Benchmarking: An International Journal

Impact of e-procurement on procurement practices and performance

Gioconda Quesada, Marvin E. González, James Mueller, Rene Mueller,
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Gioconda Quesada, Marvin E. González, James Mueller, Rene Mueller, (2010) "Impact of e‐procurement
on procurement practices and performance", Benchmarking: An International Journal, Vol. 17 Issue: 4,
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BIJ
17,4 Impact of e-procurement
on procurement practices
and performance
516
Gioconda Quesada, Marvin E. González,
James Mueller and Rene Mueller
Department of Marketing and Supply Chain Management, School of Business,
College of Charleston, Charleston, South Carolina, USA
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Abstract
Purpose – The purpose of this paper is to investigate the impact of electronic procurement
technologies on procurement practices (PPR) and procurement performance (PP).
Design/methodology/approach – This paper posits a model of the relationships between
e-procurement technology (EPT) usage, PPR, and PP. This model was tested and validated using a
sample of 368 procurement specialists in the USA.
Findings – The findings suggest that EPT usage positively affects managers’ perceptions of both
PPR and PP.
Research limitations/implications – The findings of this paper primarily pertain to the
operational level of the organization. Future research could also attempt to isolate the impact of
individual EPTs on firm performance.
Practical implications – The contribution for practitioners is to provide guidelines for the use of
EPTs, and to report its impact on PP. The measurement instruments developed in this paper can be
used to evaluate and benchmark current PPR.
Originality/value – This paper contributes to the literature by providing an empirical test of the
impact of EPTs on perceptions of PPR and performance.
Keywords Procurement, Sourcing, Electronic commerce, Information systems,
Supply chain management, United States of America
Paper type Research paper

Benchmarking: An International
Journal
Vol. 17 No. 4, 2010
pp. 516-538
q Emerald Group Publishing Limited
1463-5771
DOI 10.1108/14635771011060576
Introduction
Supply chain management (SCM) involves all the approaches used to efficiently
integrate the supply-side participants of a firm’s value chain (Porter, 1980) so that
products/services are delivered to the customer in the right quantities, to the right
location, at the right time, and at optimal cost. The application of information systems
(IS) technology to facilitate this integration process is a phenomenon that continues to
receive managerial attention and, consequently, academic interest. Research on the
application of IS technology to support SCM is abundant, results clearly show that the
use of new SCM technologies increase the efficiency of the supply chain as well as
improve overall firm performance (Lindskog and Wennberg, 2002). While electronic
data interchange (EDI), inter-organizational systems, e-commerce, e-sourcing,
e-procurement, and e-auctions are all applications of IS that support SCM
(Kameshwaran et al., 2007; Lee and Whang, 2000; Presutti, 2003; Puschmann and Alt,
2005; Dedrick et al., 2008). According to Novack and Simco (1991), e-procurement studies
are particular important due to the fact that procurement is one of the most critical
functions of the supply chain. In terms of e-commerce, e-procurement is usually the
 starting point for many companies’ overall e-commerce strategy (Chang et al., 2004). One Impact
study shows organizations spending at least one-third of their overall budget on of e-procurement
procurement products and services (Killen and Kamauff, 1995). More recent research
(Moozakis, 2001) finds that investments in procurement technologies account for the
greatest percentage (53 percent) of business investment in enterprise applications
software, followed by customer relationship management (41 percent), SCM (31 percent),
and electronic resource planning (8 percent). 517
Although overall adoption rates of e-procurement technology (EPT) are still a relative
unknown (Pearcy et al., 2008), most researchers agree that the full impact of
e-procurement has not yet been realized and that the adoption and integration of EPTs
into the business mainstream is occurring at a much slower pace than expected
(Davila et al., 2003). Indeed, studies have shown that while over 70 percent of American
buyers use internet technologies at work (Caridi et al., 2004), the percentage of business
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procurement conducted electronically is relatively low – ranging from 10 percent

