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International Journal of Production Research

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Strategic purchasing participation, supplier selection,

supplier evaluation and purchasing performance
a b c
Anand Nair , Jayanth Jayaram & Ajay Das
a
Department of Supply Chain Management, Broad College of Business, Michigan State
University, East Lansing, MI, USA
b
Department of Management Science, Moore School of Business, University of South
Carolina, Columbia, SC, USA
c
Department of Management, Zicklin School of Business, The City University of New York,
New York, NY, USA
Published online: 11 Jun 2015.

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To cite this article: Anand Nair, Jayanth Jayaram & Ajay Das (2015): Strategic purchasing participation, supplier
selection, supplier evaluation and purchasing performance, International Journal of Production Research, DOI:
10.1080/00207543.2015.1047983

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 International Journal of Production Research, 2015
http://dx.doi.org/10.1080/00207543.2015.1047983

Strategic purchasing participation, supplier selection, supplier evaluation and purchasing

performance
Anand Naira*, Jayanth Jayaramb and Ajay Dasc
a
Department of Supply Chain Management, Broad College of Business, Michigan State University, East Lansing, MI, USA;
b
Department of Management Science, Moore School of Business, University of South Carolina, Columbia, SC, USA; cDepartment of
Management, Zicklin School of Business, The City University of New York, New York, NY, USA
(Received 22 January 2015; accepted 13 April 2015)

In this article, we examine how purchasing’s strategic participation influences supply management activities via the
choice of appropriate operational and strategic criteria. Specifically, the study focuses on supplier selection and monitor-
ing ongoing supplier performance evaluation based on operational and strategic criteria. A combination of choosing
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appropriate supplier selection criteria and monitoring supplier performance ensures that the benefits of purchasing’s par-
ticipation in strategic planning translate into better purchasing performance of cost, quality, delivery, flexibility and
innovation. We test the hypotheses using survey data collected from manufacturing companies in the US by means of a
path model. Our results provide support for the tenet that purchasing’s participation in strategic planning influences
purchasing performance directly as well as through the mediating effects of supplier selection criteria and supplier
performance evaluation. We discuss the theoretical and managerial implications of the findings and propose directions
for further research.
Keywords: theory building; strategic purchasing participation; supplier selection criteria; supplier performance
evaluation; purchasing performance

1. Introduction
The strategic nature of the procurement function has been a topic of active research interest and controversy (Chen,
Paulraj, and Lado 2004; Das, Narasimhan, and Talluri 2006; Lawson et al. 2009; Johnson and Leenders 2012; Knoppen
and Sáenz 2015). Consider, for instance, the fact that while members of the purchasing profession have, for some time,
considered themselves to be strategic and value-adding players within the organisation (Spekman, Kamauff, and
Salmond 1994; Carter and Narasimhan 1996; Narasimhan, Jayaram, and Carter 2001), other members of the organisa-
tion have not always shared purchasing’s image of itself. There have been questions about whether purchasing indeed
has a strategic role in a business (Goebel 2003; Johnson, Klassen, and Leenders 2004; Johnson and Leenders 2012).
Prescriptions that include developing dyadic communications and cooperative relationships have been offered for firms
aspiring to attain such strategic roles (Goebel 2003).
Yet, from a practitioner perspective, the strategic impact of purchasing is increasingly evident – in terms of cost con-
tainment, quality, delivery, flexibility and innovation. The cost associated with procurement and supply management
processes range from 30% of cost of goods sold to as high as 70% of cost of goods sold in some industries like
automotive and chemicals (Quinn 2005). With crude oil futures hovering in the $88–$90 per barrel range and prices for
commodities like copper, nickel and resin steadily increasing over the past few years (since the steep decline in 2008),
sourcing managers have been under constant pressure to cope up with price volatility. Supply chain risks from natural
disasters and political causes, onerous new legal compliance regulations, rapid new product offerings from competition,
and evermore, demanding and fickle consumer markets have created significantly greater uncertainties for purchasing
(Zsidisin, Melnyk, and Ragatz 2005). Such escalating challenges have led to recommendations for appropriate purchas-
ing actions. One such recommendation centres on increasing purchasing’s participation in strategic decision-making.
Another suggests paying particularly close attention to supplier selection to ensure that the supply base is designed and
aligned correctly to strategic priorities.
The need for purchasing to align with the overall business strategy of the firm has been highlighted in several stud-
ies (Carter and Narasimhan 1996; Cox 1996; Hardt, Reinecke, and Spiller 2007; Schoenherr et al. 2012; Lindgreen

