Impact of Global Purchasing and Supplier Integration on Product Innovation

The paper presents four sets of hypotheses. The first two involve comparing the priorities and impact of global purchasing. To test for significant differences between the two groups, an independent sample t-test was used, as recommended by Forza. The third and fourth hypotheses concern the innovation impact of supplier integration, as well as the innovation impact of proficiency in supplier integration. When a single dependent variable is presumed to be related to multiple independent variables, multiple regression analysis is appropriate. This section will thus first present the results of the independent sample t-test and then the results of multiple regression analyses. Since there are two dependent variables and two groups of firms, a total of four regression analyses are required.

The first hypotheses concern the priorities of the purchasing department. From Table VI, we can see that there are significant differences between regional and global purchasing. Global purchasing is significantly more guided by priorities of improving TTM and rates of new products than those purchased regionally, thus supporting H1a and H1b.

Table VI. Character and competitive priorities of the purchased category (mean values)

The second set of hypotheses concerns the outcome of regional and global purchasing, in terms of product innovation. The results show that there are no significant differences between the groups. Supplier TTM and the level of supplier product innovation appear to be unrelated to where the suppliers are located, thus providing no support for H2a and H2b.

The third and fourth sets of hypotheses concern the impact of supplier integration and the impact of proficiency in supplier integration, and whether they differ between firms purchasing globally and firms purchasing locally. The results in Tables VII and VIII show that supplier integration is strongly associated with shorter supplier TTM but not with level of supplier product innovation, and only for firms purchasing globally. We thus find support for H3b, but not for H3a. Integrating global suppliers is thus important to ensure short TTM, but is not enough for ensuring a high level of supplier innovation. Supplier integration is not very important for firms purchasing regionally, at least not in terms of these two performance indicators.

Table VII. The impact of purchasing proficiency and supplier integration

The results also show that proficiency in supplier integration is strongly associated with the level of supplier product innovation, but only for firms purchasing globally, thus supporting H4a. Moreover, proficiency in supplier integration is also associated with shorter supplier TTM for all firms, providing no support for H4b.

Of the control variables, only one significant effect was detected: suppliers proving unique resources is strongly associated with level of supplier product innovation for firms purchasing globally, which is indeed in line with the reviewed literature. Purchasing volume is not related to innovation performance in any way.

Both models for firms purchasing globally display satisfactory explanatory power (R ² and adjusted R²), and the F-value is statistically significant. For the regional sourcing group, only the model with dependent variable supplier TTM is statistically significant, although the R² values are rather low. The VIF is consistently below 1.3, indicating no multicollinearity problems. Ten is usually considered the threshold for potential multicollinearity problems. Thus, the regression models for the global purchasing group provide valuable insight into factors contributing to supplier innovation performance, whereas the models are insufficient for explaining what drives supplier innovation performance for firms purchasing regionally. A normal probability plot showed that, for the global purchasing group, the standardized residuals behave randomly, which suggests that the data fit the model well. For the regional purchasing groups, the residuals do not behave randomly, which strengthens our conviction that other variables are needed to explain supplier innovation for this group.

Table VIII. The impact of purchasing proficiency and supplier integration