The alignment of appropriate firm and supply strategies for competitive advantage

Abstract

PurposeAims to prove that a firm's perception of the strategic nature of supply depends on how it defines its competitive advantage within the marketplace.Design/methodology/approachData were collected using a random stratified cross‐sectional design from 142 large manufacturing firms in the UK. Structural equation modelling (SEM) was employed to test the hypothesised model.FindingsFirms defining their competitive advantage as being cost‐focused will generally consider supply as playing merely a cost‐reduction role, i.e. passive and supportive, whereas firms viewing their competitive advantage as being differentiated will see supply as strategic, i.e. as a distinctive capability.Research limitations/implicationsThis study's single country setting could limit the generalizability of the findings. Replication of the model would require contrasting empirical contexts. Longitudinal as opposed to cross‐sectional data are needed for studying causations. Also future studies should take a multiple‐source as opposed to a single‐source data collection approach. Finally, more empirical research is needed, specifically grounded in the established strategy literature.Practical implicationsThe model presented allows managers to understand what strategies to follow and which relationship modes to adopt. This study has a number of implications for strategy makers at the level of the firm and within supply.Originality/valueSupply management has so far focused on the wrong question. Instead of “why isn't purchasing strategic?”, it should be “what are the firm's strategic goals and priorities?” This refocusing allows exploration of the linkage between the firm's competitive positioning and priorities and that of supply.