Cross‐Functional Influence and the Supplier Selection Decision in Competitive Environments: Who Makes the Call?

• DOI: http://doi.org/10.1111/jbl.12199
• Published date: 01 June 2019
• Author: Barry Brewer,Cynthia Wallin Blair,Bryan Ashenbaum
• Date: 01 June 2019

Cross-Functional Influence and the Supplier Selection Decision in

Competitive Environments: Who Makes the Call?

Barry Brewer

1

, Bryan Ashenbaum

2

, and Cynthia Wallin Blair

3

1

University of Wyoming

2

Miami University

3

Brigham Young University

This paper presents the results of a multiple-case study that examines how procurement and engineering personnel share priorities, have a

common vision, and influence the supplier selection decision in competitive environments of varying risk and uncertainty. We interviewed

113 procurement and engineering respondents from 26 different companies/business units across up-, mid-, and downstream segments of the oil

and gas industry. Following a middle-range theorizing approach, we develop a series of working propositions and theoretical frameworks, utiliz-

ing goal congruence theory to sharpen proposition development and create suggested extensions for theory. In general, we find that engineering

personnel tend to dominate cross-functional decision making in higher risk environments and that more equal arrangements exist when both risk

and uncertainty are low. When competitive environment risk is low but uncertainty is high, considerable disagreement arises over which func-

tion “leads”this decision. Higher risk environments drive higher goal congruence through shared vision and consensus on who makes supplier

selection decisions.

Keywords: procurement; engineering; supplier selection; competitive environment; goal congruence; mid-range theorizing

INTRODUCTION AND LITERATURE REVIEW

Supplier selection is among the most important of firm decisions.

Good suppliers can enhance your bottom line; bad ones can cost

you money, customers, or even your business. For this reason,

this decision is often multifunctional in nature, involving both

engineering personnel, who bring technical expertise to the table,

and procurement personnel, who provide commercial knowledge

such as procurement best practices, contract particulars, and sup-

ply market expertise.

1

Yet little is known about the nature of

how personnel in procurement and engineering functions work

together to make supplier selection decisions (Zimmermann and

Foerstl 2014). Our purpose in this study is to address this gap in

the research by examining how professionals in purchasing and

engineering functions influence supplier selection decisions

within the context of varying competitive business environments.

The supplier selection literature is largely silent on the role

multiple functions within a firm play in the selection of suppli-

ers, focusing instead on topics such as the prioritization of selec-

tion criteria (e.g., price, delivery, flexibility, quality), single vs.

multisourcing, relationship factors, and the company’s position in

the supply chain (e.g., Choi and Hartley 1996; Verma and Pull-

man 1998; Ho et al. 2010). There is also extensive research on

the decision-making methods, tools, and techniques (e.g., artifi-

cial intelligence, mathematical modeling, and analytical hierarchy

processing) used in the supplier selection process (de Boer et al.

2001; Dulmin and Mininno 2003; Ho et al. 2010; Wu and Bar-

nes 2011; Chai et al. 2013). While there is extensive literature

examining cross-functional integration, it tends to focus on per-

formance outcomes and on decision-making processes (e.g.,

NPD) not related to supplier selection. Literature reviews of sup-

plier selection research have recognized this gap, noting the lack

of research outside the final selection phase, and have issued

calls for research on the earlier phases of supplier selection when

the needs of various stakeholders must be considered (de Boer

et al. 2001; Ho et al. 2010; Wu and Barnes 2011). Wu and Bar-

nes (2011) suggest future research overcome this gap through

multidisciplinary research and descriptive empirical studies.

As supplier selection decisions are externally focused, they are

often strongly affected by the competitive business environment.

In particular, competitive environments that are “hostile”can add

great difficulty and complexity to decision-making processes

(Bstieler 2005; Kach et al. 2016). Hostile environments are those

characterized by shrinking markets, high levels of regulation,

intense competition, limited resources (including labor and raw

materials), significant and frequent economic swings, and high

levels of uncertainty (Miller and Friesen 1983; Calantone et al.

