Cross‐functional integration and functional coordination in purchasing and supply management

Abstract

PurposeThe purpose of this paper is to develop a set of nine hypotheses linking four purchasing and supply management (PSM) practices directly to purchasing performance and indirectly to financial performance.Design/methodology/approachThe authors collected data in a global cross‐industry survey of 148 companies, combining primary interview and survey data with secondary data on firm performance, in order to minimize the impact of common method variance.FindingsSupport was found for eight of the nine hypotheses. In particular, a positive impact was found of cross‐functional integration and functional coordination on purchasing performance, and of purchasing performance on firm performance. Both talent management and performance management have a positive impact on cross‐functional integration and functional coordination. Talent management also has a direct impact on purchasing performance, in contrast to performance management.Originality/valueThe association of enhanced PSM maturity levels with financial performance metrics collected from secondary data sources provides robust empirical support for the stated but to this point largely untested positive impact of PSMmaturity on the firm's competitive position.