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Paper info: Investigating the Link Between Purchasing and Supply Management (PSM) Practices, PSM Performance and Company Performance - Evidence from a Structural Equation Model

Title


Investigating the Link Between Purchasing and Supply Management (PSM) Practices, PSM Performance and Company Performance - Evidence from a Structural Equation Model

Authors


Evi Hartmann
ebs European Business School, International University
Germany
Evi Hartmann , KaiD Foerstl and
Roger Moser
ebs European Business School, International University
Germany
Roger Moser

Place of Publication


The paper was published at the 24th IMP-conference in Uppsala, Sweden in 2008.

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Abstract


Realizing that the 'purchasing and supply management (PSM) practice-performance link' is conceptually well established, but lacks large scale empirical investigation is the starting point of this paper. Empirically testing a broad research model of selected PSM practices and their impact on the buying firm's performance, we are able to assess the relative performance impact of selected PSM practices. The study combines three data collection approaches for the operationalization of the constructs in order to reduce the impact of method bias in the analysis. In particular the PSM performance is perceptually measured while company performance is measured using objective performance data. All data was collected in a global survey of 148 companies across different industry sectors with revenues above USD 3 billion. To test our hypotheses the data is evaluated in a structural equation model. We find strong support for the hypothesized PSM practice-performance link. In particular our findings show that firms with high levels of strategic purchasing are more likely to achieve cost reduction, but also to eliminate obstacles that cause delivery delays and quality problems of purchased goods and services. Moreover, our analysis identifies the strong direct impact of supply talent management on PSM performance and its importance to fully master PSM's transition towards a function of high organizational status and influence. Our findings confirm PSM performance as a strong value driver of overall company performance.