The impact of purchasing and supplier involvement on strategic purchasing and its impact on firm's performance

The focus of this paper is on purchasing and supplier involvement in the firm. Using the resource-base view of the firm, hypotheses are developed concerning purchasing/supplier involvement, strategic purchasing and firm's financial performance. A model of the hypothesized relationships is offered and empirically tested using structural equation modeling. The model is tested using data collected in 1999. Each factor in the model is measured by a number of scale items. Based on the results of confirmatory factor analysis, an overall fit of the model to the data is achieved. Both convergent and discriminate validity is demonstrated. The research findings reveal that the hypotheses tested in the model are supported. Purchasing/supplier involvement has a positive impact on strategic purchasing, and strategic purchasing has a positive impact on firm's financial performance. The paper concludes with some research implications, limitations of the study and suggestions for future research.