Decision Sciences Journal
Volume 31, Number 1
Winter 2000
A Structural Analysis of the Effectiveness of Buying Firms’
Strategies to Improve Supplier Performance
Daniel R. Krause
Department of Supply Chain Management, College of Business, Arizona
State University, Tempe, AZ 85287-4706, email: daniel.krause@asu.edu
Thomas V. Scannell
Department of Management, Schneider Hall Room 3390, Haworth College
of Business, Western Michigan University, Kalamazoo, MI 49008,
email: tom.scannell@wmich.edu
Roger J. Calantone
Department of Marketing & Supply Chain Management, N370 Business
College Complex, The Eli Broad Graduate School of Management,
Michigan State University, East Lansing, MI 48824-1122, email:
rogercal@pilot.msu.edu
ABSTRACT. Many manufacturing firms have increased the
amount of component parts and services they outsource, while
refocusing on their core capabilities. Outsourcing parts and
services to independent, external suppliers means that suppliers’
performance is increasingly critical to the long-term success
of these buying firms. Buying firms are increasingly using disparate
supplier development strategies to improve supplier performance
including supplier assessment, providing incentives for improved
performance, instigating competition among suppliers, and direct
involvement of the buying firm’s personnel with suppliers
through activities such as training of suppliers’ personnel.
Using resource-based theory, internalization theory, and structural
equation modeling, we examine the impact of these supplier development
strategies on performance. We conclude that direct involvement
activities, where the buying firm internalizes a significant
amount of the supplier development effort, play a critical role
in performance improvement.
Subject Areas: Materials Management, Purchasing, Structural
Equation Models, and Supply Chain Management. |