The impact of global purchasing and supplier integration on product innovation

Purpose – The interest in global purchasing has increased significantly in recent years, but the impact on product innovation is not well understood. The purpose of this paper is to empirically analyse the impact of global purchasing on product innovation sourced from suppliers, while taking into account how firms integrate their suppliers. Design/methodology/approach – The data used in this study are from the International Purchasing Survey, an international online survey on purchasing and supply management conducted in 2009. The data are analysed using factor and regression analyses. Findings – The paper shows that global purchasing has no direct impact on product innovation performance. However, supplier integration is more strongly associated with product innovation performance for firms purchasing globally compared to firms purchasing regionally. Practical implications – The implication is that when companies purchase globally, they must have a highly developed purchasing department in order to sustain a high level of innovation. For firms purchasing only regionally, the role of the purchasing department is diminished, at least in terms of contributing to innovation. Originality/value – This paper contributes to the discussion of potential advantages and disadvantages of global purchasing. First, the paper provides an explanation for the ambiguous results of previous research. Product innovation does not depend on whether firms are purchasing globally or not, it depends on how they purchase. This paper has showed that when purchasing globally, the role of the purchasing department becomes crucial for product innovation. The proficiency and activities of the purchasing department largely determine the success, in terms of supplier product innovation, of global purchasing.