(Qualyle, 2005) to 20 percent (Kulp et al., 2006). This disconnect is evident in a recent
study by Gunasekaran and Ngai (2008). In this study, 80 percent of industry respondents
agreed that the use of the internet was important in procurement; however, only
20 percent had actually adopted EPTs. According to Talluri et al. (2006), managers
recognize benefits of e-procurement such as: better coordination with suppliers, quicker
transaction times, higher flexibility, better supplier integration, and lower costs
(Fang et al., 2007).
If managers and workers understand the benefits of EPTs, why are they not used?
Gilbert (2000) has partially answered this question by arguing that companies jump onto
the e-procurement bandwagon without fully understanding the inter-organizational
collaboration and network effects underlying these technology models, the investment
required to move the right information from suppliers to employees, and the
complexities of integrating these technologies with existing enterprise resource
planning systems. Recognizing the managerial challenges, operational risks, and
difficulty measuring incremental increases to profit inherent in implementing new
(and relatively expensive) supply chain technologies, this research seeks to explore the
effect of EPT usage on procurement practices (PPR) and PP). Through a large-scale
empirical study investigating how emerging EPTs affect the procurement function,
a theoretical model is developed and resulting hypotheses are empirically tested. First,
a literature review is presented.

Literature review and hypotheses development

Leenders et al. (2002) briefly summarize the history of procurement since the late 1800s.
Initially, procurement (purchasing) was considered a clerical function. By the 1970s,
purchasing/procurement began to receive academic attention as its importance as an
administrative function became recognized (Ammer, 1974). It was Porter’s (1980)
seminal work, however, that prompted firms to think of procurement as a strategic
function rather than simply and administrative one (his five forces model includes
supplier and buyer power as two critical forces for competitiveness). Since the 1980s,
procurement has evolved from being viewed as merely a process for buying goods and
services for a firm, to being more comprehensively defined as all the activities necessary
to acquire goods and services needed to achieve user requirements (Tassabehji and
Moorhouse, 2008).
 BIJ The strategic importance of procurement has been reiterated frequently, and is still
17,4 one of the critical themes found in the literature (Drake and Lee, 2009; Ordanini and
Rubera, 2008; Rajagopal and Bernard, 1993; Ellram and Carr, 1994; Rink and Fox, 1999;
Kocabasoglu, 2002). Soares-Agular and Palma-Dos-Reis (2008) and Drake and Lee (2009)
argue the importance of giving procurement a strategic role in the organization and
agree that achieving world-class status in procurement requires leadership and
518 alignment of purchasing strategy with business strategy.
While relatively fewer studies have analyzed procurement and its impact on different
functional, firm or supply chain performance objectives (Croom and Johnson, 2003;
Gebauer et al., 1998; Frohlich and Westbrook, 2002), components of the basic
e-procurement model can be gleaned from contributions in the literature at both the
strategic and operational levels. The benchmarking process can provide a critical link in
understanding the relationship between the components of this model, as shown in
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Figure 1, and explained in the next sections.

EPT usage
EPT usage has been defined as the extended usage of electronic network technologies
and practices that facilitate electronic communication, information exchange and
transaction support through either public or private networks (Min and Galle, 1999).
In this context, it becomes critical to understand the effects of changing information
technologies on EPT usage, business performance, and the achievement of business
goals.
Previous literature has used the term e-procurement to describe the use of the internet
on procurement tasks (Davila et al., 2003; Presutti, 2003). The mistaken emphasis on the
internet only could lead academicians and practitioners to understand too narrowly the
capabilities, benefits and limitations of e-procurement; however, this is not internet
procurement, but electronic procurement (Neef, 2001). Clearly, the internet provides a
low-cost solution for those firms wanting to start e-procurement but not having the
resources necessary for adopting more expensive information technologies such as EDI.
Despite the emphasis on the internet, EPT is not synonymous with
internet-procurement. Indeed, Ordanini and Rubera (2008) found that the internet is
useful primarily when used as a complementary tool used in conjunction with other
EPTs. Other researchers have cleared this misunderstanding by naming web-based B2B
procurement as specific procurement activities done through the internet (Candrasekar
and Shaw, 2002; Lindskog and Wennberg, 2002).

