For decades, there has been research on specific buying approaches and procedures used by organizational customers. Yet, there has been only limited effort to conceptualize the key higher order constructs that characterize organizational buying as a process. It is therefore useful to evaluate the simultaneous interrelationships among different aspects of the overall procurement process and how they vary with characteristics of the purchase situation. This research addresses these issues. We draw on structural equation modeling techniques and use a sample of 636 purchases to develop and test a parsimonious integrative model of interrelationships among key aspects of the procurement process. In general, our results support our model of the procurement process, including relationships among purchase importance, extensiveness of choice set, buyer power, reliance on procedural controls, a proactive focus on long-term strategic issues, search for information, and the use of formal analytical tools.
Corporations have come to view procurement as a strategic-level concern in developing competitive advantage—and organizational buying has become more sophisticated and professional (Dobler and Burt, 1996, Gadde and Håkansson, 1993 and Smeltzer and Siferd, 1998). For business-to-business marketers, survival and success hinges on making effective judgments about how customers approach vendor selection decisions. The recognition of buying and selling as critical components of firm success is reflected in the progression of scholarly research. Beginning with Webster (1965) and Sheth (1973), scholars identified constructs relevant to organizational buying and later focused on important topics such as the decision-making unit, channel relationships, and buyer–seller negotiations (Sheth, 1996 and Ward and Webster, 1991). Dramatic changes in the literature surfaced in the 1980s as scholars characterized buyer–seller interactions on a continuum from transactional to relational exchanges or from hierarchies to markets (Dwyer et al., 1987 and Webster, 1992). Subsequent research emphasized buyer–seller interactions and a rich body of research on relationship marketing followed. This includes research on working partnerships (Anderson & Narus, 1990) and the interactions, relationships, and networks involved in buyer–seller exchanges (Anderson et al., 1994, Cannon and Homburg, 2001, Metcalf et al., 1992 and Turnbull et al., 1996).
In light of the evolution in scholarly thinking about organizational buying, it is constructive to recognize the breadth and diversity of vendor choice situations in practice and to develop a theoretical basis from which to view alternative perspectives on buyer–seller exchanges. This brings to the forefront the need to address some basic, yet unanswered questions about organizational procurement. For example, while there has been substantial scholarly work to examine search effort in organizational buying, there is little research on how the search for information integrates with the procurement process as well as how search influences decision-making. More broadly, research that considers the procurement process from a holistic perspective, as opposed to isolating component parts, complements our understanding of the parts by revealing how those parts fit together. Thus, to improve our understanding of the procurement process, we need an integrative approach to modeling that considers the interrelationships among purchasing constructs that are important in both classic and contemporary views on organizational buying.
Drawing on literature from marketing and related disciplines, we develop an integrated model and a set of hypotheses concerning the simultaneous interrelationships among approaches used in organizational procurement decisions and the influence of key characteristics of the purchase situation. Specifically, we address the extent to which buyers search for information, rely on procedural controls, adopt a proactive (long-term strategic) focus, and employ formal analytical tools in the vendor selection process; our model controls for important characteristics of the purchase situation, including the extensiveness of the choice set, buyer power, and purchase importance. We note control relationships that are well established and we highlight new relationships or those with mixed results in the literature. We make an empirical contribution by testing the structure of the interrelationships specified in the model across a wide range of purchase situations.
We start with a brief overview of the conceptual model and then we define the model constructs—discussing both normative theories and positivist empirical evidence relevant to the relationships. Next, we describe the methods used to collect and analyze the data and to test the relationships in the model. We then present the results of the study and evaluate (1) how well the conceptual model represents the overall structure of the empirical data, (2) estimates of specific relationships among constructs in the model, and (3) alternative formulations of the model. The paper concludes with a discussion of the limitations and implications of the research. We consider recent advances in procurement and suggest avenues of continued research in light of developments in buying practices and our research findings.
