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´ ´ ´ Cristobal Sanchez-Rodrıguez
School of Administrative Studies, York University, Toronto, Canada
Abstract Purpose – This purpose of this paper is to introduce strategic purchasing (SP) and supplier development (SD) as constructs that could have the potential to contribute to the success of relationship marketing efforts. Based on the relational view of the ﬁrm, the authors propose that SP is an antecedent of SD practices and can create value for the buying ﬁrm in terms of better purchasing performance. Design/methodology/approach – Hypotheses derived from the key features of SP and SD practices are tested using structural equation modeling through ﬁeld research on a sample of 306 manufacturing companies in Spain. Findings – Findings from this study indicate that there is signiﬁcant evidence to support the hypothesized model in which SP exerts a direct inﬂuence on SD practices and purchasing performance, as well as an indirect impact on purchasing performance mediated through SD. Research limitations/implications – Further research is necessary to increase our understanding of a buyer’s strategic purchasing and supplier development practices and more speciﬁcally how suppliers could develop a supporting environment to facilitate the strategic alignment of these two concepts. The limitations of the survey are also discussed. Practical implications – The ﬁndings from this study provide supplying ﬁrms with an understanding of how buying ﬁrms use SD to deploy their SP initiatives in order to achieve improvements in purchasing performance. Originality/value – While there is some literature analyzing SP and the implications for buyer-supplier relationships, the relationship between SP and SD practices and their effect on purchasing performance has not been yet analyzed. Keywords Buyer-supplier relationships, Purchasing, Supply chain management Paper type Research paper
An executive summary for managers and executive readers can be found at the end of this issue.
Industrial markets have undergone fundamental transformations during the last decade making buyersupplier relationships a matter of strategic analysis for industrial buyers and marketers (e.g. Cannon and Perreault, 1999; Dyer and Hatch, 2004; Jap, 1999, 2001; Wanger and Johnson, 2004). Researchers have suggested that buyersupplier relationships are undergoing a paradigm shift from transaction-oriented to relation-oriented, thus, making relationship marketing an increasingly important organizational concern for business. Critical to the success of relationship marketing is the exchange of resources between buyer and supplier (Hunt and Morgan, 1994). In this regard, both supplier (Perrien et al., 1995; Perrien and Ricard, 1995) and buyer (Campbell, 1998, p. 199) play a key role in ensuring the overall quality and effectiveness of relationship marketing efforts. As one author has argued:
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Unsuccessful relationship marketing efforts by suppliers may not necessarily be attributed to an inherent weakness in the supplier, but rather to organizational barriers and constrains within the buying ﬁrm that inhibit the successful implementation of relationship marketing practices (Campbell, 1998, p. 199).
Journal of Business & Industrial Marketing 24/3/4 (2009) 161–172 q Emerald Group Publishing Limited [ISSN 0885-8624] [DOI 10.1108/08858620910939714]
Thus, successful relationship marketing requires that managers have a clear understanding of how each partner can contribute to this relationship building process. In this context, a buying ﬁrm’s efforts towards strategic planning in purchasing (strategic purchasing) and the realignment of a supplier’s capabilities to match the buyer’s needs (supplier development) has the potential to contribute signiﬁcantly to the success of relationship marketing. Strategic purchasing has been identiﬁed as a critical antecedent of supplier involvement in the buyer’s new product development process (Carr and Pearson, 2002) and the implementation of effective communication and evaluation practices with suppliers (Carr and Pearson, 1999), thus making it an integral part of building successful buyer-supplier relationships. Similarly, supplier development has also been acknowledged to be a critical element of collaborative buyer-supplier relationships and has been identiﬁed to play a critical role in improving a supplier’s capabilities and performance (Krause, 1999; Krause et al., 2000). However, to date there has been no direct effort to analyze the relationship between strategic purchasing and supplier development practices. Thus, we use the relational view of the ﬁrm (Dyer and Singh, 1998) to gain a better understanding of this issue by empirically examining the implementation of a buyer’s strategic purchasing and supplier development activities, and relating them to the buyer’s 161
In order to do so. Carr and Pearson (1999) provided a formal deﬁnition of strategic purchasing as the process of planning. the buying ﬁrm can initiate a supplier development program. it would be reasonable to assume that strategic purchasing is an antecedent of supplier development.g. implementing. Narasimhan and Das (2001) suggested that strategic purchasing actions should preferably precede investments in purchasing activities (e. for such efforts to be effective it is necessary that they are aligned with the ﬁrm’s overall goals and strategies. in any case. Finally. the buying ﬁrm’s supply management activities need to be strategically oriented towards the accomplishment of the ﬁrm’s overall goals and strategies.g. ﬁnding evidence that strategic purchasing precedes the implementation of strategically managed buyer-supplier relationships and evaluation systems. it would need to strategically target individual customers (buyers) and realign the ﬁrm’s capabilities to match the customer ﬁrm’s buying priorities. Accordingly. Similarly. we describe the research model. Literature review and research model In recent years. 1999) through an investigation involving small-sized ﬁrms and found that strategic purchasing precedes efforts to involve suppliers in the ﬁrm’s new product development process (Carr and Pearson. involvement in the company’s strategic planning process) (Ellram. 1998) argues that ﬁrms who combine resources in unique ways may realize a competitive advantage through four important mechanisms: joint investments. We model strategic purchasing as a direct antecedent of supplier development and purchasing performance. Thus. then. and functional (Leenders et al. supplier development activities) and. Figure 1 depicts our theoretical model that links strategic purchasing with supplier development and purchasing performance. the following hypothesis was formulated: H1. 1994). Thus. business unit. for a supplying ﬁrm to effectively address the needs of the customers. evaluating. According to Watts et al. More recently. 2. 1999.g. In 2002. 1997). 2002). Carr and Pearson replicated their earlier study (Carr and Pearson. involvement in the product design process. 