*Corresponding author. Email: nair@broad.msu.edu

© 2015 Taylor & Francis

 2 A. Nair et al.

et al. 2013). To this end, scholars have called attention to strategic purchasing participation, which has been defined as
the extent to which purchasing function participates in strategic planning processes, aligns supply management with
external environments and provides strategic contributions, such as affecting changes to end products or inputs needed
to develop new products (Chen, Paulraj, and Lado 2004; González-Benito 2007; Chen, Lee, and Paulraj 2014). Partici-
pating in strategic decision-making enables purchasing to understand and appreciate the interests of multiple internal
stakeholders – the significance of cost to manufacturing, the importance of time to order fulfilment or the value of
innovation and new products to marketing.
While strategic purchasing participation enables purchasing to recognise, influence, and support internal stakeholder
and firm priorities, the realisation of such priorities is considerably dependent on the role played by the suppliers. Pur-
chasing contributes to stakeholder value through performance on select strategic areas. Purchasing performance, in turn,
is linked to supplier performance (Goffin, Lemke, and Szwejczewski 2006; Hsu et al. 2006). Supplier performance is
dependent on the selection and development of suppliers that support purchasing goals, and thereby, the firm’s competi-
tive position. A truism today is that competitive conflict is waged between supply chains, and not just individual compa-
nies. In a sense ,then, the supplier becomes an external stakeholder, inextricably linked to buyer goals, actions and
fortunes. Finally, supplier selection is an outcome of careful and strategic identification and application of appropriate
supplier selection criteria.
Both capabilities and performance need to address multiple stakeholder interests. Accordingly, purchasing perfor-
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mance targets multiple strategic perspectives such as cost, quality, delivery, flexibility and innovation. Supplier selection
criteria should include an evaluation of supplier capabilities (and ultimately supplier performance) on such multiple attri-
butes. Strategic purchasing participation underlies and integrates these goals, by aligning purchasing actions to internal
stakeholder interests and by aligning buyer and supplier strategic intent and strategic capabilities. To sum up, our article
aims to build a coherent and connected theoretical perspective that asks, and attempts to answer, the following research
questions:
(a) Extent to which strategic purchasing participation (a medium for understanding and reconciling multi-stakeholder
perspectives) affects the criteria for supplier selection and in turn the supplier performance evaluation criteria.
(b) Extent to which strategic purchasing participation, supplier selection and supplier performance evaluation create
pathways for improving purchasing performance.
The rest of the article is structured as follows. In the next section we develop our research hypotheses. Section 3
describes the research design, and Section 4 presents our results. In Section 5, we present the theoretical and managerial
implications of our findings and offer directions for future research.

2. Research hypotheses
2.1 Strategic purchasing participation and supplier selection criteria
The principle of unity of command in classical organisation theory highlights the implications for role clarity and role
expectations in complex organisations (Rizzo, House, and Lirtzman 1970). The principle of unity of command states
that there should be one plan for a group of activities having the same objective. In essence, the unity of command
principle keeps a check on incompatible expectations. Participation in strategic decision-making and planning process is
one of the mechanisms to ensure unity of command. Participation in strategic planning has been positively associated
with strategic commitment (Coch and French 1948; Nutt 1989). Ketokivi and Castañer (2004) assert that engagement in
strategic planning is an attempt to create consistent organisational goals which can then be communicated throughout
the organisation (Vancil and Lorange 1975; Porter 1985). By integrating the general literature on participation (e.g.
Tannenbaum and Massarik 1950; Mitchell 1973; Schuler 1980; Fry and Hellriegel 1987) and the literature on strategic
planning (Wooldridge and Floyd 1990), it can be asserted that participation in the strategic planning process results in
informational, affective and motivational effects that reduce position bias and increase goal convergence (Ketokivi and
Castañer 2004). In a purchasing context, including purchasing in strategic planning provides clarity on required supplier
roles and enables selection of suitable suppliers for strengthening organisational strategic capabilities (Hillebrand and
Biemans 2004).
Supplier selection criteria form a set of qualifying strategic and operational standards that buyers employ to align
external resources with internal stakeholder goals (Sarkis and Talluri 2006). Clear and aligned supplier selection criteria
can help ensure unambiguity in supplier roles and predictability in outcomes and responses. By participating in strategic
planning process, internal supplier integration practices enable purchasing to reduce its own and (consequently) sup-
pliers’ role ambiguity. Prior work has emphasised the need for a certain level of competence and know-how to con-
tribute towards innovation (Prabhu, Chandy, and Ellis 2005). This implies that in the pursuit of selecting suppliers,
 International Journal of Production Research 3

purchasing needs to exercise care and caution (Schiele 2006). Supplier’s ability to provide product technology, assist in
product development and global reach, and the ability to anticipate and adapt to technological changes are important
determinants of its ability to provide strategic inputs to a firm (Roy, Sivakumar, and Wilkinson 2003). From a buying
firm’s standpoint, explicit consideration of these strategic aspects in their supplier selection criteria is important to
augment purchasing performance. We refer to these as strategic supplier selection criteria and distinguish them from
operational supplier selection criteria which relate to cost, quality, delivery and flexibility- related facets (Florida and
Kenney 1991; Forker, Ruch, and Hershauer 1999). We hypothesise that strategic purchasing participation increases the
goal congruence between the strategic directions that is desired from purchasing and business strategy. The strategic role
expected of purchasing shapes how it decides on the strategic and operational role expectations of its suppliers, i.e. it
forms the basis for supplier selection based on strategic and operational criteria. Thus,

H1a: Strategic purchasing participation is positively associated with the use of operational supplier selection criteria.

H1b: Strategic purchasing participation is positively associated with the use of strategic supplier selection criteria.

