Managing from a distance in international purchasing and supply

Neale G. O’Connor (), Yan Du, Zhilin Yang and Mohammadreza Akbari
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Neale G. O’Connor: Monash University
Yan Du: EDHEC Business School
Zhilin Yang: City University of Hong Kong, Kowloon, Hong Kong | Alibaba Business School, Hangzhou Normal University, Hangzhou
Mohammadreza Akbari: James Cook University

Operations Management Research, 2023, vol. 16, issue 2, No 3, 594-619

Abstract: 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.

Keywords: Supply chain management; Geographical distance; Culture distance; Formal management control mechanisms; Strategic resources; Transaction costs theory (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s12063-022-00291-7

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