1980). This is referred to as strategic purchasing.Effect of strategic purchasing on supplier development ´ ´ ´ Cristobal Sanchez-Rodrıguez Journal of Business & Industrial Marketing Volume 24 · Number 3/4 · 2009 · 161 –172 purchasing performance. (2007) in their empirical study found that high strategic purchasing oriented ﬁrms evaluate their suppliers differently on a number of issues including a ﬁt with the buyer’s competitive strategy. Carr and Pearson (1999) analyzed the relationship between strategic purchasing. and the establishment of collaborative relationships with suppliers. Carr and Smeltzer. both supply management and relationship marketing activities are critical elements to a ﬁrm’s competitive advantage. Next. combining valuable and scarce resources. implemented. Consequently. knowledge exchange. manufacturing) activities that are consistent with the overall corporate competitive strategy”. methodology and results. This also requires that supplier capabilities need to be congruent with the buying ﬁrm’s purchasing and manufacturing requirements. Corporate strategic plans are the important basis for the subsequent development of the business unit goals and strategies. Zsidisin and Ellram (2001) reported evidence of a positive association between strategic purchasing and supplier alliances. However. Monczka et al. Thus.g. purchasing has the ability to support the corporate planning framework and the corporate value system (Freeman and Cavinato.. thus. a strategic purchasing function is characterized by having direct communication links with top management and the focus is on short term as well as long-term purchasing decisions (e. Strategic purchasing will be positively related to supplier development 162 . and controlling strategic and operating purchasing decisions for directing all activities of the purchasing function toward opportunities consistent with the ﬁrm’s capabilities to achieve its long-term goals. 2. This is known in the literature as strategic purchasing (Carr and Pearson. not be delayed beyond the start of such investments.. we discuss our research ﬁndings and the limitations of the study. a ﬁrm’s purchasing and manufacturing strategies must be congruent with the business unit and corporate level strategy. It has been argued that the focus of purchasing should be on strategies that are planned. cost and value analysis. which in turn drive the operational strategies and daily activities of functional areas (Carr and Smeltzer. 1990). 2002. 1997). 2002).1 Linking strategic purchasing and supplier development The literature has provided support for the strategic importance of purchasing in the corporate strategy and provides a classic approach to strategy formulation that identiﬁes purchasing as a key functional element to address the business overall objectives (e. researchers have adopted a relational approach to explain how buyer-supplier relationships can be a source of competitive advantage. Pressey et al. A ﬁrm’s strategic planning process generally involves three organizational levels: corporate. any effort on the part of the buying ﬁrm to realign the supplying ﬁrm’s capabilities with the buyer’s needs should be part of the buying ﬁrm’s planned strategy (strategic purchasing) if they are to contribute to the attainment of the ﬁrm’s overall goals. (1992) a buyer’s purchasing strategy can be viewed at the functional level as the “pattern of decisions related to acquiring required materials and services to support operations (e. The relational view (Dyer and Singh. 1992) and when purchasing’s operations are designed around the needs of the total organization. Porter. This suggests that strategic purchasing should precede the adoption of supply management practices including supplier development. and more effective governance. supplier evaluation systems. and controlled in order to Figure 1 Research model achieve the long-term goals of the ﬁrm (Aguilar. Thus.
survey methodology ensures greater generalizability of the results when compared to case based research. 2002) and mediated (e. Tan et al. Carr and Pearson.3 Linking strategic purchasing to a buyer’s purchasing performance Strategic planning processes that are well developed. implementation of a purchasing’s long-range plan (more than two years). the participation of purchasing in the strategic planning process of the company (strategic purchasing) should also have a positive effect on the buyer’s purchasing performance. . As Rajagopal and Bernard (1993) claim: A planned and proactive approach to the strategic management of the purchasing function both show enormous potential for the ﬁrm in terms of increased proﬁt and improved competitiveness in the marketplace. The above discussion suggests that implementation of supplier development results in increasing supplier performance which. combining valuable and scarce resources. sharing of cost structure information enables knowledge exchange. Narasimhan and Das. In addition. Survey methodology was chosen because the phenomena to be studied required obtaining information regarding a ﬁrm’s relationships with their suppliers and this type of information is not available publicly. and purchasing performance. we hypothesize that strategic purchasing has a direct positive effect on performance (H3) and a mediated impact through supplier development (H4): H3. 2004. 2002) since it can facilitate purchasing’s involvement in the company’s strategic decision-making process (Fitzpatrick. Initial evidence from the literature is supportive of the positive effect of individual supplier development practices on performance. 2001) impact of strategic purchasing on performance measures. supplier development. For example. Strategic purchasing will be positively and directly related to purchasing performance. Krause (1997) and Krause et al. Finally. it contributes to ﬁll this gap in the literature. Thus.Effect of strategic purchasing on supplier development ´ ´ ´ Cristobal Sanchez-Rodrıguez Journal of Business & Industrial Marketing Volume 24 · Number 3/4 · 2009 · 161 –172 2. 1988).. involving suppliers in the buyer’s product design process provides the buyer with access to the partner’s technology (Han et al. strategic purchasing would be expected to have a positive direct effect on a buyer’s performance. It could be the unique combination of strategic purchasing and supplier development practices or activities and their conﬁguration with the buying ﬁrm’s strategic goals as well as the supplying ﬁrm’s speciﬁc resources and capabilities.g. (1998) reported that sharing conﬁdential information (e. Chen and Paulraj. and the reward and recognition of a supplier’s achievements enables more effective governance mechanisms. therefore. the effect of strategic purchasing on performance could also be mediated by supply management practices.g. H4. Strategic purchasing is present in the company when the purchasing function has a formally written long-range plan. Accordingly. and controlled have a positive effect on a ﬁrm’s performance (Bracker et al. Supplier development will be positively related to purchasing performance. 