2.2 Multi-dimensional performance implications of strategic purchasing participation

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Participation in the strategic planning process improves participant goal orientation. Participants are able to interpret and
understand organisational goals by virtue of their participation in organisational strategy planning, in turn incorporating
these goals in their communications to others. Further, Ketokivi and Castañer (2004) argue that participation in strategic
planning and the communication of resulting goals act as a structural device that attenuates position bias and reduces
the likelihood of employees engaging in sub goal pursuit. The integration of functional decisions into a holistic corpo-
rate strategy and how functional decisions can shape corporate strategy has received a lot of attention in the operations
management literature as well (Hayes and Wheelwright 1984; Ward and Duray 2000). In a related vein, Cool and
Schendel (1988) have found that firms operating in the same market segment and following similar functional strategies
can have dramatically different levels of performance due to differences in functional level competencies. Some firms
manage the development of distinctive competencies overtime ‘better’ than others.
The development and deployment of such distinctive competencies can be expected to result in performance differ-
ences across firms (Lawless, Bergh, and Wilsted 1989). Studies have provided empirical evidence for the integrative role
of participation in strategic planning process (Vancil and Lorange 1975; Wooldridge and Floyd 1990) and associated
performance gains. Thus, in addition to providing clarity to suppliers about expected roles, strategic purchasing partic-
ipation also facilitates aligned behaviour and the development of appropriate purchasing capabilities within an organisa-
tion as well as alignment with external environment, improving performance outcomes manifested in terms of multiple
dimensions such as cost, quality, delivery, flexibility and innovation (Krause, Pagell, and Curkovic 2001). Ramsay
(2001) notes that purchasing functions display ‘an enormous range of differences in performance, personal skills,
experiences, and so on, some of which may confer an advantage that is hard to replicate’ (41).
Participation in strategic planning is one way in which the purchasing function in an organisation differentiates itself
from others by developing the skill levels of purchasing personnel (Carter and Narasimhan 1996; Carr and Smeltzer
2000) and fosters inimitable advantages. Purchasing managers have a better understanding of the holistic needs of an
organisation, which enables them to align their behaviours towards improving both strategic and operational dimensions
of purchasing performance. Based on this reasoning, we offer the following hypothesis:

H2: Strategic purchasing participation is positively associated with (a) cost, (b) quality, (c) delivery (d) flexibility and (e)
innovation dimensions of purchasing performance.

2.3 Supplier selection criteria and supplier evaluation

In firms that have a hierarchical structure, the role expectancy of middle managers is to participate in strategic planning
activities and take actions that are congruent with organisational priorities (Burgelman 1983; Bower 1986; Schilit 1987).
The lack of role conflict and role ambiguity leads to favourable outcomes (Kahn et al. 1964; Rizzo, House, and
Lirtzman 1970; House and Rizzo 1972; Hamner and Tosi 1974). Using the argument from Rizzo, House, and Lirtzman
(1970), the expectations that are conditioned by participation in strategic planning serve as standards for evaluating the
worth or appropriateness of behaviour, and they tend to condition or determine such behaviour.
In other words, unambiguous supplier selection criteria provide a basis for the specific strategic and operational
activities that are expected from the supplier. These strategic and operational activities by the supplier drive supplier’s
 4 A. Nair et al.

strategic and operational performance (Mitchell 1973; Schuler 1980). Strategic performance relates to supplier’s
performance in providing product technology, assisting in product development efforts, providing global reach and
anticipating technological change, whereas operational supplier performance focuses on performance of cost, quality,
delivery and flexibility (Simpson, Siguaw, and White 2002; Schiele 2006; Modi and Mabert 2007). Thus,

H3: The use of operational supplier selection criteria is positively associated with supplier’s operational performance
evaluation.

H4: The use of strategic supplier selection criteria is positively associated with supplier’s strategic performance evaluation.

2.4 Supplier performance evaluation and multi-dimensional purchasing performance

Purchasing performance is an important determinant of a firm’s competitive advantage. Cost, quality and delivery mea-
sures are often used to conceptualise purchasing performance (Krause, Pagell, and Curkovic 2001). These performance
dimensions are closely tied to supplier performance evaluations. For example, the cost performance for the buying firm
would be dependent on an evaluation of supplier’s cost performance. Scholars have argued that the cost reductions
achieved by the suppliers are typically passed on to industrial buyers by means of price reduction (Human and Provan
1997). Similarly, quality of components from the supplier influences the quality of buying firm’s products (Krause and
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Handfield 1999). Delivery performance dimension is critically linked to the reliability and speed of delivery from the
suppliers (Krause, Handfield, and Tyler 2007). Response to change hinges on purchasing’s flexibility performance,
which is closely related to supplier’s ability to meet changes in quantity requirements, provide timely delivery of prod-
ucts on short notice, and produce smaller production runs at more frequent intervals (Krause, Handfield, and Tyler
2007; Narasimhan and Das 2007). Hence, the performance dimensions of cost, quality, delivery and flexibility are
expected to be positively associated with supplier’s operational performance evaluation. At the same time, the supplier’s
strategic performance, manifested in terms of their ability to invest in capacity and to have a global footprint, is also
expected to contribute in enhancing purchasing performance dimensions of cost, quality, delivery and flexibility. For
instance, global presence in low cost manufacturing regions help the supplier to reduce its own costs, which in turn can
improve purchasing’s cost performance. Similarly, global presence of a supplier near a firm’s customers can help in
reducing delivery times. Supplier’s ability to invest in quality and capacity also lends positive benefits to operational
purchasing performance dimensions. Accordingly, we hypothesise the following:

H5: Supplier’s operational performance evaluation is positively associated with purchasing performance dimensions – (a) cost,
(b) quality, (c) delivery and (d) flexibility.

H6: Supplier’s strategic performance evaluation is positively associated with purchasing performance dimensions – (a) cost,
(b) quality, (c) delivery and (d) flexibility.

Extending beyond these traditional measures that is used for capturing purchasing performance, we also investigate
purchasing’s performance in terms of its ability to respond to change as well as to provide a foundation for innovation.
Evaluation of purchasing in terms of design flexibility and innovation performance is still relatively limited in industry.
Given that strategic supplier evaluation calls attention to supplier’s technological and product development- related per-
formance, it can be argued that strategic supplier performance evaluation should positively impact innovation perfor-
mance. We assert that suppliers help buying firms by providing design and technological capabilities (Krause, Pagell,
and Curkovic 2001). Strategic facets that are considered in supplier performance evaluation as performed by the pur-
chasing function provide the foundation to attain innovation performance. Based on this reasoning, we hypothesise that:

H6e: Supplier’s strategic performance evaluation is positively associated with the innovation dimension of purchasing
performance.

