ARTICLE IN PRESS

Journal of Purchasing & Supply Management 15 (2009) 214226

Contents lists available at ScienceDirect

Journal of Purchasing & Supply Management

journal homepage: www.elsevier.com/locate/pursup

Purchasing practices in small- to medium-sized enterprises:

An examination of strategic purchasing adoption, supplier evaluation
and supplier capabilities
Andrew D. Pressey a,, Heidi M. Winklhofer b, Nikolaos X. Tzokas a
a
b

Norwich Business School, University of East Anglia, Norwich NR4 7TJ, UK

Nottingham University Business School, University of Nottingham, Jubilee Campus, Wollaton Road, Nottingam NG8 1BB, UK

a r t i c l e in f o

a b s t r a c t

Article history:
Received 20 February 2008
Received in revised form
5 March 2009
Accepted 11 March 2009

The benets that can be derived from effective purchasing have long been recognised in the
management literature. Despite a growing body of research on purchasing practices in small- to
medium-sized enterprises (SMEs), a number of key issues remain under-examined. We investigate SME
purchasing practices in terms of (1) the degree to which purchasing is regarded as a strategic activity
by SMEs, (2) the use of supplier evaluation systems by SMEs and (3) the supplier capabilities
emphasised by SME buyers. Through a survey of UK SME managers, we nd that purchasing practices
varied greatly across SMEs. Purchasing formality is generally low with limited evidence of purchasing
being employed strategically and with many rms not undertaking formal supplier evaluations. In
terms of supplier capabilities, we nd that SMEs differ in the capabilities they prioritise, with three
distinct groups evident. These groups are labelled holistic, process and logistics based on the supplier
capabilities they emphasise. These three groups of rms also differed in terms of the emphasis they
placed on strategic purchasing, supplier evaluation, technological focus and how they compete in their
main markets, but not in terms of rm size or number of suppliers utilised. The implications of these
ndings are discussed and areas meriting future research are proposed.
& 2009 Elsevier Ltd. All rights reserved.

Keywords:
SME
Purchasing
Strategic purchasing
Supplier evaluation
Capabilities

1. Introduction
The literature is replete with studies supporting the value that
effective purchasing can add to the rm beyond that of an orderprocessing role (for example, Kraljic, 1983; Carr and Pearson, 1999;
Cousins and Spekman, 2003). Several authors agree that small- to
medium-sized enterprises (SMEs) would particularly benet from
effective purchasing (Dollinger and Kolchin, 1986; Gadde and
Hakansson, 2001) since in order to be successful their own limited
resources need to be complimented by external resources. Despite
this importance, Ellegaards (2006, p. 272) recent review of SME
purchasing practice led him to conclude that although there is
a growing body of research on SME purchasing, research on
purchasing in small companies is still limited, despite the
recognised dependence of small companies on external resources.
In addition, empirical evidence is somewhat contradictory, indicating SMEs should not be regarded as a homogenous group as
purchasing practices vary (Morrissey and Pittaway, 2004).

 Corresponding author.

E-mail addresses: a.pressey@uea.ac.uk (A.D. Pressey),

heidi.winklhofer@nottingham.ac.uk (H.M. Winklhofer),
n.tzokas@uea.ac.uk (N.X. Tzokas).
1478-4092/$ - see front matter & 2009 Elsevier Ltd. All rights reserved.
doi:10.1016/j.pursup.2009.03.006

As a consequence, it is relatively unclear whether the buying

practices of many of the leading industrial rms have ltered
down to SMEs. Our understanding of SMEs is crucial in todays
business climate as they are a major source of innovation and an
important catalyst for economic development, both in Europe and
in the US (Homer, 1985; Ghobadian and Gallear, 1996). In the UK
(the context for the present article) the Department for Trade and
Industry estimates that of the 4.3 million enterprises that exist,
99.9% are small- to medium-sized, employing 58% of the private
sector workforce and producing 51% of UK GDP (DTI, 2005).
Against this background we aim to explore three issues that have
attracted considerable scholarly interest, but, as we will argue
later, have not yet received sufcient attention in academic
research in an SME context, namely
(i) the degree to which purchasing is regarded as a strategic
activity by SMEs,
(ii) SMEs evaluation of existing supplier relationships and
(iii) supplier capabilities emphasised by SME buyers.
We nd that purchasing practices varied greatly across SMEs.
Purchasing formality is generally low with limited evidence of
purchasing being employed strategically and with many rms not

ARTICLE IN PRESS
A.D. Pressey et al. / Journal of Purchasing & Supply Management 15 (2009) 214226

undertaking formal supplier evaluations. In terms of supplier

capabilities, we nd that SMEs differ in the capabilities they
prioritise. Three distinct groups were evident (labelled holistic,
process and logistics based on the suppler capabilities they
emphasise). These three groups of rms also differed in terms of
the emphasis they placed on strategic purchasing and supplier
evaluation. These ndings contribute to the understanding of how
purchasing is viewed in SMEs, the evaluation of suppliers, the
abilities that SMEs expect their suppliers to possess and potential
differences across SMEs. These issues are particularly important
for SMEs owing to resource scarcity and a need to draw on the
skills of suppliers to help ensure the long-term success of the rm
(Park and Krishnan, 2001; Presutti, 1988; Mudambi et al., 2004).
This article is organised in the following way. Firstly, we
discuss the literature concerning SME purchasing. Next, we
examine the literature related to strategic purchasing, supplier
evaluation systems and supplier capabilities. The remainder of the
paper explains the research methodology and presents the results
and implications of the study.

2. Purchasing and the small- to medium-sized rm

The role purchasing plays in increasing rm performance (Carr
and Pearson, 1999) and the contribution it can make when aligned
to company strategy are widely acknowledged (e.g. Wouters et al.,
2005; Cousins and Spekman, 2003), particularly as SMEs stand
to gain considerably from drawing on external resources such
as suppliers (Dollinger and Kolchin, 1986; Gadde and Hakansson,
2001). In a comprehensive review of the SME purchasing
literature, Ellegaard (2006) identied 18 papers on small rms
in specialist purchasing journals, with some 58 papers in total on
purchasing in small rms. In this and subsequent sections we
draw on some of the key contributions to highlight the status of
purchasing in SMEs present purchasing practices.
Empirical studies have shown that purchasing in SMEs falls
generally within the remit of the owner or a few key employees
(Dollinger and Kolchin, 1986). Purchasing is not seen as a separate
function; instead it is an integral part of running the company
(Gadde and Hakansson, 2001).
Several studies (Ogden et al., 2007; Quayle, 2002) have
concluded that purchasing is afforded low status in UK companies
in general, attributed to a lack of resources, a view long held in the
literature concerning SMEs (Dobler, 1965). In contrast, Crichton et
al. (2003) suggest that large rms were actually quite positive
about the role that purchasing plays in comparison to smaller
rms, who were less positive about the contribution of purchasing
to the organisation. Similarly, in an examination of SMEs in the
Lancashire region of the UK, Morrissey and Pittaway (2004) found
that SMEs were often reluctant to collaborate with competitors in
purchasing consortia and may even eschew rational models of
purchasing behaviour in order to support lifestyle choices and to
facilitate the sale of the business.
The sophistication of SMEs in terms of specic purchasing
practices would appear to be limited. For example, the adoption of
modern purchasing practices including e-business activities (such
as the use of e-catalogues and e-auctions) were virtually nonexistent in SMEs (Zheng et al., 2004; Foley and Ram, 2002).
Further, most SMEs are thought to source locally and nationally
rather than internationally (Agndal, 2006) in order to help reduce
risk (Ellegaard, 2008). The lack of sophistication in purchasing
is attributed to a number of issues including a lack of awareness
that an efcient purchasing function can inuence protability
and that SMEs perceived few shortcomings with their limited
purchasing capabilities, even though evidence suggests that
purchasing activities can inuence rm performance in SMEs