1998). properly implemented. 3. would produce improvements in a buying ﬁrm’s purchasing performance. production costs) with the suppliers is positively correlated with a ﬁrm’s overall business performance. 2000). the number of articles dealing with strategic purchasing and supplier development using survey methodology is relatively small compared to case research methodology.. purchasing’s strategy alignment with the 163 2. we expect that a buying ﬁrm’s strategic purchasing efforts should lead to increased performance both directly and indirectly (mediated by supplier development). an appropriate method to obtain this information was to survey purchasing manager’s perspectives on supplier development and strategic purchasing. subsequently. Supplier development enables these four rent-generating mechanisms.2 Linking supplier development to a buyer ﬁrm’s purchasing performance According to the relational view. Thus. production schedules. the purchasing goals and plans are aligned with the ﬁrm’s strategic goals and plans (Carr and Smeltzer. 3. supplier development could be viewed a strategy where both buyer and supplier access and combine other ﬁrms’ resources with their own in order to improve performance and garner otherwise unavailable competitive advantages. suppliers are meanwhile given the opportunity to work with the buyer to identify parts that can most efﬁciently and effectively be produced given their production capability (Trent and Monczka. 1997). Purchasing’s representation in top-level management is another important element of strategic purchasing (Carr and Pearson. the strategic purchasing construct includes measures of purchasing’s active involvement in the company’s planning process. involvement of the supplier in the buyer’s new product design process enables joint investment and combining valuable and scarce resources. 1999. 1993).. Research methodology A survey methodology was chosen to test the research hypotheses. Measures were developed following the procedure recommended by Churchill (1979) after reviewing the extant academic and trade literatures related to strategic purchasing. Thus. and more effective governance (Dyer and Singh. Supplier development mediates the relationship between strategic purchasing and purchasing performance. (2000) reported that the evaluation of suppliers through site visits and the use of supplier reward and recognition systems improves supplier performance. Timely and accurate information is also crucial to buyer-supplier decision-making and ultimately to supplier performance (Handﬁeld et al. Additionally. idiosyncratic interﬁrm linkages may be a source of performance improvements (relational rents) which are the outcome of four rent generation mechanisms: joint investments. 1999). knowledge exchange. Therefore. 2001). the following hypothesis was formulated: H2. and purchasing participates actively in the strategic planning process within the ﬁrm (Narasimhan and Das. However. Thus. Previous evidence from the literature support both direct (Carr and Pearson. Forker and Hershauer (2000) found that involvement of the buyer in the supplier’s new product design process resulted in better performance for both supplier and buyer. For example. what may protect the buying ﬁrm’s competitive advantage. In this context. 1996). Thus.1 Construct measurement Multi-item scales were developed for each of the variables included in the theoretical model (see Table I).
077 1.054 0.250 28. the supplier development construct included the following measures: visiting suppliers to assess their facilities.626 0. For the purchasing function.580 0.022 0.108 3. accounting. Supplier development broadly refers to “any effort by a buying ﬁrm to improve a supplier’s performance and/or capabilities to meet the buying ﬁrm’s short.007 0.. of the right quality.107 1. item V6 in Table I pertains to supplier reward and recognition. the purchasing performance construct included measures of quality of materials purchased.287 20.621 2. suppliers involvement in the buyer’s new product design process.086 0. Krause and Ellram.886 1.102 4.725 Strategic purchasing Purchasing is actively involved in the company’s planning process Purchasing has a long-term plan (more than 2 years) The top purchasing manager is located in the top higher levels of the organizational hierarchy The purchasing strategy is consistent with the ﬁrm’s corporate strategy Supplier development Plant visits to suppliers Supplier reward and recognition Collaboration with suppliers in materials improvement Providing training to suppliers Sharing of cost and quality information by the supplier Supplier involvement in the buyer’s product design process Purchasing performance Cost of materials Quality of materials On-time delivery Inventory performance Internal customer satisfaction Eigenvalues Percent variance extracted 3.074 0. standard deviations and exploratory factor analysis for the items composing the scales measuring strategic purchasing. Thus.784 3. Respondents were asked to indicate their degree of agreement or disagreement with the statements using ﬁvepoint Likert scales where 1 represented “strongly disagree” and 5 represented “strongly agree”.824 20. Reported discrepancies and comments were used to further reﬁne the instrument. Typical activities of a supplier development program include visits to suppliers’ plants to assess their processes (Krause.051 0.214 1.670 0.011 20.048 20.624 0.046 0.239 2. 1990). reward and recognition of a supplier’s achievements (Krause. collaborating with suppliers in materials improvement. 2002).411 1.237 0. and purchasing performance Code Construct/item SP V1 V2 V3 V4 SD V5 V6 V7 V8 V9 V10 PP V11 V12 V13 V14 V15 Mean Std dev. Factor 1 3. 1987) and has been used as a purchasing performance outcome in several studies (Stanley and Wisner.108 20.768 0.973 0. Purchasing managers at ﬁve manufacturing sites were interviewed while they reviewed the questionnaire to identify any language ambiguities and perceived omissions of other relevant practices not included in the survey. and involvement of the supplier in the buyer’s new product design process (Humphreys et al. on-time delivery.720 0.016 0.124 20.027 0.016 0.025 0.242 1.151 20.635 0. on-time.373 1.010 0.424 9.857 0. quality levels.and/or long-term supply needs” (Krause.190 1.011 20. Thus.343 3. For example. 1997).961 3.549 3.003 0.791 0.010 0. inventory performance. 1999).333 0.097 4. the question in the survey instrument was: “Suppliers are recognized and rewarded for materials quality improvement. 2001. Effective communication between buyer and supplier constitutes another important factor in supplier development (Humphreys et al.Effect of strategic purchasing on supplier development ´ ´ ´ Cristobal Sanchez-Rodrıguez Journal of Business & Industrial Marketing Volume 24 · Number 3/4 · 2009 · 161 –172 Table I Means. collaboration with suppliers to improve existing materials and components or develop new ones (Forker and Hershauer.314 4. the customer is the company department for whom the material or service is purchased and thus is deﬁned as an internal customer. training provided to suppliers.004 0.067 20.137 20. and sharing of cost and quality information. internal customer satisfaction has been identiﬁed as the most important element of purchasing performance (Cavinato. and in the right quantities 164 (Giunipero.512 0. A buying ﬁrm can make use of a wide range of supplier development practices to improve a supplier’s performance and/or capabilities. 