The overall research model and the associated hypotheses are presented in Figure 1.

3. Research design
In this section, we present the details regarding the research instrument, sampling procedure and measures that were
used for developing our key constructs and the results of the measurement model.
 International Journal of Production Research 5

Strategic Supplier H4 Supplier’s Strategic

Performance Evaluation H6(a,b,c,d,e)
Selection
H1b MULTI-PERSPECTIVE
PURCHASING
Strategic purchasing H2(a,b,c,d,e)
PERFORMANCE
participation
-Cost
H1a -Quality
-Delivery
Operational Supplier H3 Supplier’s Operational -Flexibility
Selection Performance Evaluation -Innovation
H5(a,b,c,d)

Figure 1. Research model.

3.1 Instrument development

Item measures for the different constructs in our study were adapted and built from existing scales and conceptual
works. Item measures for the purchasing performance dimensions were adopted from the manufacturing strategy litera-
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ture (Roth and Miller 1990; Dean and Snell 1991; Miller and Roth 1994). The item pool thus generated was pretested
on academics and several practitioners. Following the DeVellis (1991) guidelines, initial face validation for the item
measures was achieved through discussions with practitioners and academics. Feedback was also obtained for other
aspects such as instrument length, format and approximate completion time. A separate validation section was not added
in view of instrument length considerations. However, reverse coding and distributed placement of the item measures
were used as a precautionary measure against potential response bias.
Item scales were graded on a 1–7 Likert scale basis, with ‘strongly disagree–strongly agree’/‘poor–excellent’/
‘almost never–almost always’ anchors. As a part of the scale refinement process, a preliminary instrument was
developed and pilot tested among six senior-level supply chain executives. Based on feedback received from these
executives, individual items were dropped or added, and a revised final instrument was developed for large sample
administration.

3.2 Sampling
The sample frame was drawn from the manufacturing sector of the Institute for Supply Management (ISM) on a cross-
industry basis using Standard Industrial Classification (SIC) codes 34–37. The ISM represents a total population of
about 37,000 purchasing professionals in the US (53% in manufacturing industries), of which more than 66% possess
bachelors and more advanced degrees and have in excess of 9 years professional experience. Following Dillman’s
(1978) guidelines, the final instrument was mailed to 1500 senior-level ISM members selected at random from the ISM
member list. The mailing package consisted of a cover letter, the survey and a reply paid return envelope. A reminder
post card was mailed to all non-respondents after a week of mailing. Written follow-ups (with duplicate questionnaires)
were mailed to all non-respondents approximately three weeks after the initial mailing. Respondents were offered a
benchmarking report as an incentive to participate.
Two mailings of the survey instrument resulted in a total of 244 responses, excluding returns, refusals and unusable
responses. The response rate of 16.26% compares well with past studies (Gupta and Somers 1996; Das and Joshi 2007).
The SIC codes included in the sample were as follows:
SIC 34 – Fabricated Metal Products, except Machinery and Transportation Equipment.
SIC 35 – Industrial and Commercial Machinery and Computing Equipment.
SIC 36 – Electronic and other Electrical Equipment and Components.
SIC 37 – Transportation Machinery and Items.
Firms in these SICs engage in discrete product manufacturing where worker population, involvement and interaction
could be expected to be greater relative to continuous flow environments (US Department of Commerce). The unit of
analysis was the strategic business unit. Table 1 shows the respondent profile.
Respondents were senior level supply chain managers. Some respondents declined to provide certain sales and per-
formance data. Only complete responses were included in the data analysis. Tests for non-response bias across the first
(n = 184) and second (n = 60) wave of respondents did not show any significant results.
 6 A. Nair et al.

Table 1. Respondent profile of companies in the sample.

Characteristics All companies N = 233

Number of employees in business unit Mean: 2412.20

Std. dev.: 9787.08
Gross sales Mean: $907 million
Std. dev.: $3678.98 million
Production lot size Mode: <50 units
Median: 50–200 units
Product variety (major design differences) Mode: >10
Median: 9–10

3.3 Measures
The measures underlying the core constructs were developed by relying on support from the relevant literature. The
details regarding the underlying measures are reported as follows:
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3.3.1 Strategic purchasing participation

Several researchers have emphasised the strategic role of purchasing (Farmer 1972; Spekman 1981; Caddick and Dale
1987; Harland, Lamming, and Cousins 1999). In line with these and other studies that have used the notion of internal
integration to emphasise the strategic activities performed by purchasing (e.g. Ellram and Carr 1994; Gadde and
Håkansson 1994; Narasimhan and Das 2001; Narasimhan and Kim 2002; Das, Narasimhan, and Talluri 2006), we con-
ceptualise strategic purchasing participation as a bundle of practices that include participation in cross-functional teams,
participation in strategy meetings and participation in product-process designs.