215

(Dollinger and Kolchin, 1986). In addition, Holter et al. (2008,

p. 21) contend that Many SMEs lack competence in purchasing
transport services and a subsequent lack of purchasing power
may cause SMEs to be treated as order takers rather than order
makers. In support, Rooks and Snijders (2001) found that when
problems occur with suppliers that are not rectied most SMEs do
not pursue this further, presumably due to not wishing to expend
valuable resources on litigation and also owing to size disparities
in some instances between SMEs and larger supplier rms.
In contrast to these studies a small number of papers have
emphasised that purchasing might not be viewed as a low priority
in all SMEs. For example, Mudambi et al. (2004) examined
successful SMEs in engineering and related manufacturing
industries and found that few rms engaged in co-operative
arrangements with suppliers, instead favouring adversarial modes
of interaction. They did nd evidence, however, to suggest that
some SMEs were successfully imitating the strategies of larger
rms through their deliberate co-operative purchasing strategies
with suppliers. In a study of Welsh SMEs business practices,
Quayle (2003) found that procurement rated highly out of 18
issues, fth only behind leadership, strategy, waste reduction and
team working. Similarly, Morrissey and Pittaways (2006) examination of SMEs in the North West of England found that some did
appear to value the role played by purchasing. International
sourcing was widespread amongst a sample of US rms (Scully
and Fawcett, 1994), a nding also conrmed by Overby and
Servais (2005) who reported that Danish SMEs were involved
in sourcing both within the EU and outside, not motivated by
domestic unavailability, but by a desire to attract reduced prices
and increased quality. Finally, in a study of Australian SMEs and
environmentally friendly purchasing practices, Schaper (2002)
provides evidence that owner/managers having the time and
access to environmental information (that is business-related)
were positively associated with green purchasing practices (for
example, sourcing goods that are recyclable) for their internal
consumption.
Based on the articles examined it would seem that purchasing
practices of SMEs vary considerably and that SMEs should not be
regarded as a homogenous group (see also Morrissey and
Pittaway, 2004). Further, research concerning SME purchasing
practices is somewhat fragmented with a number of issues
and areas requiring comprehension (Ellegaard, 2006). Exploring
the differences across SMEs, we contribute to some of these
research gaps. Firstly, we examine the level of strategic purchasing adoption to enhance our understanding of the purchasing
practices developed by SMEs. Secondly, we explore supplier
evaluation and thirdly the capabilities of suppliers as desired by
SME customers, thus contributing to our understanding of how
SMEs manage and utilise supplier relationships. The following
sections provide an overview of three aspects of purchasing and
supply management that have attracted considerable attention in
these areas.

2.1. Strategic purchasing

Purchasing has been elevated to that of a strategic function
within many rms in part due to competitive pressures (Rozemeijer, 2000; Ellram and Carr, 1994; Rajagopal and Bernard, 1994;
Wouters et al., 2005; Pearson and Gritzmacher, 1990). In practice,
strategic purchasing calls for an alignment of the objectives of
purchasing with the objectives of the organisation requiring a
more proactive role in the management of suppliers and their
continual evaluation and appraisal (Carr and Pearson, 1999). The
adoption of strategic purchasing requires certain key activities
such as having a formally written long-range purchasing plan,

ARTICLE IN PRESS
216

A.D. Pressey et al. / Journal of Purchasing & Supply Management 15 (2009) 214226

reviewing and, if necessary, adjusting the plan to match changes

in the companys strategic plans on a regular basis, purchasing
staff working closely with managers of other functions to produce
a purchasing plan, and stipulating in the plan the various types
of relationships to be established with key suppliers (Carr and
Pearson, 1999). Many large organisations including Siemens
Medical Systems, Honda of America, Ford Motors and Dun
and Bradstreet have beneted from strategically managing the
purchasing function and their relationships with key supply
partners (Carbone, 2001; Carr and Pearson, 1999; Zeller and Gillis,
1995).
The nature of relationships with suppliers under the tenets of
strategic purchasing might include negotiating exclusive agreements for particular components or joint project collaborations
to develop new products. Empirical evidence suggests that many
medium to large rms have adopted strategic purchasing as
noted above leading to improvements in performance (Carr and
Pearson, 1999; Paulraj et al., 2006). For example, Paulraj et al.
(2006) found that a more advanced adoption of strategic
purchasing can result in better supply integration in predominantly medium to large rms. In contrast, Ogden et al.s (2007)
study of strategic purchasing practices in seven North American
and European countries suggests that there appears to be a major
problem linking long-term strategic planning with a more
proactive and innovative role for purchasing in supplier development (p. 8) in the UK, the context for the present article.
Strategic purchasing is regarded as being relevant to rms
of all sizes, which, in order to respond to the challenges of
increasingly competitive markets, have integrated/aligned the
purchasing function into strategic planning (Park and Krishnan,
2001). There are, however, concerns that strategic purchasing may
be unsuitable for SMEs, which often lack the exibility to devote
resources to such initiatives (Carr and Pearson, 1999). Others
share the view that the strategic signicance of purchasing to
SMEs is likely to be almost non-existent due to size asymmetries
and the competitive nature of markets (Ramsay, 2001; Quayle,
2000). Further, purchasing practices in SMEs are felt to be
fragmented and non-strategic as they often buy in small
quantities due to cash ow concerns (Zheng et al., 2004, 2007).
Clearly the foregoing discussion highlights a number of
plausible concerns regarding SMEs and strategic purchasing
adoption. This said, however, the adoption and role played by
strategic purchasing in SMEs has remained a relatively unexamined phenomenon. As Ellegaard (2006, p. 279) notes, there has
been a ylack of attention to strategic purchasing in an SME
context, a view echoed by a number of scholars (Mudambi
and Schrunder, 1996; Quayle, 2000). Similarly, the literature has
long emphasised the need for greater planning sophistication and
formalisation in SMEs purchasing procedures (Dobler, 1965).

2.2. Supplier evaluation

Although studies on the topic of supplier evaluation are well
established within the business and management literatures (e.g.
Duncan, 1940; Wieters and Ostrom, 1977), selecting the right
suppliers and evaluating their performance has taken on increased importance in recent years due to the complexity
of modern buying decisions, changing buyer preferences and the
globalisation of trade (de Boer et al., 2001). The systematic
evaluation of suppliers by the purchasing function is perhaps one
of its most important activities. Supplier evaluation activities of a
number of large rms have been heavily publicised, for example,
Boeing (Stundza, 2000), despite probable differences in the
criteria employed by SMEs in comparison to large rms (Evans
et al., 1990).

In contrast, due to many SMEs lack of resources and power,

supplier development is thought to be of little importance
(Quayle, 2000). Conversely, Wieters and Ostrom (1977) observed
that a lack of resources in many SMEs placed greater importance
on supplier monitoring. Based on the practices of 87 SMEs in the
US electronics industry, Pearson and Ellram (1995) examined both
the occurrence of, and, criteria used, for evaluating suppliers. They
found that the majority of supplier evaluations were conducted on
an ad hoc basis at the buyers discretion. Although not specically
addressing the issue of supplier evaluation and performance,
Moller and Pesonen (1981) examined the buyer decision-making
practices of small businesses nding that they favour loyalty to a
particular supplier as a means of reducing risk and avoiding the
necessity to engage in detailed information search. Overall,
however, given the paucity of research on the topic it is little
wonder that Ellegaard (2006, p. 276) notes that both the
purchasing literature on SMEs and the SME literature in general
ypays insignicant attention to SPM [supplier performance
management].

2.3. Supplier capabilities

Understanding the buyer and their needs is a basic tenet of
organisational selling (Plank and Dempsey, 1980), and sustaining
key supply relationships requires organisational learning focused
on understanding what buyers want and value (Day, 2000; Ulaga
and Chacour, 2001). In order to produce customer value, a set of
supplier capabilities are required that are based on the needs
of customers (Moller and Torronen, 2003; Harmsen and Jensen,
2004; Roos and Roos, 1997). Capabilities are viewed as bundles of
skills, knowledge and resources possessed by suppliers that are
perceived as being valuable by customers and that are not easily
imitated by competitors (Harmsen and Jensen, 2004; Ulaga and
Chacour, 2001; Day, 1994). In turn, capabilities are viewed as a key
driver of organisational performance (Teece et al., 1997) and it is
often these capabilities that the organisation buys (Croom, 1992;
Vargo and Lusch, 2004).
The literature largely focuses on suppliers organisational
capabilities as desired by large rms (ORegan et al., 2006; Liker
and Choi, 2004). Despite this imbalance, purchasing is a vital task
for SMEs due to their dependence on external resources (such as
gaining access to valuable supplier capabilities and information),
particularly in lean times (Dollinger and Kolchin, 1986). This view
is echoed by Ellegaard (2006) who argues that SMEs rely on their
networking capabilities in order to access external resources.
Jones (1996) similarly emphasises the importance of supplier
capabilities reporting that some SMEs adopt a progressive mindset and work closely with suppliers for mutual gain. Morrissey
and Pittaway (2006) provide further evidence that the majority of
SMEs report having good relationships with their suppliers; in
many cases it was felt that these relationships were better even
than those with customers.
Studies of SMEs desired supplier capabilities are somewhat
fragmented. Pearson and Ellram (1995) found that quality and
cost factors were the dominating criteria used when evaluating
suppliers. This is broadly in line with Quayles (2002, 2003)
ndings, who reported that SMEs emphasised price, quality,
capability to support, product and service reliability and time
to market as key supplier priorities. Other studies, however,
conclude that factors beyond cost and quality are also of
importance. More specically, personal attention to client needs,
and provision of specialized expertise have been reported as
major factors contributing most to the competitive advantage
of SMEs (Cambridge Small Business Research Centre, 1992; Kitson
and Wilkinson, 1996). Despite these contributions greater

