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A Structural Analysis of the Effectiveness of Buying Firms' Strategies to Improve Supplier Performance
Author(s) -
Krause Daniel R.,
Scannell Thomas V.,
Calantone Roger J.
Publication year - 2000
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.2000.tb00923.x
Subject(s) - outsourcing , business , industrial organization , supplier relationship management , incentive , competition (biology) , structural equation modeling , core competency , marketing , core (optical fiber) , resource (disambiguation) , supply chain management , supply chain , microeconomics , computer science , economics , ecology , telecommunications , computer network , machine learning , biology
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.