E-procurement
technology usage
(EPT)

H2 H3

Procurement Procurement
Figure 1. practices performance
Research framework H1
(PPR) (PP)
 Procurement practices Impact
Despite significant academic interest in the subject, it does not appear to be a universally of e-procurement
accepted delineation of the PPR construct. Based on a review of the literature (Cammish
and Keough, 1991; Keough, 1993; Ellram and Siferd, 1993; Laios and Xideas, 1994;
Baldwin and Orr, 1997; Cavinato, 1991; Novack and Simco, 1991; Rajagopal and
Bernard, 1993; Herberling, 1993; Sutton, 1989; Archer and Yuan, 2000; Leenders et al.,
2002; Lincoln University, 2001; Gebauer and Segev, 2001; Kong and Li, 2001; Rink and 519
Fox, 1999; Segev, 2001; Berger and Gattorna, 2001; Subramaniam and Shaw, 2002; Neef,
2001; Alt and Fleisch, 2000; Presutti, 2003; Tracey, 2004; Gonzalez and Medrano, 2002),
PPR can be divided into information gathering, supplier contact, contracting,
requisitioning, and intelligence/analysis as described below:
(1) Information gathering. Webster and Wind (1996) specify the buying tasks as:
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.
identification of need;
.
establishment of specifications;
. identification of alternatives;
.
evaluation of alternatives; and
.
selection of suppliers.
All of these steps are done in the procurement stage of information gathering.
As stated by Segev et al. (1998), in information gathering, prospective
buyers identify their needs and evaluate potential sources to fulfill them. This
process is accomplished by gathering information about market conditions,
products and sellers. Novack and Simco (1991) explain the information
gathering process as conducting market analysis, depending upon if it is a
competitive market (many suppliers), an oligopolistic market (a few large
suppliers) or a monopolistic market (one supplier).
(2) Supplier contact. The buyers’ request for quotes, request for proposals (RFP),
request for information and bids are all contained in supplier contact. Rink and
Fox (1999) include supplier contact as part of the procurement activities in any
stage of a product-life cycle, from requesting for quotes, to requesting for volume
discounts and bids. Segev et al. (1998) report that the RFP ranked third in
frequency-of-use as a negotiation technique, after face-to-face contact and bids.
(3) Contracting. Negotiation is the interaction of partners to determine price,
availability and delivery times of goods and services (Segev et al., 1998).
Contracting is simply the result of successful negotiations. The contracting
process varies depending on whether the transaction is a new buy, a modified
rebuy, or straight rebuy (Anderson et al., 1987).
(4) Requisitioning. In requisitioning, the terms of the contracts are carried out and
goods and services are transferred in exchange for money or other forms of
compensation. Requisitioning is also referred to as settlement (Segev et al., 1998),
or delivery of products and performance of service (Novack and Simco, 1991) and
culminates with the generation of performance data used as inputs in the
following stage, intelligence, and analysis.
(5) Intelligence and analysis. Berger and Gattorna (2001) define intelligence and
analysis as the identification, collection and use of internal and external data to
 BIJ enable procurement to make smart sourcing decisions. Narasimhan and Carter
17,4 (1998) specified purchasing practices as:
.
supplier certification;
.
supplier development;
.
supplier qualification;
520 .
just-in-time procurement; and
.
supply base rationalization.
All these activities require intelligence and analysis as part of the PPR to make
better decisions about suppliers. Novack and Simco (1991) argue to include
intelligence and analysis as a post-purchase/make performance evaluation for
control purposes; however, Gonzalez et al. (2004) argue that intelligence is more
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than just a control of performance; high-quality information is a key tool for

