers and scholars in-
creasingly consider purchasing and supply management (PSM) to be a
strategic function of the firm (Carr and Pearson, 2002; Chen et al.,
2004; Van Weele and Van Raaij, 2014; Handfield et al., 2015). The
focus of PSM is no longer just on short-term cost savings, but is in-
creasingly also on long-term goals such as innovation and renewal, and
the product life-cycle cost implications of procurement decisions
(Ellram, 1995). Although the strategic nature of the PSM function has
been widely recognized in the literature (Gadde and Håkansson, 1994;
Chen et al., 2004; Krause et al., 2009), it has been argued that there is
still a gap between the intended strategic role of PSM and the prevailing
reality (Knoppen and Sáenz, 2015). The gap may be explained by the
imbalance between PSM’s strategic importance and the resources and
managerial capabilities devoted to it. Widening the PSM perspective
from price to total cost of ownership and even to value (Ellram, 1995;
Ferrin and Plank, 2002), and from buying products and services to in-
volving suppliers in a firm’s innovation activities (Johnsen, 2009;
Pihlajamaa et al., 2017) means that PSM must be capable of carrying
out both exploration and exploitation tasks (March, 1991). Since these
tasks require very different management activities, an essential chal-
lenge for any organization is to balance their efforts to both explore and
exploit, i.e. to achieve ambidexterity (O’Reilly and Tushman, 2004).
Although exploitation, exploration and ambidexterity have gained
substantial attention in organization theory literature (see e.g. Raisch
and Birkinshaw, 2008; Birkinshaw and Gupta, 2013), the accumulated
knowledge regarding ambidexterity is still somewhat sparse in the PSM
context, particularly regarding its antecedents (see e.g. Gualandris
et al., 2018).
As PSM is essentially about the management of external resources,
managerial attention regarding such resources is crucial (Ocasio, 1997).
Therefore, it may be argued that supply market knowledge is indis-
pensable in order to increase the strategic role of the PSM function (Van
Weele and Van Raaij, 2014), as it supports both the short-term ex-
ploitation goals such as continuous quality improvement (Kilpi et al.,
2018), and the long term exploration goals such as innovation (Aslam
et al., 2018 Cousins et al., 2011; Aslam et al., 2018), and thus ambi-
dexterity. However, despite this logic, the attainment of ambidexterity

∗
Corresponding author.
E-mail addresses: harri.lorentz@utu.fi (H. Lorentz), sini.laari@utu.fi (S. Laari), janne.engblom@utu.fi (J. Engblom), kari.tanskanen@aalto.fi (K. Tanskanen).