ARTICLE IN PRESS
A.D. Pressey et al. / Journal of Purchasing & Supply Management 15 (2009) 214226

217

Fig. 1. Capability base and value production. Source: Moller and Torronen (2003).

research examining how SMEs utilise supplier relationships has

been called for (Ellegaard, 2006).
A number of studies have offered some insights into identifying the supplier capabilities that constitute value propositions
(Moller and Torronen, 2003; Ulaga, 2003; Harmsen and Jensen,
2004). In our article, we adopt the conceptual work of Moller and
Torronen (2003), which incorporates a number of earlier studies
(for example, Ford and McDowell, 1999; Ford et al., 1996) into an
extensive typology of supplier capabilities. Their framework is
also useful as it provides a generic approach to supplier
capabilities that is not predicated on rm size. Moller and
Torronen (2003) propose that suppliers can potentially provide
their customers with value propositions in a number of generic
areas based on distinct capabilities, namely production (e.g.
capacity, facilities), delivery (e.g. accuracy, exibility), process
improvement (e.g. cost reductions, improvements in production/
delivery capabilities), incremental innovation (e.g. record of
production process and delivery process innovations), relational
(e.g. key account management), networking (e.g. multilevel/
multifunctional contacts), radical innovation (e.g. record of R&D
achievements) and mastering the customers business (e.g.
understanding the buyers market conditions). Value creation is
viewed as a continuum based on the level of complexity involved
between buyer and supplier and the time horizon of anticipated
value realisation, resulting in the following three main categories
(see also Fig. 1).
(i) core-value production (e.g. production and delivery capabilities),
(ii) value-adding production (e.g. relational and networking
capabilities) and
(iii) future-oriented value production (e.g. radical innovation
capabilities, mastering the customers business).
As noted above in the review of extant literature, empirical
evidence of SME behaviour in these areas (and purchasing
behaviour in general) is growing but still somewhat limited.
Collectively, the three areas of purchasing examined in the present
study provide a useful framework with which to explore SME
purchasing practices, as they assist in our understanding of (1)
how purchasing is viewed within the rm (strategic purchasing),
(2) how suppliers are assessed (supplier evaluation) and (3) the

abilities that SME buyers expect from their suppliers (supplier

capabilities) (cf. Ellegaard, 2006). The previous studies conducted
on SME purchasing practices discussed provide a valuable insight
into a neglected area. In contrast to these studies, however, the
present study is the rst to examine these three areas of
purchasing practice in combination (and in the case of strategic
purchasing and variation in desired supplier capabilities, for the
rst time in an SME context).

3. Methodology
3.1. Measures and pretest
Initially, we conducted in-depth interviews with 18 managers
participating in an executive MBA programme (many of whom
worked in SMEs) to establish whether the list of capabilities
discussed in Moller and Torronen (2003) was fully capturing
all possible capabilities expected from a supplier, as well as to
ascertain the face validity of the items listed by the authors. Based
on these interviews, two further capability categories were added
relating to (1) managerial capabilities (i.e. evidence of strong
leadership in the supplying organisation, evidence of strategic
planning, evidence of an ethical control system, reputation of
the supplier in the sector) and (2) nancial capabilities (i.e. solid
nancial control systems; past nancial performance of key
supplier; cost allocation methods used by the key supplier;
pricing methods used by the key supplier). Both were seen as
value-adding capabilities. Incremental innovation (track record of
production process and delivery process innovations) was perceived as being similar to process improvement capabilities and
so these categories were merged under process improvement
capabilities. Similarly, relational and networking capabilities
were viewed as very close concepts and were consequently
merged. Production, delivery, radical innovation and mastering
the customers business capabilities were unchanged. In total,
we included eight supplier capabilities, captured by a minimum of
three and a maximum of nine items. We employed a ve-point
response format for the items ranging from 1 not important to
5 very important (see Appendix 1 for a listing of all measure
and items employed).

ARTICLE IN PRESS
218

A.D. Pressey et al. / Journal of Purchasing & Supply Management 15 (2009) 214226

Strategic purchasing and supplier evaluation of an existing

supplier relationship were both measured using Carr and
Pearsons (1999) empirically validated scales. A ve-point Likert
response scale (1 strongly disagree to 5 strongly agree) was
used as the response format for strategic purchasing and supplier
evaluation. Questions were also asked concerning company
demographic details including number of full time employees,
number of suppliers, the type of market in which they are
operating (i.e. high-tech versus low-tech) and how they compete
in their chosen target market (i.e. added value, price or product
differentiation). In terms of the respondent, we inquired about
their position and how long they have worked in their current
role. The survey was pretested in two phases, initially the
instrument was evaluated by a group of MBA students and nally
by four senior academics.
3.2. Sample and data collection
The sample is based on a mail survey sponsored by the
Strategic Operations Management Centre, University of East
Anglia. The total sample was drawn from ve general industrial
sectors in the UK to aid generalisability: manufacture of chemicals
and chemical production (SIC code 24), manufacture of rubber
and plastic products (25), manufacture of machinery and equipment (29), manufacture of ofce machines and computers (30)
and manufacture of medical and optical instruments (33). Via
the UK FAME directory we selected a random sample of rms
that were manufacturers/service providers. The questionnaire was
posted to 750 rms (150 to each SIC sector) resulting in a response
rate of 16% (120 questionnaires). This was a study designed to
examine purchasing practices across rms regardless of their size.
Of these, 97 responses satised the criteria of SMEs (dened by
the European Commission and UK DTI as rms with between 0
and 250 employees and a turnover of less than h50 m) forming a
subset of respondents on which the analysis of strategic purchasing, supplier evaluation and supplier capabilities is based.
The response rate is comparable to the average response rate of
studies employing mail surveys to examine strategic sourcing and
supplier selection issues of approximately 17% (Gargeya and Su,
2004), and comparable to mail surveys concerning the purchasing
practices of SMEs (Mudambi and Schrunder, 1996). Many
respondents provided their business cards with the returned
questionnaire, indicating a high degree of acceptance and interest
in the study. The 97 SME respondents represent a fairly even
spread of rms across four of the ve SIC codes used to construct
the sampling frame (discussed in more detail below).

responses suggesting that respondents aspirations to look good

was not inuencing responses to the study.
Reliability analyses on the constructs strategic purchasing and
supplier evaluation resulted in highly satisfactory coefcient
alpha values (.82 and .76, respectively). The items comprising
the various capabilities are regarded as causal (i.e. formative)
indicators and thus do not reect the construct. Instead, they
determine the construct (Bollen and Lennox, 1991; Jarvis et al.,
2003). Consequently, reliability of the measurements cannot be
assessed using coefcient alpha (Diamantopoulos and Winklhofer,
2001).
3.4. Sample description
The demographic information collected indicates that on
average respondents to the survey had been employed in their
current rm for 10 years and held their position for 6 years
(see Table 1). A number of respondents combined purchasing
with another role evidenced by 25% of the sample who were
nancial directors, directors or managing directors with the
remainder having buying-related titles. The evidence suggests
that purchasing in a number of SMEs in our sample was not
performed by a dedicated buyer but rather as part of the
responsibilities of a member of the senior management team
(cf. Gadde and Hakansson, 2001).
The respondents worked in rms fairly evenly spread across
the ve SIC codes sampled with the exception of SIC 30
(manufacture of ofce machines and computers) which accounted for the smallest category (6%). The sample consisted of
rms primarily providing products (63%) and rms providing a
mix of products and services (33%), whilst 4% of rms were found
to provide only services. The majority of the SMEs studied had
fewer than 100 suppliers (with a mean number of suppliers of 74).
However, 19% of the sample used in excess of 200 suppliers.
Turning to rm size, 29% can be classied as small or
microbusinesses with fewer than 50 employees, the remainder
(71%) are medium-sized businesses with 50249 employees.
A large proportion of rms sampled offer high-tech products
(40.9%), slightly more (43%) position themselves as half way
between high- and low-tech, and the minority (16.1%) describe
their products as low-tech. Our respondents compete mainly on
price (mean 4.08; 1 strongly disagree to 5 strongly agree)
and product characteristics (mean 4.02), with slightly less
emphasis on value-added services (mean 3.72).