3.3.2 Supplier selection criteria

The strategic expectations include technology capability of the suppliers, a wide geographic reach to accomplish
competitive advantage in the global marketplace (Thorelli 1986), an ability to contribute in new product development
(Choi and Hartley 1996) and ability to undertake appropriate investments (Nishiguchi 1994). Operational role expecta-
tions are also formed, which include quality, flexibility and customisation capabilities (Florida and Kenney 1991).
In contexts where purchasing participates in strategic planning activities, the buying firm treats the supply base as an
integral asset, and suppliers are given explicit and formal operational and strategic roles (Johnson 1999). In such a con-
text, the buying firm establishes trust-based relationship with key suppliers, maintains communication with suppliers and
provides constant feedback on supplier performance.

3.3.3 Supplier performance evaluation

Modi and Mabert (2007) conceptualise supplier performance by using buying firm’s perceptions. Specifically, the
authors conceptualise supplier’s performance to include operational performance dimensions such as cost, quality and
delivery dimensions and strategic performance dimensions such as product design and process technology improvement.
We extend the conceptualisation to consider a multi-dimensional perspective for supplier performance evaluation (also
see Simpson, Siguaw, and White 2002). In particular, we distinguish between supplier’s operational performance evalua-
tion (evaluation of cost, quality, delivery and flexibility performance dimensions) and supplier’s strategic performance
(evaluation of product development capability, technology management capabilities, investment capability and global
supply capabilities).

3.3.4 Purchasing performance

We consider operational and strategic dimensions of purchasing performance. _Operational purchasing performance is
captured in terms of cost, quality, delivery and flexibility performance, whereas innovation represents strategic dimen-
sion of purchasing performance. The measures underlying these dimensions include cost and quality of inputs/outputs,
cost of purchasing activities, procurement cycle times, on-time deliveries, inventory turns, percentage of JIT suppliers,
ability to respond quickly to design changes, the ability to respond quickly to changes in production volumes or
 International Journal of Production Research 7

schedules, and access to new technologies, and involvement in new product development (Chao, Scheuing, and Ruch
1993; Krause, Pagell, and Curkovic 2001; Leenders et al. 2002).

3.3.5 Control variables

Since firm size and product variety are expected to impact innovation and flexibility dimensions of purchasing perfor-
mance, we control for these variables in our statistical analyses (Johnson et al. 2002; Gelderman and Van Weele 2006).
We operationalise firm size in terms of the logarithm of number of employees and product variety in terms of number
of major design differences among products.

4. Results
Confirmatory factor analysis (CFA) was used in order to simultaneously validate the measures of purchasing participa-
tion in strategic planning and supplier selection criteria constructs. An exploratory factor analysis (EFA) preceded the
CFA for the constructs: supplier selection criteria and supplier performance evaluation. This step was undertaken to see
whether the items underlying these constructs hold together as one construct or whether they form conceptually distinct
factors. The EFA results suggested two distinct factors for supplier selection criteria (strategic selection criteria and
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operational selection criteria) and supplier performance evaluation (supplier’s strategic performance evaluation and
operational performance evaluation). In the CFA, all items loaded significantly on their hypothesised constructs. The
reliability of the latent variables was assessed by using Cronbach’s alpha and composite reliability values (Fornell and
Larcker 1981). The Cronbach’s alphas and composite reliability values suggest acceptable reliability for each of the
scales. The results obtained from the reliability analysis and the CFA are presented in Appendix 1.
The item loadings and overall model fit results for the confirmatory factor analyses lend a strong evidence of unidi-
mensionality and convergent validity for the measures underlying the constructs of purchasing’s strategic participation,
strategic and operational supplier selection criteria, supplier’s strategic and operational performance and purchasing per-
formance (Carmines and McIver 1981; Bollen 1989; Bagozzi, Yi, and Phillips 1991; Hoskisson et al. 1993). Discrimi-
nant validity was evidenced at acceptable levels by means of an examination using the chi-square difference test and by
comparing the average variance extracted for each construct with the squared correlation between that construct and any
other constructs (Fornell and Larcker 1981).
A potential source of bias in survey research is common method variance. To investigate any potential bias, we used
Harman’s one-factor test (Podsakoff and Organ 1986). As suggested in the test, an EFA was conducted to examine
whether one single dominant factor emerges for the independent and criterion variables. Our investigation did not iden-
tify such a single factor that adequately accounted for the variance, suggesting that variance existed that was not associ-
ated with using the same method for measuring the variables. The subjective nature of survey data could be another
potential source of bias. Miller, Cardinal, and Glick (1997) suggested that subjective data may be reliable and valid if it
fulfils the two criteria: (a) questions do not require recall from distant past and (b) informants are motivated to provide

Table 2. Intercorrelations among latent variables.

PurP SupS SupO SupPS SupPO PC PQ PD PF PI

PurP 1.00
SupS 0.46 (0.07) 1.00
SupO 0.23 (0.08) 0.29 (0.08) 1.00
SupPS 0.39 (0.08) 0.75 (0.05) 0.35 (0.08) 1.00
SupPO 0.35 (0.08) 0.26 (0.08) 0.77 (0.05) 0.60 (0.07) 1.00
PC 0.34 (0.09) 0.44 (0.09) 0.47 (0.09) 0.56 (0.09) 0.62 (0.08) 1.00
PQ 0.42 (0.07) 0.41 (0.08) 0.40 (0.08) 0.47 (0.08) 0.52 (0.07) 0.78 (0.07) 1.00
PD 0.42 (0.07) 0.39 (0.08) 0.61 (0.07) 0.51 (0.07) 0.65 (0.06) 0.95 (0.06) 0.73 (0.05) 1.00
PF 0.31 (0.08) 0.36 (0.08) 0.43 (0.08) 0.39 (0.08) 0.53 (0.07) 0.55 (0.09) 0.61 (0.07) 0.62 (0.07) 1.00
PI 0.57 (0.07) 0.60 (0.07) 0.27 (0.09) 0.52 (0.08) 0.33 (0.08) 0.44 (0.09) 0.71 (0.06) 0.57 (0.07) 0.57 (0.07) 1.00

Notes: Standard errors in parentheses.