2000).256 1.011 0.612 1. 2004).313 2. and ﬁnancial data). Similarly.039 2. From the supplier ﬁrm’s perspective. 1998.496 overall ﬁrm’s strategy.003 Factor 2 20. information about costs. providing training to suppliers (Krause. Operations management faculty were used as expert judges for content validation to determine how well the chosen items represented the four deﬁned constructs. supplier development.183 0.343 3. these purchasing performance dimensions can be viewed to areas where the supplier could create value for the buying ﬁrm. rewarding and recognizing suppliers’ performance improvements.” This is the same procedure used by Krause and Ellram (1997) in their investigation about the critical elements of supplier development.993 13. 2004. cost of materials.743 0/016 20. 1997).740 0.016 1. and the importance of a purchasing’s manager in the company’s organizational hierarchy (see Table I).014 0.820 4. . Purchasing performance refers to the effectiveness in procuring materials at the lower total cost of acquisition.780 0.173 1. 1997).g.112 Factor 3 0.805 0.775 0.714 0. and internal customer satisfaction. 1997) and it can be attained by intensive information sharing between buyer and supplier (e..
Six weeks after the initial mailing.9 2.000 Over 1.9 3.9 100. miscellaneous manufacturing. This response rate of 25 percent is comparable to similar studies in the literature (e. Table II provides frequency distribution of sales. The ﬁrms that participated in the study came from different industries. The only signiﬁcant difference corresponded to item V3 (purchasing position in the organizational hierarchy) between directors of purchasing . and chemicals were the most widely represented industries in the respondent group (see Table II). when performing the Boferroni test. Director of Purchasing and Quality. In descending order of response frequency: food.000 Total Respondent’s title Director of purchasing General manager of purchasing Purchasing manager Purchasing supervisor General director Director of logistics Sourcing manager Materials director Director of operations Supply chain manager Director of production Corporate director of purchasing Other Total 58 46 41 38 20 15 14 12 12 12 11 10 9 9 306 30 155 73 48 306 10 50 24 16 100 145 89 19 8 7 4 3 3 3 2 2 2 11 298 48. The survey questionnaire was pre-tested in six companies and respondents were given one month to provide comments regarding the wording. automotive components. the results are directly applicable to Spanish ﬁrms but could also be transferable to ﬁrms in other countries especially in countries with similar economic characteristics such members of the European Union. Therefore.6 3. 1977) on sales volume. were sent to all members in the sample frame.7 0. Coordinator of Relationships with Suppliers. we reworded a few of the items to ensure that the deﬁnitions of items were meaningful and comprehensive for the sample.7 3.0 Notes: The 11 titles under “Other” were Director of Services. Early versus late respondents were compared (Armstrong and Overton. no statistically signiﬁcant differences were found. a respondent’s title did not have a signiﬁcant inﬂuence in two of the four strategic purchasing measurement indicators. we performed correlation analyses between sales.7 0.9 6. Purchasing Agent. Only the correlation between size and V2 (purchasing has a long-term plan) was signiﬁcant although of small magnitude (0.9 4. a second survey and cover letter were sent to the remaining non-respondents.4 2.7 100.9 15.9 3.4 6. Vice President. we found no signiﬁcant differences among groups in item V2. we performed analyses of variance (ANOVA) to identify possible differences in 165 Table II Respondents’ Industries.0 0.3 1. number of employees. A letter encouraging nonrespondents to participate in the research was sent three weeks later.2 Sample description The sampling frame for the study was identiﬁed from the Dun and Bradstreet business database. supplier development practices and purchasing performance outcomes. After eliminating responses with missing data (15). Similarly. number of employees. Purchasing managers were determined as the most appropriate respondents because they are most familiar with their organization’s strategic purchasing. This ensured content and face validity. along with a postage-paid envelope.g. As it can be seen in Table III.5 4. it appeared that respondents had no difﬁculty in understanding the survey items. using the number of employees as the criterion for selecting the companies.200 manufacturing companies in Spain. the sample for analysis consists of 306 usable responses.Effect of strategic purchasing on supplier development ´ ´ ´ Cristobal Sanchez-Rodrıguez Journal of Business & Industrial Marketing Volume 24 · Number 3/4 · 2009 · 161 –172 3. Director of Materials and Purchasing.7 2.0 Industry Food and beverage Auto components Miscellaneous manufacturing Chemicals Machinery Pharmaceutical products Construction materials Telecommunications and electronic equipment Electricity materials Primary metals Paper Electric appliances Non ferrous metallurgy Textile Total Number of employees 0-100 101-500 501-1. VP Assistant.3 1. In the ﬁrst mailing. Using these responses. We identiﬁed and sent survey questionnaires to the largest 1. Business Director and Director of Logistics and Marketing respondents’ perceptions about strategic purchasing.0 1. Furthermore. and all six purchasing executives responded.6 3. number of employees and respondent’s title Number of Number of respondents ﬁrms % 18. and cost of raw materials and components. Results in Table III show that correlations between size (sales and number of employees) and three strategic purchasing indicators were non-signiﬁcant. overall. Director of Production Control. and respondents’ titles. Marketing Director. 2004. a cover letter explaining the purpose of the study and a survey questionnaire.0 13.14). number of employees.0 1. The ﬁnal survey questionnaire was administered in three mailings following a modiﬁed version of Dillman’s (1978) total design for survey research.4 12.7 29.3 2.9 3. Annual sales and number of employees for the companies in the sample averaged e141 million and 568 employees respectively. The selection of Spanish manufacturing ﬁrms was also appropriate due to the scarce number of studies devoted to the analysis of strategic purchasing and supplier development in Spanish ﬁrms. 2001). and the strategic purchasing measurement indicators. 198 corresponding to the ﬁrst mailing and 108 corresponding to the second mailing. Stanley and Wisner. clarity of items and structure issues. Chen and Paulraj. To evaluate the possibility of a structural inﬂuence due to size.