1997; Gonz

alez-Benito et al. 2010; Kach et al. 2016; Kim and

Kim 2016). A rich stream of research has investigated the

impacts of competitive environments on firm and functional

strategies and actions, particular production and innovation areas

(see, e.g., Sabherwal and King 1992; Ward et al. 1995; Calan-

tone et al. 1997; Amoako-Gyampah and Boye 2001; Koufteros

et al. 2005; Das and Joshi 2012). Still lacking is research specific

to the link between the external environment and procurement

activities, despite the potential profit impact of a firm’s procure-

ment strategies (Ward et al. 1995; Ward and Duray 2000;

Gonz

alez-Benito et al. 2010).

The motivation for this study is thus driven by the apparent

void at the nexus of these research areas: the influence of multi-

ple functions on the supplier selection decision, and decision

making in the context of hostile environments. Put specifically,

Corresponding author:

Barry Brewer, College of Business, University of Wyoming, 1000

E. University Ave., Laramie, WY 82070, USA; E-mail: bbrewer4@

uwyo.edu

1

This paper uses the term procurement for ease of flow and

readability; we assume it is largely synonymous with other terms

for this function, such as purchasing or strategic sourcing.

Journal of Business Logistics, 2019, 40(2): 105–125 doi: 10.1111/jbl.12199

© 2019 Council of Supply Chain Management Professionals

supplier selection, a process of considerable interest to scholars

and managers alike, occurs within environments of varying hos-

tility and is dependent upon input from engineering and procure-

ment. Posed as research questions:

1. To what extent is the supplier selection decision truly multi-

functional between procurement and engineering?

2. Which function tends to drive the final decision and why?

3. What impact does the competitive business environment have

on procurement–engineering interactions in the context of

supplier selection decision making?

In light of the scarcity of research specific to this area and

given the relatively open-ended nature of our research ques-

tions, we chose a multiple-case study approach, detailing our

methodology in the next section of the paper (Yin 2014). We

have followed a middle-range theorizing (MRT) approach, in

which an extant theory is used to refine the patterns emerging

from data analysis (Craighead et al. 2016). Specifically, we use

goal congruence theory (Witt 1998; Kristof-Brown and Stevens

2001) to help shape the research propositions arising from the

within-case descriptions and cross-case analysis in the findings

and discussion section. The paper concludes with a summary

discussing the contributions, limitations, and directions for

future research.

METHODOLOGY

Case study approach and industry focused sample (oil and gas)

Most previous efforts to understand cross-functional efforts fol-

low a survey-based, hypothesis-testing approach (Pagell 2004, a

case study, is a notable exception). This study takes a case study

approach, following the method espoused by Yin (2014).

Although the data were collected in a cross-sectional manner,

something of a longitudinal perspective was achieved as respon-

dents provided their assessments of the timing of events and, to

some extent, the cause-and-effect drivers in various situational

contexts (Guide and Ketokivi 2015).

We chose the procurement–engineering supplier selection deci-

sion as our unit of analysis and focused this study within the oil

and gas (O&G) industry, which lies in the broader energy sector.

The energy sector contains a high variety of firm types and value

chains, spanning many different business environments. A focus

on O&G firms thus makes sense for the following reasons:

1. O&G companies buy highly technical goods and services, so

supplier selection depends on input from both engineering for

technical expertise and procurement personnel for negotiation

of business conditions. O&G companies are heavily “out-

sourced”in their operations, so supplier selection decisions

are fundamental to operational success.

2. The O&G supply chain runs from “upstream”drillers and

operators of wells, to “midstream”collection facilities and

pipeline operators, to “downstream”refinery operators

and utilities (see Figure 1). These differing business environ-

ments are characterized by varying external pressures, such as

the rate of technology change, economic cycle volatility,

degree of government regulation, and national/local political

pressure. These different environments should provide rich

and varied contexts for examining our research questions.

3. The focus on a single economic sector provides the embedded

context for a MRT approach. MRT focuses on concepts and

predictions specifictoa“focal domain”such as an industry

or functional area of business practice (Stank et al. 2017).

Sampling approach

We conducted an embedded, multiple-case study, interviewing mul-

tiple informants from both functions from a wide variety of firms

within our target industry. Our approach employed a theoretical

sampling method for respondent firm selection (Eisenhardt 1989;

Miles and Huberman 1994).The final sample of 26 firms/SBUs was

drawn from up-, mid-, and downstream environments, including

both oil companies and gas companies with diverse characteristics

Figure 1: Oil and gas supply chain and sample companies.

106 B. Brewer et al.