purchasing internationalisation on both sides of the atlantic

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Journal of Purchasing & Supply Management 11 (2005) 57–71

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Purchasing internationalisation on both sides of the Atlantic

Lieven Quintensa,�, Paul Matthyssensb,c, Wouter Faesa

aDepartment of Business Administration, Hasselt University, Agoralaan-Gebouw D, B-3590 Diepenbeek, BelgiumbDepartment of Management, University of Antwerp, Prinsstraat 13, B-2000 Antwerp, Belgium

cErasmus University Rotterdam, The Netherlands

Received 2 May 2005; received in revised form 22 August 2005; accepted 5 October 2005

Abstract

This article focuses on similarities and differences in the perception of companies in the United States (7 cases in New York State) and

Europe (5 cases from Belgium) on global purchasing opportunities and on how they react to these. It addresses two questions. First, what

forces drive companies to engage in international purchasing? Seemingly basic issues such as price, quality and availability appear to be

the three most important elements in this respect. Second, how do organisations organise for international purchasing in terms of

configuration of actors and activities and their use of intermediaries such as brokers or agents? Findings indicate that the ways companies

are organised run parallel on both sides of the Atlantic. However, we find that the New York State cases rely much more on

intermediaries for their international purchasing activities than Belgian companies do.

r 2005 Elsevier Ltd. All rights reserved.

Keywords: Global sourcing; Internationalisation; Comparative case study

1. Introduction

In recent years, global economic competition has forcedmany companies to complement their domestic by inter-national purchasing to achieve sustainable competitiveadvantage (Kotabe and Murray, 1990; Bozarth et al.,1998). Simultaneously, purchasing is becoming a strategi-cally more important function (Gadde and Hakansson,2001; Samli and Browning, 2003). However, research onhow a company’s purchasing function could and shouldadapt to these changes is scarce. This is mainly becausepurchasing in general and international purchasing inparticular, has been seen for a long time as a staticphenomenon, without taking the company-specific dy-namics and the environmental context into consideration.

Differences between countries and cultures have sincelong been acknowledged to explain different businesspractices (Hofstede, 1991; Usunier, 2000). It is thereforesurprising that comparative studies of international pur-

e front matter r 2005 Elsevier Ltd. All rights reserved.

rsup.2005.10.003

ing author. Tel.: +3211 26 86 28; fax: +3211 26 87 00

esses: [email protected] (L. Quintens),

[email protected] (P. Matthyssens), [email protected]

chasing preferences and habits in different cultures,countries and regions are scarce. The few studies on thistopic, however, clearly indicate the existence of suchdifferences.Motwani and Ahuja (2000) investigated the purchasing

practices of American and Indian purchasing managers.Significant differences in their perception of suppliernetworks, the problems experienced in internationalpurchasing, the criteria used in supplier selection andevaluation processes and in establishing trading relation-ships emerged. In their search for alternative sourcingstrategies, Kotabe and Omura (1989) found 14 differentmajor sourcing patterns at European companies and only10 at Japanese companies. Dzever et al. (2001) foundevidence that different perceptions exist on environmentalfactors as well as different influences of various functionaldepartments on the purchasing decision-making process incompanies situated in Australia, New Zealand, Thailandand China.Other sources indicate how dealing with foreign suppli-

ers and international purchasing is experienced in variouscountries (Katsikeas and Kaleka, 1999; Mummalaneniet al., 1996; Ghymn et al., 1999; Thorelli and Glowacka,1995; Deng and Wortzel, 1995). These studies show that

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ARTICLE IN PRESSL. Quintens et al. / Journal of Purchasing & Supply Management 11 (2005) 57–7158

companies from different countries and regions do notlook at international purchasing in the same way. Taking acloser look into such findings could strengthen the role ofinternational purchasing in an integrated business strategy.

According to our knowledge, the study by Carter andNarasimhan (1996) is one of the only ones to focus on thedifferent perceptions of European and North Americancompanies with regard to future purchasing trends. Resultsshow that although agreement exists on a number of futuretrends (e.g., cost avoidance, the importance of sourcingteams, the degree of supply base reduction and the need forglobal sourcing), less unanimity can be observed on thetrend towards environmentally sensitive purchasing (moreimportant to European companies), and on the importanceof deeper integration in the supply chain and within thebusiness unit itself (more emphasised in North America).The authors found that international purchasing isperceived as equally important in absolute values to NorthAmerican and European firms. It should be noted,however, that European firms consider internationalpurchasing relatively more important than North Amer-ican firms do since European firms were less definite intheir global perception on the trends. A reasoning how thisdifference could be explained is not given, since this wasoutside the scope of their study. It raises, however, aninteresting question; i.e., do American and European firmslook differently towards the internationalisation of pur-chasing? And if so, what explains the observed differences?

In this article, we zoom in on a number of keymanagement decisions of the international purchasingprocess and the motives that drive companies to carrythem out. Thereby, we are focussing on the observeddifferences and resemblances of two sets of companies onboth sides of the Atlantic Ocean, i.e. seven in New YorkState and five in a EU country, Belgium.1

There are three underlying questions in our research.First, what are the drivers and challenges for companieswhen purchasing internationally? Second, which are theconfiguration determinants associated with the purchasinginternationalisation process? Third, what sourcing strat-egy2 (in terms of direct versus indirect buying) is applied bycompanies in an international environment? The second aswell as the third question will be examined at companieswith respect to their company-specific driving forces forinternationalisation.

The structure of this article is as follows. After definingthe three interrelated aspects of international purchasing

1We do not claim that the regions in our study are representative for the

whole continent of which they make part. We consider them, though, as

two exponents of the managerial styles on both sides of the Atlantic.

Moreover, the two regions are relatively similar in that they are both

located close to national borders.2The term sourcing strategy covers many elements related with sourcing

decisions, in particular the strategy on how many suppliers are needed for

a product (single, sole, dual, multiple sourcing). In the remainder of this

article, we mean by sourcing strategy the strategic decision to buy directly

from foreign suppliers or to make use of intermediaries.

we include in our research, our methodological approach isexplained in section three. The main findings of our casesare described in the next section. This is followed by adiscussion and a reflection on the existing literature.Finally, we propose some avenues for future research.

2. Three interrelated aspects of international purchasing:

drivers, configuration and use of intermediaries

The internationalisation process of purchasing comprisesmany aspects. In line with Matthyssens et al. (2003), wefocus on three of them, namely the drivers of internationalpurchasing activities, the internal configuration of thecompanies’ purchasing activities (centralisation/decentrali-sation, and/or coordination) and the use of intermediaries.Although these three items are to a certain degreeintertwined, we discuss them separately.

