Strategic purchasing, supply management, and firm performance

Abstract

Abstract Purchasing has increasingly assumed a pivotal strategic role in supply‐chain management. Yet, claims of the strategic role of purchasing have not been fully subjected to rigorous theoretical and empirical scrutiny. Extant research has remained largely anecdotal and theoretically under‐developed. In this paper, we examine the links among strategic purchasing, supply management, and firm performance. We argue that strategic purchasing can engender sustainable competitive advantage by enabling firms to: (a) foster close working relationships with a limited number of suppliers; (b) promote open communication among supply‐chain partners; and (c) develop long‐term strategic relationship orientation to achieve mutual gains. Using structural equation modeling, we empirically test a number of hypothesized relationships based on a sample of 221 United States manufacturing firms. Our results provide robust support for the links between strategic purchasing, supply management, customer responsiveness, and financial performance of the buying firm. Implications for future research and managerial practice in supply‐chain management are also offered.