https://doi.org/10.1016/j.pursup.2019.100560
Received 26 February 2019; Received in revised form 28 June 2019; Accepted 16 August 2019
Available online 17 August 2019
1478-4092/ © 2019 Elsevier Ltd. All rights reserved.
H. Lorentz, et al.
in PSM is challenging, as the managerial attention needed for gaining
in-depth knowledge of supply markets is limited in nature (Ocasio,
1997; Shepherd et al., 2017), especially as regards the often resource-
constrained PSM function (Quayle, 2002; Zheng et al., 2007). Much of
the potentially vast supply market may therefore lie at the periphery of
managerial vision, i.e. where managers’ attention is not (Day and
Schoemaker, 2004). This limits managers’ ability to notice and, cru-
cially, to act on opportunities, and to mitigate risks (Hambrick, 1981) in
an ambidextrous manner. Due to the constrained attention allocation, it
has been suggested that managers “consciously select and accurately
scan appropriate environmental sectors” in order to initiate effective
actions to align supply with the various competitive priorities of the
organization (cf. Garg et al., 2003), such as cost, quality, delivery,
flexibility, innovation or sustainability (Krause et al., 2001; Pagell and
Wu, 2009). In other words, attentional processing in PSM regarding
supply markets, i.e. supply market attention, produces key knowledge
inputs for exploitation-oriented improvement activities and explora-
tion-oriented innovation activities for PSM alignment (March, 1991;
Mom et al., 2007).
In this research, we seek to shed further light on the circumstances
in which the PSM function develops ambidexterity in order to improve
both short and long-term PSM outcomes. In this effort, we adopt the
attention-based view of the firm (ABV; Ocasio, 1997). Drawing on be-
havioral theories in management (Simon, 1947; Cyert and March,
1963), the ABV conception of attention relates to the individual deci-
sion processes of noticing and selecting aspects of situations to be at-
tended to, or to be ignored (Ocasio, 1997). Whether the scope of at-
tention is broad or laser-sharp (Day and Schoemaker, 2004) is
suggested as depending on the nature of the context, both inside and
outside the organization (Ben-Menahem et al., 2013; Bouquet and
Birkinshaw, 2011). For example, the complexity of purchasing tasks (Liu
and Li, 2012) and the supply base (Bozarth et al., 2009) may burden
managers and constrain the scope of attention. Furthermore, top
management may communicate priorities and commitments, such as
regarding the status of PSM in the company, and thus foster and em-
power attention to notice, for example, disruptive technologies in
supply markets (cf. Bouquet and Birkinshaw, 2011). Therefore, we can
say that certain organizational and environmental factors may play a
role in the attention allocation patterns of organizations in general, and
of PSM in particular.
Based on the above, our research aims are the following: (1) to test
the association of supply complexity and PSM status with supply market
attention, and (2) to test the association of supply market attention with
exploitative and explorative orientation, as well as ambidexterity in
PSM. These aims allow us to examine the attentional antecedents of
ambidexterity in PSM. Our approach of using ABV in this research on
PSM is novel and “shifts the emphasis from what the firm does to how
its managers act” in order to achieve their PSM-related objectives (cf.
Bouquet and Birkinshaw, 2011, 257).
ABV has seldom been applied in empirical research, especially in
survey studies, due in part to practical measurement challenges
(Ocasio, 2011). Therefore, one of the contributions of this research is
the operationalization of attentional processing in PSM. Increased
awareness of the types of attentional processing and their drivers, al-
lows managers to consciously make better attention allocation deci-
sions, in order to develop supply market knowledge and adapt the PSM
organization in an ambidextrous manner.
2. Theoretical grounding and hypothesis development
2.1. Defining and linking attentional processing and ambidexterity
ABV conceptualizes attention as a scarce resource used to notice
opportunities and threats, or events, in the environment (e.g. Ren and
Guo, 2011). As such, attentional focus determines both the speed of
strategic response to events (Nadkarni and Barr, 2008) and the
2
Journal of Purchasing and Supply Management 25 (2019) 100560
organizational adaptation (Ocasio, 2011), and thus, as a simplification,
it can be said that what decision makers do depends on what they focus
on (Ocasio, 1997).
This simple, yet evidence-based, statement has significant implica-
tions for strategic management in general and PSM in particular. As the
focus of attention, or its allocation, is governed by attentional structures
(Ocasio, 1997), or drivers such as the various social, economic, and
cultural aspects of organizations, it results in considerable hetero-
geneity in how attention is focused, not only among firms but also
among individuals inside firms (Barreto and Patient, 2013). Conse-
quently, strategic action is not influenced by industry structure alone
(e.g. Porter, 1985), but may perhaps be primarily driven by managerial
cognition (e.g. Nadkarni and Barr, 2008; Daft and Weick, 1984). In-
deed, recent commentary implies that ABV defines a firm’s strategy as
the pattern of organizational attention (Ocasio et al., 2018). Further-
more, evidence suggests that attention-driven sensemaking regarding
salient phenomena in the environment results in the emergence of new
institutions in organizations (Nigam and Ocasio, 2010), i.e. rules, norms
and beliefs, and “explanations of what is and what is not, what can be
acted upon and what cannot” (Hoffman, 1999, 351).
According to ABV, there is variety in the ways in which individuals
and groups focus attention and process specific sets of stimuli (Ocasio,
2011). On one hand, top-down attentional processing “helps top man-
agers achieve efficiency, predictability, and reliability, by directing
their attention towards the aspects of the environment that are expected
to reveal potential opportunities and away from those aspects that are
not expected to be important” (Shepherd et al., 2017, 630). Experience,
heuristics and knowledge structures, or cognitive frameworks
(McNamara et al., 2002), serve as the “kind of mental template[s] that
individuals impose on an information environment to give it form and
meaning” (Walsh, 1995, 281). Top-down attentional processing is in
essence goal or schema-driven (Ocasio, 2011).
On the other hand, by engaging in more bottom-up attentional
processing, “top managers allow the environment to capture attention”,
involving “the features and/or properties inherent in the situation that
draw attention to themselves even when individuals are not actively
searching for them” (Shepherd et al., 2017, 631). It is based on ad hoc,
random, unpredictable and reciprocal interactions (Shepherd et al.,
2017), and is in essence data or stimulus-driven (Ocasio, 2011). In the
context of PSM, managers pay attention to the dynamic supply market
in a top-down and/or bottom-up manner, in their efforts to align supply
with the competitive priorities of the firm.
Essentially, ABV and the attentional processing construct provide a
useful lens for understanding why PSM differs across organizations, as
functions and managers are likely to vary in terms of how they foster
externally-oriented attention structures, and how they notice and re-
spond to external events such as discontinuous technological change
(Kammerlander and Ganter, 2015) and emerging opportunities in
supply markets (cf. Ren and Guo, 2011). This attentional heterogeneity
gives rise to differing institutions, and further, asymmetric value ex-
pectations regarding external resources, which suggests that managerial