4. Analysis and results

3.3. Survey and measurement validation
To test for response bias, we compared early and late
responses. No signicant differences were found, which provides
some condence that non-response is not a problem in this study
(Armstrong and Overton, 1977). In order to check for any nonparticipant bias, we conducted short telephone interviews with
approximately 250 rms. This revealed that the chief causes
of non-participation were due to (1) the rm no longer trading, (2)
company policy not to complete research questionnaires and (3)
not having time to complete the survey. These were not viewed as
issues that would lead to bias in the nal sample. Other potential
sources of bias in cross-sectional surveys is that social desirability may be inuencing the results as rms want to give the
appearance that they are doing everything correctly and consequently respond positively to all questions asked (Martin and
Grbac, 2003). However, the means and standard deviations
derived from data analysis of the sample produced a variety of

Initially, ANOVA was used to test for differences between the

respondents in the ve SIC (industry) codes for the major
variables (strategic purchasing, supplier evaluation and supplier
capabilities). No signicant differences were detected, indicating
no strong variance in response between the manufacturing
sectors used in the sampling frame. Consequently, the analysis
is based on the entire sample rather than a sectoral comparison.
The research ndings for each of the three areas of purchasing
practices investigated are presented in turn below.
4.1. Strategic purchasing practices of SMEs
To gain an insight into how the role performed by purchasing
was viewed in SMEs, respondents were asked to reect on the
strategic nature of their purchasing function. As the results in
Table 2 indicate, the emphasis placed on strategic purchasing by
SMEs is low (mean 2.24; 1 disagree strongly to 5 agree

ARTICLE IN PRESS
A.D. Pressey et al. / Journal of Purchasing & Supply Management 15 (2009) 214226

219

Table 1
Respondent and company demographic information.
Respondent job title

Sector (UK SIC)

Buyer
Managing director
Purchasing manager
Director
Financial director
Logistics manager
Senior buyer
Procurement manager
Materials manager
Other (buyer variants)

15
15
11
5
5
5
3
3
3
35

Chemicals and chemical production (24)

Rubber and plastic products (25)
Machinery and equipment (29)
Ofce machines and computers (30)
Medical and optical instruments (33)

Respondent length of time at rm

Firm size breakdowna

15 years
610 years
1120 years
421 years

44
17
27
12

Micro/small (049 employees)

Medium (50249 employees)

29
71

Respondent length of time in current position

No. of suppliers

15 years
610 years
410 years

66
17
17

110
1130
3199
100199
4200

34
24
11
12
19

Market

Important form of competition in primary target market that affects rm protability

Mean (std. dev.)

High-tech
Between high-tech and low-tech
Low-tech

41
43
16

Price
Product characteristics
Value-adding services

19
26
25
6
24

4.08 (.773)
4.02 (.913)
3.72 (.976)

Based on DTI classication (www.dti.gov.UK/).

Table 2
Strategic purchasing and supplier evaluation in SMEs.
Construct

Meana

Standard Deviation

Strategic purchasing
Total sample
Micro/smallb
Medium
110 suppliers
1150 suppliers
450 suppliers

2.24
2.21
2.25
2.24
2.13
2.20

.967
.830
1.024
.916
1.035
.982

Supplier evaluation
Total sample
Micro/small
Medium
110 suppliers
1150 suppliers
450 suppliers

3.40
3.47
3.37
3.30
3.48
3.41

.971
.886
1.007
.917
1.010
1.021

a
b

p-value

Agree/agree strongly

Neither agree nor disagree

Disagree/disagree strongly

12.6%

32.6%

54.7%

48.9%

35.1%

16.0%

.859
.593

.611
.768

1 disagree strongly and 5 agree strongly.

149 employees micro/small and 50250 employees medium.

strongly). Only 12.6% of the SMEs in our sample claimed to

employ strategic purchasing (denoted by agree/agree strongly
responses) with the majority of rms sampled (54.7%) not
subscribing to strategic purchasing. Further inspection of the
items comprising the composite measurement (see Appendix 1)
revealed that the sample did not engage in formally writing a
long-range plan for the purchasing function for the next 510
years (mean 1.65). Nevertheless, purchasing planning appears
to be taking place less formally and/or less long-term, as rms are
somewhat more inclined to review and adjust their purchasing
plan to match it with the companies strategic plan (mean 2.32),
incorporate the type of relationships they aim to establish with
their key suppliers (mean 2.49), and work closely with

managers internally to produce the long-range purchasing plan

(mean 2.49). Independent sample t-tests and ANOVA showed
that strategic purchasing is independent of rm size and number
of suppliers (see Table 21).
4.2. Supplier evaluation practices of SMEs
Turning to supplier evaluation opinions were roughly equally
divided, with some 48.9% of SMEs claimed to engage in such
1
No signicant differences were also found at item leveldetailed results
available from author on request.

ARTICLE IN PRESS
220

A.D. Pressey et al. / Journal of Purchasing & Supply Management 15 (2009) 214226

'Holistic Purchasers'
'Hybrid Purchasers'
'Transactional Purchasers'

Mastering the
Customer's Business

Production
5
4

Delivery

3
2
1
Innovation

Relationship/
Networking

[1 = not important at all;

5 = extremely important]

Process

Managerial

Financial

Fig. 2. Three clustersdesired supplier capabilities (1 not important at all and 5 extremely important).

activities (see Table 2). This is also reected in the mean value of
this measurement of 3.40 (1 disagree strongly to 5 agree
strongly). Only 16% of rms made no or very little use of supplier
evaluation. This nding suggests that in approximately half of the
SMEs sampled supplier evaluation is undertaken. More detailed
analysis of the individual items comprising supplier evaluation
(see Appendix 1) indicates that reviewing suppliers regularly to
identify problems and/or opportunities is widespread (mean
3.98), as is the use of explicit criteria for evaluations
(mean 3.43). However, SMEs were less inclined to employ a
standard form or certication document pertaining to supplier
relationship evaluation to assist management to reach evaluation
and termination decisions (mean 2.81). The extensiveness of
supplier evaluation is independent of rm size, and number
of suppliers as shown by independent sample t-test and ANOVA.
Based on the above, supplier evaluation is far more widespread
amongst SMEs than engaging in strategic purchasing activities
(mean 3.40 versus mean 2.24).

