The Performance Effects of Congruence between Product Competitive Strategies and Purchasing Management Design

Management Science, Vol. 48, No. 7, July 2002

40 Pages Posted: 4 May 2004

See all articles by Julie Smith David

Julie Smith David

Arizona State University (ASU) - Department of Information Systems

Yuhchang Hwang

Arizona State University (ASU) - School of Accountancy; China Europe International Business School

Buck Pei

Arizona State University (ASU) - School of Accountancy

J. Hal Reneau

Arizona State University (Deceased)

Abstract

The objective of this study is to examine a performance contingency effect between product competitive strategy and organization design using an archival approach. Specifically, this study examines a sample of 194 firms from 20 industries based on the data collected by Center for Advanced Purchasing Studies (CAPS) in its benchmarking surveys between 1989-1994 and links the benchmarking data to the COMPUSTAT (Standard & Poor's) financial data of these firms. The results of the study reveal a contingency relationship among product competitive strategies, purchasing design characteristics, and overall firm financial performance (return on assets). Specifically, the nature of this contingency relationship suggests that a firm's product competitive strategy must be enabled with a complementary design in purchasing management to promote firm performance. Given the growing practice of benchmarking at the functional level, this study also examines whether or not a firm achieving a congruency in product strategy and design will necessarily enjoy higher operational efficiency at the purchasing management level. The results show that this is true only under specific conditions. The implications of the preceding findings are discussed accordingly.

Keywords: Contingency theory, supply chain, competitive strategies, benchmarking, firm performance

JEL Classification: L23

Suggested Citation

David, Julie Smith and Hwang, Yuhchang and Pei, Buck and Reneau, J. Hal, The Performance Effects of Congruence between Product Competitive Strategies and Purchasing Management Design. Management Science, Vol. 48, No. 7, July 2002, Available at SSRN: https://ssrn.com/abstract=525202

Julie Smith David

Arizona State University (ASU) - Department of Information Systems ( email )

Tempe, AZ
United States

Yuhchang Hwang (Contact Author)

Arizona State University (ASU) - School of Accountancy ( email )

Tempe, AZ 85287
United States

China Europe International Business School ( email )

Shanghai-Hongfeng Road
Shanghai 201206
Shanghai 201206
China

Buck Pei

Arizona State University (ASU) - School of Accountancy ( email )

Tempe, AZ 85287
United States

J. Hal Reneau

Arizona State University (Deceased)

No Address Available
United States

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