attention and focus may become the key determinants of PSM-driven
competitive advantage (cf. Barney, 2012; Ramsay, 2001a; Ramsay,
2001b).
The association of attention and PSM-based competitive advantage
may, however, be more nuanced, as a mediating role may be proposed
for ambidexterity between the constructs of attentional processing and
PSM performance. In terms of the outcome side of this chain of asso-
ciations, it is noted that several studies seem to show the positive as-
sociation of organizational ambidexterity and firm performance out-
comes, particularly in uncertain environments (O’Reilly and Tushman,
2013). In the PSM context, Gualandris et al. (2018) show exploratory
and exploitative activities (ambidexterity) serving as the determinants
of supplier efficiency and product innovation, as well as buyer financial
performance. Regarding the antecedent side, it is useful to consider the
different approaches to ambidexterity. The approaches can be divided
H. Lorentz, et al.
to two types: those that are based on separating exploration and ex-
ploitation activities organizationally or by varying emphasis over time,
and those that aim for coexistence of exploitation and exploration in the
same organizational unit (contextual ambidexterity) (O’Reilly and
Tushman, 2013; Raisch and Birkinshaw, 2008; March, 1991). Studies
focusing on ambidexterity of the PSM or supply chain functions (e.g.
Gualandris et al., 2018; Kristal et al., 2010), or of the suppliers
(Azadegan and Dooley, 2010), could be classified as taking the con-
textual approach, which suggests that business units or functions may
achieve ambidexterity without temporal or organizational separation of
its conflicting underlying components. Importantly, this may be
achieved by the means of behavioral capacity of its decision makers for
simultaneous pursuance of exploitation and exploration, supported by
managements systems or culture (Gibson and Birkinshaw, 2004;
O’Reilly and Tushman, 2013). Aoki and Wilhelm (2016) appear to show
such culture-enabled behavioral capacity in Toyota, where experience-
based knowledge accumulation regarding internal production processes
is suggested to underlie ambidextrous supplier management activities.
Kauppila (2010) seems to suggest that matching types of knowledge
is required for exploitation and exploration in order to achieve con-
textual ambidexterity. In the PSM context, similar stance has been
adopted by Kilpi et al. (2018), who show that knowledge acquisition,
regarding the firm’s existing supply base and broader supply markets,
supports the exploitative and explorative orientations in PSM respec-
tively. Based on these studies it may therefore be proposed that beha-
vioural capacities that support the acquisition and accumulation of
knowledge relating to external resources therefore seems to serve as a
key antecedent of ambidexterity in PSM, and that such associations may
have a favorable impact on firm performance. As we focus on the
antecedent side in our study, it is further proposed that attentional
processing as a behavioural capacity, regarding the supply environ-
ment, essentially produces the key knowledge inputs for exploitation-
oriented improvement activities and exploration-oriented innovation
activities in PSM (March, 1991; Mom et al., 2007). Thus it is clear that
the linkage between attentional processing and ambidexterity seems to
hold significance for PSM, and understanding this association would
indeed be the next logical step in advancing the literature on ambi-
dexterity in PSM. For the benefit of the following hypothesis develop-
ment, we define ambidextrous PSM orientation to be the simultaneous
coexistence of exploitative and explorative orientations within the
function, the former relating to efficiency, alignment with and im-
provement of existing practices, and their standardization, and the
latter to adaptation, experimentation with new practices, challenging of
existing practices and to the search for new solutions and practices (cf.
Kilpi et al., 2018).
2.2. Hypotheses and research models
ABV suggests that top-down attentional processing is more likely to
result in noting incremental changes in the environment and current
trajectories, and thus would be oriented towards, or associated with
similar kinds of development opportunities or actions. In contrast,
bottom-up attentional processing is likely to be associated with noting
discontinuous changes and disruptions inconsistent with the current
trajectories, and thus may lead to more radical development opportu-
nities and actions (Shepherd et al., 2017; cf. Day and Schoemaker,
2004). Furthermore, too much focus on either may result in missing
unexpected signals in the environment, or risking a reinvention of the
wheel and being burdened with complexity, and thus in underscoring
the importance of appropriately balanced attention allocation, i.e. be-
tween the domains of top-down and bottom-up (Shepherd et al., 2017).
At the same time, it should be noted that managerial attention is a
scarce resource (Ocasio, 1997; Simon, 1947). Therefore, there are costs
and an eventual burden associated with absorbing information inputs
from increasing the level of resources dedicated to peripheral vision, for
example (Day and Schoemaker, 2004).
3
Journal of Purchasing and Supply Management 25 (2019) 100560
To further emphasize the possibly important implications of this
dichotomous theoretical concept, we suggest a link between attentional
processing and the concept of ambidexterity (March, 1991), or, more
precisely, the components of ambidexterity, as suggested and supported
by the above discussion. While top-down supply market attention is
likely to produce useful insights for both exploitation and exploration,
it may indeed be hypothesized that top-down processing is more sali-
ently associated with exploitation-oriented learning and development
(Mom et al., 2007). Furthermore, while bottom-up supply market at-
tention may result in discoveries that contribute to both incremental
process improvement and more disruptive management innovations,
this type of attentional processing would be more saliently associated
with explorative development activities, as is suggested by Mom et al.
(2007; see also Laureiro-Martínez et al., 2015; Day and Schoemaker,
2004). As it may be proposed that these theorized associations apply
also in the context of developing supply and various procurement
processes and practices, we state the following set of hypotheses:
H1a. Top-down supply market attention is positively associated with
exploitative PSM orientation.
H1b. Top-down supply market attention is positively associated with
explorative PSM orientation.
H1c. The association between top-down supply market attention and
exploitative PSM orientation is stronger than the association between
top-down supply market attention and explorative PSM orientation.
H1d. Bottom-up supply market attention is positively associated with
explorative PSM orientation.
H1e. Bottom-up supply market attention is positively associated with
exploitative PSM orientation.
H1f. The association between bottom-up supply market attention and
explorative PSM orientation is stronger than the association between
bottom-up supply market attention and exploitative PSM orientation.
The exploitation and exploration development orientations together
contribute to organizational ambidexterity (March, 1991), which im-
plies higher performance (e.g. Bierly and Daly, 2007). However, the
literature suggests tensions between the components (Lavie et al.,
2010), and a lack of an explicit trade-off point in terms of balancing and
prioritization (Raisch et al., 2009; Tushman and O’Reilly, 1996). Allo-
cation of resources for exploitative and explorative activities requires