PurP – strategic purchasing participation; SupO – operational supplier selection criteria; SupS – strategic supplier selection criteria;
SupPS – supplier’s strategic performance evaluation; SupPO – supplier’s operational performance evaluation; PC – purchasing perfor-
mance – cost; PQ – purchasing performance – quality; PD – purchasing performance – delivery; PF – purchasing performance –
flexibility; PI – purchasing performance – innovation.
 Downloaded by [New York University] at 05:08 06 August 2015

Table 3. Path analysis results.

Operational Strategic Supplier’s operational Supplier’s strategic Purchasing Purchasing Purchasing Purchasing Purchasing
supplier selection supplier performance performance performance – performance – performance – performance – performance –
criteria# selection criteria evaluation evaluation cost quality delivery flexibility innovation

Strategic purchasing 0.241** (0.064) 0.355** (0.0612) 0.076 (0.068) 0.238** (0.065) 0.222** (0.065) 0.116^ (0.069) 0.407** (0.058)
participation
Operational supplier 0.626** (0.043)
selection criteria
Strategic supplier 0.678** (0.038)
selection criteria
Supplier’s operational 0.296** (0.073) 0.283** (0.072) 0.361** (0.070) 0.377** (0.073) 0.049 (0.072)
performance
evaluation
A. Nair et al.

Supplier’s strategic 0.202** (0.073) 0.170* (0.072) 0.102 (0.072) 0.029 (0.076) 0.237** (0.070)
performance
evaluation
Control 1: size 0.027 (0.064) −0.052 (0.063) −0.039 (0.062) −0.063 (0.066) 0.065 (0.061)
Control 2: product 0.119^ (0.063) 0.015 (0.062) 0.057 (0.062) 0.056 (0.065) −0.015 (0.061)
variety
χ2 = 63.41; d.f. = 20; CFI = 0.95

Note: The table presents standardised estimates.

#
Standard errors are presented in brackets.
**p < 0.01; *p < 0.05; ^p < 0.10.
 International Journal of Production Research 9

accurate information. Both these criteria were met in our data collection. The first criterion was met as the questionnaire
focused on ongoing supply management practices and processes. The second criterion was met by ensuring the
confidentiality of responses and by providing a benchmark report as an incentive for participation. Descriptive statistics
and correlation matrix are presented in Table 2.
By testing the measurement model (discussed earlier and reported in Appendix 1), we assessed the adequacy of
measures used to develop our key constructs. We use path model to test our research hypotheses. The results of the path
model are presented in Table 3. As shown in the results, we find strong support for the relationship between strategic
purchasing participation and supplier selection criteria (H1a and H1b) and between supplier selection criteria and sup-
plier performance evaluation (H3 and H4). We did not find support for the relationship between strategic purchasing
participation and cost performance (H2a), but the results lend support for the relationship between strategic purchasing
participation and quality (H2b), delivery (H2c), flexibility (H2d) and innovation (H2e) performance. Operational supplier
performance evaluation was positively associated with purchasing’s cost, quality, delivery, and flexibility dimensions of
performance. This lends support to hypotheses H5a–H5d. Strategic supplier performance evaluation was significantly
associated with cost, quality and innovation performance dimensions, thereby lending support for H6a, H6b and H6e.
We do not find support for the association of strategic supplier performance evaluation with delivery and flexibility
dimensions (H6c and H6d). The control variable firm size was not significantly associated with any dimension of pur-
chasing performance, but product variety is positively associated with purchasing cost. To check for the robustness of
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our results, we also considered gross sales (log transformed) as an alternative control variable. The results of hypotheses
tests remain unchanged. We also found our results to be robust after removing five firms with sales revenue exceeding
$4 billion. This lends credibility to our findings.

5. Discussion
This study addressed purchasing’s participation with internal stakeholders by means of strategic participation. This
allowed us to consider a multi-stakeholder perspective in which purchasing plays an important role in strategic decision-
making. Based on the results obtained from analysing the data for manufacturing companies in the US, we found that
strategic purchasing participation had a direct positive association with quality, delivery, flexibility and innovation
dimensions of purchasing performance but not with the cost dimension. However, when viewed from the indirect link
between strategic purchasing participation and performance, via the mediating effects of supplier selection and supplier
performance evaluation, we found that the operational route (operational supplier selection criteria and supplier’s opera-
tional performance evaluation) was significantly associated with cost, quality, delivery and flexibility. The strategic route
(strategic supplier selection criteria and supplier’s strategic performance evaluation) was significantly associated with
cost, quality and innovation dimensions of purchasing performance. This differential pattern is an important contribution,
and we present a fuller discussion of this pattern of results next by pointing out contributions to the academic literature
and to managerial practice.

5.1 Contributions to the academic literature

5.1.1 Strategic purchasing participation
We find that within the context of manufacturing companies in the US, purchasing’s participation in strategic activities
positively influenced supplier selection criteria, both from strategic and operational perspectives. The results suggest that
by participating in strategic planning process, purchasing obtains a coherent understanding of overall organisation goals.
A clear understanding of organisational goals fosters strategic commitment towards these goals. This commitment trans-
lates into establishing appropriate strategic and operational supplier selection criteria that are congruent with the overall
organisational goals. In essence, by means of participating in strategic planning and thereby having a clear understand-
ing and commitment to organisational goals, purchasing seeks to ensure convergence of the organisational goals with
supplier capabilities.
The direct effect of strategic purchasing participation on purchasing performance was confirmed for quality, delivery,
flexibility and innovation. The direct association of strategic purchasing participation with cost was not supported. In a
purchasing context, we find evidence that substantiates an integrative role of participation in strategic planning process
and associated performance gains on multiple dimensions.

