The Alignment Performance Link in Purchasing and Supply Management: Performance Implications of Fit between Business Strategy, Purchasing Strategy, and Purchasing Practices

240 Pages·2008·1.02 MB·English

by  Christian Baier

Christian Baier
The Alignment Performance Link in
Purchasing and Supply Management
GABLER EDITION WISSENSCHAFT
Einkauf, Logistik und
Supply Chain Management
Herausgegeben von
Professor Dr. Christopher Jahns
Die Schriftenreihe stellt den State-of-the-art betriebswirtschaftlicher
Forschung am Supply Management Institute SMI™ im Bereich Ein-
kauf, Logistik und Supply Chain Management dar. Die Verbindung von
Theorie und Praxis steht dabei ebenso im Vordergrund wie die inter-
nationale Ausrichtung und die unmittelbare Verknüpfung der Themen
Einkauf, Logistik und Supply Chain Management.
Christian Baier
The Alignment
Performance Link in
Purchasing and Supply
Management
Performance Implications of Fit between
Business Strategy, Purchasing Strategy,
and Purchasing Practices
With a foreword by Prof. Dr. Christopher Jahns
GABLER EDITION WISSENSCHAFT
Bibliographic information published by Die Deutsche Nationalbibliothek
Die Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie;
detailed bibliographic data is available in the Internet at <http://dnb.d-nb.de>.
Dissertation European Business School Oestrich-Winkel, 2008
D 1540
1st Edition 2008
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Foreword V
Foreword
In today’s markets, companies face ever growing international competition, radical
technological change, and increasingly demanding customers. These developments
force managers to focus on core competencies and result in decreasing in-house value-
add across industries. Adequate supplier selection and competent management of the
supply base have thus become key firm success factors. As a consequence, purchasing
and supply management (PSM) has developed into a powerful weapon for contributing
to a firm’s competitive advantage along dimensions such as cost, quality, and innova-
tion. Such a contribution, however, critically depends upon the alignment of purchas-
ing strategies and practices with the company’s overall business strategy. Only if the
purchasing function supports the firm’s competitive position can it effectively improve
profitability. Unfortunately, existing research still lacks both the theoretical concepts
and empirical foundation to provide detailed guidance to practitioners regarding how
such alignment can be achieved and what impact it should have on firm performance.
The doctoral thesis presented by Christian Baier develops and tests a comprehensive
model of the alignment-performance link in PSM in order to close this knowledge gap.
Drawing on insights from the market-based view, the resource-based view, principal-
agent theory, and contingency theory, the author derives a solid theoretical understand-
ing of the relationships between business strategy and strategies and practices at the
functional level. By applying the theory of production competence to the PSM context,
two critical levels of alignment are identified: strategic alignment, i.e., fit between
business strategy and purchasing strategy, and purchasing efficacy, i.e., fit between
purchasing strategy and purchasing practices. A configurational view, and profile devi-
aton in particular, is employed to empirically test hypotheses regarding both concepts.
Findings from the study deliver significant insights for both management practice and
research. Besides supporting the existence of the proposed alignment-performance link
in PSM, the results specify exactly which purchasing strategies and practices best sup-
VI Foreword
port different types of strategies at both the business and functional level. Therefore,
PSM practitioners who look for guidance on how to design their purchasing functions
in order to most effectively contribute to firm success will find this study particularly
helpful. This doctoral thesis provides two important implications for research. First, it
demonstrates the utility of an interview-based survey approach for collecting data on
purchasing practices. Second, it introduces profile deviation analysis as a means for
investigating complex, multidimensional alignment-performance relationships in PSM.
Univ.-Prof. Christopher Jahns
