International Purchasing Research Articles

International purchasing offices in China: roles and resource/capability requirements

Purpose– The purpose of this paper is to address global sourcing organisational design through the following research questions: how do the roles performed by International Purchasing Offices (IPOs) change over time?; what are the resources/capabilities required by an IPO for an effective performance and how do they change over time?; and what are the contingent factors affecting such changes?Design/methodology/approach– The authors employed an exploratory multiple case study approach and analysed 14 Western IPOs located in China for a period between 2007 and 2012. The data were primarily collected through 34 direct, semi-structured interviews of IPO heads and sourcing managers or senior buyers.Findings– The authors identify and discuss the importance of ten roles played by IPOs and 12 required resources/capabilities. Furthermore, considering the changes that occurred to these IPOs over a five-year period (2007-2012), the authors observe three distinct evolutionary behaviours (i.e. “overall development”, “selective development”, and “stable configuration”) and highlight three contingent factors that jointly affect these behaviours (i.e. the architectural and technological complexity of the sourced items, annual volume sourced abroad, and experience in the foreign context).Originality/value– This paper contributes to the resource-based view of the firm in a global sourcing context by highlighting the resources/capabilities required by IPOs and discussing their characteristics. Furthermore, it proposes a typology of IPO micro-organisational evolutionary behaviours. Finally, it applies contingency theory and identifies three factors that might affect the evolutionary behaviours.

Challenges facing procurement professionals in developing economies: Unlocking value through professional international purchasing

Background: Until recently, procurement was seen as a necessity only. In fact, in many developing economies the profession is still being treated as a ‘back-office’ function. However, not much has been done to explore and address challenges facing procurement professionals in developing economies.Objectives: The purpose of this article was to examine the critical role played by the procurement function in business and to reveal the challenges faced by procurement professionals in developing economies as well as to suggest solutions to these challenges.Method: A sequential literary analysis was used, complemented by cross-country qualitative data gathered from one hundred diverse procurement practitioners from Botswana, Namibia and Zimbabwe. These were primarily participants in a series of procurement workshops run by the researchers from January to June 2014.Results: Findings suggested that limited recognition, increasing unethical behaviour, poor supplier service delivery, poor regulatory environment, varying supplier standards and poor corporate governance are the main challenges faced by the procurement profession in these countries.Conclusion: The study’s findings imply that there is limited understanding regarding the role procurement plays in both government and non-government institutions in developing economies. The article suggests solutions which procurement professionals and organisations can implement in order to unlock the potential value in the procurement function.

The impact of global purchasing and supplier integration on product innovation

Purpose – The interest in global purchasing has increased significantly in recent years, but the impact on product innovation is not well understood. The purpose of this paper is to empirically analyse the impact of global purchasing on product innovation sourced from suppliers, while taking into account how firms integrate their suppliers. Design/methodology/approach – The data used in this study are from the International Purchasing Survey, an international online survey on purchasing and supply management conducted in 2009. The data are analysed using factor and regression analyses. Findings – The paper shows that global purchasing has no direct impact on product innovation performance. However, supplier integration is more strongly associated with product innovation performance for firms purchasing globally compared to firms purchasing regionally. Practical implications – The implication is that when companies purchase globally, they must have a highly developed purchasing department in order to sustain a high level of innovation. For firms purchasing only regionally, the role of the purchasing department is diminished, at least in terms of contributing to innovation. Originality/value – This paper contributes to the discussion of potential advantages and disadvantages of global purchasing. First, the paper provides an explanation for the ambiguous results of previous research. Product innovation does not depend on whether firms are purchasing globally or not, it depends on how they purchase. This paper has showed that when purchasing globally, the role of the purchasing department becomes crucial for product innovation. The proficiency and activities of the purchasing department largely determine the success, in terms of supplier product innovation, of global purchasing.

Determinants of International Purchasing Success: An Analysis of the Status Quo of Research

International purchasing is one of the most important strategic topics for managers, and attracts more and moreinterest among researchers. The literature review in this article analyzes the status quo of theoretical knowledge andempirical research in international purchasing. We find that, owing to the relatively recent focus on internationalpurchasing as a scientific field, research often still lacks strong theoretical foundations, does not make enough use ofadvanced empirical methods, and still lacks systematic insights on the intricacies of purchasing success. Building onwhat progress has been made in past studies, we provide a strategy and structure framework of determinants ofinternational purchasing success that seeks to contribute to clearer theoretical thinking in the discipline and offers aformidable platform for the design of future empirical research.