5.1.2 Supplier selection criteria

Supplier selection criteria represent the role expectancy of the supplier by the buyer. When purchasing, which typically
is the primary point of contact with the supplier, engages in strategic activities, the resulting role expectations from the
 10 A. Nair et al.

supplier are unambiguous. Participation in strategic planning activities conditions the role expectations, which is in turn
translated into strategic and operational supplier selection criteria. In the US manufacturing context, we find that clarity
in operational and strategic role expectations from the supplier, i.e. supplier selection criteria, positively influenced sup-
plier performance evaluation on operational and strategic sub-criteria. The choice of appropriate supplier selection crite-
ria on both operational and strategic sub-dimensions leads to goal convergence of the supplier with the expectations of
the purchasing firm.

5.1.3 Supplier performance evaluation

Supplier’s performance evaluation on operational criteria positively and significantly influenced cost, quality, delivery
and flexibility dimensions of purchasing performance in US-based manufacturing companies. This suggests that select-
ing suppliers on operational criteria such as cost, quality, delivery and flexibility and monitoring performance on those
criteria significantly affected the desired capability of cost, quality, delivery and flexibility performance internally.
It is interesting to note that for two purchasing performance dimensions (delivery and flexibility performance), sup-
plier’s performance evaluation on the strategic criteria did not influence purchasing performance. Consistent with our
hypothesis, our results suggest that the purchasing function can deliver on the innovation performance dimension only if
the strategic criteria of assistance by suppliers on product technology, new product development, investments, global
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supply and technology were used and monitored as a basis for supplier selection and supplier evaluation. While there is
increasing evidence of supplier performance evaluation on strategic aspects, purchasing is still commonly evaluated on
the cost dimension alone. Interestingly, our results suggest that even cost and quality dimensions of purchasing perfor-
mance are also positively associated with strategic performance evaluation of suppliers. An expanded scope of purchas-
ing performance which includes such measures as product development performance, adaptation to technological
changes and global reach is much needed. When viewed from this expanded performance perspective, synergies
between strategic supplier performance evaluation and purchasing performance would perhaps be more apparent.
Overall, the results from the path models seem to suggest that purchasing’s participation in strategic planning activi-
ties shapes supplier selection criteria (both long-term strategic and short-term operational) which in turn influenced sup-
plier evaluation and monitoring activities on those precise dimensions regardless of context. This is consistent with
studies by Morris, Steers, and Koch (1979) and Schuler (1980) who had suggested a model in which expectancy and
role perceptions are intervening variables between participation and performance. Extending this argument to the pur-
chasing context, we contend that supplier selection criteria and supplier performance evaluation act as important inter-
vening variables in translating strategic purchasing participation into purchasing performance. Specifically, operational
supplier selection criteria and operational supplier performance evaluation consistently mediate the association of strate-
gic purchasing participation with cost, quality, delivery and flexibility purchasing performance dimensions. Strategic
supplier selection criteria and strategic supplier performance evaluation mediate the relationship between strategic pur-
chasing participation and innovation dimension of purchasing performance. The results suggest that participation in
strategic planning activities brings clarity to the expectations from the supplier, which shape strategic and operational
supplier selection criteria. These supplier selection criteria positively influence supplier performance evaluation and
consequently purchasing performance. Table 4 summarises the relationships that were identified in our study.

5.2 Managerial implications

It is expected that buyers that report low levels of strategic participation will experience lower levels of purchasing per-
formance, since in theory; they would not have adequate insight on their roles and thus not be able to pick the right set
of suppliers in their selection process nor be able to set-up an appropriate supplier performance monitoring system. On
the other hand, buyers that report higher levels of strategic participation should experience reduced buyer role ambiguity
and enhanced buyer expectancy clarity.
Buyers that report higher levels of strategic participation adopt a strategic route which look at the long- term
viability of suppliers and ensure that the clarity stemming from involvement in strategic planning is ensured beyond
supplier selection to include monitoring and evaluating supplier performance. Through a process of selection and ongo-
ing monitoring of supplier performance, purchasing performance dimension of innovation is enhanced.
Another choice would be to opt for an operational route, in that, the supplier selection criteria include operational
aspects of suppliers like ensuring good quality and timely deliveries for key suppliers. This would be critical in their
influence on purchasing performance. We surmise that leading edge firms have different key suppliers for strategic
criteria as opposed to operational criteria. Both strategic and operational alignment are important for better purchasing
performance. To this extent, we suggest that there is a ‘translation recipe’ which converts purchasing’s strategic
 Downloaded by [New York University] at 05:08 06 August 2015

Table 4. Summary of results.

