The role of geographical distance and its efficacy on global purchasing practices

Abstract

PurposeThe purpose of this paper is to investigate the extent to which the geographical location of and thus the geographical distance between buyer and supplier impact on the efficacy of purchasing practices (i.e. strategic purchasing management, tactical purchasing management, relational purchasing management) in terms of operational performance.Design/methodology/approachThe authors utilise cross-country data collected through the International Purchasing Survey group across a variety of countries and industry sectors. The authors conduct exploratory factor analysis to assess construct validity and regression analysis to test the varying effects of purchasing practices on operational performance. The authors split the sample to compare potential differences in the efficacy of purchasing practices between buyers and suppliers through geographical characteristics.FindingsThe results indicate that the efficacy of purchasing practices does indeed vary depending on differences in geographical location. Specifically, the authors identify that in cases where the buyer and supplier are located in the same country tactical and relational purchasing tools have a positive impact on operational performance. However, in cases where they are situated in different countries none of the purchasing tools seems to significantly improve operational performance.Originality/valueResearch that has taken a cross-country perspective on the efficacy of supply chain practices is surprisingly sparse. Since most supply chains are becoming more and more global it is important to consider the geographical location of the supply chain members when assessing the performance benefits of supply chain practices such as purchasing tools. Thus, the authors introduce and test the concept of geographical distance on the efficacy of purchasing practices at the dyadic level. To test the implications of geographical distance for purchasing practices the authors use a large-scale cross-country survey.