2.1. Drivers for internationalisation

The question ‘‘what makes companies to purchaseinternationally’’ has been covered relatively well byliterature. Frequently mentioned motives are price, qualityand availability of goods and services (Birou and Fawcett,1993; Cavusgil et al., 1993). Lower wages and thereforecheaper products incite firms to purchase internationally.Thus, almost all research indicates price as a veryimportant factor in the importers’ decision process. It ishowever not always considered to be the most decisive one(e.g., Liang and Parkhe, 1997). Since the quality of foreignproducts is often similar to or even better than the qualitylocal suppliers can offer, this is also frequently mentionedto be a motive for international purchasing. AlthoughFrear et al. (1992) indicate that quality and availability ofgoods are not decisive factors when buying abroad for amajority of their respondents, many more recent articles(Cho and Kang, 2001; Ghymn et al., 1999; Birou andFawcett, 1993), conclude the contrary. All studies, how-ever, identify price, quality and availability—and some-times some other elements—as important drivers forinternational purchasing. Within a specific country, in-dustry or product focus, the ranking might however beslightly different.The decision to purchase internationally does not solely

depend on drivers. In reality, it is a complex comparisonbetween drivers and barriers, motivators and inhibitors.Birou and Fawcett (1993) indicate the requirements ofefficient just-in-time sourcing, the finding of qualifiedforeign suppliers and—on a more tactical level—thecultural and language differences as the major challengesfor international purchasing. With respect to internationalpurchasing partnerships, Ellram (1991) refers to poorcommunication and the lack of support from top manage-ment as key barriers to successful international purchasing.The nationalistic feelings of the buyer, supplier evaluation,logistic problems due to geographical distance, differencesin culture and business customs, and governmental

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3Onkvisit and Shaw (1997) stress the wide variety of intermediaries

(agents, brokers, export management companies and so on), involved in

moving products across borders. They discuss factors impacting on the

direct versus indirect selling decision. This decision is, in some way, linked

to and determined by the entry mode decision. The latter decision,

however, is of a more strategic nature. In fact, contrary to an entry mode

choice, which might be difficult to reverse and/or adapt, a decision to sell

or buy directly or indirectly might vary per product and is more flexible in

case of a channel redesign decision.

L. Quintens et al. / Journal of Purchasing & Supply Management 11 (2005) 57–71 59

influences are elements that are frequently mentioned forhampering the internationalisation of purchasing (Leoni-dou, 1999; Barreyre and Lentrein, 1992; Alguire et al.,1994).

Although there exists a consensus on which elementsadvance or prevent international purchasing, it is to a largeextent dependent on the company, the sector in which itoperates, its relationship with foreign suppliers, the type ofproduct purchased as well as the country where the foreignsupplier is located. We believe it is important to take thecompany-specific drivers into consideration, for they aresignificantly interrelated with both the configuration ofinternational purchasing and the use of intermediaries.

2.2. Configuration of international purchasing

While a lot of research has been undertaken on themotives for international purchasing, research on theorganisational conditions within which international pur-chasing takes place is much scarcer. Arnold (1999)explored the companies’ pursuit for an optimal degree ofconfiguration. He compares the configuration with apendulum that swings between full centralisation and fulldecentralisation. Giunipero and Monczka (1997) foundfour broad types of centralisation that companies use: (1)totally decentralised international purchasing, (2) decen-tralised, coordinated international purchasing, (3) centra-lised responsibility for worldwide purchasing, and (4)functional international purchasing groups. Other notableexceptions are Faes et al. (2000) who discuss thecentralisation–decentralisation dichotomy in the purchas-ing function with respect to achieving effective globalpurchasing synergy, and Fawcett and Scully (1998), whoincorporate a number of organisational conditions asfacilitators into their model (e.g., managerial support,cultural empathy and global sourcing skills).

With respect to the configuration issue, there are still anumber of gaps in literature. Although we have a goodknowledge on different (international) purchasing isorganised, there is little insight on why the currentorganisational setting is chosen and how effective theirapproach is. So, if the configuration pendulum swingsbetween decentralisation and centralisation, there has to bea number of driving forces that make the pendulum swingat which we will take a closer look. This is also in line withthe question for further research posed by Narasimhan andCarter (1990) on the suitability of the current organisa-tional designs with respect to international purchasing.

2.3. Use of intermediaries

In the purchasing literature, conceptual as well asempirical publications on the subject of direct versusindirect buying are extremely scarce, especially on theinternational scene. This is remarkable, since the counter-part in international marketing research, distribution andentry approaches in international markets, is a highly

debated topic as well on the generic level (e.g., Root, 1994)as with respect to specific distribution methods and theselection of intermediaries for foreign entry (e.g., Onkvisitand Shaw, 1997).3 Most publications are concerned withthe advantages and disadvantages of direct and indirectbuying. Whereas manufacturer prices might be lower thandistributor prices, the service package and assistanceoffered by the latter may largely offset the cost of thedistribution fee, specifically for spare parts, MRO-items orinvestment goods (Harding, 1995). In an internationalsetting, the services rendered by distributors might even belarger and include market research and knowledge,technical import assistance, warehousing and financial riskoffsetting (Birou and Fawcett, 1993; Killen and Kamauff,1995). Handfield (1994) investigated the popularity ofdifferent international sourcing strategies by Americanfirms. He found that direct contact between the companyand its supplier was the most prevalent (49.1%), closelyfollowed by contacts between the company and represen-tatives of the supplier in the United States (41.8%). The useof an external trading company was only practiced in asmall number of cases. A more recent survey amongAmerican practitioners (Ciancarelli, 1999) shows thatdirect sourcing is still mostly practiced (61%), but the useof a purchasing consultant (20%) and trading companies(13%) seems to become more and more popular.When we make an analogy to internationalisation in

general, we can refer to the Uppsala School of research(Johanson and Vahlne, 1977, 1990) who expects thatintermediaries are used in the first stages of the purchasinginternationalisation effort, as a way to reduce perceivedbusiness risks. Giunipero and Monczka (1997) agree withthis. They situate the use of intermediaries in the earlyoperational/transactional stage of purchasing internatio-nalisation.It can be assumed that the decision to use intermediaries

or not will be dependent on a number of issues such as theconfiguration of the supply chain, the level of risk thecompany is willing to take and the amount of knowledge ofthe supplier markets the company desires to acquires. Toour knowledge, however, there is no such insight fromliterature that supports these presumptions.

3. Methodology and research design

We believe that qualitative research is most suitable forthis venture as the underlying research stream on purchas-ing internationalisation is still in its exploratory stage.


Moreover, such a methodology enables the formulation ofresearch propositions for future surveys on a much largerscale and for a more in-depth analysis at a later stage.