4.3. Important supplier capabilities for SMEs

Next, we examined the relative importance of the eight
supplier capabilities (see Appendix 1). Not surprisingly, the most
important capabilities are linked to core value production, namely
delivery capability (mean 4.52) and production capability
(mean 3.86) (1 not important at all and 5 extremely
important). The four value-adding capabilities, process improvement (mean 3.60), relational/networking (mean 3.45), managerial (mean 3.48) and nancial (mean 3.50) are regarded
very similar in terms of importance. Their mean values of around
3.5 indicate that on average SMEs attach some importance to
these capabilities when selecting suppliers. Our results show that
future oriented capabilities tend to vary in terms of importance,
with the capability of mastering a customers business is seen as

somewhat important (mean 3.33), and radical innovation

capability (mean 2.66) is of less relevance for SMEs when
selecting a supplier.
Firms differ based on their own capabilities (Barney, 1991), and
a combination of capabilities are necessary in order to produce
value (Moller and Torronen, 2003). Consequently, rms are likely
to vary in terms of the capabilities they demand from their
suppliers. Equally, a rms perception of the purchasing function
might impact on the demands they place on their suppliers. We
employed K-means cluster analysis using SPSS with the eight
composite measures for the capabilities as input (see Appendix 2
for details). The aim was to determine whether SMEs value
different combinations of supplier capabilities. A number of
cluster solutions were generated using random seed points and
Squared Euclidean Distance to allocate cases to clusters. The three
cluster solution was most stable and allowed a meaningful
interpretation of the clusters. Cluster 1 captures the largest group
with 40.3% of rms in the sample, Cluster 2 the smallest with
28.4% of the sample and Cluster 3 includes 31.3% of our SME
respondents.2 The differences between the clusters were examined through ANOVA tests and post hoc Scheffe tests, and are
illustrated in Fig. 2 and discussed below.
Cluster 1, the largest cluster, comprises the most demanding
rms, which we termed Holistic Purchasers. These rms select
suppliers based on a comprehensive range of capabilities. Delivery
capabilities are highly important followed by production capabilities, while value-adding capabilities such as process, managerial,
nancial, as well as relationship/networking capabilities are also
viewed as important when selecting a supplier. Even mastering
a customers business, a future oriented capability, is seen as
2
Capability measurements were only included in two-thirds of the 750
questionnaires mailed to respondents (n 500) due to the sponsorship arrangements. The cluster analysis was based on all 67 responses satisfying the SME
criteria. The sample size, however, is suitable for cluster analysis (Hair et al., 2006).

ARTICLE IN PRESS
A.D. Pressey et al. / Journal of Purchasing & Supply Management 15 (2009) 214226

221

Table 3
Cluster proles.
Purchasing

Total
sample

Holistic
purchasers C1

Process
purchasers C2

Logistics
purchasers C3

Sign. level

Post hoc tests

C14C2; C14C3;
C 2 C3
C14C2; C14C3;
C 2 C3

Strategic purchasing

2.31

2.91

1.77

2.07

.000

Supplier evaluation

3.39

3.91

3.07

3.01

.001

Firm demographics
Number of employees
Number of suppliers
Technology based rm (high-tech versus low-tech)
Type of competition
Competition in terms of product characteristics
(quality/variety)
Price competition
Competition in value-adding services
a

93
99
N.A.

118
84
Mean rank 38.26a

81
88
Mean rank 33.33

72
127
Mean rank 24.93

.034
C1 C2 C 3
.464
C 1 C2 C 3
Kruskal Wallis Test N.A.
.030

3.97

4.33

3.79

3.67

.021

4.19
3.60

4.04
3.85

4.26
3.42

4.33
3.43

.288
.156

C1 C2; C14C3;
C2 C3
C1 C2 C3
C1 C2 C 3

These scores represent the mean rank for each cluster.

important. However, radical innovation capabilities are viewed of

lower importance by the Holistic Purchasers.
The SMEs comprising Cluster 2 are less demanding, only
regarding delivery capabilities as very important. Production and
most of the value-adding capabilities, such as process, relational/
networking and managerial capabilities, score on average around
3.5, indicating that they are also of importance. Of moderate
importance are nancial, and mastering the customers business
capabilities while radical innovations seems of no importance.
Consequently, we termed them Process Purchasers due to their
emphasis on delivery and process capabilities.
Cluster 3 comprises almost one in three rms in our sample.
These rms only demand delivery capabilities from their suppliers
and exhibit some interest in production capabilities. The remainder of the capabilities are of little concern to these rms, which
we labelled Logistic Purchasers owing to their emphasis on
delivery and production capabilities.
Clearly the type and combinations of supplier capabilities
demanded by these three groups vary greatly. To gain a better
understanding of what drives these differences we compared the
three clusters of rms in terms of purchasing characteristics
(strategic purchasing and supplier evaluation), rm demographics
(size, number of suppliers, high-tech versus low-tech) and the
type of competition that mainly affect protability in their chosen
target market (price focused, product differentiation, or added
services). Differences were analysed by means of KruskalWallis
Test for the ordinal measure of level of technology (high-tech
versus low-tech) and ANOVA followed by post-hoc Scheffe tests
for the remaining proling variables (see Table 3). Based on the
ndings obtained, we observe that Holistic Purchasers, who
demand from their suppliers the largest range of capabilities,
engage to a greater extent in strategic purchasing and evaluating
their suppliers than the other two clusters of rms. Holistic
Purchasers are more likely to operate in high-tech business areas
and differentiate themselves from competitors in terms of product
characteristics. In contrast, a comparison of Process Purchasers
and Logistics Purchasers proles showed that the Process
Purchasers are more involved in high-tech businesses than the
Logistics Purchasers, but do not differ on the remaining criteria
(i.e. strategic purchasing, supplier evaluation and competition in
terms of product characteristics). Overall, all three clusters are
similar regarding rm size, number of suppliers, importance of
price competition or competing in terms of value-added services.
In addition, a cross-tabulation of job roles across the three clusters

was performed. This identied no signicant or clear differences

between each group. Hence, the responsibility for purchasing in
each of the three groups of rms was as likely to be performed by
a member of the management team as it was by a dedicated
buyer.

5. Discussion and implications

Based on the ndings obtained, the three areas of purchasing
behaviour in SMEs are now discussed in greater detail.
5.1. Strategic purchasing and SMEs
Strategic purchasing adoption, as dened by Carr and Pearsons
(1999), calls on rms to engage in activities such as producing a
long-range purchasing plan, reviewing and adjusting the plan
to match corporate strategic plans, deciding on the types of
relationships the rm wants with its key suppliers and cooperating with other functions. Based on this conceptualisation,
our ndings offer limited evidence to suggest that strategic
purchasing is of relevance to SMEs, with only 12% of rms fully
embracing these types of activities. In contrast, in their study of
medium to large companies, Paulraj et al. (2006) found that some
26% of rms sampled were highly evolved in terms of strategic
purchasing adoption, while a further 51% of rms had adopted
some aspects of strategic purchasing but could still be regarded as
tactical in nature. Hence, rms that had not adopted any aspect of
strategic purchasing in their sample were very much in the
minority.
Overall, our ndings support the views of Ramsay (2001) and
Quayle (2000) who argued that strategic purchasing might be
unsuitable for SMEs, mainly due to size symmetries. Alternatively,
it could be argued that in circumstances where SMEs lack power
(e.g. in terms of turnover or specialist knowledge) strategic
purchasing takes on even greater importance for rms in order
to manage purchasing more closely to aid access to crucial
external resources. As we now examine, however, this might be a
form of strategic purchasing that compliments the specic
circumstances of SMEs.
It is worth reecting on the underlying items of Carr and
Pearsons (1999) strategic purchasing measure and its capacity to
accurately portray the potentially strategic purchasing activities
of SMEs. We would argue that the measure displays a de facto

ARTICLE IN PRESS
222

A.D. Pressey et al. / Journal of Purchasing & Supply Management 15 (2009) 214226

large rm bias as the items pertain to the formalised nature of

activities such as writing a long-range purchasing plan and
reviewing and adjusting the plan to match changes in the
companys strategic plans which may be inappropriate to SMEs
with less-formalised activities and relationships, including those
with suppliers. SMEs who score low on the strategic purchasing
measure might still regard purchasing of strategic importance.
Our item analysis would suggest that some sort of purchasing
planning takes place in many SMEs. Given that some 25% of
respondents responsible for purchasing in our sample are at
Directorial/Management level this emphasises the limited distinctions between roles in many SMEs (Habershon, 2006). Under
such conditions purchasing is likely to play an informal role in the
strategic planning process by virtue of the seniority of the person
in the rm who has the dual responsibility of buying for the
organisation and also another role in the senior management
team. The type of supplier capabilities valued by SMEs also
suggests that a much larger proportion of rms draw on a
multitude of supplier capabilities, and as a consequence could
regard their suppliers of strategic importance.