developing effective strategies.
Recent literature in SCM shows empirical and theoretical evidence that improvement in
PPR; positively affect the procurement function performance. Vaidyanathan and
Devaraj (2008) show empirical evidence that support the relationships between PPR and
e-procurement satisfaction performance. Vaidyanathan et al. (2008) provided results
based on Australian companies showing that higher frequency of PPR positively
impacts the effect of e-procurement on procurement performance (PP). Tatsiopoulos
(2004) indicate that about 60 percent of global purchasing expenditures are spent on
high-volume, low-money maintenance, repair, and operating (MRO) purchases (MRO
supplies); which typically account for 20 percent of an organization’s purchases but
80 percent of its orders. Therefore, by improving the PPR of MRO ordering, a dramatic
decrease in transaction costs is expected. Tavi (2008) emphasizes that organizations
cannot ignore the abundant benefits that world-class PPR offer in an increasingly global
economy (increased control, cost savings, efficiencies and good corporate citizenship,
among others). Based on the literature, the authors claim:
H1. The higher the use of PPR in a firm, the higher the PP.
Carr et al. (2000) found that higher firm performance is associated with functional-level
purchasing expertise, purchasing risk-taking, and strategic purchasing activities.
Likewise, Bayraktar et al. (2009) report a positive correlation between the adoption of IS
technology and the level of SCM practices and firm performance by using a sample of
metal fabrication industry in Turkey. The transformational effect of e-procurement has
been empirically validated by Croom and Brandon-Jones (2007); however, it is within
the narrowly constrained domain of nine UK public sector organizations. Finally, while
Garrido et al. (2008) investigated the impact of internet intensity-of-use in PPR on the
organizational processes and structure, it was only done with Spanish industrial firms.
Segev et al. (1997) investigated the impact of the internet on PPR; however, the findings do
not report validity and reliability of the PPR construct, only descriptive statistics related to
procurement implementation via internet applications. This study seeks to overcome
some of the constraints presented in previous literature by using a large and
representative random sample selected from the Institute for Supply Chain Management,
the world’s largest SCM association. Based on previous literature, the authors suggest:
H2. The higher the EPT usage of the firm, the higher the PPR.
 Procurement performance Impact
Although the need for performance measurement in procurement has long been of e-procurement
recognized, for a variety of reasons, many organizations fail to measure it adequately
(Cammish and Keough, 1991; Brun et al., 2004). Easton et al. (2002) review the history of
PP measurement in the literature through the 1980s and early 1990s and conclude that a
general weakness of “traditional” measures is that they recognize and reward mainly
short-term gains, rather than long-term ones. Laudon and Laudon (2010) argued that 521
measuring long-term impact is notoriously difficult.
Another problem with traditional metrics is that they often work to improve the PP at
the expense of other departments’ performance; however, the concept of improving only
one unit’s performance (a traditional way of measuring PP) has been heavily criticized in
the literature (Bourne et al., 2002; Ghalayini and Noble, 1996, 1997) and is counter to the
total quality management philosophy. Other criticisms of traditional measures of PP
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include: being based too much on financial performance; one-dimensional or incomplete;