To overcome the main critique often mentioned aboutqualitative research in international business publications,namely the lack of methodological rigor (Yeung, 1995), wehave paid extensive attention to the robustness of themultiple case study methodology using methodologicalprescriptions from Eisenhardt (1989), Miles and Huberman(1994) and Yin (1994). As we want to present a closer studyon differences in the pattern of purchasing internationali-sation on both sides of the Atlantic—our basic unit ofanalysis is the global purchasing activity of comparativecase companies in Europe and the United States. We triedto map real events, as they are perceived by managers andenacted upon by the purchasing departments they manage.A detailed analysis of such cases may indeed revealunderlying motives, structures and sub-processes, whichcould merit closer scrutiny (Yin, 1994) in a further study.

As in Matthyssens et al. (2003), we consider purchasinginternationalisation to consist of events and intertwinedsub-processes (Pettigrew, 1997). Therefore, we decided tofollow Fredrickson’s (1983) strategy process researchguidance, blended with the concept of culture.4 The qualityof this multiple case study rests further on the principles oftheoretical sampling and triangulation. We address both ofthem briefly.

3.1. Theoretical sampling

Twelve comparative case studies were selected, capableof describing as rich a diversity as possible between theinward internationalisation process in American andEuropean companies. Five companies were situated inEurope (country of Belgium, region of Flanders), seven inthe United States (New York State, region of the GreatLakes).

The Belgian and American cultures are very different.According to Hofstede (2001), Belgium scores much higheron power distance, uncertainty avoidance and long-termorientation. The United States has higher scores onindividualism and slightly higher on masculinity. Variousauthors proposed cultural clusters (see e.g., Koen, 2005;Schneider and Barsoux, 1997; Ronen and Shenkar, 1985;Matthyssens and Wursten, 2003). They consistently cate-gorise the United States in a different cultural group thanBelgium. From such categorisation, it becomes evident that

4Fredrickson (1983) describes six ‘‘high priority questions’’ for strategic

process research. These are (1) motives for initiation, (2) concept of goals,

(3) relationship between means and ends, (4) concept of choice, (5)

analytic comprehensiveness, and (6) integrative comprehensiveness. We

focus more on the first four questions than on the latter two of

Fredrickson’s list. This is due to the fact that in international business/

international marketing research, we deem the motivation to internatio-

nalise, the organisation for internationalisation and the sourcing strategy

(analogous to entry/distribution strategy in international business, e.g.,

Root, 1994; Kotabe and Helsen, 2001) as key issues.

managers from both countries use and prefer differentmental models, decision styles and relational managementapproaches.A critical reader, however, might doubt whether our

companies coming from one Belgian region only are‘‘representative’’ for Belgium. However, Schneider andBarsoux (1997) claim that Belgian managers both from theFrench speaking south as from the Dutch speaking north,are culturally very similar and share the same culturalattitudes as French managers. The same reasoning mighthold for the United States: Is New York State ‘‘represen-tative’’ for the whole of the United States? In this respect,we refer to the existing literature that always speaks of ahomogenous United States culture.In our pursuit to achieve a theoretical sampling, we took

the following aspects into consideration. First, we chosetwo very different industries (the food processing and themachine industry). The reason for choosing these industrieswas to gather insights from companies that allowedfor maximum variation (Miles and Huberman, 1994).There was also a more pragmatic reason, since wechose two industries which are well represented in bothregions, therefore facilitating our search for useful casecompanies.Second, we aimed at companies with different sizes and

degrees of internationalisation; We looked at the purchas-ing internationalisation (how much do they purchaseabroad, how many suppliers were involved) as well astheir international experience, international mentality interms of Bartlett and Ghoshal’s (2000) terminology oninternational, multinational, global and transnationalmentalities. A detailed description of the cases, for whichthe interviews took place in the first half of 2004, is foundin Table 1.

3.2. Triangulation

Data collection was carried out by means of two wavesof interviews with the managers believed to be the best-informed persons in our case companies, identified duringthe case-selection process. After the first interview, atranscript of the interview was sent back to this personwho was asked to comment on our summary and to clarifypoints, if necessary.Data triangulation was aimed at enhancing the internal

validity of our study. In most companies, at least tworespondents were interviewed. Their function ranged frombuyer and senior buyer to purchasing director and directorof global supply chain management. The respondentsincluded also a CEO and a manager planning andprocurement. Managers were also asked to give feedbackon the transcript (sent to them by e-mail), and as far aspossible, company documents were used in addition to theinterviews.Interviews lasted between one and two and a half hours

and were always executed by the same group of two people.The interviews were tape-recorded and extensive notes were

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Table 1

Profile of the case companies

Company Industry Size Number of foreign

suppliers

Type of goods

sourced abroad

Degree of

international

experience

Bartlett and

Ghoshal typology

for purchasing

Degree of

inernationalisationa

BE-1 Food SME Medium Mainly raw materials Medium International Medium

BE-2 Machine SME Few Mainly components Low International Medium

BE-3 Machine SME Few Mainly components Medium International Little to medium

BE-4 Machine Large Many Almost all goods and

services

High Transnational Much

BE-5 Food Large Many Mainly raw materials

and packaging

High Global Medium

NY-1 Food Large Many Mainly raw materials High Transnational Little

NY-2 Machine SME Few Mainly components

and raw materials

Low International Medium

NY-3 Machine Large Medium Mainly components Medium Multinational Much

NY-4 Machine SME Many Mainly components High International Medium

NY-5 Machine Large Many Mainly components

and raw materials

High Multinational Much

NY-6 Machine SME Few Mainly commodities Low International Little

NY-7 Machine Large Many Almost all goods and

services

High Global Much

aThe degree of internationalisation is determined as follows: Little: international purchasing occurs only sporadically; Medium: international

purchasing is considered as part of the normal business activities. Local purchasing, however, is more frequently practiced. Much: international

purchasing is considered in almost all or all purchasing activities.


taken. To facilitate the conversations and for ease ofcomparison, a topic list was used throughout the inter-views. This list included three parts: the international visionof the company, the structure and organisation of thepurchasing activities and the internationalisation of thepurchasing function. In the verification stage, a modifiedtopic list was used and deeper questions were asked to theinterviewees, whenever some elements needed more clar-ification after the first interview.

These findings were complemented by secondary materi-als on the companies and their global sourcing effort,such as websites, independent consultant reports, head-quarter audits and communications, and effectivenessmeasurement reports with relevance to the process understudy. Frequently, these documents were confidential bynature.

