Buying into the revolution

Their article calls for a quiet revolution in the way PSM research is undertaken but will people buy into Professor Arjan van Weele and Dr Erik van Raaij's ideas for the future?

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A sub-field within management, purchasing and supply management has always married theory and praxis - but this relationship has not been an equal one. While a growing body of research and literature attests to the insights and breakthroughs academics and practitioners have discovered, some believe that a more structured framework to guide future development is needed, one which would ensure coherence and clarity of purpose. A recent article takes up this idea, outlining the steps required to make PSM relevant and robust.

In honour of the Journal of Supply Chain Management's 50^th anniversary, Professor Arjan van Weele of Eindhoven University of Technology and ERIM's Dr Erik van Raaij were invited to contribute an article on purchasing and supply management (PSM). They use the opportunity to outline their vision for the future of PSM research, with researchers and indeed journals themselves coming under scrutiny for the methods and policies currently adhered to. It concludes with a call to action within the framework of a 'quiet revolution': a paradigm shift toward more robust, less 'one hit wonder' research.

The timing of the article could be argued to be reminiscent of a previous period of development within PSM, namely the 1970s, when economic recession and supply disruptions meant external resource management was of great importance to firms. “Purchasing and supply management becomes very important to firms when there is scarcity of money and/or resources,” Dr Van Raaij explains, “as firms look at what they spend, whether it could be spent more professionally, and ensuring they obtain the necessary resources from suppliers.”

In the introduction to their article, Van Weele and Van Raaij note that good external resource management through cost efficiency, keen negotiating and competitive contracting have been the main focus of researchers in the field. What has received less attention however is the strategic relevance of PSM and of PSM research. If research is not particularly relevant to the development of PSM, how can the field continue to grow and mature? And if research is not conducted to a rigorous set of standards, how can progress be made? As the authors themselves argue, “[r]esearch on strategically relevant topics has no value if it has not been executed with the highest possible rigor.”

Relevance – Bridging theory and reality

Purchasing and supply management is not just an academic discipline – it's one of the central functions of firms competing in the market: By the end of the twentieth century, “the purchasing ratio in (manufacturing) companies had increased to often 60-80 per cent of their total cost,” Van Weele and Van Raaij note. Therefore, companies are becoming increasingly dependent on the capabilities of their suppliers, and on the quality of the relationship built up between the parties.

Theories as to how and why firms should concentrate on certain aspects of the purchasing and supply process are therefore useful beyond the realm of academia. The resource-based view of the firm argues that differences in performance among companies are not primarily a result of the products that a firm makes, nor the market environment in which they operate. Instead, the theory claims, success is due to firms' effective and efficient use of resources and relationships, be they physical or human, inside or outside of the firm. The relational view of the firm theorizes, as the name would suggest, that relations between a firm and its suppliers can be a source of competitive advantage. What is confounding, therefore, is why strategic management scholars do not seem to consider PSM as a specialist research domain able to provide insight on how suppliers can be managed as a resource. For Van Weele and Van Raaij, this is not a great surprise.

As they highlight in their paper: “PSM research represents a scattered field which only has limited overlap with strategic management trends and management thinking. Most PSM research seems to lack a clear theoretical underpinning.” A systematic review by Gabriele Spina, Federico Caniato and others of PSM articles published between 2002 and 2010 found that only 14% were grounded in a specific theory. In other words, “[t]he vast majority did not make reference to any theoretical background that was used to inform and structure the research.”

The development, testing and application of theoretical knowledge within PSM is a necessary requirement should researchers wish for PSM to gain higher visibility, recognition and traction as a discipline. Aligning research agendas with strategic priorities in the business arena is also suggested. Furthermore, Van Weele and Van Raaij argue, future research should also devote more attention to key concepts such as innovation, flexibility and sustainability.

Promoting the use of theory is only half the story, however: How such theory is implemented, tested and analysed by PSM researchers is just as important.

Rigor – Ensuring credibility

In their article, Van Weele and Van Raaij state that employing suitable methodological and analytical techniques when conducting research is critical for the future development of PSM. The field is currently starting to sag under the weight of an inertia which has led to unsuitable and perhaps outdated methods being perpetuated by researchers, reviewers and editors. As Dr Van Raaij notes, “people publishing today have been trained in a certain way; the reviewers and editors have a certain background - it's very difficult to change an ingrained system like this.” A consequence has been the creation of a vicious, self-sustaining cycle – by no means unique to PSM – whereby novelty and attention-grabbing headlines dominate at the expense of repetition and consideration. Those using 'accepted' methods are themselves more accepted and better understood by the community.

Research Objectives

The paper highlights the common practice within PSM of testing theoretical claims in a single study, with the repeated testing of such claims in different contexts and different times a rare occurrence. Professor Van Weele and Dr Van Raaij also note that where there have been multiple tests, there has been “little evaluation across such tests.” What changes would the authors like to see? Firstly, a shift toward acknowledging that replication research is inherently valuable and a turn away from the idea that “a significant effect found in a single study proves the general existence of such an effect in business reality.” Second, an increase in more meta-analytical thinking, enriching PSM theories by identifying moderating variables, would also be welcome.

Data Collection

One example given by the authors to highlight the disjuncture between research aims and the tools used in trying to achieve these aims is the widespread use of surveys, even though “the (cross-sectional) survey has severe limitations for testing a causal relationship.” Indeed, Van Raaij argues, “part of the solution to improving rigor is not to use self-administered questionnaires that often. There are lots of other ways to do our research and it will definitely make our research better if we think about other data sources.”

Data Analysis

Also critically assessed is the adherence to null significance hypothesis testing (NHST), a technique inherited from psychology, which examines the likelihood of whether results could be attributed purely to chance. Together with three of his colleagues at ERIM, Tony Hak, Jan Dul, and Finn Wynstra, Van Raaij practises what he preaches, teaching a research methods course which moves beyond standard NSHT. This is because while it does have positive attributes, NHST “provides only a very limited, and sometimes a misguiding, picture of the test outcomes for a theoretical claim.” Researchers should be reporting effect sizes with confidence intervals, “discussed in terms of what change in the independent variable(s) leads to how much of a change in the dependent variable, and with what level of certainty.” This would help interested parties to better understand the impact certain factors would have on outcomes in a much clearer way,  Added to this, Van Raaij argues, findings should be very much contextualized in terms of limitations and boundary conditions, “in such a way that readers can understand the consequences.”

To distil the article's key points:

• Theory should play a central role in research, with more attention given to network and stakeholder theories, the resource-based view of the firm and dynamic capabilities theory.
• Research should be replicable, and repetition encouraged.
• Research methods and techniques need to be the most suitable for the study, not just the most popular.

The suggestions outlined in The Future of Purchasing and Supply Management Research are neither complex nor unworkable – but what they require are a shift in attitudes and an acknowledgement that the current PSM research-journal ecosystem runs the risk of producing a stagnant environment.

In his best-selling book, Thinking, Fast and Slow, Nobel Prize-winning psychologist Professor Daniel Kahneman writes that “Questioning that we believe and want is difficult at the best of times, and especially difficult when we most need to do it, but we can benefit from the informed opinions of others.” If the wider PSM community wishes to benefit their field, they would do well to buy into Van Weele and Van Raaij's vision for the future.

<link people erik-van-raaij>Erik van Raaij is Associate Professor of Purchasing & Supply Management at Rotterdam School of Management, Erasmus University.

'The Future of Purchasing and Supply Management Research: About Relevance and Rigor,' by Arjan J. van Weele and Erik M. van Raaij was published in the Journal of Supply Chain Management in February 2014.