analysis and assessment (March, 1991), and resource-constrained firms
may indeed have to be selective (Voss and Voss, 2013). It may be as-
sumed that, typically, firms are more naturally exploitative, as most
organizations lack the extra resources for experimenting with novel and
risky concepts (Lavie et al., 2010) and behavioral routines are self-re-
inforcing (Birkinshaw and Gupta, 2013). Ambidexterity is therefore
difficult to achieve and exceptional among organizations (Birkinshaw
and Gupta, 2013). Drawing on the earlier discussion, bottom-up at-
tentional processing may be considered to be associated relatively more
with a balance between exploitation and exploration (Birkinshaw and
Gupta, 2013), as it is the primary driver of exploration (Mom et al.,
2007; Laureiro-Martínez et al., 2015; Day and Schoemaker, 2004), and
thus balances naturally-occurring exploitative tendencies. We empha-
size that here the definition and operationalization both matter, and
that balanced ambidexterity essentially means that equal levels in both
components is the key to improved performance. We propose an al-
ternative set of hypotheses for the outcome side as follows:
H2a. Top-down supply market attention is positively associated with
ambidextrous (balanced) PSM orientation.
H2b. Bottom-up supply market attention is negatively associated with
ambidextrous (balanced) PSM orientation.
Having developed alternative sets of hypotheses for the outcome
side of supply market attention, we turn to the antecedents or
H. Lorentz, et al.
Fig. 1. Two alternative research models.
circumstances of attentional processing in PSM. In essence, we are in-
terested in what may constrain or stimulate attentional processing in
general, and whether there are differences in terms of how the two
dimensions of attention are affected. Here, the important assumptions
are that managerial attention is limited (Ocasio, 1997; Simon, 1947;
Day and Schoemaker, 2004), and that the external environment
changes dynamically with enough diversity such that phenomena may
take place at the periphery of focus (Shepherd et al., 2017). Therefore,
the allocation of attention between the dichotomous dimensions of at-
tentional processing, and the causes of such allocation, are important
issues to be considered.
In seeking to meet the performance goals defined by organizations,
managers face task challenges that determine the level of task or job
demands, the latter defined as “the degree to which a given executive
experiences his or her job as difficult or challenging” (Hambrick et al.,
2005). It has been suggested that a key driver of task demands is the
task complexity arising from numerous components and dynamism (Liu
and Li, 2012), as this burdens the information-processing capacity of
managers, and thus also implies challenges for supply management
(e.g. Bozarth et al., 2009). While the uncertainty and dynamism aspects
of complexity may cause significant challenges in supply management
(Bozarth et al., 2009; Milgate, 2001), detail complexity in the form of
large supplier networks prominently drives poor performance (Bode
and Wagner, 2015; Lorentz et al., 2012; Choi and Krause, 2006; Vachon
and Klassen, 2002). Due to the need to make frequent decisions in terms
of numerous sourced items, suppliers, orders and source country con-
texts, i.e. supply complexity, supply managers are likely to be under a
high task challenge, and thus experience significant and competing task
demands (Hambrick et al., 2005). With such salient items demanding
the focus and attention of managers, and with these challenges ad-
dressed naturally through the existing knowledge structures in the
manner of top-down attentional processing (e.g. Birkinshaw and Gupta,
2013; Peeters et al., 2015; Turner et al., 2018), the periphery of vision
may be starved of bottom-up attentional processing of emergent weak
signals. Indeed, it has been suggested that the higher the level of
competing task demands, the higher the reliance on top-down atten-
tional processing by managers (Shepherd et al., 2017). Therefore we
state the following hypotheses.
H3a. Supply complexity is positively associated with top-down supply
market attention.
H3b. Supply complexity is negatively associated with bottom-up supply
market attention.
The role and status of the PSM function is related to visibility and
participation in strategic decision-making, equality among functions,
top-management support and a prominent role in the company (Carr
and Smeltzer, 1997; Cousins and Menguc, 2006). These characteristics
have been shown to enable both exploitative and explorative
4
Journal of Purchasing and Supply Management 25 (2019) 100560
development in PSM; however, explorative orientation may depend
more on status (Kilpi et al., 2018), as status drives empowerment
(Seibert et al., 2004), the availability of slack resources and favorable
conditions for experimenting with novel and risky concepts (Lavie
et al., 2010; Levinthal and March, 1993). Status may also drive atten-
tional coherence across the various levels, units and functions of the
organization, allowing attentional triangulation and spotting weak
signals at the periphery of vision (Rerup, 2009). Furthermore, by de-
finition, status involves the integration of PSM with other functions, the
cross-functional category teams potentially serving as embodiments of
contexts in which established attentional perspectives are challenged
due to variation in the knowledge structures and aims of the partici-
pating individuals. Such attentional engagement allows organizations
to identify new issues, generate new action alternatives and make sense
of causes and consequences (Ocasio, 2011). The logic behind this ar-
gumentation is often based on Ashby’s (1958) law of requisite variety,
which holds that “an organization can only detect variety in the en-
vironment, such as weak cues, non-events, or emerging problems, to the
extent that it has sufficient internal attentional variety to represent it”
(Rerup, 2009, p. 888). It could therefore be hypothesized that PSM
status, through its empowering and integrative nature, is a relatively
more important driver of such attentional processing that is bottom-up
in nature. We therefore state the following hypotheses.
H4a. PSM status is positively associated with bottom-up supply market
attention.
H4b. PSM status is positively associated with top-down supply market
attention.
H4c. The association between PSM status and bottom-up supply market
attention is stronger than the association between PSM status and top-
down supply market attention.
The previously stated hypotheses are summarized as the research
models in Fig. 1 (the main model and the alternative outcome side
model), which allows us to examine the antecedents and outcomes of
attentional processing in PSM, as well as ambidexterity in PSM.
3. Methods
3.1. Measurement
Based on the above-discussed conceptual foundations and defini-
tions of the two dimensions in attentional processing, and due to a lack
of existing operationalizations, we engaged in developing novel PSM-
specific statements for these concepts. These statements essentially
describe the PSM function’s way of operating in terms of supply market
attention. For the top-down attentional processing related items, we
adopted the idea that there are certain standard operating procedures,
goals, requirements and experience that direct and define the way PSM
H. Lorentz, et al.
professionals make decisions, engage in discussions with suppliers,
observe and research supply markets, and examine supply risks (cf.
Shepherd et al., 2017; Ocasio, 2011). Appendix A presents the oper-
ationalizations for top-down attentional processing.
In Appendix A we also define statements for bottom-up attention
allocation in PSM. The design of these statements was guided by con-