In contrast. measurement and path model combined) (Bollen and Long. Table IV sets out the estimated values of the standardized coefﬁcients. comparative ﬁt index (CFI).00 0. and factor 3 to strategic purchasing. we used the conﬁrmatory factor analysis model to verify that the constructs are indeed distinct (discriminant validity) and that a single factor model would not be appropriate. GFI ¼ 0:959. 1988).5). overall.74 4. the chi-square statistic (x2) for the full measurement model was nonsigniﬁcant ( p . it immediately becomes clear that all the coefﬁcients have a statistical signiﬁcance of 1 percent. we ﬁrst evaluated the structural model (i. x2/d. for 166 every coefﬁcient.60 recommended value for exploratory studies (Churchill. (r) V1 V2 V3 V4 0. CFI ¼ 0:985.18 Respondent’s title (ANOVA results) (F-value) Sig. constraining) the correlation between the pair of constructs to 1. 0.87 0. 4. As it can be seen in Tables V and VI.e.14 0. where at least one construct is both a dependent and an independent variable (Hair et al. Prior to assessing the study’s hypotheses.87 1.70 value for non-exploratory studies and well above the 0. From an initial analysis at this table. ratio¼ 1:19. Because the distinction between the constructs strategic purchasing and supplier development in the study is important to the results of the study. As it can be seen in Table IV. the use of SEM allows researchers to estimate the strength of relationships among scale items and latent constructs. An alternative method for testing discriminant validity consists in ﬁxing (i.90 level (Chau. A cursory look at the factor loadings indicates that the measurement variables had a high loading value in their corresponding variable and a low loading value in the other two factors.08 and general managers of purchasing. which are useful for the assessment of the relative weight of each manifest variable in the deﬁnition of the construct being referred to. multiple ﬁt criteria are presented to evaluate the overall ﬁt of the model (Bollen and Long.06 20.32 0. 1993). the results seem to point to the absence of a structural inﬂuence of size and management level over the strategic purchasing construct.08 0.18 0.15 4. it should also be remembered that the limit values for the t-values are: 1.f. which makes it possible to evaluate the statistical signiﬁcance of the link between the manifest variable and the latent construct. 1995). Thus. A signiﬁcant x2 difference indicates that a single factor model is not appropriate and that the two constructs are separate and distinct and therefore that discriminant validity exists.42 0. All constructs displayed composite reliabilities (Hair et al. Discriminant validity was assessed using the Fornell and Larcker’s (1981) criterion.985.. with values of 0. 1.981.00 0. Tables V and VI show that the smallest average variance extracted exceeds the squared correlation between each pair of value sources indicating a satisfactory level of discriminant validity.96 with a signiﬁcance value of 5 percent and 2. 1993). The table also contains.01 0. and above all. Each hypothesis would have corresponded to a regression analysis that would have to be evaluated individually. Three factors were extracted with eigenvalues greater than one totaling 51. while giving the investigator an indication of overall model ﬁt. All speciﬁed factor loadings were highly signiﬁcant.07 0. these results provide supporting evidence that the scales used in this study are reliable.15 0. 1997).0.09 0. Factor 1 corresponded to supplier development. 1995) in excess of the generally accepted 0.27 Number of employees (correlation results) (r) Sig. the differences amongst the constructs were signiﬁcant.06 0.Effect of strategic purchasing on supplier development ´ ´ ´ Cristobal Sanchez-Rodrıguez Journal of Business & Industrial Marketing Volume 24 · Number 3/4 · 2009 · 161 –172 Table III Correlations and ANOVA analysis between strategic purchasing and sales. the values of which are also reported.6 percent of variance of purchasing performance (R2 ¼ 0:106).048 0. 4.80 minimum recommended value.05) indicating a good ﬁt between the data and the proposed model. and goodness of ﬁt index (GFI).. Each extracted factor corresponded to each one of the research variables under study as indicated by their factors loadings (factor loadings greater than 0. number of employees. The hypothesized model (Figure 1) explained 10. This . RMSEA ¼ 0:025. A combination of factor analysis and regression analysis could also have been used to test the study’s hypotheses. 0. which indicates good convergent validity among the measures of each construct. AGFI ¼ 0:940.e. The non-normed ﬁt index (NNFI). 1993. 