A Meta‐Analysis of the “Purchasing and Supply Management Practice–Performance Link”

• Author: Friso Zimmermann,Kai Foerstl
• Date: 01 July 2014
• DOI: http://doi.org/10.1111/jscm.12051
• Published date: 01 July 2014

A META-ANALYSIS OF THE “PURCHASING AND SUPPLY

MANAGEMENT PRACTICE–PERFORMANCE LINK”

FRISO ZIMMERMANN AND KAI FOERSTL

EBS Business School

Resource-based theory (RBT) suggests that purchasing and supply man-

agement (PSM) practices can help buying firms enhance their perfor-

mance. Consequently, the PSM practice–performance link has undergone

intense empirical investigation over the last two decades. Although most

studies report a positive relationship between PSM practices and firm per-

formance, it remains unclear whether and to what extent PSM practices

relate to performance. We assess the empirical literature by conducting a

meta-analysis of 99 PSM studies from an RBT perspective. Our results

indicate strong support for the positive relationships among PSM prac-

tices and firm performance. Our findings contribute to the literature by

underlining the relevance of PSM, identifying aspects of the PSM function

that can be considered strategic and detecting areas that require additional

empirical investigation. Our research also provides guidance to managers

as to which PSM practices demonstrate the strongest potential for contrib-

uting to buying firm performance.

Keywords: purchasing and supply management practices; firm performance; meta-

analysis; resource-based theory

INTRODUCTION

The outsourcing surge has led to the recognition of

the purchasing and supply management (PSM) func-

tion as a potentially valuable contributor to superior

firm performance (Carter & Narasimhan, 1996; Trent

& Monczka, 1998). Indeed, since the mid-1980s, PSM

has evolved from an administrative function to a stra-

tegic function (Kerkfeld & Hartmann, 2012; Paulraj,

Chen, & Flynn, 2006). Despite this evolution, some

researchers have debated whether and to what extent

PSM can shape performance (Mol, 2003; Ramsay,

2001; Ramsay & Croom, 2008; Rozemeijer, 2008).

Moreover, the question of whether PSM practices,

defined as activities that relate to the purchasing–

supply base interface (Narasimhan & Das, 2001; p.

594), contribute to corporate success has received

substantial attention (Das & Narasimhan, 2000;

Gonz

alez-Benito, 2007; Shao, Moser, & Henke, 2012).

As a result, the “PSM practice–performance link” has

undergone substantial empirical investigation (Chen,

Paulraj, & Lado, 2004).

We leverage insights from resource-based theory

(RBT) (Barney, 1991) and the relational view (Dyer &

Singh, 1998) to argue that PSM practices are important

determinants of performance. In particular, we aggre-

gate extant results via meta-analysis (Hunter &

Schmidt, 2004). Meta-analysis statistically combines

results about a relationship of interest and provides an

estimate of the strength (i.e., the effect size) of a rela-

tionship (Hunter & Schmidt, 2004). Thus, we believe

that meta-analysis is the best available tool to synthe-

size extant results and, in doing so, help resolve the

ongoing debate over whether sourcing in the upstream

supply market positively contributes to superior buy-

ing firm performance and, thus, whether PSM can be

truly considered a strategic function (Barney, 2012).

The main research question guiding this study is as

follows: What is the impact of the different PSM

practice categories on buying firms’ economic perfor-

mance (see Figure 1)? As the evidence of this study

permits, we indicate where relationships do or do

not exist, the strength of these relationships, and

whether moderating variables affect certain “PSM

practice–performance links.” Furthermore, we took

stock of published works in this research domain,

which allowed us to identify under-researched fields

that require further research and fields that have

already reached saturation regarding unambiguous

findings. Last but not least, we contribute to RBT in

validating which practices of the PSM function can

be regarded as “strategic” and a source of superior

performance.

July 2014 37

The remainder of this article is structured as follows:

First, we present our conceptual framework and

develop our research hypotheses based on RBT. Next,

we describe our methods of data collection, coding,

and data analysis before presenting our hypothesis

testing and post hoc robustness tests. As we conclude

the study, we present the theoretical and practical

contributions of our research and highlight potential

areas for further research.

CONCEPTUAL DEVELOPMENT AND

THEORETICAL FOUNDATIONS

We introduce RBT as the theoretical foundation of

the study. We are interested in determining the mag-

nitudes of relationships between PSM practices and

performance (see Figure 1). Because the small sample

sizes in previous studies often do not have sufficient

explanatory power, more valid conclusions can be

drawn by undertaking a meta-analysis with a suitable

conceptual framework that combines a variety of stud-

ies on PSM practices and their links to performance

(Hunter, 2001).

The PSM Practice–Performance Link and

Resource-Based Theory

The genesis of RBT emerged following a reflection

on the economic theories of Penrose (1959), who

identified firms as collections of resources. Such

resources can be physical assets, human talent, organi-

zational processes and capabilities, as well as knowl-

edge possessed by the firm (Barney, 1991). A

“strategic” resource is defined as being valuable, rare,

imperfectly imitable, and nonsubstitutable, also

referred to as the VRIN criteria (Barney, 1991). Imper-

fect imitability and nonsubstitutability have been

identified as the most important criteria for a resource

to sustain its value over time (Amit & Schoemaker,

1993).

RBT assumes that firms have imperfect ex ante

knowledge about strategic resources and limited access

to them (Barney, 1986; Dierickx & Cool, 1989), other-

wise the anticipated returns resulting from the posses-

sion of these resources would disappear through

competition a priori (Peteraf, 1993). Barney (2012)

recently argued that supply chain management prac-

tices have the potential to enhance buying firm perfor-

mance. He argued that PSM practices can be VRIN

because these practices help firms work together and

share key attributes across firms. Because these

practices help develop idiosyncratic attributes that are

time-consuming to develop and are costly to imitate,

RBT appears helpful in explaining the performance

differences via specific PSM practices (Knudsen, 2003).

To structure our analysis of the performance impli-

cations stemming from the multitude of PSM prac-

tices, we distinguished between (1) external supplier-

facing PSM practices and (2) internal PSM practices

(Day & Lichtenstein, 2006). Based on this differentia-

tion (see Figure 1), we further categorized supplier-

facing and internal PSM practices into more finite

categories, as suggested by the extant literature

(Narasimhan & Das, 2001; Terpend, Tyler, Krause, &

Handfield, 2008).

Supplier-facing practices incl ude relational PSM

practices where the effectiveness o f the intended

PSM practice is dependent on the m utual deploy-

ment of resources by the buyer and the su pplier

(Dyer & Singh, 1998). Such practi ces encompass

knowledge sharing or joint product dev elopment.

The other group of supplier-fa cing practices, labeled

nonrelational PSM practices, inc lude supply base

reduction or supplier evaluati on and selection prac-

tices that only require resource de ployment from

the buying firm rather than from both sides (Ter-

pend et al., 2008).

Internal PSM practices include four subcategories:

(1) vertically aligned PSM practices, (2) cross-functional

FIGURE 1

Conceptual Framework

Supplier-facing practices

Relational PSM practices

Non-relational PSM practices

Internal PSM practices

Vertically aligned PSM practices

Cross-functional integration practices

Within PSM practices

Enabling PSM practices.

PSM Practice Dimensions

Operational performance

Market performance

Financial performance

Buying Firm Performance

Volume 50, Number 3

Journal of Supply Chain Management

38