cepts such as informality, emergence, as well as reciprocal and ad-hoc
exchange and identification of ideas with existing and new suppliers,
other functions and colleagues about markets, products and technolo-
gies. The statements essentially describe a way of operating that ex-
poses PSM to external stimuli (cf. Shepherd et al., 2017; Ocasio, 2011).
It is important to note that the statements regarding attentional pro-
cessing must be defined so that they allow respondents to agree or
disagree with both the top-down and the bottom-up statements si-
multaneously, for example. This is in line with the earlier considered
hypothesis regarding a balanced attention allocation, in comparison to
a biased allocation, where, for example, only the top-down attention
allocation would be practiced.
On the outcome side, we used most of the items measuring ex-
ploitative and explorative PSM orientation as suggested by Kilpi et al.
(2018). The deleted items d and h were replaced by the following
statements which are aligned with Mom et al. (2007): (1) We con-
tinuously assess new suppliers and supply markets in order to replace
existing supply arrangements; (2) We mostly develop procurement
within the framework of existing practices and policies (see Appendix
for full set of measures). We note that the operationalization of ambi-
dexterity varies greatly, and our approach can be considered as mea-
surement of the propensity to do something, and measurement of ba-
lanced ambidexterity as follows: |Exploitative PSM orientation –
Explorative PSM orientation| (the lower the better), instead of a pro-
duct or sum (Exploitative PSM orientation x Explorative PSM orienta-
tion, Exploitative PSM orientation + Explorative PSM orientation,
suggesting higher the better) which focuses on the trade-off (see dis-
cussion in Birkinshaw and Gupta, 2013).
On the antecedent side, the PSM status measurement was based on
Kilpi et al. (2018). Their measures are based on the work of Carr and
Smeltzer (1997) and Cousins and Menguc (2006), and are associated
with participation in decision-making, equality among functions and
relevance from the competitiveness point of view (see Appendix).
Furthermore, three objective single item measures were used to
assess the extent of supply complexity: (1) the number of active items
handled by the procurement function, (2) the number of orders handled
by the procurement function, (3) the number of suppliers handled by
the procurement function. These more objective indicators were di-
vided by the number of procurement personnel, in order to make the
complexity measures comparable across firms and PSM functions of
different size. Conceptually, all the complexity measures contribute to
task complexity due to the number of elements to be managed (e.g. Liu
and Li, 2012), whereas the third may also be considered as an indicator
of horizontal supply chain complexity (Bode and Wagner, 2015).
The survey questions inquired about current states and practices,
and the appropriate averages during the last 12 months. The subjective
measures used a 7-point Likert scale, consisting of the following points:
1) completely disagree, 2) mostly disagree, 3) somewhat disagree, 4)
neither agree not disagree, 5) somewhat agree, 6) mostly agree, and 7)
completely agree.
3.2. Pretest procedure for supply market attention scales
The initial versions of the top-down and bottom-up supply market
attention scales were presented separately to several industry experts
who were asked to critically review each construct and item. The
constructs and survey items were then refined for clarity using this
feedback. Next, an online questionnaire was created to pilot test the
items, in order to identify potential problems and to make adjustments
before the full-scale launch of the survey in late spring 2017. The
5
Journal of Purchasing and Supply Management 25 (2019) 100560
invitation to participate in the survey was sent to a convenience sample
of 51 PSM professionals in the authors’ professional networks. In total,
25 useable responses were collected.
Next, an exploratory factor analysis (EFA) was conducted, using
principal component analysis with Varimax rotation. Based on the item
loadings, two factors were extracted and labeled as Bottom-up supply
market attention and Top-down supply market attention. The final
scales account for 68.652% of the cumulative variance extracted. The
scale reliability of the instrument was inspected for both scales.
Cronbach’s alpha for bottom-up and top-down supply market attention
turned out to be 0.865 and 0.789 respectively, which is above the
threshold value of 0.7 (Nunnally, 1978).
3.3. Data collection
The sample consists of Finnish firms in the manufacturing sector. A
commercial provider of company contact details was used to establish a
sampling frame. The sampling was limited to large, medium and small
manufacturing firms, essentially excluding micro-sized firms, i.e. those
with an annual net turnover of under EUR 2 million. The final sampling
frame was determined by the existence of contact details (email ad-
dresses) of company procurement personnel and chief executive officers
(CEOs), resulting in a list of 1853 firms from a population size of 2830
firms. The coverage of the population by the sampling frame can thus
be considered reasonably adequate. The final questionnaire was ad-
ministered online. The number of responses was 154 and the response
rate was 8.3%. According to Gu et al. (2017) and Mora-Monge et al.
(2019) such a response rate is typical when target respondents hold
executive positions in a firm. De Beuckelaer and Wagner (2012) point
out that small sample surveys are not deficient per se. Instead, if the
methodological issues are understood and good practices are followed,
small sample surveys are able to provide valuable and valid contribu-
tions.
However, lower response rates require testing for non-response bias.
Early and late respondents were compared with an independent sam-
ples t-test to evaluate possible non-response bias (Armstrong and
Overton, 1977). The early and late respondents were compared across
theoretical constructs and demographic variables. Furthermore, we
compared our final sample to 400 randomly selected non-respondents
using demographic variables such as annual turnover and profit. No
significant differences (p < 0.05) were found, which indicates that non-
response bias does not influence the results of our study (Anderson and
Gerbing, 1988).
To reduce the likelihood of consistency motive bias, the theoretical
constructs were separated and placed in different phases of the survey.
To avoid social desirability bias, the respondents were assured con-
fidentiality and could choose either to complete the survey anon-
ymously or to reveal the name of the firm and an email address in order
to receive a benchmarking report.
61 (40%) of the firms were small (turnover EUR 2–10 million), 66
(43%) were medium-sized (turnover EUR 10–50 million), while 27
(17%) were large (turnover in excess of EUR 50 million). The sample
covers a wide spectrum of industries, the largest groups being the
manufacture of fabricated metal products (35) and the manufacture of
machinery and equipment (30).
3.4. Common method variance
Common method variance (CMV) was addressed through proce-
dural and methodological approaches. We took pre-emptive procedural
remedies to avoid CMV as suggested by Podsakoff et al. (2003) and
placed the measures in different phases of the questionnaire. To test the
existence of CMV we first performed the Harman’s single-factor test.
The single factor accounted for 30.4% of cumulative variance. Next, we
chose item “What is the share of suppliers that possess a relevant cer-
tificate (related to quality or CSR, for example)?” as a marker variable
H. Lorentz, et al. Journal of Purchasing and Supply Management 25 (2019) 100560