A thematic analysis of research on global sourcing and international purchasing in retail firms

Purpose – The purpose of this paper is to offer a thematic analysis of global sourcing and international purchasing issues in international retail firms. Design/methodology/approach – We review literature that addresses purchasing/sourcing activities of retail firms in foreign markets. We categorize this literature into different themes and analyse how these themes are conceptually or empirically linked to performance. We then use the thematic analysis as a foundation for suggesting potential avenues for future research. Findings – Four distinct themes emerge from our literature review. Originality/value – There is a lack of research that addresses how retail firms can extract value from global sourcing and international purchasing activities. A thematic review, along with a careful classification of different themes, could lead to an enhanced understanding of the processes and objectives that underpin global sourcing and international purchasing activities in retail firms.

Inter-Sectoral Comparative Advantage of Tanzania and Impact on International Purchasing

The authors have analyzed inter-sectoral comparative advantage of Tanzania and impact on international purchasing. Comparative advantage fairly exists in some sectors in Tanzania. Comparative disadvantage also exists mainly in the foot wear/head gear and transportation sectors. The sectors with high numbers of products have positive impact on international purchasing as they can be a competitive source to procure from. As the case may be, there is still a room in Tanzania to improve on competitiveness. It is recommended that Tanzania comes up with sectoral policies that can enhance competitiveness further. It is also recommended that a more focused export promotion strategy be promoted. Attracting foreign direct investment especially trans-national corporations can assist Tanzania to improve on its competitive advantage mainly through technology transfer.

International purchasing offices: Literature review and research directions

International Purchasing Offices (IPOs) now play an increasingly important role in the management of international sourcing activities, both in developed and emerging economies. The relevance of this organisational solution and the relatively limited research that has been published so far in the P&SCM literature make the “IPO” topic particularly promising for future research. This paper – based on an analysis of 59 works published between 1991 and 2011 – provides the first comprehensive literature review and research agenda on this topic. The primary issues (i.e., IPO definition, activities, location choices, strengths, weaknesses, and human resources management) are identified, and a conceptual framework is proposed. Building on this analysis, some theoretical and methodological weaknesses of the existing works and some gaps in the literature are discussed. This work concludes by suggesting several future research directions.

Global purchasing strategy and International Purchasing Offices: Evidence from case studies

Setting up an international purchasing office (IPO) is one of the key steps for firms doing global sourcing. This paper aims to explore the relationship between strategy and structure in a contemporary global purchasing context. We build a theory of IPOs, employing a case study method to address two research questions—what types of IPOs exist in China? And how may an IPO become strategic to its parent's global purchasing? We identify three types or clusters of IPOs along four dimensions: motives for sourcing from China; global purchasing strategy for China; IPO structure and IPO followership. We present a causal model and associated propositions to explain how an IPO may become more strategic for its parent company. In the model we identify that, in addition to the direct link of ‘structure follows strategy’, IPO followership can be an underlying construct, linking IPO structure and global purchasing strategy for China. The paper opens up new avenues for global sourcing research and provides new insights for managers on global purchasing strategy, specifically with respect to IPO organisational design and capabilities.

Comparative Advantage of Ethiopia and the Role of International Purchasing

The authors investigated the comparative advantage of Ethiopia and the role played by international purchasing. They found that Ethiopia has 302 product lines in which it has revealed comparative advantage, RCA equal and greater than 1. The authors have concluded that Ethiopia has comparative advantage in 302 products. Tanned/crust skins of sheep/lambs were found to have a revealed comparative advantage index of 1821.51. International purchasing play a significant role in promoting comparative advantage.

Effects of geographic dispersion on intra‐firm supply chain performance

PurposeThis article aims to quantify and analyse empirically how the geographic dispersion of a firm's supply chain impacts on intra‐firm supply chain performance.Design/methodology/approachGeneralised linear modelling is utilised to analyse a sample of 95 large manufacturing companies operating in Finland.FindingsResults indicate that the increased geographic dispersion of the upstream supply chain results in higher costs of warehousing and logistics administration. On the downstream side, inventory costs, inventory days of supply, and cash‐to‐cash cycle time tend to increase due to geographically dispersed sales network. Increased geographic dispersion in the upstream and downstream supply chain results in the decline of perfect orders, and increases order fulfilment cycle time. However, the increased dispersion of the production network reduces order fulfilment cycle time. The results also indicate that the larger the firm, the better it can alleviate the negative implications of dispersion on perfect order fulfilment. Make‐to‐stock companies suffer less from the supply chain dispersion related delays in comparison to companies that utilise more pull‐type production and inventory strategies.Research limitations/implicationsResearch limitations include the cross‐sectional nature of the data, the concentrated geographic origin of the respondents, and the small sample size.Originality/valueBuilding on the multidisciplinary body of prior literature on geographic dispersion, the research provides quantified insights into the general principles of international supply chain design in the presence of a performance related trade‐off between the dispersion and centralisation of operations across the tiers of the supply chain. Contributions are made to the discussions on supply chain complexity, international sales portfolio diversification and international purchasing.