contradictory to continuous improvement; inflexible; no strategic focus; and even
invalid (Easton et al., 2002).
The literature on e-PP is divided in terms of its impact at the operational or strategic
level of the organization. At the operational level, there have been several studies
investigating the impact of EPTs on PPR and PP including Mishra et al. (2007),
Vaidyanathan and Devaraj (2008) and Teo et al. (2009). It is argued that by utilizing new
procurement technologies, firms can increase the efficiency of their entire procurement
process and, thereby, can achieve higher firm performance (Lindskog and Wennberg,
2002). Research by Gebauer et al. (1998) has also described PPR and how these positively
impact PP in terms of cost, time, satisfaction, quality, stock, and value.
Several studies are particularly useful for helping define and understand e-PP and
how it can be measured. Croom and Johnston (2003), for example, focus on
e-procurement when they address the impact of e-business on internal customer service.
Frohlich and Westbrook (2002) measure the impact of web-based procurement in
operational performance (delivery time, transaction cost, profitability, and inventory
turnover) while Gebauer et al. (1998) analyze the effect of the internet on strategic
procurement planning practices and how these practices influence PP. Relatively few
studies, however, have analyzed this phenomenon and its impact on different functional,
firm or supply chain performance objectives.
The potential benefits of e-procurement have been described extensively in both
practitioner and academic journals (Kocabasoglu, 2002; Lindskog and Wennberg, 2002;
Gebauer et al., 1998). There is general agreement that e-PPR positively impact PP in
terms of cost, time, satisfaction, quality, stock, and value; however, estimates of the
impact of investments vary (Ordanini and Rubera, 2008; Gunasekaran and Ngai, 2008)
and empirically derived figures are difficult to unearth. The Aberdeen Group (2006)
reports e-procurement benefits including: 64 percent reduction in off-contract
(“maverick”) spending, 7.3 percent reduction in prices for spend brought back onto
contract, 66 percent reduction in requisition-to-order cycles and 58 percent reduction in
requisition-to-order costs; accordingly, the report concludes that e-procurement “really
works”. A.T. Kearney, a global management consulting firm, similarly argues that
companies can save more than 13 times their investment in EPTs and claims further that
the top 500 global companies could realize $330 billion in annual savings through the use
of e-procurement (Plano, 2002). Hackett Benchmarking & Research likewise argue that
 BIJ that e-procurement can save a company 2 percent annually (Roth, 2001). Rai et al. (2009)
17,4 provide evidence of the positive impact of e-procurement on procurement productivity.
Hence, the authors suggest:
H3. The higher the EPT usage of the firm, the higher the PP.
Owing to the great impact of e-procurement on business performance (as reviewed
522 previously), it is the purpose of this research to provide a broad understanding of the
impact of all kinds of electronic technologies that facilitate the PPR among organizations
(Berger and Gattorna, 2001). In this study, the researchers include in EPTs (public as
well as private networks) that could be designed for specific firms, e.g. EDI and other
interorganizational systems.
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Research methods
A large-scale survey approach was used to test the hypotheses derived for the research
model (Figure 1). The constructs for this research were developed with a strong
theoretical foundation based on a review of available literature. The literature review
included theoretical models as well as reliable and valid measures that have been used in
past research on PPR and performance. Items were found in the literature and were
augmented by open-ended interviews with procurement managers. A five-point Likert
scale where 1 – not at all, 2 – to a small extent, 3 – to a moderate extent, 4 – to a
considerable extent, and 5 – to a great extent was used. A sixth classification was
provided for reducing missing values, 6 – do not know.
The first step was to allow experts in the business and academic fields to review the
items for clarity and content. The items were modified, deleted and added as necessary
by incorporating their feedback and analysis. The researchers then used the Q-sort
methodology (Stephenson, 1953) to pre-test the convergent and discriminant validity of
the scales (Q-sort also ensures content validity and clarification of the items and
dimensions of the different constructs).
A large-scale survey was the instrument for data gathering (Appendix 1). The focus
of the study is procurement specialists, since they are the most appropriate to answer
questions related to PPR, PP, and EPT usage. The Institute for Supply Management
(ISM) was selected as the source for the mailing list. ISM is the largest supply
management association in the world with nearly 43,000 members. It is a prestigious
association of professionals in the area of procurement from diverse industries around
the nation. The mailing list contained 5,000 names randomly selected from the ISM US
membership database. Priorities were given to members in the following SIC
classifications: 28 “chemicals and allied products”, 33 “primary metal industries”,
34 “fabricated metal products”, 35 “industrial and commercial machinery and computer
equipment”, 36 “electrical equipment and components”, and 37 “transportation
equipment”. Respondents included procurement/materials/supply chain
vice-presidents, directors, and managers. The mailing list was further refined. Since
the large-scale survey was going to be implemented using online data gathering, those
names with no email addresses were deleted from the initial contact database. From the
5,000 names, a total of 3,532 contained e-mail addresses, and therefore, passed the first
screening.
A x 2 test was conducted to check for non-response bias. The results showed that
there is no significant difference between the sample of 2,712 and the respondents of 368
 when considering the percentages in SIC codes at 0.05 level of significance, therefore, the Impact
sample showed that the sample was not biased. Another non-respondent bias analysis of e-procurement
was done using the first round of the respondents (those who responded to the first
e-mail) as the expected frequency and the second round of the respondents (those who
responded to the second e-mail) as the observed frequency for the different SIC codes.
Both tests exhibit that the respondents represent an unbiased sample.
The first step after collecting the large-scale data is to perform a confirmatory factor 523
analysis for the measurement models, and then, focus on the structural equation model
displaying the hypothesized relationships. The purification of the measurement models
was done by examining the modification indexes along with the factor loadings and
error terms as first criteria for testing the model fit (Appendix 2). Then, the researchers
studied the logic and theoretical support for deleting items. The researchers deleted one
item at a time if there was a reason to do so, based on the criteria for model fit. Otherwise,
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the item remained in the model. The researchers continued the modifications in each of
the measurement models until an acceptable model fit was obtained.
The researchers used a combination of several fit measures for model testing, as
proposed in the literature (Bagozzi and Yi, 1991). Bagozzi and Phillips (1992) propose to
use a confirmatory factor analysis to assess the hypothesized model for each construct.
Once the hypothesized model has passed the preliminary first criteria for model fit
(absence of negative error variances, correlations greater than one and very large
standard errors), the overall model fit indexes were checked. Table I summarizes the
model fit criteria used in the measurement models and in the structural equation model.
Discriminate validity measures the ability of measurement items to differentiate
among constructs being measured (Syamil, 2000). The researchers assessed
discriminate validity by running a x 2 test of discriminate validity for each pair of
constructs (Bagozzi and Phillips, 1992). This was done by obtaining the difference in x 2
between a fixed correlation of 1 between the constructs and a freed correlation between
the same constructs. Reliability estimation is left for last because in the absence of a valid
construct, reliability may not be relevant (Koufteros, 1999). Composite reliability was
used to measure the reliability of the hypothesized measurement models. The formula
used was:

