Managing from a distance in international purchasing and supply

Neale G. O'Connor, Yan Du, Zhilin Yang, Mohammadreza Akbari

Research output: Contribution to journalArticleResearchpeer-review

1 Citation (Scopus)

Abstract

International purchasing and supply management (PSM) teams have long faced the visibility and understandability challenges of managing geographically dispersed and culturally distant suppliers. Problems arising from inadequate monitoring and control over suppliers can be attributed to geographical and cultural distance, capability gaps, weak institutions, and supply market dynamism. With transaction costs theory as our lens, we examine how international geographically and culturally distant purchasing and supply management (PSM) teams control emerging economy suppliers with formal management controls. We use interview survey data on 339 international customer-Chinese supplier relationships using supplier perceptions of the extent to which performance measurement and monitoring practices are used by their primary customer in the purchase reorder decision and control. The results demonstrate that the cultural and, to a lesser extent, geographical distance between the customer and the supplier is associated with more extensive use of formal management controls. Also, we find the relationship between geographical or cultural distance and the importance of performance measurement is strengthened for suppliers of complex components.

Original languageEnglish
Pages (from-to)594-619
Number of pages26
JournalOperations Management Research
Volume16
DOIs
Publication statusPublished - 2023

Keywords

  • Culture distance
  • Formal management control mechanisms
  • Geographical distance
  • Strategic resources
  • Supply chain management
  • Transaction costs theory

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