Aligning Business Strategic Priorities and Purchasing Practices in Industrial Firms: Evidence from an Emerging Economy

Abstract

Recent literature emphasized purchasing as a strategic function to improve competitiveness, but existing purchasing models lack a comprehensive approach to define the variety of purchasing practices in purchasing strategic categories. This paper assesses purchasing practices’ strategic fit with business strategic priorities, providing an in-depth, descriptive assessment of different purchasing construct practices, and proposing a framework to allocate the variety of purchasing practices according to the targeted strategic intent. The model was tested with cluster analysis of structured questionnaire data from industrial firms in Jordan, to develop an empirical taxonomy of purchasing operational practices. The results suggest that purchasing practices can be grouped into three categories (cost, quality, and availability practices) and there is a significant relationship between different possible purchasing practices and varied related strategic intents, which can be utilized to improve business performance. Practical implications are provided for purchasing executives to better understand what practices need to be adopted in order to reduce transaction costs, in support of firms’ overall business strategies.