P 2
standardized_loading
Composite_Reliability ¼
P 2 P
standardized_loading þ 1j

Model fit measures Class Acceptable value References

2 2
x /df 1 1 , x /df , 3 (at most) Carmines and McIver (1981)
p-value 1 .0.05 Joreskog (1969)
RMR 1 Smaller better Arbuckle and Wothke (1999)
GFI 1 Closest to 1 better Tanaka and Huba (1985)
AGFI 2 $0.9 Hair et al. (1998)
NFI 2 $0.9 Bentler and Bonett (1980)
TLI 2 $0.9 Bentler and Bonett (1980)
CFI 2 $0.9 Hair et al. (1998)
RMSEA 1 ,0.05 (the most , 0.08) Browne and Cudeck (1993) Table I.
ECVI 3 Should decrease Hair et al. (1998) Model fit criteria
 BIJ A commonly used value for acceptable reliability is 0.7 (Hair et al., 1998). More reliable
17,4 measures give greater confidence that the individual indicators are all consistent in their
measurements, and therefore, the model is repeatable. The method for structural
equation model is that the researchers state a model based on theoretical foundations.
Then, the researchers test its plausibility based on sample data that comprise all
observed variables in the model. If the discrepancy between the theoretical and the
524 data-oriented model is small, the theoretical model is statistically well fitting, and thus,
substantially meaningful (Zhang, 2001).
Of the data, 2 percent was taken out of the analysis since the respondents specified
that they have not used e-procurement at all. First, the averaged score of the items loaded
for each dimension of each construct was computed. Second, these scores were used as
indicators for the corresponding construct. In the case, there are no dimensions (i.e. EPT
usage), all the items are put together in one dimension (it does not mean that EPT is
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measured only by one item). Schumacker and Lomax (1996) indicate that the use of items
from an instrument to measure the latent variables in a structural model increases
the degrees of freedom in the structural equation model and may cause problems in
model fit.

Research results
The measurement models were validated and tested for reliability before adding them to
the structural equation model. The structural equation model is shown as a path
diagram in Figure 2. In this model, EPT usage is treated as the exogenous variable (j1).
The endogenous variables include PPR (h1) and PP (h2). Exogenous latent variables
(i.e. independent variables, X-variables) cause fluctuations in the values of other latent
variables in the model. Changes in the values of exogenous variables are not explained
by the model. Endogenous latent variables (i.e. dependent variables, Y-variables) are
affected by the exogenous variables in the model, either directly or indirectly.
The structural equation model showed a good fit between the theoretical model and
the data. Measures of absolute fit of the model to the data show a high degree to which
the overall model predicts the observed covariance matrix (x 2/df ¼ 2.52, RMR ¼ 0.04,
GFI ¼ 0.93, RMSEA ¼ 0.06). Measures of incremental fit show a good fit (AGFI ¼ 0.90,
NFI ¼ 0.90, TLI ¼ 0.92 and CFI ¼ 0.93). Overall, the model is accepted as a good model
fit. The three hypothesized paths were significant at the 0.05 level of significance. The
results indicate that EPT usage affects both PPR and PP. Presutti (2003) supports
theoretically that EPT usage significantly improves the effectiveness and efficiency of
the procurement process. Content validity was assessed with literature review and
interviews with practitioners and academicians. Reliability was assessed for each
dimension using the composite reliability. All reliability estimates exceed customary
acceptable levels (higher than 0.75 for all of them). Discriminant validity was assessed
by comparing the x 2 and degrees of freedom differences between the constrained model
and the unconstrained model relating two dimensions. This process was done for all pair
of constructs, and no significant differences were found at 0.001 level of significance. All
correlations among constructs were significant using a two-tail test.
Once the model was tested for reliability and validity, the researchers focused on
the hypotheses testing. Each path with a single-headed arrow was estimated by a
structural equation. The path coefficients between each pairs of factors showed
 er1 er2 er3 er4 er5 er6 er7 Impact
of e-procurement
0.40 0.26 0.41 0.41 0.46 0.65 0.61
IG SC CNF IANF IP SR IC

0.64 0.68 0.81

0.78 525
0.63 0.51 0.64

Procurement 0.45 Procurement

practices performance
(PPR) (PP)
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0.62 0.59

res3
res2 0.36
0.79

eProcurement
technology
usage (EPT)

0.51

EPT

0.26
Figure 2.
er14 Structural equation model

p-values less than 0.05. This means that the paths in the model shown in Figure 1 are
positive and significant. The results show full support for hypotheses H1-H3.