Activity specific knowledge characteristics in the internationalization process

PurposeThe purpose of this paper is to investigate differences in the characteristics of knowledge, which is very important for the internationalization of different business activities. In particular, the focus is on internationalization in emerging markets such as China and India.Design/methodology/approachThe paper presents a framework primarily based on knowledge management theory, which is illustrated in relation to interesting cases of four companies that are global leaders.FindingsAn R&D knowledge gap still exists in China and India. Differences across business activities exist in terms of the characteristics of the knowledge, which is most important for the internationalization in emerging markets within multinational corporations (MNCs). The most important knowledge for the internationalization of R&D activities is more tacit than it is for manufacturing activities and international purchasing activities. The source of the most important knowledge for the internationalization of R&D activities, as well as manufacturing activities, is more likely to be the MNC itself, than when marketing activities or purchasing activities are internationalized to emerging markets.Originality/valueA model is developed that illustrates differences between the most important knowledge for the internationalization of key business activities within MNCs. It is proposed that the technical dimension of tacit knowledge is more easily codified than the cognitive dimension of tacit knowledge. The cognitive dimension of local tacit knowledge is crucial for the internationalization of marketing activities, whereas the technical dimension of tacit R&D knowledge from the home base is crucial for the internationalization of R&D activities.

Internationalization Factors of Thai Multinationals and Thailand's Bilateral Trade Policy

This article investigates the impact of Thailand's recent bilateral free-trade agreements (FTAs) on the internationalization of Thai multinational enterprises (MNEs). The results highlight the relative importance of internal and external factors in the internationalization of developing country MNEs. The empirical evidence indicated that Thai MNEs judged bilateral FTAs as a critical facilitator of internationalization success. The FTAs facilitated firms' exports to a certain degree and marginally expedited firms' international purchasing activities. The influence of FTAs on firms' foreign investment was not discernible.

Continental differences in purchasing strategies and tools

This article focuses on the similarities and differences between the continental purchasing strategies and tools of companies in Western Europe and North America. The main question examined here is the strategic priorities and tools that European and North American buyers use (at the category level) for direct purchases and how they differ. The analysis is based on an empirical study of 224 companies from 10 countries. The results suggest that Europeans emphasise a reduction in prices and total cost of ownership as strategic objectives, while North Americans place greater emphasis on compliance with social and ethical guidelines. Both groups place surprisingly little emphasis on environmental objectives. In terms of tools, North American buyers have higher utilisation of electronic tools in purchasing and in communicating with suppliers, while European buyers appear to more extensively use purchasing tools associated with rating and auditing suppliers. Overall, it appears that a majority of purchases take place in home countries and close-by regions. Accordingly, we argue that practices adopted there offer interesting insights for international purchasing of the companies.

Combining industrial buyer and seller strategies for international supply and marketing management

PurposeThe purpose of this paper is to review international industrial purchasing and marketing literature with a focus on portfolio models, to develop portfolio models for buyers' and sellers' international strategies, and to combine the models so that both the buyer and seller perspectives are dealt with simultaneously.Design/methodology/approachLiterature on international industrial purchasing and marketing is discussed. Dimensions that are important for the buyers' and sellers' strategies are identified. Portfolio models for buyers and sellers are developed and the two perspectives are matched together.FindingsThe paper contributes a specification of features that are important for industrial buyers' and sellers' international purchasing and marketing strategies. These dimensions are used to develop a model of supplier relationship management and a marketing management model for supplier strategies. The consequences for the firm's international activities are discussed. A model combining industrial buyers' and sellers' international supply and marketing management strategies is developed.Research limitations/implicationsThis paper provides a deeper understanding of international exchange processes by combining literature on international industrial purchasing and international marketing. Situations are identified where different areas of theory are applicable. The paper also contributes to the discussion on what should be the conceptual domain of international business. Here, it is argued that international exchange is the product of joint decisions made by two or more actors based in different countries. Earlier academic literature reveals a striking imbalance: while one side of the coin – the exporter side – has been extensively studied, the importer side has largely been neglected. In this paper, it is tried to present a balanced view of both sides.Practical implicationsThis paper introduces portfolio management models that can be used for both industrial purchasing and marketing management. The paper stresses the importance of finding a fit between the marketing and purchasing strategies within a relationship. If both parties have positioned the relationship in a similar way, there are much greater possibilities for the relationship to create value for both parties.Originality/valueThe paper combines international industrial purchasing and international marketing perspectives as few studies have done before.