4. Main findings of the cases

This section is structured as follows. First, we discuss thedrivers for international purchasing. Next, the two broadissues in organising international purchasing, namely theconfiguration of the purchasing activity (degree of cen-tralisation, coordination) and the structure of the interna-tional supply chain, are dealt with separately. We willhighlight the observed differences between the Belgian (BE)and New York State (NY) companies by systematicallydiscussing the findings of the Belgian cases first and theAmerican ones later. The most important findings aresummarised in Table 2.

4.1. Drivers of the international purchasing efforts

4.1.1. Belgian companies

BE-1 is situated in the food industry and engages ininternational purchasing for reasons of cost minimisation.The company mainly buys standard products abroad inlow-cost countries. Most of their purchasing is situatednear to their production sites. It includes, among others,natural extracts from animals and plants originating inEast Asia. While synthetic alternatives also exist, thecompany prefers natural ingredients. The quality of thesenatural products is equal in various countries, but the exactspecifications are somewhat different. This causes BE-1difficulties in evaluating and comparing them.BE-2’s drivers to purchase internationally are the price/

quality ratio and the availability of the products. So, onlywhen a product or an exact specification is locally notavailable at a given price/quality ratio, they are sourcedabroad.Company BE-3’s policy is that the origin of the products

bought is less important, as long as their logistics areexcellent. BE-3 focuses on every aspect of service enhance-ment. The company prefers suppliers assuring worldwideavailability, not only for the purchase of components andmachines, but also for the purchase of spare parts andcustomer service. The worldwide network in whichsuppliers operate is thus an important issue. So is the costaspect. Because local production of engine components isexpensive in Belgium, the company often sources themabroad. In search of the cheapest alternative, the companyhas, for instance, sourced a specific item first in Turkey,

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Table

2

Internationalisationissues

ofthecase

companies

Company

Driversexplicitlymentioned

byour

respondents.

Organisationalstructure

Direct(nointerm

ediaries

are

used)

orindirect?

Cited

reasonsforusing/notusing

interm

ediaries

Observed

trends(ifany)andspecial

remarks.

BE-1

Cost

minim

isation

Centralisedpurchasing

Both

Interm

ediaries

are

only

usediftheir

knowledgeofthemarket

situation

andactors

isbetter.

Definitelyatrendtowardsgetting

ridoflocalinterm

ediaries

whenever

possible.

Availabilityofrightquality

and

innovativetechnology

Mainly

directbuying

BE-2

Cost

pressure


Indirectbuying

Asweare

asm

allcompany,we

haveto

focusonessential

operationsandthusleave

importingto

specialists.

Gradualoutphasingof

interm

ediaries

whenever

wecan

asserttherisk

betterourselves

and

aswegrow.

Quality

Therisk

ofdoingitaloneistoo

large.

Availabilityofproduct

BE-3

Cost

minim

isation


Indirectbuying

Serviceofinterm

ediaries

is

indispensable

asweare

rather

small.

Availabilityoftheproduct

Servicedelivered

BE-4

Cost

minim

isation

Decentralisedwithcentral

coordination

Only

directbuying

Multinationalcompaniesare

presentoneverymarket

andhave

localpeople

todealwitheventual

uncertainties,costsandproblems.

Ifnecessary

weask

forspecialised

servicecompaniesto

helpwith

partialaspects

oftheinternational

buyingprocess.

Quality

Technologicalinnovativeness

BE-5

Totalcost

ofownership

comparison


Mainly

directbuying

Wecanassertrisksourselves

and

compare

costs.

Availabilityofrightproduct

quality

NY-1

Availabilityofproducts

Centralisedstructure

withlimited

item

spurchaseddecentral

Mainly

indirectbuying

Supplier

does

nothavesales

capacity

toselldirectly.

More

directbuysneeded

since

this

would

create

abetterrelationship

withsuppliersandamore

free

exchangeofinform

ation.

Price

andquality

relativeto

deliverytime

Tim

epressure

tofindproductson

time.

Paperwork

needed

forim

port.

L. Quintens et al. / Journal of Purchasing & Supply Management 11 (2005) 57–7162

ARTICLE IN PRESSNY-2

Cost

minim

isation

Centralisedstructure

withlimited

item

spurchaseddecentral

Both

Languagebarriers

andcultural

differencesleadto

indirectbuying.

Awarenessthatagoodknowledge

offoreignculturesandlanguages

canleadto

more

effective

internationalpurchasing,whichis

alsograduallyim

plemented.

Indirectbuyingmainly

fornon-

strategic

products

Interm

ediaries

haveabetterview

oninternationalsuppliers’

capabilities.

NY-3

Balance

betweencostsandquality

Decentralisedwithfrequent

communication

Both

Interm

ediaries

takeaway

uncertainty

andbusinessrisk.

Intra-firm

purchasingvia

plants

in

Europe.

NY-4

Cost

minim

isation

Centralised,close

contact

customer

Indirectbuying

Ourcustomershelpus.

Languagebarriers

andcultural

differences.

NY-5

Cost

pressure


communication

Both

Althoughin

indirectbuyingwe

havenodirectfamiliarity

withour

suppliers,thedistance

andtheeasy

accessto

inform

ationandproblem

solvingleadsto

prefer

interm

ediaries

(services

offered).

Facilities

inEuropeare

usedfor

screeningpotentialsuppliers.

Quality

oftheproduct

Mainly

indirectbuying

Deliverytime

NY-6

Cost

minim

isation


communication

Both

Ourcustomershelpus.

Clearcommunicationandspeedof

actionare

improved

since

many

problemsare

dealtwithbyour

customersandbytheinterm

ediary.

NY-7

Totalcost

ofownership

minim

isation


Mainly

directbuying

Multinationalcompaniesare

presentoneverymarket

andhave

localpeople

todealwitheventual

uncertainties,costsandproblems.

Wedrivetheprocess

ourselves,

havebettercontrolandim

prove

reliabilityofinform

ationand

services.

Necessity

totaptechnological

changes

oninnovativemarkets



then in the Czech Republic and finally in Poland. Recently,purchasing has been shifted once again (now to China).

Company BE-4 is operating on a very competitivemarket. Their customers are very price sensitive, whichobliges their buyers to constantly search for the lowestpossible cost. BE-4 experiences very small margins and hasyearly cost reduction targets. Globalisation of theirpurchasing activities is really a survival strategy. Thequality of the products and the production processes ofsuppliers are obviously screened, but the main purchasingfocus is on price.

In company BE-5 focuses on price in internationalpurchasing. However, this depends on the importance ofthe product to the company. Some products are onlyneeded in small amounts, so searching for the supplier thatoffers the lowest price would be cost-efficient. Due to thesector in which BE-5 operates (food), it is not alwaysfeasible neither to supply the cheapest products in time.For fresh and perishable goods for instance, local suppliersare selected. Moreover, purchasing cheaper products inlow-cost countries does not always offset the increasedlogistic costs. This is specifically the case when the value ofthe items is low and their volume large.