Acknowledgements VII
Acknowledgements
This doctoral thesis is based upon a joint research effort of the Purchasing and Supply
Management Practice of McKinsey & Company and the Supply Management Institute
at the European Business School (ebs). Several researchers and practitioners from both
institutions provided ongoing support and contributed significantly to the findings pre-
sented in the following chapters.
First, I would like to thank Dr. Nicolas Reinecke from McKinsey & Company for
providing me with the unique opportunity to participate in this research project as part
of my professional career and for allowing me to use the data for my doctoral thesis.
I am also deeply grateful to Prof. Dr. Christopher Jahns, the Executive Director of the
Supply Management Institute and my doctoral supervisor, both for the great contribu-
tions he and his team made to our research cooperation and the support provided for
my doctoral thesis. I appreciate his open and honest feedback.
I would also like to thank Prof. Dr. Ronald Gleich in his role as second supervisor for
the fast and positive review of my work.
In addition, many other researchers and practitioners were involved in my research
effort. I owe special thanks to Prof. Dr. Evi Hartmann, Prof. Dr. Roger Moser, and
Julia Wolf of the Supply Management Institute. I would also like to thank Peter
Spiller, Dr. Michael Stolle, and all the partners of McKinsey & Company who invited
their clients to participate in this research project.
Moreover, I would like to thank all Chief Purchasing Officers who took the time to
participate in our interview-based empirical study. I really do hope that the feedback
and insights we provided were helpful in practice.
Finally, a big thank you goes to my family, friends, and fellow doctoral students. They
made my docoral studies a fun and enjoyable period of my life.
Christian Baier
Table of content IX
Table of content
List of figures XI
List of tables XIII
List of abbreviations XV
1 Problem situation and research approach 1
1.1 Problem definition and research gap 2
1.2 Research objectives 8
1.3 Structure of thesis 11
2 A theoretical perspective on the contribution of PSM to the generation of
competitive advantage 13
2.1 Clarification of terms and their definitions 13
2.1.1 Purchasing and supply management (PSM) 13
2.1.2 Competitive advantage 15
2.1.3 The concept of fit 18
2.2 A theory-based understanding of PSM’s role in generating competitive
advantage 20
2.2.1 Market-based view 20
2.2.2 Resource-based view 24
2.2.3 Principal-agent theory 28
2.2.4 Contingency theory 32
2.3 Levers and prerequisites for PSM’s contribution to competitive
advantage in practice 34
2.3.1 PSM’s value-creation levers 34
2.3.2 PSM’s value-creation prerequisites 39
2.4 Interim summary: PSM as an important contributor to the firm’s
competitive advantage 47
3 A conceptual model of the alignment-performance link in PSM 51
3.1 Development of hypotheses model 51
3.1.1 The strategy hierarchy as the foundation for a conceptual model
of the alignment-performance link in PSM 51
3.1.2 The theory of production competence as a vehicle for adapting
the strategy hierarchy to the specific context of PSM 58
X Table of content
3.1.3 Development of hypotheses 64
3.2 Development of constructs 70
3.2.1 Business strategy construct 71
3.2.2 Purchasing strategy construct 78
3.2.3 Purchasing practice construct 85
3.2.4 Business performance construct 111
3.3 Research approach for investigating the alignment-performance link in
PSM 114
3.4 Interim summary: A conceptual model for analyzing the alignment-
performance link in PSM 119
4 An empirical analysis of the alignment-performance link in PSM 123
4.1 Research methodology 123
4.1.1 Research concept and study design 123
4.1.2 Data collection approach and survey design 128
4.1.3 Population and sample 135
4.2 Data analysis 140
4.2.1 Data hygiene 140
4.2.2 Operationalization of measures 143
4.2.3 Psychometric analysis 151
4.2.4 Hypothesis testing and analysis results 157
4.3 Discussion of results 168
4.3.1 Implications for management practice 169
4.3.2 Implications for management research 173
4.3.3 Limitations and suggestions for further research 175
4.4 Interim summary: Detailed insights into the alignment-performance link
in PSM 179
5 Summary and conclusions 183
Appendix 191
References 197