20. Structural ¨ ¨ equation is an appropriate statistical technique when testing a model that is hypothesized a priori and which assesses the relationships among latent constructs that are measured by multiple scale items. 1997).02 0. a conﬁrmatory factor analysis (CFA) was conducted to verify the measurement model (Anderson and Gerbing. 1993).2 Hypothesis testing The hypothesized structural model (Figure 1) was tested using the structural equation modeling (SEM) LISREL 8. and RMSR ¼ 0:039 (Chau. that is. Finally.05 0. in order to calculate the reliability indicators of the measurement model.959 respectively.50 software package (Joreskog and Sorbom. and respondent’s title Annual sales (correlation results) Sig.576 with a signiﬁcance value of 1 percent. 1979). Finally. 0. the construct reliability and the extracted variance. NNFI ¼ 0:981. Validity assessments and tests of the research hypotheses 4. Hair et al. Prior to estimating the structural model in Figure 1. the relative t-value. The structural model displayed a good ﬁt as indicated by the model ﬁt statistics: the chi-square statistic (x2) was nonsigniﬁcant (p ¼ 0:112). The results are reported in Table IV. the adjusted goodness of ﬁt index (AGFI ¼ 0:940) was above the 0. were all above the recommended acceptable 0. Thus.1 Construct validity In order to test the construct validity of the variables in the study an exploratory factor analysis was conducted using principal components and oblique rotation (see Table I). As recommended by many researchers..10 0. factor 2 to purchasing performance. 1995). which indicates that all the constructs are unique and distinct in the study and that discriminant validity is demonstrated.1 percent of the variance explained. then re-estimating the modiﬁed model (Segars and Grover.
35 Notes: x2 ¼ 98:954.226 12. the links between the constructs are statistically signiﬁcant (see Figure 2). 0.997 11.93 (24) Difference 128.746 0.256 0.543 12. and purchasing performance Code SP V1 V2 V3 V4 SD V5 V6 V7 V8 V9 V10 PP V11 V12 V13 V14 V15 Construct/item Standardized loadings 0.743 10. p ÿ value ¼ 0:112.512 0.080 Squared correlations among constructs Supplier development 0.51 * 0.434 9. †Minimum reliabilities Table V Assessment of discriminant validity of the constructs Strategic purchasing Strategic purchasing Supplier development Purchasing performance 0.51 Strategic purchasing Purchasing is actively involved in the company’s planning process Purchasing has a long-term plan (more than 2 years) The top purchasing manager is located in the top higher levels of the organizational hierarchy The purchasing strategy is consistent with the ﬁrm’s corporate strategy Supplier development Plant visits to suppliers Supplier reward and recognition Collaboration with suppliers in materials improvement Providing training to suppliers Sharing of cost and quality information by the supplier Supplier involvement in the buyer’s product design process Purchasing performance Cost of materials Quality of materials On-time delivery Inventory performance Internal customer satisfaction 0.680 0.154 13.28 * 0.735 t-value * 8. Comparative Fit Index (CFI ¼ 0:985). so it 167 can be stated that the data support the theory.868 0.928 8.f.44 0.716† 0.52 (31) 176.375 0.528 0.679 0.39 (30) 32. However.406 0.506 0.347 * Note: *Numbers on the diagonal show the average extracted variance.29 * 43.) 36.000 0.589 12.000 Note: *Correlation is signiﬁcant at the a ¼ 0:05 level suggests that the variance of this construct is only partially explained by the supplier development and strategic purchasing constructs. Goodness of Fit Index ðGFI ¼ 0:959Þ.663 0.677 11.801† Average variance extracted 0.794† 0.388 10.538 5.741 0.561 Composite reliability 0.82 p-value 0.510 * 0. Adjusted Goodness of Fit Index ðAGFI ¼ 0:940Þ.830 0.63 (43) 337. which does require the existence of these links.701 0.438 * 0.16 (44) 293.073 Purchasing performance 0.527 10. numbers below the diagonal represent the squared correlations Table VI Assessment of discriminant validity of the constructs Correlation Unconstrained model (d.53 0.855 8.05. .11 (23) Chi-Square statistic Constrained model (d.Effect of strategic purchasing on supplier development ´ ´ ´ Cristobal Sanchez-Rodrıguez Journal of Business & Industrial Marketing Volume 24 · Number 3/4 · 2009 · 161 –172 Table IV Conﬁrmatory factor analysis for the items composing the scales measuring strategic purchasing. Root Mean Square Residual ðRMSR ¼ 0:0399Þ. supplier development. *All t-values are signiﬁcant at p .5 percent of variance of supplier development. Root Mean Squared Error of Approximation ðRMSEA ¼ 0:025Þ.13 144. Non-Normed Fit Index ðNNFI ¼ 0:981Þ.f) 164.695 0. In addition.482 11.000 Strategic purchasing with Supplier development Purchasing performance Supplier development with Purchasing performance 0. the strategic purchasing construct explained 25.
