A conceptual model and analytical framework for studying purchasing & supply management within SMEs

Abstract: The central objective of this conceptual paper is to gain a better understanding under what circumstances purchasing and supply activities within Small & Medium-sized Enterprises (SMEs) are managed. Purchasing & Supply Management (PS Management) within SMEs differs from that in large enterprises. SMEs have different organisational settings and are not small versions of large enterprises. Whilst there is abundant literature on SMEs as well as on PSM, there is only little literature on PSM within SMEs. PSM research within SMEs must consider specific characteristics such as informal organisation, less specialization in business functions and less available resources. SME management will focus more on the overall operations and less on specific business functions. The approach of SME management to inward-bound purchasing and supply activities is often holistic; its approach to outward-bound purchasing and supply activities is characterized by a relative dependent position in supply chains. This paper proposes a conceptual model to explain the relationship between the governance of purchasing and supply activities and their purchasing and supply performance. The paper adopted the Transaction Cost Theory (TCT) with levels of integration to describe five governance types. To explain the relation between these governance types and performance, the paper includes the TCT-related moderating variables general uncertainty (macro and meso environment) and asset specificity (meso environment). It also introduces the moderating variables SME characteristics and management characteristics and business model. From this conceptual model the paper then develops an analytical framework which describes the five governance types and the circumstances under which they are ideal-typically sustained. The conceptual model and analytical framework combine different domains of literature to enhance the understanding of the different forms of purchasing and supply activities within an SME context. Combining these different domains gives beneficial insights that cannot be found in the separate literature domains. The applying model and framework in empirical research will enable the design of management instruments. Hence this paper is a starting point into purchasing and supply management research within SMEs aimed at supporting SMEs in their performance