Building procurement capability for firm performance: a service‐dominant logic view

Abstract

PurposeThe purpose of this study is to explore four integrative supply chain practices – customer information technology (IT) integration, supplier IT integration, customer collaboration, and supplier collaboration – using a service‐dominant logic (SDL) lens to inform their relationships with procurement capability and ultimately firm performance. The study goes on to examine how firms with high and low procurement capability differ in their use of these practices, thus informing curiosity regarding “best practices”.Design/methodology/approachData were collected from 711 firms in 23 countries during the International Manufacturing Strategy Survey (IMSS). Exploratory factor analysis established simple factor structure and construct validity. Stepwise regression was employed to analyze relationships among customer collaboration, supplier collaboration, customer IT integration, supplier IT integration, procurement capability, and firm performance. T‐tests examined differences between the practices employed by firms with high and low procurement capability.FindingsFindings reveal positive relationships among customer collaboration, supplier collaboration, customer IT integration, and procurement capability. Supplier IT integration is not found to be significantly related to procurement capability. Procurement capability is in turn found to be positively associated with firm performance. All four variables emerge as best practices of firm's demonstrating high procurement capability.Originality/valueThis study provides a rare empirical investigation, and rich insights, into SDL for value co‐creation in supply chain management by examining an international sample of manufacturers. This study contributes to the extant understanding of supply chain collaboration and integration by unpacking key practices in the context of a firm's procurement capability. Lastly, “best practices” are provided which should be of great interest for practitioners from around the globe.