5.2. Supplier evaluation and SMEs

In contrast to Pearson and Ellram (1995) who found that most
supplier evaluations by SMEs were conducted on an ad hoc basis,
approximately half the SMEs in our sample conducted regular
supplier reviews incorporating explicit criteria whereas the
remaining SMEs professed to having a limited emphasis on
supplier evaluation. It also emerged that SMEs are less likely to
have a standard form or certication document to evaluate their
suppliers. This could be explained by the fact that in many SMEs
purchasing is the domain of the owner or a small team of
managers, which might require a less-formalised process. Nevertheless, this should not distract from the nding that regular
evaluation of their suppliers is a widespread activity amongst our
sample of SMEs, irrespective of rm size (micro versus small/
medium) and the number of suppliers the rm utilises. Our
ndings question the notion that supplier evaluation is of little
importance to SMEs (cf. Quayle 2000). Supplier evaluation is more
pervasive among SMEs than strategic purchasing adoption.
For those SMEs that did not engage in supplier evaluation it
may be that they lack the time and resources to dedicate to formal
supplier evaluations. Our data do not reveal whether supplier
evaluations are undertaken by the SME buyer alone (e.g. using
supplier scorecards) or in conjunction with their suppliers.
Further research would also be required to establish under what
circumstances suppliers engage with their SME customers in a
supplier evaluation process. For example, the size asymmetries or
strategic position in the supply chain (Pavitt, 1984) could impact
on a suppliers willingness to take part. As noted in the preceding
section concerning strategic purchasing adoption, however, size
asymmetries may well not be the only factor explaining
dependence and thus determine the likelihood of co-operation
in supplier evaluation programmes. Even large rms may well be
highly dependent on certain SME customers due to their access to
specialist, market and application knowledge, among other
capabilities. Learning and improvements in large rms is unlikely
to be entirely predicated on the size of a customer. Many large
companies will seek opportunities to improve their capabilities
regardless of power asymmetries particularly where suppliers
posses specialist knowledge, as noted. In certain industries (e.g. in
some high-tech markets) SMEs may collectively be targeted by
large suppliers as a base of companies they stand to learn from by
association. Further, some SMEs will grow to become the large
rms of tomorrow, hence adoption or non-adoption of either

strategic purchasing or supplier evaluation should not be reduced

to discussions of power asymmetries in isolation, clearly even
small customers can be important to their large rm customers.3
5.3. Supplier capabilities and SMEs
The nal objective of the article was to determine the supplier
capabilities demanded by SMEs. As expected, we nd that
production and delivery are regarded as important supplier
capabilities emphasised by all SMEs sampled. The ndings on
the remaining capabilities vary considerably across our sample
and three distinct clusters valuing a combination of capabilities
were identied. The largest group of rms (40%), termed Holistic
Purchasers, harbour high expectations of their suppliers, scoring
in excess of the overall sample mean (as well as 43) for all
capabilities. Process Purchasers (28%) are less demanding of their
suppliers, with delivery capabilities of main concern to this group
of rms. Further, key suppliers also need to demonstrate their
value-adding capabilities such as process capabilities, nancial
capabilities, managerial, and relational/networking capabilities,
but less so in terms of future-oriented value production. In
contrast, almost one in three rms sampled (31.3%) display a
largely transactional relationship with their suppliers where the
emphasis is placed on core capabilities (i.e. delivery and
production capabilities with the remaining supplier capabilities
regarded as being moderate to low in importance).
Possible drivers for these differences appear to be the products
the rms are offering (high-tech versus low-tech) and the type of
competition. Firms offering high-tech products and/or operating
in markets where competition is more heavily based on product
characteristics might be more reliant on their suppliers future
oriented capabilities such as mastering the customers business
and to some extent, radical innovation capabilities. Shorter
product life cycles characterizing high-tech products (Meldrum,
1995) might well amplify the resource deciencies of SMEs and
demand closer ties with their network of suppliers. Being more
reliant on a broader set of capabilities might compel rms to
conduct more frequent and systematic evaluations of suppliers
and help explain why strategic purchasing is rated more highly
amongst the Holistic Purchasers. Equally, moving beyond core
value (which generally allows fairly clear and straightforward
comparison points between rms) to emphasising added and
future value capabilities creates greater uncertainty and are more
difcult to evaluate as a result (Moller and Torronen, 2003). This
in turn could also increase the importance of evaluating existing
supplier arrangements.
Our ndings concur with Mudambi et als. (2004) assertions
that some SMEs are developing co-operative relationships with
suppliers. Given the scarcity of resources accessible to many
SMEs, good positioning in a network of suppliers may allow them
access to latest materials, technologies, processes and other
innovations. Furthermore, one should not underestimate the
market scouting function that large suppliers may play and the
potential benets for SMEs if they have access to such information. As rms emphasise capabilities that reach beyond core value
into added and future value this calls for greater adaptation
between actors and increases relational complexity (Moller and
Torronen, 2003). In our study the Holistic Purchasers and to some
extent the group of Process Purchasers are clearly looking
towards the capabilities of their suppliers in order to identify
their potential to add greater value and improving their future
offerings as a consequence. Our ndings also support that SMEs
3
We gratefully acknowledge the input of an anonymous JPSM reviewer for
ideas used in this section.

ARTICLE IN PRESS
A.D. Pressey et al. / Journal of Purchasing & Supply Management 15 (2009) 214226

value the networking capabilities of their suppliers to access

valuable resources (cf. Ellegaard, 2006).

6. Conclusion and future research directions

Although our understanding of SME purchasing practices has
improved in recent years, there exist many notable gaps
(Ellegaard, 2006). The present study found evidence of some
progressive and highly varied purchasing practices amongst SMEs.
There was limited evidence of strategic purchasing, mainly due to
the lack of formal purchasing planning although supplier evaluations were more widespread, but again mostly on a lessformalised basis. Interestingly, there was considerable variance
between SME buyers in terms of the capabilities they expect key
suppliers to possess, with the largest group being highly
demanding. These SMEs could arguably be described as successfully imitating the strategies of larger rms by desiring a
comprehensive bundle of supplier capabilities (cf. Mudambi et
al., 2004). This would seem important particularly as many large
rms increasingly expect the SMEs they interact with to act cooperatively (Dyer and Nobeoka, 2000), regardless of disparities in
size between SMEs and larger suppliers.
Our ndings concur with Pearson and Ellram (1995) who argue
that a lack of formalised approach to purchasing in many SMEs
does not necessarily indicate limited management sophistication
in the case of small rms. We have found that purchasing in the
majority of SMEs appears to play an essential role, especially
amongst SMEs offering high-tech products and operating in
markets where competition is based on product characteristics.
Instead of a highly formalised approach, SMEs appear to be in a
position to promote the importance of suppliers and supply
relationships internally by using the personality of the ownermanager/senior managers.

223

Before introducing suggestions for further research it is

worthwhile noting the limitations of the study. One limitation is
that a single informant was used in each SME making the
assessment of informant bias impossible. Further, the ndings of
this article cannot be extended to all SMEs in general as data were
collected from ve albeit broad industries. The ndings,
however, offer an insight into SME purchasing across a broad
range of manufacturing rms.
There is a real need for an improved understanding of the
purchasing behaviour and competence of SMEs particularly in
terms of its informal nature. This might also involve the reevaluation of the relevancy of the current strategic purchasing
measure to SMEs and its capacity to accurately represent the
strategic nature of purchasing behaviour in SMEs.
An extension of this article would be to identify how SMEs
inuence and interact with their suppliers and to explain the
reasons for the variance in terms of supplier capabilities that are
deemed important by SME buyers. For example, the strategic
orientation of managers in SMEs might explain potential differences in desired supplier capabilities (cf. Park and Krishnan,
2001), as might market drivers such as product life cycles and
competitive intensity.
Finally, one would expect that different stages of SME growth
may require different types of suppliers and capabilities, relationships and supplier evaluation criteria, all of which point once
again to the need for a more strategic approach to supply
relationships by SMEs and therefore a better understanding of
the rms that seem to have instilled a strategic orientation to
purchasing.

Appendix A1
See Table A1.

Table A1
Measurement: constructs and items.
Strategic purchasing (Carr and Pearson, 1999) [1 disagree strongly; 5 agree strongly]

1.
2.
3.
4.