1 2 3 4 5 6 7 8 9
Operational Strategic Supplier’s Supplier’s
supplier supplier operational strategic Purchasing Purchasing Purchasing Purchasing Purchasing
selection selection performance performance performance performance performance performance – performance –
criteria criteria evaluation evaluation – cost – quality – delivery flexibility innovation
p p p p p p
1 Strategic
Purchasing
Participation p
2 Operational
supplier selection
criteria p
3 Strategic supplier
selection criteria p p p p
4 Supplier’s
operational
performance
evaluation p p p
5 Supplier’s
International Journal of Production Research

strategic
performance
evaluation
p
indicates that variables in the row impact the variable in the column.
11
 12 A. Nair et al.

involvement into better purchasing performance. This takes place by taking the outputs of the strategic planning
activities and using that to channel tactical supplier selection and supplier monitoring schemes. Albeit, this takes a near-
term approach to ensure that the purchasing performance on a day-to-day basis is optimal. In contrast, the strategic
translation recipe involves aligning with corporate strategy, and hence, supplier selection and monitoring activities
should reflect multidimensional dimensions of purchasing performance.

5.3 Limitations and direction for future research

The study has a few limitations that present directions for future research. We consider data from US -based manufactur-
ing companies for informing our research. Hence, we cannot be certain whether these findings will hold in other geo-
graphical contexts and in the service sector. Extending this research into these contexts will shed further light into the
phenomenon. While supplier selection criteria are a good proxy for the role expectancy of the supplier, future studies
can incorporate a richer conceptualisation by direct measurement and examination of concepts such as role clarity and
role ambiguity. Further, strategic purchasing performance that includes factors such as environmental (green) perfor-
mance could provide further insights. In this study, we do not distinguish between strategic, non-crucial, bottleneck and
leverage purchases (Blome, Hollos, and Paulraj 2014). Future studies can consider Kraljic Matrix Classification (Kraljic
1983; Rezaei and Ortt 2012; Wu et al. 2013) to undertake a more nuanced understanding of the relationships based on
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the type of purchase. Finally, our study has the limitations associated with perceptual measures of performance. Further
research that considers objective performance measures would provide a stronger validation of the theoretical model
proposed in the article. Notwithstanding these limitations, we believe that, to the best of our knowledge, our study is
the first one to comprehensively consider strategic purchasing participation, supplier selection, supplier performance
evaluation and multiple dimensions of purchasing performance in a theoretical framework. The findings of this study
offer several directions for extending the knowledge-base in the domain of purchasing and supply management.

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Appendix 1. Construct measures, validity and reliability analysis

Standardised item
Item scales loading SE

Strategic purchasing participation (Cronbach’s α = 0.83)

To what extent does purchasing work with other departments to establish major business goals? 0.71* 0.098
To what extent does purchasing play an influential role in corporate strategy meetings? 0.93* 0.096
To what extent does purchasing recommend or affect changes in end products and inputs? 0.64* 0.098
To what extent does purchasing make presentations to top management? 0.69* 0.12

Strategic supplier selection criteria (Cronbach’s α = 0.71)

Importance of existing product technology as a criteria to use critical suppliers 0.54* 0.082
Importance of supplier’s ability to assist in product development efforts as criteria to use critical 0.76* 0.079
suppliers
Importance of supplier’s willingness to make needed investments as criteria to use critical suppliers 0.63* 0.089
Importance of global presence as criteria to use critical suppliers 0.43* 0.12
Importance of supplier’s ability to anticipate and meet technology changes in input as criteria to use 0.69* 0.089
critical suppliers
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Operational supplier selection criteria (Cronbach’s α = 0.67)

Importance of quality as a criteria to use critical suppliers 0.46* 0.066
Importance of the ability to customise products as a criteria to use critical suppliers 0.48* 0.10
Importance of delivery flexibility as a criteria to use critical suppliers 0.84* 0.074
Importance of volume flexibility as a criteria to use critical suppliers 0.65* 0.084

Supplier’s strategic performance evaluation (Cronbach’s α = 0.71)

Supplier’s performance on product technology 0.62* 0.069
Supplier’s performance in assisting in product development efforts 0.72* 0.079
Supplier’s performance in making needed investments 0.65* 0.091
Supplier’s performance as global supply sources 0.46* 0.11
Supplier’s ability in anticipating technological changes 0.56* 0.082

Supplier’s operational performance evaluation (Cronbach’s α = 0.77)

Supplier’s performance on cost 0.51* 0.066
Supplier’s performance on quality 0.46* 0.068
Supplier’s performance on product customisation 0.57* 0.078
Supplier’s performance on delivery flexibility 0.80* 0.071
Supplier’s performance on volume flexibility 0.74* 0.076

Cost (Inter-item correlation: 0.62)

Purchasing performance in reducing cost of inputs. 0.66* 0.087
Purchasing performance in reducing costs of purchasing activities. 0.67* 0.091

Quality (Cronbach’s α = 0.74)

Purchasing performance in improving the quality of inputs 0.87* 0.071
Purchasing performance in improving the quality of outgoing products 0.70* 0.073
Purchasing performance in increasing standardisation of inputs 0.60* 0.086

Delivery (Cronbach’s α = 0.67)

Purchasing performance in reducing the procurement cycle time 0.81* 0.078
Purchasing performance in improving the on-time deliveries 0.69* 0.074
Increase inventory turns 0.60* 0.087
Purchasing performance in increasing percentage of JIT suppliers 0.54* 0.098

Flexibility (Inter-item correlation = 0.74)

Purchasing performance in responding quickly to design changes 0.79* 0.086
Purchasing performance in responding quickly to requirements arising out of changes in production 0.76* 0.077
volumes or schedules

Innovation (Inter-item correlation: 0.75)

Gain access to new technologies 0.79* 0.091
Participate in product development efforts 0.77* 0.10

Overall model fit: chi-square = 919.15; d.f. = 542; CFI = 0.96

*
Significant at p < 0.01.