4.1.2. American companies

Company NY-1 has a strong link with local suppliers.The food industry is vertically integrated, which entails astrong preference for sources, situated close to thecompany, certainly when harvesting and processing shouldoccur in a matter of hours. NY-1 therefore only engages ininternational purchasing when the purchased products donot/cannot grow in the United States. Price and quality areboth relative to the problems that could be encounteredwith the delivery. The company tries to obtain discounts byplaying national and international suppliers against eachother, thereby creating a temporary competitive advantage.

Company NY-2 operates in a highly competitive market.The prices of their end products are directly determined bythe general purchasing prices paid for the components.Lowering the cost of the purchased goods is therefore themain driver to purchase abroad. Recently the prices of rawmaterials have risen, so looking for cheaper productsabroad seems to be the only way out in a situation whereinput cost increases cannot be transferred to powerfulcustomers.

Company NY-3 does a balancing act between cost andquality. This also includes the consideration to outsourceparts of their production. Purchasing abroad presents costadvantages, but the company perceives larger risks due todistance, time differences and the number of nodes theproduct passes before it reaches the company. Theirphilosophy is to buy wherever it makes sense to do so,without any restriction to domestic or international sources.

Company NY-4 is an assembly plant for a multinational.It benefits heavily from the support the multinational isgiving and contributes to the multinational’s understand-ing of international markets. It purchases internationally

mainly because of the expected cost benefit, but it is also areaction to the request of the multinational.Company NY-5 is driven towards international purchas-

ing because it searches for all their purchases the highestquality, combined with the lowest price and timely sourcingwhether they are found local or international. However,domestic purchasing is prevalent, due to the specific natureof the majority of their purchases (heavy and largematerials), which makes transportation expensive. But forsome specific requirements of global customers, thecompany cannot be satisfied by domestic suppliers, as theycannot meet the specifications.Company NY-6 only purchases abroad as long as the

quality is available and the price is fair and better than inthe USA. Europe for instance, has better or equaltechnology than the United States, but it has become costineffective. The same arguing is valid for a number ofcommodities, where price structures imply that they cannotbe sourced outside the United States at the moment.Finally, company NY-7 focuses on quality as well as on

total cost of ownership. Their motto is to find the worlds’lowest cost suppliers, so that their product remainsattractive to people. Two factors favour the internationa-lisation of their purchasing efforts. First, it enables them totap into the potential of low cost and high technologyclusters all over the world. Secondly, the companymentions the argument that it is a matter of fairness toalso ‘‘buy where you sell’’. Since they are a global player,this is of course easier for them to realise.

4.2. Configuration of international purchasing

A second element we took into consideration was theorganisational structure of the purchasing function in thecase companies.


BE-1, BE-2 and BE-3 are small, loosely structuredcompanies. Their purchasing departments pursue interna-tional purchasing activities rather reactively, that is whenno alternative exists at home. The companies are aware oftheir limitations in the international purchasing arena.More specifically, duties and customs are seen as criticalelements. Although purchasing is considered to be im-portant in all three companies, it remains reactive innature.Company BE-4 has a decentralised purchasing organisa-

tion with buyers in various plants in different countries.These purchasing activities are centrally coordinated bymeans of frequent information exchange (reports, video-conferences, etc.). All their purchasers are aware of thepurchasing activities and data of their internationalcolleagues. When possible, volumes from different plantsare consolidated to create more negotiating power.Company BE-5’s purchasing department is centralised.

It has moved from a decentral purchasing towards acentral purchasing organisation. Simultaneously, it has

ARTICLE IN PRESSL. Quintens et al. / Journal of Purchasing & Supply Management 11 (2005) 57–71 65

standardised a large number of products for variousapplications, so more economies of scale can be achieved.


The purchasing activities of the different plants of companyNY-1 are centralised, except for plant specific items (MRO,capital equipment). Our respondents see advantages in thisstructure, namely better understanding of the market placeand better control of inventories. Company NY-2 has asimilar structure. More specifically, the purchasing of rawmaterials is centralised in this company.

Company NY-3, on the contrary, has a decentralisedstructure. There is regular communication between buyersand common training and education of the purchasing staffis considered important. The company does not believe in acentral purchasing organisation. Their opinion is that itwill fail because such an organisation does not stand closeenough to suppliers and cannot react fast enough. Theircurrent approach is negotiating worldwide agreements withthe suppliers when beneficial, to which each of theindependent locations can call off its needs.

The plants of company NY-5 are all independent.However, in order to reduce costs, they try to consolidatesimilar items and materials so that these can be sourcedfrom one supplier in one package. Regular communicationamong the buyers of the different plants occurs in face-to-face meetings and by means of video conferencing. Thecompany also makes use of intra-firm buying: for manystandard items, one plant buys the total requirements andthe others simply buy from that plant. Although thecompany feels that it has to a certain degree adapted itsorganisational structure to the specific needs of interna-tional purchasing, it indicates the need for more resourcesto facilitate their international buying activities.

Company NY-6 is a small company with only two plants.Regular communication takes place between the buyers ofthese plants. The company feels it is not really adapted tointernational sourcing. It takes a reactive point of viewtowards purchasing abroad since it lacks the time for activemarket research. This is also the case for company NY-4.

Company NY-7 has an extensive purchasing staff. As aglobal company, it has created a special organisation whichis responsible for its global purchasing activities. While thescope of this global purchasing department was originallylimited to tangible material purchases, also services andfacility management items (hotel reservations, car rentals,etc.) are now globally sourced. Their philosophy is thatglobal sourcing gives access to the world’s best resources.Commodity teams, responsible for understanding a specificindustry and its main players, which also engage inbenchmarking activities, are the most prominent featureof their global purchasing organisation.

4.3. Use of intermediaries

We also took a closer look at the international sourcingmodes used in our case companies. In this respect,

companies can choose between purchasing directly froma foreign supplier or making use of the services ofintermediaries (brokers, agents, importers, merchants,and so ony).


