Strategic Supplier Selection's Effects on Buyer Competitive Performance in Matching Domains: Is Supplier Integration Effective at Mediating Relationships?

Abstract

The purpose of this research is to determine whether strategic supplier selection based on supplier capability in new product development, supplier quality, and supplier cost directly or indirectly improves the buyer's competitive performance capabilities in the matched domains of buyer product innovation, buyer quality, and buyer competitive pricing. The resource-based view of the firm is used to frame the direct effects of strategic supplier selection, arguing that a buyer's ability to select a supplier with resources and expertise in a specified domain should improve the buyer's performance capability in the "matched" domain (but not necessarily in "unmatched" domains). Two supplier integration techniques are considered as potential mediators, assuming indirect pathways. The research hypotheses examine both direct and indirect impacts for each of the matched domains, but do not assume cross-domain interactions. For instance, supplier selection for new product development capability should have an effect on buyer product innovation (in matched domains), but not always on buyer quality capability (unmatched domains). While the direct impacts of strategic supplier selection on buyer performance are supported in each matched domain, the indirect effects via supplier integration are not substantial for the matched domains. Strategic supplier selection is identified as a viable source of competitive advantage in the resource-based view. By contrast, supplier development and supplier partnership do not provide additional performance benefits in a particular domain over and beyond those obtained from strategic supplier selection in that domain; rather, it is the type of the resources selected that determines competitive advantage.