The conductor matters: the impact of purchasing orchestration on organizational performance

Abstract

Purpose Organizations increasingly manage innovation projects jointly with suppliers to use external resources to fill internal competencies. However, little is known about the practices of how companies configure internal and external resources to enhance competitiveness. Drawing on resource orchestration theory, this study aims to propose a novel approach to explain organizational performance using purchasing orchestration (PO) as an antecedent. The paper then tests an empirical model to assess the impact of PO practices on innovation and financial performance. Design/methodology/approach Cross-sectional survey data from 247 supply chain managers are used to test hypotheses relating PO to performance. SPSS PROCESS is applied to test conditional direct and indirect effects. Findings The positive impact of PO practices on innovation and financial performance is confirmed. Results indicate an organization’s entrepreneurial orientation (EO) can strengthen the positive relationship between PO and financial performance. Structuring, bundling and leveraging external resources are introduced as new organizational capabilities. Research limitations/implications This research is based on cross-sectional data, and unidimensional constructs are used. Practical implications This research guides managers on the innovation process in light of the growing importance of external resources. The manuscript highlights the role of strategic purchasing in establishing new resource capabilities as a competitive advantage. Originality/value This research provides new insights into the relationship between purchasing practices and organizational performance and helps better understand the implications of orchestrating supply chain resources. A novel construct, PO, is introduced as a theoretical basis for studying supply chain-enabled innovation.