512 * * – 0. H2 and H3 The test of H1. Tables VII and VIII. Table VII Results of model estimations Table VIII Results of model estimations Model 1 Model 2 – 0. This hypothesis was supported by a statistically signiﬁcant structural coefﬁcient of 0. p . H2 and H3 was based on the direct effects (structural coefﬁcients) among the constructs as shown in Figure 2 and reported in Tables VII and VIII.919 105. 0.50 and statistically signiﬁcant (t ¼ 7:062. model 1). Accordingly.2.917 0. Each of the three hypotheses is associated with a structural coefﬁcient in Figure 2.028 168 .189 * Model 3 0. H2 proposed a positive relationship between supplier development and purchasing performance. Complete mediation is evidenced by a non-signiﬁcant relationship between predictor and dependent variable once the mediator is included.Effect of strategic purchasing on supplier development ´ ´ ´ Cristobal Sanchez-Rodrıguez Journal of Business & Industrial Marketing Volume 24 · Number 3/4 · 2009 · 161 –172 Figure 2 Research model estimation results 4.299 * * Structural path SP ! SD SP ! PP SD ! PP R-square: SD PP 0.f.05.255 0. p .09 d. Conditions 1 and 2 were tested by H1 and H2 above.857 0.95 171. 2 The mediator variables have to be signiﬁcantly related to the dependent variable. two tail. 0. model 1.01. H3 proposed a positive relationship between strategic purchasing and purchasing performance. model 1).935 0.2 Test of H4 In order to test H4 a test of mediation was performed which required to demonstrate three conditions: 1 The predictor variables have to be signiﬁcantly related to the mediators. Tables VII and VIII.959 0. To test condition 3 for mediation (complete or partial) two additional structural models were estimated (model 2 and Chi-square Model 1: (hypothesized model) Direct and indirect effect Model 2: Direct antecedent effect Model 3 Indirect effect 99.05.96. two tail 3 There must be a substantial reduction in the relationship between the predictor and dependent variable when the mediator is included (Baron and Kenny.1 Test of H1. H1 proposed a positive relationship between strategic purchasing and supplier development.956 NFI 0.01.193 * * 0. 0.2. (t ¼ 2:152. model 1).0894 Notes: *Signiﬁcant at p . 1986). * *Signiﬁcant at p . 0.184 (t ¼ 2:256. 0.191.505 * * 0.106 0. 0. 4. two tailed which corresponds to a critical t-value of 1. p .981 GFI 0. These coefﬁcients were tested at the signiﬁcance level p .025 0.05.184 * 0.054 0. Tables VII and VIII.05. This hypothesis was also supported with a standardized coefﬁcient of 0.912 RMSEA 0.262 0. strategic purchasing was signiﬁcantly related to supplier development and supplier development was signiﬁcantly related to purchasing performance.191 * 0. This hypothesis was supported since the standardized coefﬁcient was 0.985 0.0731 0.920 0. 83 84 84 CFI 0.
This is very important for industrial marketers given the importance and interactive character of relationship marketing efforts. through buyer involvement in supplier’s new product development. collaboration with suppliers in improving existing and new materials. to understand strategic purchasing and supplier development. establishment of a system to reward and recognize supplier improvements. From the buying ﬁrm point-of-view. 2004). The second step consists in analyzing the external conditions given by the product. Ulaga. 2004). the supplying ﬁrm’s could provide training to its sales and operations personnel on how to collaborate with the customer ﬁrm on new product development. According to Bensaou (1999). exchanging knowledge (e. the ﬁndings of this study help us to better understand the link existing between strategic purchasing and supplier development and how it creates value for the buying ﬁrm. This investigation supports the view that ﬁrms that focus on strategic supplier development reap greater long-term beneﬁts from their efforts than ﬁrms using the non-strategic approach (Krause et al. and the market and selecting the type of supplier relationship to match. This step would be equivalent to strategic purchasing in our research model. Next. the ﬁndings of this research suggest that strategically oriented supplier development practices could help the supplier in creating value for the buying ﬁrm in four dimensions: product quality.05).g. suppliers should strive to reorient their relationship marketing efforts in order to support their customers’ strategic purchasing activities. Of all three models estimated. The study’s results suggest that strategically-aligned supplier development practices are a source of relational rents (i.Effect of strategic purchasing on supplier development ´ ´ ´ Cristobal Sanchez-Rodrıguez Journal of Business & Industrial Marketing Volume 24 · Number 3/4 · 2009 · 161 –172 model 3). Speciﬁcally. 0. Thus. this research offers a general guideline for industrial marketers regarding strategic purchasing practices (e. And model 3 deﬁned a fully mediated model. Thus. Since long-term value creation is one of the key organizational goals of businesses. 6. where strategic purchasing had a direct effect on supplier development. Discussion and implications The results of this research provide support for the relationship between strategic purchasing and supplier development. the signiﬁcant relationship between strategic purchasing and purchasing performance in model 2 (BetaSP!PP ¼ 0:193. and supplier involvement in the buyer’s product development process). that is. establishment of a system to reward and recognize supplier improvements.g. 0. and the existence of direct links between purchasing executives and top management) and supplier development activities (e. This research also contributes to recent literature on value creation and competitive advantages for customers (e. In addition. or developing interorganizational information systems. providing training to suppliers.g. participation of purchasing in the strategic planning process. 0.g.05). and strategic purchasing and supplier development leads to improved 169 performance in the buying ﬁrm (customer). In this way. the technology.g. Bensaou (1999) suggests that in case of misalignment between what the supplier is able to provide and what the buying ﬁrm requires. p . model 1 was a signiﬁcantly better ﬁtting model than model 2 and 3. through supplier development. delivery. Our research suggests that a buying ﬁrm could implement supplier development practices and that they could lead to better performance. and supplier involvement in the buyer’s product development process). The results of these model estimations are summarized in Tables VII and VIII. p . 