The process of planning, implementing, evaluating, and controlling strategic and operating purchasing decisions (Carr and Smeltzer, 1997, p. 201).
The purchasing function in my rm has a formally written long-range plan (for example, 510 years)
Purchasings long-range plan is reviewed and adjusted to match changes in the companys strategic plans on a regular basis
Purchasings long-range plan includes the various types of relationships to be established with key suppliers
We work closely with managers from other functions and high corporate levels to produce the long-range purchasing plan of our rm

Mean
1.65
2.32
2.49
2.49

Supplier evaluation (Carr and Pearson, 1999) [1 disagree strongly; 5 agree strongly]
To identify potential suppliers and determine their qualications as a supplier of the rm (Carr and Pearson, 1999, p. 500)
1. We review all our supply relationships regularly in order to identify problems and/or opportunities
2. In reviewing our relationships with suppliers, we have explicitly identied criteria for evaluating relationship performance
3. Some sort of standard form or certication document pertaining to supplier relationship evaluation exists in our company to assist management to reach
evaluation and termination decisions
Supplier capabilities (Moller and Torronen, 2003) [1 not important at all; 5 extremely important]

Mean
3.98
3.43
2.81
Mean

Capabilities that reect suppliers value-production capabilities (Moller and Torronen, 2003).
1.
2.
3.
4.
5.

Production capabilities
Relative production costs
Quality of products
Documented process records (capacity, speed)
Production facilities (technical specications, certications)
Qualications of workforce

Delivery capabilities
1. Documented delivery record (accuracy, schedules, quality)
2. Flexibility in emergency cases
3. Just-in-time production

3.86

4.52

ARTICLE IN PRESS
224

A.D. Pressey et al. / Journal of Purchasing & Supply Management 15 (2009) 214226

Table A1 (continued )
Strategic purchasing (Carr and Pearson, 1999) [1 disagree strongly; 5 agree strongly]
Process capabilities
1. Record of improvements in production and delivery capabilities
2. Record of continuous cost reduction in core processes
3. Record of product improvement (better functionality/lower costs)

3.60

Managerial capabilities
1. Evidence of strong leadership
2. Evidence of strategic planning
3. Evidence of an ethical control systems

3.48

Financial capabilities
Solid nancial control systems
Past nancial performance of the supplier
Cost allocation methods used by the supplier
Pricing methods used by the supplier

3.50

1.
2.
3.
4.

Relationship/Networking capability
Well-organised key account management
Customer contact personnel with team-working skills
Qualied customer support personnel
Organization-wide full appreciation of customer relationships
Sharing of proprietary information with our rm
Information systems integration
Sharing and supporting joint goals with our rms
Record of multilevel and multifunctional contacts between the supplier and our rm
Communications systems to support exchange of information

3.45

1.
2.
3.
4.
5.
6.
7.
8.
9.

Radical innovation capabilities

1. Record of R&D achievement (patents, other IPRs)
2. Qualications and track record of key scientic/technical personnel
3. Relations with core research institutions (national and international)
1.
2.
3.
4.
5.

2.66

Mastering the customers business capabilities

Track record of understanding our rms process logic (e.g. production process, logistics process)
Track record of understanding our market conditions (e.g. customer types and their needs, competitive situation)
Track record of understanding our business logic (e.g. strategic plans, competitive advantage, risks taken)
Track record of proposing to us major business improvements or new business concepts
Potential for offering outsourcing opportunities for our rm

3.33

Appendix A2
See Table A2.
Table A2
Cluster descriptionbased on ANOVA and post hoc tests.
Capability

Total sample
mean

Holistic purchasers C1
(40.3%)

Process purchasers C2
(28.4%)

Logistics purchasers C3
(31.3%)

Mean

Mean

Mean

ANOVA pvalue

Results of Scheffe
tests

C14C2; C14C3;
C2 C 3
C1 C2; C14C3;
C24C3
C14C24C3
C14C24C3
C14C2; C14C3;
C2 C3
C14C24C3
C14C2; C14C3;
C2 C3
C14C2; C14C3;
C2 C3

Production

3.86

4.28

3.56

3.58

.000

Delivery

4.52

4.76

4.66

4.10

.000

Process
Managerial
Financial

3.60
3.48
3.50

4.06
4.00
4.00

3.52
3.64
3.30

3.07
2.65
3.02

.000
.000
.000

Relational/networking
Radical innovation

3.45
2.66

3.96
3.33

3.54
2.03

2.70
2.35

.000
.000

Mastering the customers

business

3.33

3.91

3.06

2.82

.000

Valued in bold indicate clusters with non-signicant mean differences (p4.05).

References
Agndal, H., 2006. The purchasing market entry process. A study of 10 Swedish
industrial small and medium-sized enterprises. Journal of Purchasing and
Supply Management 12 (4), 182196.
Armstrong, J.S., Overton, T.S., 1977. Estimating non-response bias in mail surveys.
Journal of Marketing Research 14 (August), 396402.

Barney, J., 1991. Firm resources and sustained competitive advantage. Journal of
Management 17 (1), 99120.
Bollen, K., Lennox, R., 1991. Conventional wisdom on measurement: a structural
equation perspective. Psychological Bulletin 110 (2), 305314.
Small Business Research Centre, 1992. The State of British Enterprise. University of
Cambridge Small Business Research Centre.
Carbone, J., 2001. Strategic purchasing cuts costs 25% at Siemens. Purchasing 130
(18), 29.

ARTICLE IN PRESS
A.D. Pressey et al. / Journal of Purchasing & Supply Management 15 (2009) 214226

Carr, A.S., Pearson, J.N., 1999. Strategically managed buyersupplier relationships

and performance outcomes. Journal of Operations Management 17 (5),
497519.
Carr, A.S., Smeltzer, L.R., 1997. An empirically based operational denition of
strategic purchasing. European Journal of Purchasing & Supply Management 3
(4), 199207.
Crichton, C., Gallery, C., Zammit, V., Hughes, J., Vammen, S., Day, M., 2003.
Collecting purchasing and supplier strategies to shareholder value. Emerging
trends for executive action. Future Purchasing Alliance /www.futurepurchasing.
comS.
Croom, S., 1992. The need for entrepreneurial buyers. In: Proceedings of the First
Conference of the Purchasing and Supply Education and Research Group
(PSERG).
Cousins, P.D., Spekman, R., 2003. Strategic supply and the management of interand intra-organisational relationships. Journal of Purchasing & Supply
Management 9, 1929.
Day, G.S., 2000. Managing market relationships. Journal of the Academy of
Marketing Science 28 (1), 2430.
Day, G.S., 1994. The capabilities of market-driven organizations. Journal of
Marketing 58 (4), 3752.
de Boer, L., Labro, E., Morlacchi, P., 2001. A review of methods supporting supplier
selection. European Journal of Purchasing & Supply Management 7 (2),
7589.
Department for Trade and Industry, 2005. Statistical Press Release URN 05/92.
Ofce for National Statistics.
Diamantopoulos, A., Winklhofer, H.M., 2001. Index construction with formative
indicators: an alternative to scale development. Journal of Marketing Research
38, 269277.
Dobler, D.W., 1965. The challenge of prociency in small company purchasing.
Journal of Purchasing 1 (1), 5361.
Dollinger, M.J., Kolchin, M.G., 1986. Purchasing and the small rm. American
Journal of Small Business Winter, 3345.
Duncan, D.J., 1940. What motivates business buyers. Harvard Business Review 18,
448456.
Dyer, J.H., Nobeoka, K., 2000. Creating and managing a high-performance
knowledge-sharing network: the Toyota case. Strategic Management Journal
21 (3), 345367.
Ellegaard, C., 2008. Supply risk management in a small company perspective.
Supply Chain Management 13 (6), 425434.
Ellegaard, C., 2006. Small company purchasing: a research agenda. Journal of
Purchasing and Supply Management 12, 272283.
Ellram, L.M., Carr, A.S., 1994. Strategic purchasing: a history and review of the
literature. International Journal of Purchasing and Materials Management 30
(3), 28.
Evans, K.R., Feldman, H.D., Foster, J., 1990. Purchasing motor carrier service: an
investigation of the criteria used by small manufacturing rms. Journal of
Small Business Management, 3947.
Foley, P., Ram, M., 2002. The use of online technology by ethnic minority
businesses: a comparative study of the West Midlands and UK. In: De Montfort
University Monograph available at: http://www.sbs.gov.uk/content/research/
EMB_IT.pdf/www.sbs.gov.uk/content/research/EMB_IT.pdfS.
Ford, D., McDowell, R., 1999. Managing business relationships by analyzing the
effects and value of different actions. Industrial Marketing Management 28,
429442.
Ford, D., McDowell, R., Tomkins, C., 1996. Relationship strategy, investments, and
decision making. In: Iacobucci, D. (Ed.), Networks in Marketing. Sage,
Thousand Oaks, CA.
Gadde, L., Hakansson, H., 2001. Supply Network Strategies. Wiley, Chichester.
Gargeya, V.B., Su, J., 2004. Strategic sourcing and supplier selection: a review of
survey-based empirical research. In: 15th Annual POM Conference, Cancun,
Mexico.
Ghobadian, A., Gallear, D., 1996. Total quality management in SMEs. Omega,
International Journal of Management Science 24 (1), 83106.
Habershon, E., 2006. Small rms walk tall. Sunday Times March 5.
Hair, J.F., Black, W.C., Babin, B.J., Anderson, R.E., Tatham, R.L., 2006. Multivariate
Data Analysis, sixth ed. Prentice-Hall, Englewood Cliffs, NJ.
Harmsen, H., Jensen, B., 2004. Identifying the determinants of value creation in the
market: a competence-based approach. Journal of Business Research 57 (5),
533547.
Holter, A.R., Grant, D.B., Ritchie, J., Shaw, N., 2008. A framework for purchasing
transport services in small and medium size enterprises. International Journal
of Physical Distribution & Logistics Management 38 (1), 2138.
Homer, P., 1985. Effects of vendor size on industrial purchases of component parts.
Journal of Small Business Management 23 (2), 5360.
Jarvis, D., Mackenzie, S., Podsakoff, P., 2003. A critical review of construct indicators
and measurement model misspecication in marketing and consumer
research. Journal of Consumer Research 30 (September), 199218.
Jones, R., 1996. Small-rm success and supplier relations in the Australian boatbuilding industry: a contrast of two regions. Journal of Small Business
Management April, 7178.
Kitson, M., Wilkinson, F., 1996. Markets and competition. In: Cosh, A., Hughes, A.
(Eds.), The Changing State of British Enterprise. University of Cambridge, ESRC
Centre for Business Research, pp. 2231.
Kraljic, P., 1983. Purchasing must become supply management. Harvard Business
Review 61 (5), 109117.

