Procurement practices and operational performance: a study of linear and curvilinear relationships in a developing economy

Eugene Kafui Agbeka, Fanny Adams Quagrainie and Alan Anis Mirhage Kabalan

Journal of Public Procurement, 2024, vol. 24, issue 3, 320-347

Abstract: Purpose - While operational performance is important for a company's competitiveness and profitability, this study claims that procurement may be required to drive operational performance. This study aims to focus on how procurement practices is related to operational performance among selected manufacturing firms. Design/methodology/approach - The model was tested on a sample of 329 manufacturing firms in clothing and textiles, chemicals and plastics, food and beverages processing, wood processing, metal processing and pharmaceutical manufacturing industries in a developing economy. Findings - The results indicate that firms with higher and optimal level of procurement practices achieve higher levels of operational performance. Regardless of theH1rationale, this study suggests that increasing procurement techniques has a limit in terms of improving operational performance. This study establishes that extreme level of procurement practices is associated with decreasing operational performance. Practical implications - This study calls attention to how managers can guide organizations in refining their procurement strategies and practices; there is the need to strive to strike a balance between diversification and efficiency in procurement. Social implications - Manufacturing firms are often integral parts of local communities. The decisions they make regarding procurement practices can impact the economic health of these communities. Striking a balance between diversification and efficiency can contribute to sustainable business practices that benefit both the company and the local community. Originality/value - As the main contribution, this study brings the additional perspective that extreme level of procurement practices is associated with decreasing operational performance.

Keywords: Procurement practices; Operational performance; Law of diminishing returns; Manufacturing (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jopppp:jopp-01-2024-0010

DOI: 10.1108/JOPP-01-2024-0010

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