5. combining. but more importantly their customers’ strategic priorities. Model 2 deﬁned a direct effect model in which strategic purchasing and supplier development had direct effects on purchasing performance. combining complementary resources and capabilities (e. Thus. that is. it is therefore advisable for supplying ﬁrms and industrial marketers in particular. the buying ﬁrm should match the design of the relationship to the desired management proﬁle. exchanging. 2003. direct product costs. through suppliers being trained by the buying ﬁrm. and process costs (Ulaga. Since supplier development is a reﬂection of many building components of Dyer and Singh’s (1998) relational framework. sharing of quality and production information. Conclusions and future research This paper proposed and tested a model of mediating relationships involving three constructs: strategic purchasing. the ﬁrst step in supplier portfolio management is deﬁned by the buying ﬁrm setting up plans for its entire supplier base and for individual supplier relationships (Wanger and Johnson. the existence of a formal purchasing plan. and how they are related. see Figure 1) provided the best overall model ﬁt as suggested by the ﬁt indexes and the Chi-square difference test (Chi-square difference . the results of this research also provide support to Bensaou’s (1999) model of buyer-supplier relationships portfolio and suggest that buyersupplier portfolio management leads to performance improvements for the buying ﬁrm. through supplier reward and recognition).05) was weaker after controlling for supplier development in model 1 (BetaSP!PP ¼ 0:184.4 corresponds to a pvalue . and involving the supplier in the company’s new product development process). or investing in relationalspeciﬁc assets (e. Speciﬁcally. buyer and supplier can enable the four rentgenerating mechanisms identiﬁed by Dyer and Singh (1998). the existence of partial mediation by supplier development in the effect of strategic purchasing on purchasing performance.. .g. Industrial marketers could beneﬁt from a buyer’s efforts towards supplier development by integrating them with their own relationship marketing efforts. thus providing initial evidence of partial mediation of supplier development in the relationship between strategic purchasing and purchasing performance. frequent visits to suppliers to assess their processes. thus providing some support to H4. through buyer involvement in a supplier’s new product development.g. and deploying more effective governance mechanisms (e. and buyer’s visits to suppliers’ facilities). sharing of cost and quality information with supplier. and supplier development a direct effect on purchasing performance. improvements in performance). industrial marketers have the challenge to develop and establishing a process in the company with the capability of identifying a supplier’s degree of alignment with their customer’s strategic priorities in order to align their business processes to satisfy those priorities. In this regard. the buying ﬁrm should take appropriate actions to ﬁll the gap. 1998). model 1 (hypothesized model. 2003).e. This research also showed that strategically oriented-supplier development practices render positive results for the buying ﬁrm. in order to support the buying ﬁrm’s supplier development efforts and ensure their success.
and Hatch. NY.W. we cannot obviate the fact that these relationships may apply to larger ﬁrms more than to smaller ﬁrms. Strategic Management Journal. Vol.200 largest manufacturers in Spain. pp. 3. The study incorporated a crosssectional and descriptive sample of the manufacturing industry at a singular point in time. International Journal of Operations & Production Management. 23 No. pp. Testing Structural Equation Models. we identiﬁed that the implementation of strategically-oriented supplier development activities allows buyer and supplier to synergistically combine. exchange. R&D. “An empirically based operational deﬁnition of strategic purchasing”. 35-44. P. pp. Bracker. (2004). The collective results of this study are consistent with the view that purchasing strategy drives the implementation of purchasing practices (Ellram. 45 No. and Paulraj. 4. Vol. 6. supplier development. 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The ﬁndings suggest that a buying ﬁrm’s supplier development practices that are strategically-oriented through a buyer’s implementation of strategic purchasing generate “relational rents” that lead to superior performance. the results validate the proposed research framework (Figure 1) where the alignment of the purchasing strategy with the overall business goals is an antecedent to the implementation of supplier development practices and that this relationship produces results at the functional level increasing purchasing performance that in turn would add to improved business performance. “Strategically managed buyer-supplier relationships and performance outcomes”. Vol. Vol. 36 No.
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International Journal of Purchasing & Materials Management. 8. International Journal of Production Economics. and Johnson. pp. 629-46. Kim. International Journal of Enterprise Information Management. “Linking purchasing to corporate competitive strategy”. ´ ´ ´ among others. and Hahn.L.K. K. Canada. Vol. His research has been published in the International Journal of Operations and Production Management. Watts. About the author ´ ´ ´ Cristobal Sanchez-Rodrı guez is currently an assistant professor of Management Information Systems at the School of Administrative Studies.Y.Effect of strategic purchasing on supplier development ´ ´ ´ Cristobal Sanchez-Rodrıguez Journal of Business & Industrial Marketing Volume 24 · Number 3/4 · 2009 · 161 –172 industries”. Industrial Marketing Management. Vol. 9. pp. Zsidisin. “Activities related to purchasing and supply management involvement in supplier alliances”. 675-87. His current research interests include supply chain management. Vol.M. Wanger. (2001). “Conﬁguring and managing strategic supplier portfolios”. Cristobal Sanchez-Rodrıguez can be contacted at: email@example.com/reprints 172 . 33 No. and quality management. 28 No. (2004).ca To purchase reprints of this article please e-mail: reprints@emeraldinsight. 15-20. (1992). C. L. 4. and Ellram. pp.A. pp..com Or visit our web site for further details: www. Supply Chain Management: An International Journal. G. York University. C. Vol.A. 33 No.emeraldinsight. information systems. S. J. International Journal of Physical Distribution & Logistics Management. and International Journal of Logistics Research and Applications. 31 No. 717-30. Industrial Marketing Management. 8.
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