Testing the Effect of Supplier Development on Purchasing Performance Using Structural Equations Modelling

Supply chain management is an increasingly important organizational concern, and proper management of supplier relationships constitutes one essential element of supply chain success (Fawcett and Fawcett, 1995; Giunipero and Brand, 1996). Buying firms faced with problems of deficient supplier performance and/or capabilities can implement a wide range of supplier development practices in order to upgrade the performance and/or capabilities of the weakest links in their supply chain, such as supplier evaluation and feedback, supplier recognition, and supplier training (Krause and Ellram, 1997a). These activities require different levels of involvement by the buyer firm (Krause, 1997) and are characterized by different levels of implementation complexity (Trent and Monczka, 1999). However, we are unaware of any previous study that has characterized supplier development activities according to their level of involvement and implementation complexity (i.e., skill, time, and resources required to execute successfully a particular activity). Consequently, the main objective of this research is to comprehensively analyze the effect of supplier development practices with different levels of implementation complexity on the firm’s purchasing performance.