Impact of supplier relationship initiatives on SME procurement performance: An empirical study

Thesis Abstract

This study addresses the problem of suboptimal procurement performance among small and medium-sized enterprises (SMEs) attributable to insufficient supplier relationship management practices, variability in supplier collaboration, and limited alignment between procurement strategies and supplier capabilities. The aim is to examine how supplier relationship initiatives (SRIs)—including joint planning, supplier development programs, performance-based incentives, and enhanced information sharing—affect procurement performance metrics in SMEs. Specific objectives are (1) to assess the association between SRIs and cost efficiency, quality, on-time delivery, and flexibility; (2) to evaluate the mediating role of supplier risk management and information sharing; (3) to determine the moderating effects of firm size, industry sector, and supply base concentration on the SRIs–procurement performance relationship; and (4) to develop a parsimonious conceptual model linking SRIs to procurement outcomes validated in a field setting. A cross-sectional, mixed-methods design is employed. The population comprises SMEs in the manufacturing and consumer goods sectors within a defined metropolitan region. A stratified random sample of 320 SMEs will be contacted, with 280 usable responses (yielding an anticipated 87.5% response rate) for quantitative analysis. Additionally, 20 in-depth interviews with procurement managers and supplier relationship managers will be conducted to enrich the understanding of contextual mechanisms. Data collection instruments include a structured questionnaire measuring SRIs using a composite index of joint planning intensity, supplier development participation, performance-based contracts, and information-sharing practices; procurement performance indicators (cost, quality, delivery, and flexibility); and latent constructs for supplier risk management and information sharing quality. The instrument will be validated through content validity assessments by five procurement academics and a pilot test with 30 SMEs. Reliability will be evaluated using Cronbach’s alpha and composite reliability, with thresholds of 0.70 and above. Ethical considerations include informed consent, confidentiality, and data anonymization. Data analysis proceeds in two strands. Quantitatively, partial least squares structural equation modeling (PLS-SEM) will test the hypothesized relationships among SRIs, mediators, moderators, and procurement performance, enabling assessment of measurement models and structural paths in a single analytical framework. Hypotheses will examine direct effects of SRIs on cost efficiency, quality, on-time delivery, and flexibility; mediating effects of supplier risk management and information sharing; and moderating effects of firm size, sector, and supply base concentration. Qualitative data from interviews will be analyzed using thematic analysis to identify contextual mechanisms, best practices, and barriers, with themes triangulated against quantitative findings to strengthen construct validity. The study will also conduct robustness checks using regression-based sensitivity analyses and multi-group SEM to explore sectoral differences. Key expected findings include a positive and significant association between SRIs and procurement performance across most metrics, with stronger effects on delivery reliability and quality than on cost alone. Mediators are anticipated to partially transmit the impact, indicating that robust information sharing and proactive supplier risk management amplify the benefits of SRIs. Moderating effects are expected whereby larger SMEs and those in highly concentrated supplier bases exhibit stronger SRIs–performance linkages, while diffuse bases attenuate the effects. The study contributes to knowledge by integrating supplier relationship management with SME procurement performance in a field setting, linking SRIs to operational outcomes through theoretically grounded mechanisms. It advances the supplier development and relational procurement literatures by providing empirical validation of a comprehensive SRIs framework within SME contexts and by offering a validated measurement model for SRIs. The practical implications include evidence-based guidance for SMEs on prioritizing SRIs, investing in supplier development programs, and structuring information-sharing arrangements and performance-based contracts to improve procurement outcomes. The study concludes that deliberate, well-coordinated SRIs significantly enhance procurement performance for SMEs, particularly when supported by formal risk management and transparent information exchange. Recommendations for policy makers and practitioners include fostering industry-specific supplier development initiatives, creating accessible templates for performance-based contracts, and encouraging collaborative planning forums to sustain mutually beneficial supplier relationships.