Because company BE-1 is relatively small, it usesintermediaries to purchase abroad. Although the companytries to exclude the intermediaries in neighbouring coun-tries, they actively work with agents in distant countriesand for one-time purchasing contracts. Often, these agentsare pro-active intermediaries in a sense that they regularlycontact BE-1 when they can offer interesting opportunitiesabroad.Company BE-2 prefers direct to indirect purchasing

since it makes contacts easier, certainly for simple productsand products which involve little purchasing risk. How-ever, intermediaries are also necessary for them, which isdue to the inherent structure of their market (engines andcomponents). Parallel markets sometimes offer a solutionbut the company does not like this idea very much, becauseof possible consequential loss in service quality. Thetendency is certainly to reduce the number of intermedi-aries, as their service is not always flawless. Moreover, BE-2 wants to keep in line with the current market trend; thatis, to keep as little stock as possible. It tries to deliverstraight away to customers. Intermediaries often poseproblems to this lean operation idea. They claim, however,that reducing intermediaries is not always feasible, sincesome customers ask for specific components of certainsuppliers, which have exclusive contracts with intermedi-aries.Company BE-3 only purchases directly when they have

sufficient knowledge on the market and the availablesuppliers. They rely on a number of local dealers, oftenrepresentatives of suppliers. As they are a small company,they find it difficult to contact foreign suppliers directly.The use of intermediaries is virtually redundant for

company BE-4. Its global vocation gives it access toworldwide markets. The company has buyers everywhereand therefore is very well aware of the market opportu-nities in every part of the world.Company BE-5 mainly purchases directly. Only when

trade legislation in terms of reduced legal security hampersnormal trade, the company makes use of intermediaries tocircumvent these problems.


Company NY-1 relies on a number of brokers andtraders throughout the United States, mainly for situationsin which they cannot find a supplier in time. Sometimesthey also buy directly. The decision to rely on the servicesof an intermediary depends on the time of the year and theitem. Brokers are seen as extensions of the purchasingorganisation. They are cost effective in the sense that theymake a lot of arrangements for importing the requested


goods and, in doing so, save the company a lot of time,effort and hassle.

Because of difficulties in communication with foreignsuppliers and the differences in culture, company NY-2prefers to work with brokers as well. They only purchasedirectly abroad, when the supplier is also dealing withsomeone else they know and who they can contact as areference. In general, standard items are sometimes boughtdirectly, more complex items only via brokers. Thecompany prefers to buy locally from the supply and tradeoffices foreign countries have established in the UnitedStates.

Company NY-3 uses a mixed and opportunisticapproach towards intermediaries. Sometimes they buydirectly (in Europe), sometimes they buy indirectly, mostlyby means of US affiliates of the manufacturer of thecomponent. The company has a positive attitude towardsintermediaries, because they considerably reduce thebusiness risk for the company. They take possession ofthe goods, will keep a buffer stock and manage potentialproblems with the supplier. Moreover, these intermediariesoften speak the supplier’s language and therefore linguisticproblems are greatly reduced. Sometimes, however, theycannot make use of a broker. The distribution system ofmany European suppliers does indeed not fully complywith the requirements of company NY-3.

Being an assembly plant for a multinational, companyNY-4 makes use of the network of brokers and forwardersthat are short-listed by their customers. In doing so,misunderstandings due to language and cultural differencesare reduced.

Company NY-5 frequently makes use of intermediaries.They indicate that many intermediaries have better accessto information, as they experience no language problemsand are used to overcoming the logistic consequences ofgeographical distance. Moreover, intermediaries are morefamiliar with the suppliers abroad and their businesspractices. In Europe, the company uses its own local plantbuyers to help them find potential suppliers (includingevaluation, plant visits and analysis). Only simple items(those products that are commodities and standardised) arebought directly.

Company NY-6 uses both direct and indirect purchas-ing, depending on the source of supply. Some of these havesales representatives in the United States and insist onusing them; others are contacted directly via one of theirlarge customers.

Company NY-7, finally, only occasionally uses inter-mediaries. Because of their size, they normally buy directlyfrom international suppliers, using their own purchasingstaff in various countries. The company thus drives allthe processes themselves, and determines independentlyhow to get effective pricing and quality. Relying on theirown staff is also easier in communication for them. Thebarriers to direct buying, perceived by other companies, arenot applicable to them, because of their worldwidepresence.

5. Discussion of the findings

The discussion section consists of three parts. First, wecomment upon the major trends that appear from the data.Second, the dynamism of purchasing internationalisation isdiscussed. Finally, the perceived differences between theNew York State and the Belgian companies are examined.

5.1. A reflection on drivers, configuration and the use of

intermediaries

In general, the perception on the driving forces behindinternational purchasing is relatively comparable on bothsides of the Atlantic. All companies state that a productshould exceed a certain quality threshold before it can bepurchased abroad. Only a superb quality, not available inthe home country or standardised products with a knownlevel of quality would drive companies to purchase abroad.This is in line with Handfield (1994) who found that qualitywas the most important criterion when evaluating interna-tional suppliers.Low costs are of course pursued by all respondents, but

companies operating in highly competitive markets (e.g.,BE-4 and NY-4), tend to focus more on the lowest costs.This is also the case when standardised products areinternationally available (BE-1). In general, our Americanrespondents tended to be slightly more cost sensitive thanour European respondents, who mention quality andavailability more often as drivers for international purchas-ing. In Belgian cases, availability was frequently mentionedas a major reason for sourcing internationally. Onlysporadically, a New York State company mentions thisaspect. Availability itself is for some companies an absolutenecessity. Their suppliers also have to be present world-wide, so that identical products from the same supplier canbe bought locally in different plants. For other companies,the non-availability of a local supplier is the major reasonto purchase abroad. The same holds true for technology asa driver. Moreover, New York State based companies onlystate other drivers as the cost argument if their degree ofinternationalisation is rather high, whereas in Belgium alsocompanies with a lower degree of international purchasesacknowledge these drivers.Results from the cases show that the way a company

organises its purchasing department depends among otherson how the supplier selection and supplier relationshipsand the search for new suppliers could be organised in themost efficient matter. Although companies NY-1, NY-3and BE-4 have different sourcing structures, they all claimtheir structure helps to get a better understanding of themarket place. Therefore, they can better evaluate variousalternative sources, the proposed quality levels and allother elements that make up the total cost of ownership.This advocates the existence of different optimal degrees ofcentralisation (Arnold, 1999).Delivery time considerations may hamper the effective

and full use of international purchasing. Companies BE-5


and NY-1 both process fresh food. Supplying these itemsfrom distant places will have a negative impact on thequality of their products. Given the centralised structure ofthese companies, these fresh products will only bepurchased if they can be processed near the place of origin.

Smaller companies tend to be more reactive towardsinternational purchasing. They are not always convinced ofthe full benefits of international purchasing. This is in linewith the study by Scully and Fawcett (1994) who foundthat small firms were less global-oriented, although theypurchased relatively more international. They lack thenecessary resources to search for optimal purchasingsolutions on a worldwide basis. Time, resources andappropriate staffing are indeed required to effectivelyoperate purchasing on a global scale (Arnold, 1989;Narasimhan and Carter, 1990), especially for partnerships(Ellram, 1991). When these companies purchase abroad,they mainly intend to cut costs only (e.g., NY-6) and try toreduce risks (Cavusgil et al., 1993).