Table 1
Zero-order correlations and adjusted correlations.
Status Complexity Top-down Bottom-up Explore Exploit

Status 1 0.079 −0.045 −0.048 −0.020 0.237**

Complexity 0.067 1 0.193* 0.192* 0.096 0.069
Top-down −0.039 0.198* 1 0.904** 0.319** 0.474**
Bottom-up −0.042 0.197* 0.905** 1 0.303** 0.369**
Explore −0.014 0.101 0.323** 0.307** 1 0.514**
Exploit 0.242** 0.075 0.477** 0.373** 0.517** 1
Marker variable 0.085 0.027 −0.006 0.058 −0.125 −0.025

Zero-order correlations are below the diagonal; adjusted correlations are above the diagonal.
*p < 0.05; **p < 0.01.

that was theoretically unrelated to other substantive variables. We used Table 2

the smallest correlation between the marker variable and other vari- Results of the confirmatory factor analysis.
ables as an estimate for method bias (Lindell and Whitney, 2001; Latent variables Unstandardised factor Completely standardised t-value
Podsakoff et al., 2012). We then applied the partial correlation proce- loading factor loading
dure to adjust the correlation coefficients and tested their significance.
All CMV-controlled correlations remained significant after the adjust- PSM status (α = 0.825; CR = 0.972; AVE = 0.920)
STATUS1 1.000 0.769 -a
ment (Table 1), which suggests that the results cannot be accounted for STATUS2 1.539 0.860 6.783
by CMV. STATUS4 1.205 0.743 5.815
Finally, Fuller et al., (2016) demonstrated with a simulation study Supply complexity (α = 0.663; CR = 0.932; AVE = 0.823)
that CMV can be present at relatively high levels (70% or more) before COMP2 1.000 0.573 -a
COMP3 0.939 0.754 3.932
it induces significant biases. Taken together, CMV is hence unlikely to
COMP4 0.750 0.703 3.663
be a threat to the validity of the results. Top-down supply market attention (α = 0.780; CR = 0.960; AVE = 0.890)
TOP2 1.000 0.758 -a
TOP3 0.957 0.705 7.155
4. Data analysis and results TOP4 1.115 0.774 5.890
Bottom-up supply market attention (α = 0.709; CR = 0.784; AVE = 0.548)
4.1. Measurement model BOTTOM1 1.000 0.682 -a
BOTTOM3 1.060 0.690 3.415
BOTTOM4 1.016 0.634 3.438
The first step to evaluate the validity of the measurement instru- Explorative PSM orientation (α = 0.755; CR = 0.958; AVE = 0.887)
ment was an exploratory factor analysis (EFA) of principal components. EXPLORE1 1.000 0.749 -a
First, we excluded items with small loadings. After defining the mea- EXPLORE2 1.184 0.849 11.933
EXPLORE4 0.775 0.599 4.254
surement instruments, another factor analysis was performed. There
Exploitative PSM prientation (α = 0.745; CR = 0.0.953; AVE = 0.874)
were six factors explaining 71% of total variance. EXPLOIT1 1.000 0.601 -a
Before the confirmatory factor analysis we conducted Little’s MCAR EXPLOIT2 1.685 0.873 4.247
test and concluded that the missing values in the data are missing EXPLOIT3 1.152 0.631 4.334
completely at random (Χ2 = 457.948, df = 429, p = 0.161). In the
at-statistics fixed for scaling.
subsequent stages we thus proceeded by using the full information
Χ2/df = 1.539; RMSEA = 0.059; CFI = 0.919; TLI = 0.896.
maximum likelihood (FIML) method which avoids listwise deletion and
uses all available data. This yields smaller errors in parameter estimates
Table 3
and provides appropriate standard errors of estimation (Newman,
Discriminant validity test with Fornell-Larcker criterion.
2003).
To assess the reliability and validity of the measurement model a Status Complexity Top-down Bottom-up Explore Exploit
confirmatory factor analysis (CFA) was conducted (see Table 2). The
Status 0.959
hypothesized model fits the data appropriately (Χ2/df = 1.539, Complexity −0.165 0.907
CFI = 0.919, TLI = 0.896, RMSEA = 0.059, p-value < 0.01) (Hu and Top-down 0.310** −0.072 0.944
Bentler, 1999). All items were loaded on the intended constructs. The Bottom-up 0.412** −0.130 0.507** 0.740
standardized factor loadings were significant and ranged from 0.573 to Explore 0.329** 0.230 0.652** 0.652** 0.942
Exploit 0.211** 0.011 0.225** 0.287** 0.449** 0.935
0.873, exceeding the recommended threshold of 0.5 (Hazen et al.,
2015). The average variance extracted (AVE) values for all the con- *p < 0.05; **p < 0.01, the square root of AVE appears on the diagonal in bold.
structs are higher than 0.50, which indicates convergent validity
(Fornell and Larcker, 1981). The composite reliabilities ranged from Table 4
0.784 to 0.972, demonstrating acceptable reliability and internal con- Discriminant validity test with Heterotrait-monotrait (HTMT) ratios.
sistency of the scales (Garver and Mentzer, 1999).
Status Complexity Top-down Bottom-up Explore Exploit
We followed the guidelines of Voorhees et al. (2016) to test the
discriminant validity of the constructs. First, we compared the square Status
root of AVE to the correlations between each construct (Fornell and Complexity 0.150
Larcker, 1981). Given that the square root of AVE (displayed on the Top-down 0.615 0.110
Bottom-up 0.624 0.140 0.693
diagonal of Table 3) is higher than the correlation coefficient for all
Explore 0.443 0.175 0.583 0.767
constructs, the presence of discriminant validity was achieved. Exploit 0.444 0.040 0.499 0.552 0.803
Secondly, we used the heterotrait-monotrait (HTMT) test (Henseler
et al., 2015). The HTMT is a relatively new criterion to test discriminant
validity but has been demonstrated to perform better than the con-
ventional constrained Phi approach (Voorhees et al., 2016). All HTMT