H1: PPR have a direct positive relationship with PP

The structural equation model supports H1. The strength of the relationship between
PPR and PP is 0.45, which presents a p-value of 0.005. Theoretically, this hypothesis
shows that when the dimensions for PPR are high, the dimensions for PP are also high.
Information gathering, supplier contact, contracting, and intelligence and analysis are
important PPR that affect positively the PP (i.e. internal performance, supplier-related
performance, and internal customer performance). This result suggests that firms with
 BIJ procurement managers investing resources to seriously pursue better PPR achieve
17,4 higher levels of PP than firms with lower levels of commitment into their PPR.

H2: EPT usage has a direct positive relationship with PPR

EPT usage affects directly PPR, as supported by the structural equation model
(path ¼ 0.79), supporting H2. This means that higher usage of these technologies will
526 improve the levels of PPR. Therefore, managers should seriously consider the usage of
EPTs as a means for continuously improving their information gathering, supplier
contact, contracting, and intelligence and analysis practices.

H3: EPT usage has a direct positive relationship with PP

The path coefficient between EPT usage, and PP was 0.36 with a p-value of 0.04. This
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result implies that when procurement departments have higher levels of usage of EPTs,
the impact on PP will be positive. Therefore, firms using more EPTs for their
transactions and communications will receive higher levels of PP results.

Theoretical implications and contributions

This research provided a theoretical framework that identified positive and significant
relationships between EPT usage and both PPR and PP. The main contribution to
research is supported by the research framework shown in Figure 1. This framework
provides a foundation for future research in the area of procurement.
As stated in the literature review, there is a gap in the literature when analyzing
e-procurement. Previous research on e-procurement has limited the literature to study
internet-based procurement only, which creates a gap for other EPTs. This study goes
beyond that to include in e-procurement those technologies that facilitate PPR including
EDI, FTP, video conferencing, electronic markets, and internet/reverse auctions.
The study contributes to the procurement literature in a number of ways. First, this
research identifies measurement models for PPR, EPT usage and PP which were
validated and tested for reliability thereby providing new ways for evaluating
procurement measures in the business environment. These measurement models can be
replicated by other researchers or used in the development of new models in
procurement. This research also identified PPR as a construct with a multi-dimensional
nature, and it was defined as a second-order factor with four first-order factors
(information gathering, supplier contact, contracting, and intelligence and analysis).
The research also provides insight about usage of EPTs usage, for example,
21.4 percent of the companies in the sample do not process any procurement transaction
in e-procurement and 37.2 percent use it in less than 10 percent of their procurement
transactions; also, 76 percent of the firms indicated that their experience with EPTs is
less than 3 years. Finally, PP also showed to be a multi-dimensional construct and it was
defined as a second-order factor with three first-order factors (internal performance,
supplier-related and internal customer).

Practical implications and contributions

The empirical results from this study have important implications and contributions for
practitioners. It is important in any kind of research to provide strong theoretical
contributions; however, empirical contributions are also needed as a start point to
 provide final contributions to practitioners. This study is not an exception and the Impact
researchers summarize the empirical contributions and implications. of e-procurement
This study shows practitioners that e-procurement is not widely used (76 percent of
the firms indicated that their experience with EPTs is less than three years). This finding
is also supported by a survey of 200 multinational firms that showed that only 30 percent
of the firms have implemented at least a basic e-procurement system (Presutti, 2003).
Also, it shows that EPT usage has a positive impact on PPR, therefore, facilitates the 527
development of operational tasks in the procurement area. Managers should seriously
consider the usage of EPTs as a means for continuously improving their information
gathering, supplier contact, contracting, and intelligence and analysis practices.
Practitioners currently interested in adopting EPTs can see the positive impact it has
on PPR, which in turn, presents a positively significant impact on PP. Therefore,
organizations that are implementing e-procurement are achieving short-term benefits in
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PPR; however, it is expected that the adoption of e-procurement will have a positive
impact at the strategic level. Firms with procurement managers investing resources to
seriously pursue better PPR achieve higher levels of PP than firms with lower levels of
commitment into their PPR. This hypothesis merits further research. The research
presented in this paper also supports previous publications in practitioners’ journals
that PPR impact PP. Better PPR will positively affect the outcomes of the procurement
function.