Intermediaries are mainly used because of the conve-nience and services they offer to their customers. Theburden of searching qualified suppliers who deliver theproducts at the desired quality level and at an acceptableprice falls on them. They are also knowledgeable about thesuppliers of support services (forwarding, customs services,insurance, financial support, etc.) sometimes needed toassure a smooth international purchasing process. Espe-cially when international purchasing is in an early phase,the use of intermediaries is practiced frequently (see, e.g.,Giunipero and Monczka, 1997). Intermediaries arealso used to offset barriers of international purchasing.Since communication is a critical element in inter-national purchasing and the whole global supply chain(Handfield and Nichols, 2004), possible problems withlanguage, customs, and business practices can be avoidedby using specialised intermediaries. Companies (such asBE-1 and BE-2) using intermediaries therefore oftenonly see the cost associated with the usage of intermediariesbut do not necessarily realise all the benefits. Straightfor-ward comparisons between direct and indirect buying aretherefore difficult and somewhat blurred. Reducing thecost of using the services of an intermediary (such as BE-2intends to do) will only be possible when the knowledgeand the network connections of the intermediaries areshared.

5.2. A reflection on the process dynamics of purchasing

internationalisation

The cases show that international purchasing cannot beseen as a static phenomenon. They highlight the impor-tance of the building of a more dynamic approach ofinternational purchasing. In fact, the cases frequentlyexperience a considerable degree of dynamism within theirinternational purchasing activities. Four issues pop out.

First, gaining foreign market knowledge makes acompany feel more confident in the international purchas-

ing environment. This includes a shift from a reactivetowards a more proactive mode of international purchas-ing (Trent and Monczka, 2002). When the acquired marketknowledge is large enough, firms will also feel capableof purchasing directly, without the help of intermediaries(BE-1, NY-7). This reason is in line with the generalidea behind the stage models. These stage modelsimply that companies initially use a local purchasingfocus and gradually move on towards purchasing inter-nationally as their experience with it grows. Initially, theinvolvement will be low, but later clear strategies and cross-functional coordination efforts within the firm emerge(Trent and Monczka, 2002; Swamidass, 1993; Monczkaand Trent, 1991). The cases we studied also display suchpatterns.Second, internal organisational changes, such as the

acquisition of new plants (NY-1), lead to adaptations in theinternational purchasing activities. Third, internationalpurchasing activities change because firms need to followtheir customers (BE-4, NY-6). Finally, occurrences in theexternal environment can drive changes in the internationalpurchasing activities. The improved quality offered byforeign suppliers for instance resulted in various suppliershifts at company BE-3. NY-2 was forced to go inter-nationally because local prices of raw materials had risenfirmly, while an internal restructuring at one of theintermediaries of BE-2 led to more direct purchasing. Thelatter three reasons are not easy to insert into the existingstage models because the changes they imply are notunilateral: an increase in international purchasing mightoccur, as well as the complete opposite (withdrawal ordecrease of the level of international purchasing, such aswas the case at company BE-3). This indicates the necessityto include feedback loops in these stage models and to seeinternational purchasing as a non-linear unidirectionalprocess (Melin, 1992).The dynamic routes towards more international pur-

chasing can be explained in other ways. Mol et al. (2004)present a typology based on the depth (value) and scope(number of countries) of international purchasing. Theysuggest two routes: first increasing depth or first increasingscope. The first route will suit for companies in technolo-gical non-volatile environments. Company BE-1 is a goodexample of such a firm. It is aiming at gradually increasingits international purchasing activities without changing thecountry scope. The second route (suggested for companiesin technologically volatile environments) is true for, e.g.,company NY-2. Further research on these routes mightincrease our understanding of the dynamics of interna-tional purchasing.The option to use intermediaries clearly detects another

flaw in these stage models: companies do not have tobecome fully coordinated and integrated on a worldwidescale to benefit most from international purchasing. Whenknowledge of foreign markets and expertise in importing isnot desired by the buying company, intermediaries offer anequally valid solution.


5.3. A reflection on perceived differences between New York

state and Belgium

Results from our cases indicate a different attitudetowards international purchasing on both sides of theAtlantic. Whereas New York State companies (comforta-ble with a large supply base within their national borders)will probably only start buying abroad when competitiveforces pressure them to do so (the cost argument), Belgianmanagers seem to have a much more positive attitudetowards the advantages of international buying as such,having probably experienced this much more in the past.

The organisational structure of the companies runsparallel on both sides of the Atlantic. Small firms have lessorganised purchasing departments. When more plants arebelonging to the group, there is a mixture betweencentralisation and decentralisation. Fully centralised inter-national purchasing could not always be practiced by thecase companies. The industry-specific situation in the foodprocessing industry (BE-5, NY-1) rules out a completecentralisation of purchasing, since perishability concernsforce these companies to purchase goods locally (andtherefore best organised decentrally).

A fully decentralised approach was not present in ourcases. What is mostly found is a hybrid structure wherecompanies group their purchasing staff in certain plants,dependent on the specific products these require (e.g.,company NY-1), or where companies are trying toconsolidate and coordinate purchasing volumes to createmore buying power on their supply markets. The currenttrend seems to be that one plant/purchaser negotiates acontract as a lead buyer for the group and other plants thenbenefit from these efforts (such as is done at companies BE-1, BE-4 and NY-1).

As for the use of intermediaries, from Table 2 we cancertainly draw the conclusion that although only a limitednumber of companies were observed, there is a strikingdifference in attitude towards using intermediaries in theNew York State based companies compared to theirEuropean counterparts. Whereas in Europe only two smallcompanies (BE-2 and BE-3) deliberately chose to useimport intermediaries, all but one of the New York Statecompanies found this alternative clearly to work best. Theone exception (NY-7) is moreover a multinational com-pany with firm connections and own staff members all overthe world. Consequently, it possesses the necessary know-how to deal with global suppliers in different cultures. Thesame holds true for BE-4.

