Maximizing impact of investments into purchasing and supply management

Abstract

PurposeThe purpose of this paper is to empirically evaluate the effect of resources and capabilities in purchasing and supply management (PSM) on operational performance. Specifically, to examine whether managers who neglect investments into key knowledge‐driven PSM resources will be foregoing the opportunity for a higher performance return from their core supplier‐related capabilities.Design/methodology/approachBased on an international cross‐industry survey of 273 major companies, two conceptual models grounded in the resource‐based view (RBV) theory are analyzed for moderation and mediation effects, and provide both researchers and practitioners with means of determining targets for investment prioritization. The models are tested using multiple regression techniques and structural equation modeling.FindingsThe authors' findings suggest that the impact of supply base practices on operational performance is stronger in firms where more advanced PSM resources are deployed; and that these improvements can be explained by a higher leverage of supply base practices on advanced PSM resources.Research limitations/implicationsThe paper documents the combined positive effect of knowledge‐driven resources and supplier‐related capabilities on operational performance. Additional resources and capabilities, e.g. PSM integration, deserve further research. A longitudinal survey of relationships would help us to gain a better understanding of sequential relationships between the examined constructs.Practical implicationsThis paper will help to guide senior management in balancing investment decisions for PSM development. The applied measurement model can be used to identify specific potential of improvement in individual organizations that can lead to increased operational performance.Originality/valueThe simultaneous consideration of moderation and mediation based on the RBV's conceptualization of resources versus capabilities provided a contribution in PSM. The results support management in maximizing the return of investments into PSM.