Role of logistics outsourcing on supply chain strategy and management

PurposeThe purpose of this paper is to investigate the effects of logistics outsourcing in Northern Europe through survey research. Research work intends to shed more light on logistics outsourcing with other than case‐based company examples.Design/methodology/approachSurvey was completed during late 2007 and early 2008 in Finland and Sweden for the largest companies in industrial and service sectors. Altogether 34 answers were received, and they were gained mostly from industrial and trading companies.FindingsThe research results show that warehousing, IT, and customs brokerage outsourcing could have impact on some managerial and strategic aspects of supply chains (SC). Thus, none of the identified difference areas was found to be statistically significant. Potential impact areas of SC strategy and management are integrated IT systems of manufacturing and logistics, reverse logistics procedures, and re‐engineering of logistics processes. However, research shows that in‐house produced IT function, and potentially outsourced warehousing, have important roles in more international purchasing.Research limitations/implicationsAltogether, the amount of responses in the survey was relatively low, but treating Finnish and Swedish companies as one group gives us some opportunity for statistical analysis. This grouping might be one limiting factors of our study, and especially in its generalization power; however, our earlier analysis with the data shows that these countries operate in a rather similar interest area. Another limiting factor of our research findings is the difference in respondent profiles – operating principles of logistics and trade companies are different as compared to manufacturing.Practical implicationsResearch shows that IT is potentially having an important role in both, international purchasing emphasis as well as on warehousing outsourcing activities. Contrary to the common view, this research gives some indication that in‐house IT is valuable, and more integrated applications are needed for example, when warehousing is being outsourced.Originality/valueThis is one of the seminal research works regarding North European outsourcing practices, and their affects on SC strategies and management. Both of the countries have an advanced industrial sector, which gives perspective for the readers world wide.

Global sourcing practices: the perceived importance of success factors and issues of actual implementation

An abundance of previous studies has investigated aspects of international purchasing and global sourcing, mainly focusing on the benefits, challenges, critical success factors, strategy development and the issues associated with the progression between different levels of sourcing. In such previous studies numerous factors have been identified as being critical to successfully develop and implement a global sourcing strategy. The research on which this paper is based seeks to understand how companies based in the UK have approached the implementation of their sourcing strategy. This paper highlights findings from a survey into the relationships between the perceived importance of various success factors for global sourcing and the actual implementation of such factors in global sourcing strategies.

The New Text of the Agreement on Government Procurement: An Analysis and Assessment

This article describes and analyzes the new, tentatively agreed text of the WTO Agreement on Government Procurement. It compares it to the existing agreement of 1995, offers interpretation of its provisions and discusses its potential implications for the regulation of international government purchasing. The objective of the article is to examine whether it has indeed delivered on its promise, namely to improve the existing agreement and to eliminate any remaining discriminatory measures and practices. To that aim it presents the critique that has been leveled against the provisions of the existing GPA and examines to what extent the flaws detected by this critique have been rectified in the new text. The paper concludes with a scorecard of the new text assessing its allover strengths and weaknesses.

A relationship model between key problems of international purchasing and the post‐purchase behavior of industrial firms

PurposeThis paper aims to analyze the key problems related to the international purchasing operations and their interrelationship with the post‐purchase industrial behavior: repeated purchase with modification, repeated purchase without modification and no rebuy. The objective is to develop a conceptual model in the area of international post‐purchase industrial behavior.Design/methodology/approachBased upon prior research in business marketing, international marketing, international business and intercultural communication, and complemented by an exploratory qualitative approach, the paper proposes a conceptualization of the post‐purchase industrial behavior and of the relationships between cost, logistics, governmental and cultural factors affecting international post‐purchase industrial behavior.FindingsThis paper elaborates a conceptual model and research propositions that delineate the relationship between key problems of international purchasing and the post‐purchase behavior of industrial firms. The importance of the cultural factor‐problem is outlined.Originality/valueThe value of the paper is to provide an emerging theory for the study of international post‐purchase industrial behavior. The concept of post‐purchasing behavior is explained in the context of international purchasing. Also, the paper provides insights of the effect of culture in international delivery times.

The International Comparison Program and Purchasing Power Parities

This article explains what purchasing power parities (PPPs) are designed to do and how they are calculated. It provides some real-life examples which demonstrate why PPPs are preferred to exchange rates for most international comparisons and describes the efforts that are going into making the 2005 International Comparison Program (ICP) the most comprehensive and firmly-based ICP round to date.

Analyzing internationalization configurations of SME's: The purchaser's perspective

This article focuses on the international purchasing behavior of small- and medium-sized industrial firms in Denmark. Based on taxonomy of internationalization configurations defined by the import and the export share of firms, the article explores the differences in these configurations seen from a purchasing perspective. The taxonomy reveals four internationalization configurations: international sourcers, globals, locals, and international sellers. Based on the taxonomy, the researchers diagnose the differences between firms in each of the configurations and find that psychic distance, risk, and control are unimportant factors compared to conventional findings. On the other hand, close cooperation between the firm and the international partners is important when explaining differences in internationalization configurations. The paper concludes by recommending possibilities for future research and by advising managers as to increase their success.