Limitations of the study and future research guidelines

This study contributes to the literature by building on past theoretical and empirical
studies through close collaboration with manufacturing firms. It also opens a window
for further research in this area. Each of the limitations of this study is an opening area of
new research in future studies. Therefore, in the following section, the researchers
discuss limitations and recommendations for future research.
First, the researchers measured only the operational side of PPR considering the early
stages of e-procurement implementation on the organizations. Further research could
extend on measuring the strategic level of PPR and analyze the impact of EPT usage at
the strategic level.
Second, it would be interesting to measure individually the impact of each of the
different EPTs usage on the different PPR. For instance, are firms using certain EPTs on
payment processing and others for supplier contact? This would have made the
questionnaire far lengthier and it could have affected response rates; however, designing
a research to do this specifically could be more manageable.
Third, the researchers limited the industries to the following SIC classifications:
28 “chemicals and allied products”, 33 “primary metal industries”, 34 “fabricated metal
products”, 35 “industrial and commercial machinery and computer equipment”,
36 “electrical equipment and components”, and 37 “transportation equipment”.
Therefore, results can only be generalized cautiously to other industries. Future research
should include other industries.
Finally, future research can expand the current theoretical model by incorporating
constructs from other fields of study. For instance, it would be interesting to include in
the research model e-commerce measures in general, not limiting the items to those
specific to e-procurement.
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 Appendix 1. Large-scale questionnaire Impact
of e-procurement

533
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(continued)
 Downloaded by University of Sunderland At 22:00 11 September 2018 (PT)

BIJ
17,4

534

(continued )
 Downloaded by University of Sunderland At 22:00 11 September 2018 (PT)

(continued)
of e-procurement
Impact

535
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BIJ
17,4

536
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diagrams
cnfer1 cnfer2 cnfer6 ianfer4 ianfer6 ianfer7 ianfer8 scer4 scer2 scer1 iger4 iger3 iger2

0.60 0.36 0.59 0.28 0.58 0.55 0.67 0.42 0.76 0.56 0.68 0.74 0.45
cnf1 cnf2 cnf6 ianf4 ianf6 ianf7 ianf8 sc4 sc2 SC3 IG4 IG3 IG2

0.78 0.60 0.53 0.76

0.74 0.87 0.86
0.77 0.82 0.65 0.75 0.82 0.67

Contracting Intelligence/ Supplier

analysis Information
(CNF) contact (SC) gathering (IG)
0.63 0.39 (IANF) 0.32 0.48

res2 res3 res4

res5

0.63 0.57
0.79 0.69

Procurement
practices
res1 0.00 (PPR)
Appendix 2. Large-scale item purification for PPR, PP and EPT usage – path
of e-procurement
Impact

PPR measurement
Figure A1.

model – Trial 11
537
 BIJ
epter3 epter6 epter7 epter8 epter9
17,4
0.44 0.45 0.41 0.42 0.38
EPT3 EPT6 EPT7 EPT8 EPT9

538 0.67
0.64
0.67 0.65
0.61
0.00

eProcurement
Figure A2. technology
EPT usage measurement res1 usage
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model – Trial 5 (EPT)

pper1 pper3 pper4 pper5 pper7 pper9 pper10 pper12 pper14 pper15 pper17 pper18 pper21

0.62 0.54 0.66 0.51 0.28 0.31 0.42 0.49 0.70 0.46 0.49 0.57 0.54
pp1 pp3 pp4 pp5 pp7 pp9 pp10 pp12 pp14 pp15 pp17 pp18 pp21
0.74 0.53 0.70 0.75 0.73
0.79 0.81 0.55 0.65 0.70 0.83 0.68
0.71

Internal Supplier- Internal

performance related customer
(IP) (SR) (IC)
0.45 0.91
res3 0.73 res4
res2

0.95
0.67
0.85
Procurement
performance
(PP)
Figure A3.
PP measurement 0.00
model – Trial 9 res1

Corresponding author
Gioconda Quesada can be contacted at: quesadag@cofc.edu

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