Communication and cultural barriers are mentioned byNew York State companies as hampering efforts to buydirectly from global sources. Moreover, companies practi-cing indirect purchasing frequently think of the intermedi-aries’ services as very valuable. The evaluation andbalancing of value for money with regard to those servicesin solving practical problems as paperwork, dealing withimport regulations and physical distribution clearly takesplace. Only in New York State, due to the size of the US

economy the economies of scale and scope when buyinglocally are much larger than in Europe and factors likecultural and language barriers are felt more deeply.Therefore the value of import services seems to outweightheir costs more frequently than in Europe. Barrierstowards international purchasing are certainly present,but they do not prevent companies from purchasinginternationally. Language problems could be overcomeby using intermediaries (e.g., US-2), uncertainties inmarket knowledge could be resolved by using localpurchasers (e.g., BE-4), risks could be offset by passingresponsibility to a third party, the intermediaries (e.g., BE-5) and differences in attitudes and style could be put asideby regular consultations (e.g., BE-4). These solutions aresimilar to solutions given in export marketing literature toovercome export barriers (see e.g., Hollensen, 2001).Our findings confirm to a large part the cultural

differences as presupposed by the Hofstede (2001) typol-ogy. The United States score higher on the individualismmeasure. This would imply that US companies would havefewer long-term relationships with their suppliers.Although this issue is beyond the scope of our study, wedo find support that they limit their contacts with foreignsuppliers (companies NY-2, NY-3, NY-5, NY-6 were veryclear on this issue). Belgium scores higher on powerdistance. This would imply centralisation, which is onlypartially supported. (It is found in most of our cases, butthey offer reasons beyond the power distance concept andthe number of cases are too low to generalise.) Belgiumscores also higher on uncertainty avoidance. This issupported by our findings, since own quality assurances,self-control and screening factors were more practiced byBelgian companies themselves, while the New York Statecompanies handed this matter over to the intermediaries.These findings are also in conformity with the results of

Matthyssens and Wursten (2003) who characterised thebusiness conducts in various countries, including theUnited States and Belgium. They found US managers tofocus on data and clear targets and objectives. Belgianmanagers are found to be more technocrats and useformalised communication. Both characterisations fit theresults of our data well.The consequence is that the structure of the supply chain

in the United States is different from Europe when buyingon international markets. In New York State most of ourcase companies seem to ‘‘outsource’’ the import services toreliable partners, including the choice of foreign suppliers.As such they want to benefit from the network andexpertise of their intermediaries. They clearly believe thisoption to be cost-beneficial as a lot of internal costs interms of communication and intercultural adaptation arethus prevented or born by the intermediary (and directlyreflected in the purchase price). In Belgium, on thecontrary, companies lean to a ‘‘do-it-yourself’’ approachor otherwise they seem to venture on their own network.As such they keep more control over their knowledge ofpartners and markets, but deal with more complex

ARTICLE IN PRESS

Fig. 1. Two different supply structures.


relationship problems. Moreover, a total cost of ownershipcomparison will be necessary in order to calculate the realcost of the products bought abroad. This is costly andtedious, but Belgian companies seem to be willing to investmore time and effort into it than New York Statecompanies (e.g., BE-3 and BE-5 point in that direction).Fig. 1 represents this graphically.

The two main differences we observed between thepurchasing internationalisation of Belgian and New YorkState companies are that (1) the American sample mainlytaps into the potential of foreign sources for cost reasons(NY-2, NY-4, NY-6 see this by far as their largest driver),whereas all the European companies also took quality intoconsideration as a major opportunity of internationalpurchasing and that (2) the American companies werewilling to rely much more on the services of intermediaries.

There is some logic in this. If a company intends toimprove its supply in a qualitative perspective when buyingfrom international sources, it cannot solely rely on theservices of intermediate companies and importers becauseit has/wants to check personally whether new internationalsuppliers meet the company’s requirements. When addi-tionally this company wants to certify these new suppliers,it is obliged to verify at the suppliers’ site whethereverything is organised according to your auditingprinciples. Hence, it has to perform some or a lot ofverification itself. Even the best advice of intermediatecompanies cannot always help. That is what Europeancompanies actually do when they buy internationally. Onthe other hand, if only cost is of major concern to thecompany, any intermediate company can find out whetherforeign sources are of interest to you. In that case, acompany does not really need to verify quality perfor-mance itself. The company can fully justify relying onintermediaries’ assessments. And that is exactly whatAmerican companies prefer.

Both observations thus strengthen each other andincrease the likelihood of this being a differentiating factorwhen observing the international purchasing behaviour ofAmerican and European companies.

6. Conclusion and suggestions for further research

While this study was mainly exploratory in nature, itindicated an important, yet underdeveloped part ofinternational business studies: the use of intermediaries.Although earlier studies (Frear et al., 1992) did not suggesta large influence of external organisations on internationalpurchasing, we are convinced that there is a fundamentaldifference in how companies on both sides of the Atlanticperceive the role and contribution of these intermediaries.New York State companies tend to outsource more importservices than Belgian companies do.This study has important limitations. Because only 12

cases in the two regions were examined, no generalisableconclusions can be drawn on differences between Europeanversus North American international purchasing practices.Additional larger-scaled studies on the same research topicare needed. Moreover, it is evident that the purchasingdecisions of a company should be seen in relation to thecompany-specific situation, which does not only depend onlocation, but also on industry, management style, companyhistory and the embeddedness in a larger network.The data and insights from the paper raise a number of

other questions that could be further investigated. Thecultural aspect, for instance, has not been fully explored inour study. Including it into a research design could shednew lights onto the subject. Next, the issues we raised foradapting the existing stage models in internationalpurchasing should be further developed by distinguishingbetween companies establishing an owned and an out-sourced network. Finally, we have described and evaluated


organisational conditions in worldwide purchasing focuss-ing mainly on drivers. Similar research could be conductedstressing the importance of barriers to internationalisation.A possible comparative research design could includechoosing of companies in two regions with little differencesin their political and economic situation, choosing regionsof comparable size, and choosing companies with suppliersbased in the same countries. We therefore call for futureresearch to focus on the following four questions. Are ourfindings valid for other industries and regions? Do otherelements (especially culture) impact the decisions topurchasing internationally, the configuration and the useof intermediaries? Are (and if so, how are) these elementslinked to performance issues? Large-scale studies or long-itudinal case studies would help in this respect. Finally, weobserved a number of parallels between internationalpurchasing and export marketing literature. Although thislink has been subject of some research before (Korhonen etal., 1996; Fletcher, 2001), more insights on this issue wouldbe a valuable addition to international purchasing.

This study has put the most important motives and someorganisational decisions on international purchasing in abroader perspective. Staying competitive in a quicklyevolving environment appears to be the major concern ofour respondents. Companies must constantly be on theirguard and respond to these international challenges asexpressed by one of the managers: ‘‘You can have the bestproduct in the world, if you cannot buy the material at theright price and have the right quality, you’re out ofbusiness’’ (NY-5).

Acknowledgements

The authors would like to thank the editor and twoanonymous reviewers for their insightful comments andsuggestions on earlier versions of this manuscript.

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