Academic journal article Journal of Supply Chain Management

Purchasing's Internal Service Performance: Critical External and Internal Determinants

Academic journal article Journal of Supply Chain Management

Purchasing's Internal Service Performance: Critical External and Internal Determinants

Article excerpt

INTRODUCTION

Purchasing's important role in supply chain management potentially influences the firm's quality performance (Anderson, Rungtusanatham, Schroeder and Devaraj 1995), product innovation (Landeros and Monczka 1989), customer responsiveness, and the firm's financial performance (Chen and Paulraj 2004). One tool purchasing can use to improve both its supply chain performance and service to other functions, while helping to improve the firm's competitive position, is to develop a cooperative relationship with appropriate suppliers. There is evidence that the level of cooperation in the firm's key buyer-supplier relationships influences firm performance (Pickernell 1997; Larson and Kulchitsky 1998; De Toni and Nassimbeni 1999; Krause, Pagell and Curkovic 2001; O'Toole and Donaldson 2002), and that cooperative supplier-buyer relationships can provide both improved profits and a competitive advantage (Jap 1999).

In addition to maintaining external relationships, purchasing maintains relationships with its internal customers (e.g., operations, engineering and product development). By maintaining cooperative relationships internally and externally, purchasing can improve its ability to understand the firm's requirements and to effectively communicate these requirements to the supplier. At the same time, these internal and external cooperative relationships improve purchasing's ability to communicate the supplier's requirements and capabilities to the firm. There is also evidence that purchasing's internal customer orientation (i.e., internal cooperation) is related to end customers' satisfaction (Hult, Ferrell, Hurley and Giunipero 2000).

The current study integrates prior research about external and internal cooperation into one model, which is tested with data from purchasing managers to determine how both external and internal cooperation contribute to purchasing's internal service performance. The researchers test how the level of external and internal cooperation is affected by visionary leadership and test multiple antecedents of external cooperation. The purpose of this study is first to clarify the relationships of external cooperation with its antecedents; second, to examine the relationship of leadership with external and internal cooperation; and third, to determine the influence of purchasing's external and internal cooperation on purchasing's internal service performance.

The results of these tests show that leadership is very important in maintaining both internal and external cooperation. This research also shows that both internal and external cooperation contribute to purchasing's internal service performance. Finally, while this study was not able to firmly establish the relationship between trust and commitment (antecedents of external cooperation), it did determine that trust, commitment, communication and shared goals all contribute to external cooperation.

The model and the supporting literature are reviewed in the next section. Then the survey methodology and analysis are explained. The final section discusses the implications of the results of this research for purchasing theory and for practicing managers.

RESEARCH MODEL AND LITERATURE REVIEW

The model tested in this research is shown in Figure 1. Because of the increased emphasis in industry on the use of buyer-supplier relationships to obtain a competitive advantage, there has been extensive research on many of the variables in the model, (e.g., Dyer and Singh 1998). The rationale for the inclusion of these variables and for the proposed relationships in this model is based on this wealth of prior research and is explained below, starting with the last construct--Internal Service Performance. The logic of the model and its variables are explained starting on the right and moving to the left. The model investigates the influence of external cooperation and internal cooperation on internal service performance. …

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