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The Impact of strategic purchasing practices on firm performance: an analysis in hospitality sector

Aksoy, Oğuz.
Increasingly, firms realize that rather than just being a tactical function focused on day-to-day operations, purchasing function also helps firms to generate competitive advantage by adopting more strategic purchasing practices. Previous research mostly suggests that strategic purchasing practices improve firm performance. However, majority of these studies are conducted in the manufacturing context. In this thesis, the service context was examined, and specifically the hospitality sector was investigated. Three types of strategic purchasing practices – supplier selection, supplier relationship, and supplier development – were identified, and their effect on hotel performance was examined. In order to test the hypotheses, data from 71 hotels in Turkey collected by means of a survey was used. First, a cluster analysis was performed and two types of purchasing strategies were identified based on supplier selection criteria: Traditional vs. Strategic. Then, via partial least squares (PLS) method, the effects of collaborative relationships, supplier development and environmental supplier development on hotel performance were tested. Results show that in general, long-term relationships have a negative effect on both market and financial performance. Additionally, it was found that supplier development has a positive effect on performance, but only for hotels that have a traditional purchasing strategy. Interestingly, it was found that environmental supplier development has a positive effect on financial performance in hotels with a traditional purchasing strategy, but a positive effect on market performance in hotels with a strategic purchasing strategy.