Managing Innovative Suppliers: Exploring Company, Procurement, and Performance Variables in New Zealand Construction Supply Chains
Staal, Anne Anthonius Gerben
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The research concerned semi-dyadic relations in SMEs and large companies that managed innovative suppliers in New Zealand construction supply chains. It explored effects of (independent) company variables on (mediating) procurement management variables, and also the effects of these variable types on (dependent) procurement performance variables when managing innovative suppliers. Exploratory interviews (N=5) revealed that innovation procurement seemed professional and logical within their contexts. Survey I (N=112) revealed that most case companies followed a product leadership strategy, and were equally entrepreneurial to innovative customers and innovative suppliers. They were innovative and gave innovative suppliers a dominant innovation role. They seemed to prefer radical innovations less than incremental innovations, but still somewhat more than New Zealand averages. Companies had slight preferences for new, small, or foreign suppliers for radical innovations. Innovations with supplier interactions were more beneficial to the company and the natural environment, than innovations without supplier interactions. Higher company innovation-benefits could equal higher environmental innovation-benefits. This profile differed from the profile of average companies in the construction supply chain. Survey I found weak correlations among output performance variables and process or proxy performance variables. Dependent (procurement and performance) variables were affected differently. Conversely, independent (company and procurement) variables had different effects. Different from extant literature, Survey I found limited statistically-significant effects of company variables on procurement management variables, and of these two variable types on performance. A minority (41%) of company variables affected procurement variables; only two company variables (13%) affected performance; a minority (40%) of procurement variables affected performance. Product leadership and NPD/innovation experience affected performance. Moreover, trust, lifestyle strategies and survival strategies affected procurement variables. Conversely, 27% of performance variables (satisfaction on marketing & sales; benefits for the natural environment) and 30% of procurement variables (entrepreneurial orientation with innovative suppliers, relation intensity with manufacturers, and small vs large suppliers for radical innovations) responded stronger on some company variables. Company size (<99 versus >250 staff) had little effects. Innovating, opportunity-seeking and trust towards innovative suppliers, and relation intensity with innovative service providers had highest effects on performance. Conversely, 46% of the performance variables (satisfaction with innovative suppliers, benefits for natural environment and company) responded stronger on innovating, opportunities-seeking and trust variables. Survey II (N=33) identified 12 procurement best-practices that respondents used for specific supplier or innovation types. Causality should be treated cautiously. Findings reflected the inconclusive results from extant literature. The research provided a nuanced and varied understanding on management of innovative suppliers, on the effects of entrepreneurial orientation to innovative suppliers, on the limited effects of company size, on the complex relations between various performance measures, and on entrepreneurship as a theoretical lens in innovation procurement. Companies had several options on how they managed their innovative suppliers. Additionally, the company characteristics and context of in this nascent research domain could be more important than commonly assumed from extant research.