Capability and Practice in Procurement Collaboration: A Vendor’s Perspective of Benefits

Damien Power
University of Melbourne, Australia

This paper is based on a study of 105 Australian manufacturing companies focusing on their relationships as vendors with customers. In particular, the focus of the paper was on determining the extent to which collaboration through both Internet based technological capability and collaborative practices involving partnering with customers influenced three separate aspects of firm performance: operational, quality and financial. The results show that vendors perceive collaboration with customers to directly influence operational performance and quality performance. They do not see any direct link with financial outcomes. There is evidence, however, suggesting that financial performance is influenced by operational and quality performance. The findings indicate that vendors may find it difficult to see the real benefits of collaboration due to the nature of the relationship with customers. The results are explained in terms of both transaction cost theory and the knowledge based view of the firm.

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