6
H. Lorentz, et al.
ratios of correlations were lower than the threshold value of 0.85 for
every pair of constructs (Table 4), which indicates discriminant validity
(Henseler et al., 2015).
4.2. Structural equation modelling
We used structural equation modeling to test the hypothesized re-
lationships simultaneously. First, we tested the set of hypotheses in
which the exploitative and explorative PSM orientations are measured
as two separate constructs. The model fit was found to be adequate (Χ2/
df = 1.593, CFI = 0.907, TLI = 0.886, RMSEA = 0.062, p-value <
0.01). The model explains 0.231% of the variance of top-down supply
market attention and 0.334% of the variance of bottom-up supply
market attention.
The results reveal that bottom-up supply market attention is posi-
tively associated with explorative (H1d) and exploitative PSM or-
ientation (H1e). While there is no statistically significant association
between top-down supply market attention and exploitative or ex-
plorative PSM orientation (H1a-b), the result is aligned with the hy-
pothesis. Although the association between top-down supply market
attention and exploitative PSM orientation is stronger than the asso-
ciation between top-down supply market attention and explorative PSM
orientation, the difference between the coefficients is not statistically
significant. Hence, we cannot confirm H1c. However, we found statis-
tically significant support (p < 0.01) for H1f which suggests that the
association between bottom-up supply market attention and explorative
PSM orientation is stronger than the association between bottom-up
supply market attention and exploitative PSM orientation. No sig-
nificant association was found between supply complexity and atten-
tional processing (H3a-b). PSM status, in turn, is positively associated
with both top-down (H4a) and bottom-up (H4b) supply market atten-
tion. However, the difference is not statistically significant (H4c). The
results are depicted in Fig. 2.
Following the recommendation of Riedl et al. (2014), we calculated
the statistical power of the structural model. The resulting value of 0.93
(ε0 = 0.05 and εa = 0.08) in a test of close fit falls within the range
from 0.8 to 1.0, which implies that the likelihood of failing to reject an
inappropriately conceptualized model is very low (MacCallum et al.,
1996; McQuitty, 2004). Hence, the reliability and validity of the results
are strongly supported.
Next, in order to test the alternative set of hypotheses (i.e. the
ambidextrous PSM orientation), we formed the construct of ambi-
dexterity by calculating the arithmetic means of exploitative and ex-
plorative PSM orientation and calculated their absolute difference. The
error variance of the ambidexterity factor was set to the product of the
variable’s variance and one minus reliability (assumed 0.7) (Jöreskog
and Sörbom, 1993).
Fit indices imply a good fit (Χ2/df = 1.142, CFI = 0.980,
TLI = 0.974, RMSEA = 0.030, p-value = 0.213). The results regarding
supply complexity and PSM status are similar to those in the previous
analysis: supply complexity has no statistically significant relationships,
Fig. 2. SEM results, first set of hypotheses.
7
Journal of Purchasing and Supply Management 25 (2019) 100560
whereas PSM status is connected to both top-down and bottom-up
supply market attention. As expected, the results reveal a statistically
significant (p < 0.1) negative relationship between bottom-up supply
market attention and ambidextrous PSM orientation (H2b). However,
contrary to the hypothesis, top-down supply market attention is not
associated with ambidextrous PSM orientation (H2a). Table 5 sum-
marizes the results of the hypothesis testing.
5. Discussion and conclusions
5.1. Theoretical implications
The results suggest a salient role for PSM status in supporting both
types of supply market attention (H4a & H4b). As the difference be-
tween effect sizes is not statistically significant, it cannot be confirmed
that status would be more beneficial in supporting bottom-up proces-
sing, as was hypothesized (H4c). The results from our sample simply
suggest that an elevated status for the PSM function may empower
teams and individuals for strategically aligned supply market mon-
itoring and supplier interaction, and may also endow the function with
slack resources (e.g. Lavie et al., 2010), which are needed to focus more
attention on emerging issues, even at the periphery of vision. With
elevated status, the PSM staff will have greater incentive to conduct
targeted searches and analyses and to spot emerging trends in the
supply markets, as status enables ideas to be promoted and accepted
within the organization (Pemer and Skjølsvik, 2016).
Secondly, it is interesting to note the absence of associations be-
tween supply complexity and the supply market attention constructs in
our study (H3a & H3b). Although the literature emphasizes the role of
high supply complexity in poor performance outcomes (e.g. Choi and
Krause, 2006), and practitioners often lament the relatively high task
challenge in PSM, such negative effects on supply market attention
were not found in our sample. A possible explanation could be the in-
creased use of e-procurement solutions and other forms of digitalization
for supporting, simplifying and automating work flows, resulting in
burden reduction for PSM staff (Srai and Lorentz, 2019; Nissen and
Sengupta, 2006). The key question here could be whether supply
complexity is becoming irrelevant, from the task complexity perspec-
tive, due to digitalization trends that are allowing managers to pay
more attention to the supply markets.
Thirdly, only bottom-up supply market attention appears to be as-
sociated with exploitative and explorative PSM orientations (H1a-e).
Although this, to some degree, runs counter to the results of Shepherd
et al. (2017), it is noted that the association of bottom-up supply market
attention with explorative PSM attention is relatively stronger. This
supports the hypothesis that bottom-up attentional processing matches
better with aims and actions promoting novel or even radical devel-
opment which could be characterized as exploratory in nature (H1f).
From the perspective of ambidexterity in PSM, the findings indeed
suggest that increased levels of bottom-up supply market attention
balance the hypothesized default tendencies for exploitative PSM
H. Lorentz, et al. Journal of Purchasing and Supply Management 25 (2019) 100560

Fig. 3. SEM results, second set of hypotheses.

Table 5
Results of the hypothesis testing.
Hypothesis Outcome

H1a: Top-down supply market attention is positively associated with exploitative PSM orientation. Not supported
H1b: Top-down supply market attention is positively associated with explorative PSM orientation. Not supported
H1c: The association between top-down supply market attention and exploitative PSM orientation is stronger than the association between top-down supply Not supported
market attention and explorative PSM orientation.
H1d: Bottom-up supply market attention is positively associated with explorative PSM orientation. Supported
H1e: Bottom-up supply market attention is positively associated with exploitative PSM orientation. Supported
H1f: The association between bottom-up supply market attention and explorative PSM orientation is stronger than the association between bottom-up supply Supported
market attention and exploitative PSM orientation.
H2a: Top-down supply market attention is positively associated with ambidextrous (balanced) PSM orientation. Not supported
H2b: Bottom-up supply market attention is negatively associated with ambidextrous (balanced) PSM orientation. Supported
H3a: Supply complexity is positively associated with top-down supply market attention. Not supported
H3b: Supply complexity is negatively associated with bottom-up supply market attention. Not supported
H4a: PSM status is positively associated with bottom-up supply market attention. Supported
H4b: PSM status is positively associated with top-down supply market attention. Supported
H4c: The association between PSM status and bottom-up supply market attention is stronger than the association between PSM status and top-down supply Not supported
market attention.