225

Liker, J.K., Choi, T.Y., 2004. Building deeper supplier relationships. Harvard Business
Review December, 104113.
Martin, J.H., Grbac, B., 2003. Using supply chain management to leverage a rms
market orientation. Industrial Marketing Management 32 (1), 2538.
Meldrum, M.J., 1995. Marketing high-tech products: the emerging themes.
European Journal of Marketing 29 (10), 4558.
Moller, K.E., Torronen, P., 2003. Business suppliers value creation potential:
a capability-based analysis. Industrial Marketing Management 32 (2),
109118.
Moller, K., Pesonen, P., 1981. Small business purchasing of capital equipment.
Industrial Marketing Management 10 (4), 265271.
Morrissey, W.J., Pittaway, L., 2006. Buyersupplier relationships in small rms. The
use of social factors to manage relationships. International Small Business
Journal 24 (3), 272298.
Morrissey, B., Pittaway, L., 2004. A study of procurement behaviour in small
rms. Journal of Small Business and Enterprise Development 11 (2),
254262.
Mudambi, R., Schrunder, C.P., Mongar, A., 2004. How co-operative is co-operative
purchasing in small rms? Evidence from UK engineering SMEs. Long Range
Planning 37 (1), 85102.
Mudambi, R., Schrunder, C.P., 1996. Progress towards buyersupplier partnerships.
Evidence from small and medium-sized manufacturing rms. European
Journal of Purchasing & Supply Management 2 (23), 119127.
ORegan, N., Ghobadian, A., Gallear, D., 2006. In search of the drivers of high growth
in manufacturing SMEs. Technovation 26 (1), 3041.
Ogden, J.A., Rossetti, C.L., Hendrick, T.E., 2007. An exploratory cross-country
comparison of strategic purchasing. Journal of Purchasing & Supply Management 13, 216.
Overby, J.W., Servais, P., 2005. Small and medium-sized rms import behavior: the
case of Danish industrial purchasers. Industrial Marketing Management 34 (1),
7183.
Park, D., Krishnan, H.A., 2001. Supplier selection practices among small rms in the
United States: testing three models. Journal of Small Business Management 39
(3), 259271.
Paulraj, A., Chen, I.J., Flynn, J., 2006. Levels of strategic purchasing: impact on
supply integration and performance. Journal of Purchasing and Supply
Management 12 (3), 107122.
Pavitt, K., 1984. Sectoral patterns of technical change: towards a taxonomy and a
theory. Research Policy 13 (6), 343374.
Pearson, J.N., Gritzmacher, K.J., 1990. Integrating purchasing into strategic
management. Long Range Planning 23 (3), 9199.
Pearson, J.N., Ellram, L.M., 1995. Supplier selection and evaluation in small versus
large electronics rms. Journal of Small Business Management 33 (4),
5365.
Plank, R., Dempsey, W.A., 1980. A framework for personal selling to organizations.
Industrial Marketing Management 9 (2), 143149.
Presutti, W.D., 1988. Purchasing management practices of small manufacturers.
Journal of Purchasing and Materials Management 24 (4), 2631.
Quayle, M., 2003. A study of supply chain management practice in UK
industrial SMEs. Supply Chain Management: An International Journal 8 (1),
7986.
Quayle, M., 2002. Purchasing in small rms. European Journal of Purchasing &
Supply Management 8 (3), 151159.
Quayle, M., 2000. Supplier development for UK small and medium-sized
enterprises. Journal of Applied Management Studies 9 (1), 117133.
Rajagopal, S., Bernard, K.N., 1994. Creating strategic change in procurement
orientation: a strategy for improving competitiveness. European Journal of
Purchasing & Supply Management 1 (3), 149160.
Ramsay, J., 2001. Purchasings strategic irrelevance. European Journal of Purchasing
& Supply Management 7 (4), 257263.
Rooks, G., Snijders, C., 2001. The purchase of information technology products by
Dutch SMEs: problem resolution. Journal of Supply Chain Management 37 (4),
3442.
Roos, G., Roos, J., 1997. Measuring your companys intellectual performance. Long
Range Planning 30 (3), 413426.
Rozemeijer, F.R., 2000. Creating corporate advantage in purchasing. Unpublished
Ph.D. Thesis, Eindhoven Centre for Innovation Studies, Technische Universtiteit
Eindhoven.
Schaper, M., 2002. Small rms and environmental management: predictors of
green purchasing in western Australian pharmacies. International Small
Business Journal 20, 235251.
Scully, J.L., Fawcett, S.E., 1994. International procurement strategies: challenges
and opportunities for the small rm. Production and Inventory Management
Journal 35 (2), 3946.
Stundza, T., 2000. Boeing careful when picking the best. Purchasing, 11/16/2000
129 (9).
Teece, D.J., Pisano, G., Shuen, A., 1997. Dynamic capabilities and strategic
management. Strategic Management Journal 18 (7), 509533.
Ulaga, W., Chacour, S., 2001. Measuring customer-perceived value in business
markets: a prerequisite for marketing strategy development and implementation. Industrial Marketing Management 30 (6), 525540.
Ulaga, W., 2003. Capturing value creation in business relationships: a customer
perspective. Industrial Marketing Management 32 (8), 677693.
Vargo, S.L., Lusch, R.F., 2004. Evolving to a new dominant logic of marketing.
Journal of Marketing 68 (January), 117.

ARTICLE IN PRESS
226

A.D. Pressey et al. / Journal of Purchasing & Supply Management 15 (2009) 214226

Wieters, C.D., Ostrom, L.L., 1977. Maintaining effective suppliers: a small business
approach. Journal of Small Business Management 15 (4), 4449.
Wouters, M., Anderson, J.C., Wynstra, F., 2005. The adoption of total cost of
ownership for sourcing decisionsa structural equations analysis. Accounting,
Organizations and Society 30 (2), 167191.
Zeller, T.L., Gillis, D.M., 1995. Achieving market excellence through quality: the case
of Ford Motor. Business Horizons 38 (3), 2231.

Zheng, J., Knight, L., Harland, C., Humby, S., James, K., 2007. An analysis of research
into the future of purchasing and supply management. Journal of Purchasing
and Supply Management 13 (1), 6983.
Zheng, J., Caldwell, N., Harland, C., Powell, P., Woenrdl, M., Xu, S., 2004. Small rms
and e-business: cautiousness, contingency and costbenet. Journal of
Purchasing and Supply Management 10 (1), 2739.