orientation, and thus allow the PSM function to achieve a beneficial
situation in which both exploitation and exploration co-exist for am-
bidexterity (Birkinshaw and Gupta, 2013).
Fourthly, whereas our results emphasize the importance of bottom-
up attentional processing in PSM, it is noted that the evidence suggests
that PSM benefits from aligned purchasing strategy and practices (Baier
et al., 2008; also Hesping and Schiele, 2015). This perspective ad-
vocates a top-down alignment in PSM, and confirms that goal-driven, or
top-down attentional processing for external resources is needed, and
that it often serves perhaps as the default attentional-DNA in PSM teams
and organizations. However, if goal-driven and schema-guided ten-
dencies related to supply base management and supply market analyses
are too strong, the function – which is in charge of spotting opportu-
nities in the supply markets – will be in danger of missing key events,
emerging technologies and evolving risks at the periphery of attention.
Our results suggest that, for ambidextrous PSM orientation, i.e. for
improving and exploiting existing resources while simultaneously ex-
ploring novel concepts and ideas from the markets, a determined effort
will be needed to offset any default bias towards top-down attention by
emphasizing bottom-up supply market attention (H2a & H2b). With
reference to the famous metaphor by O’Reilly and Tushman (2004), we
deviate slightly by suggesting that, similarly to the Roman god Janus,
PSM indeed needs two sets of open eyes: one set for top-down attention
and, as emphasized by our results, another set for bottom-up attention,
in order to enable the two equally strong hands of exploitation and
exploration to work and develop the PSM processes. The key enablers in
this balanced effort will be the empowerment, the early involvement in
planning and decision-making, and the slack resources that come with
high PSM status within the organization. Herein lies the theoretical
contribution of our research: understanding the role and enablers of
attentional mechanisms that underpin ambidextrous orientation in
PSM.
In broader terms, our study answers the call for research on how
information is acquired and acted on in the supply chain (Schorsch
et al., 2017), by examining how attentional engagement influences the
strategic agenda of the PSM function, and thereby contributes to the
emerging field of behavioral supply chain management. A contribution
to the ABV theory is made by suggesting operationalizations of man-
agerial attention constructs. Despite the abundance of studies adopting
the ABV framework, there are few studies using surveys to test the
relationship of attentional processing to its antecedents and outcomes.
5.2. Managerial implications
The findings also provide relevant insight for executives. First, we
encourage that top management should formally and informally re-
cognize the role and status of the PSM function and dedicate resources,
such as money, personnel and time, to encourage purchasing personnel
to search for novel ideas and solutions. A resource-constrained PSM
function is prone to sticking to existing routines and searching ways of
exploiting existing supply arrangements. In order to tackle challenges
ranging from innovation to climate change, PSM needs to be empow-
ered to discover critical ideas, knowledge and solutions hidden within
supply networks (Gualandris et al., 2018).
Second, while the goal-driven and schema-guided top-down ap-
proach may be necessary to achieve predictability, efficiency, and re-
liability by directing attention on features that are expected to be im-
portant (Shepherd et al., 2017), a more bottom-up approach can allow
purchasing professionals to notice and interpret strategically relevant
weak signals and discontinuous change in the supply market. Im-
portantly, the results emphasize that there needs to be a right balance
between top-down and bottom-up supply market attention. A balanced
approach implies that PSM staff will not need to choose between ex-
ploitation and exploration. It should also be noted that this attentional

8
H. Lorentz, et al. Journal of Purchasing and Supply Management 25 (2019) 100560

balance is dynamic and needs to be adapted over time (Walrave et al.,
2017).
5.3. Limitations and future research
The above conclusions need to be considered in the light of some
limitations of our research. Our sample is somewhat small and geo-
graphically limited, inhibiting the generalizability of the results. Data
collection is cross-sectional in nature, and thus conclusions regarding
causality between constructs have to be made with caution.
Nevertheless, the results suggest relatively strong associations, which
are in line with the theory-based hypotheses, increasing the level of
confidence in the results. In addition to suggesting operationalizations
of the attentional processing constructs for survey research, this re-
search provides novel insights into ambidexterity in PSM, and essen-
tially suggests that how purchasing and supply managers focus their
attention reflects what they know, and further, what they know reflects
how they manage external resources. This makes the ABV an exciting
new perspective for understanding strategic PSM.
While this study emphasized that empowerment of the PSM func-
tion supports both top-down and bottom-up attentional processing, an
additional research opportunity lies in an individual-level examination
of managerial attention and decision-making (Kaufmann et al., 2017).
By discovering the factors within individuals (e.g. their values and
beliefs) and within organizations (e.g. their organizational culture and
routines) that affect attention allocation, we could shed further light on
how to achieve ambidextrous PSM. For example, Pemer and Skjølsvik
(2016) found that purchasing professionals were guided by market
logic, such as creating effective markets, increasing transaction effi-
ciency and using quantifiable selection criteria, when purchasing
knowledge-intensive services. On the other hand, excessive focus on
these specific values and guidelines could blind them from seeing al-
ternative courses of action.
Acknowledgements
This work was supported by the Finnish Foundation for Economic
Education (Liikesivistysrahasto; grant no. 160171)

Appendix.A

Subjective statements and items used in the research

Top-down supply market attention

a. Defined ways of working guide our procurement decisions in a significant manner (e.g. supplier selection or collaboration).
b. Defined goals guide our discussions with suppliers in a significant manner.
c. Defined procurement requirements guide the monitoring of major supply markets in a significant manner.
d. Proven ways of working guide the identification of threats to our supply in a significant manner.
Bottom-up supply market attention a. We continuously engage in informal discussions with suppliers on markets, products or technologies, for example.
b. We continuously engage in informal discussions with the other functions of the organization (e.g. research and development).
c. We continuously monitor the development of major supply markets by, for example, visiting exhibitions and following news feeds and professional publications.
d. We actively communicate our sourcing requirements to potential suppliers.
e. We regularly participate in seminars and professional networks dedicated to purchasing and supply management.
Explorative PSM orientation (see Kilpi et al., 2018) a. We often try new tools and practices.
b. We continuously challenge current practices.
c. We continuously search for significant new solutions, such as products and technologies for the firm.
d. We continuously assess new suppliers and supply markets in order to replace existing supply arrangements.
Exploitative PSM orientation (see Kilpi et al. 2018) a. We focus on increasing efficiency in operations.
b. We determinedly focus on improving current practices.
c. We seek to determinedly standardize practices and processes.
d. We mostly develop procurement within the framework of existing practices and policies.
PSM status (see Kilpi et al., 2018) a. Purchasing is perceived as an important contributor for the competitiveness of the company
b. Purchasing is involved early on in the preparation of important decisions regarding the company
c. Purchasing functions’ views on purchasing policies are taken into consideration in other functions of the company.
d. Purchasing function’s suggestions for policy changes are considered as important in other functions suggestions within the company.

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