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Title Opposites attract: organisational culture and supply chain performance
Authors(s) Cadden, Trevor; Marshall, Donna; Cao, Guangming
Publication date 2013
Publication information Supply Chain Managment: An International Journal, 18 (1): 86-103
Publisher Emerald
Item record/more information http://hdl.handle.net/10197/6000
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Publisher's version (DOI) 10.1108/13598541311293203
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Opposites(attract?(Organisational(culture(and(supply(chain(
performance(
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1.(Introduction(
There are many studies over the years investigating the impact of organisational culture on
firm performance (Denison and Mishra, 1995; Flamholtz and Kannan-Narasimhan, 2005;
Marcoulides and Heck, 1993; Petty et al, 1995; Yilmaz et al, 2005). The result is a widely
accepted view that organisational culture has a significant impact on both business and
operational firm performance. ‘Cultural fit’ entered the literature in the early 1990s with a
study by Cartwright and Cooper (1993). It stayed largely in social science research in
relation to mergers and acquisitions or joint ventures (Cartwright and Cooper, 1993b;
Chaterjee et al, 1992; Deshpandé and Farley, 2004; Sirmon and Lane, 2004; Teerikangas and
Very, 2006; Weber and Camerer, 2003; Weber et al, 1996). Lately, the significance of inter-
organisational cultural fit on firm performance is recognised in the supply chain management
literature (Whitfield and Lenderos, 2006), few empirical studies focus on the influence of inter-
organisational cultural fit on strategic buyer-supplier relationship performance (Winklhofer et
al, 2006). Yet, firms are increasingly forming strategic buyer-supplier relationships to achieve
success (Chen and Paulraj, 2004; Dyer, 2000; Krause et al, 1998; Phillips et al, 2006) with
inter-organisational cultural fit recognised as an essential ingredient within these relationships
to achieve success (Fawcett et al, 2008; Lau and Goh, 2005; McHugh et al, 2003). Many
papers discussing strategic buyer-supplier performance make fleeting or inferential references
to the significance of cultural fit in achieving increased and sustained performance but most
do not focus specifically on or develop the concept (Barringer and Harrison, 2000; Cousins et
al, 2006; Lamming, et al, 2004; Prahinksi and Benton, 2004).
This study is embedded within the relational view theory, whereby buyers and
suppliers join together in long-term relationships and combine resources (assets, knowledge
and capabilities) to deliver competitive advantage. Partnerships that exhibit behaviours of
knowledge sharing, high levels of trust, and joint coordination report supernormal profits for
both parties that neither could achieve in isolation (Dyer and Singh, 1998; Zacheria et al,
2011). The relational view theory compliments the current study as certain behaviours: have
an outcome focus; open exchanges of ideas and information; and goodwill are synonymous
with organisational cultures that report significant positive performance outcomes.
This paper seeks to expand the knowledge in this area of buyer-supplier relationships
by investigating the extent to which organisational cultural fit between a buyer and its
strategic suppliers positively influences performance. Another key contribution is insights are
gained using mixed methodologies: as the survey method alone is limited in conducting
supply chain management research (Larson and Halldorsson, 2002; Tangpong et al, 2010).
Further, most strategic buyer-supplier relationship studies tend to focus on the buyer side
only, the buyers’ perception of the supplier, or are purely theoretical or quantitative (Cousins
et al, 2006; Mello and Stank, 2005), while this study goes beyond the dyad.
The central research question in this study is: “What cultural dimensions between a
buyer and its supply chain partners support high and poor performance outcomes?”
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The key objectives of this study are:
1. To measure the organisational culture of buyer and supplier organisations (tier one
and two) within a best performing supply chain and an underperforming supply chain;
2. To investigate how differing organisational cultural dimensions between supply
chain members influence the performance of the supply chain;
3. To provide a tentative organisational cultural fit model to support high performance
outcomes in strategic buyer-supplier relationships; and
4. To develop a set of propositions for large-scale testing.
The paper is presented as follows: Firstly, the literature is reviewed relating to the
variables of interest, followed by a detailed research methodology section. Thereafter the
results and analysis section is presented. Further a discussion of the findings is summarised
and finally further research directions, research implications and limitations are posed.
2.#Literature#Review#
#
#
2.1 Strategic buyer-supplier relationships
With shorter product life cycles, increased global competition and dynamic environments,
many firms are engaging in supplier rationalisation (Cousins et al, 2008; McIvor and
McHugh, 2000; Prahinski and Benton, 2004). The key objective of this rationalisation
programme is to increase competitiveness by reducing the cost base and more effectively
managing relationships with fewer, critical suppliers (Fawcett et al, 2008; Cousins, 2002; Tan
et al, 2002).
Although the automotive and aerospace industries have long led the way with early
supplier involvement and rationalisation initiatives (Cousins et al, 2003), the concept has now
permeated across a range of industries and sectors (Cadden et al, 2010; Lamming et al, 2004),
due to purchasing costs in manufacturing companies reported to be in excess of 55% (Tully et
al, 1995; Degraeve and Roodhooft, 2001) with service companies reporting up to 35% of cost
of sales as direct purchasing costs (Degraeve and Roodhooft, 2001). Such findings have
resulted in increased attention on buyer-supplier relationships across sectors to enhance
performance outcomes. Supply base rationalisation has led to firms categorising critical
suppliers as ‘strategic’ and moving away from the traditional arm’s-length or adversarial
relationships (Sako, 1992; McIvor and McHugh, 2000). To become a strategic supplier,
buying firms require suppliers to exhibit a number of key characteristics and capabilities in
addition to the standard cost, service and quality measures; for example, during supplier
selection stage, Nortel (a large multinational telecommunications firm) measures potential
strategic suppliers against a range of additional criteria including innovation, strategic fit,
customer and industry knowledge, systems development, and, significantly, cultural fit
(Cadden et al, 2010).
Many benefits of strategic buyer-supplier relationships have been reported such as
increased market share, improved time to market, reduced supply chain lead times and
increased profit for supply chain participants (Cousins et al, 2008; Shin et al, 2000).
However, in order for these benefits to be maximised, understanding the culture of each
supply chain partner organisation is deemed critical (Fawcett et al, 2008; Shub and
Stonebaker, 2008), with the ability to align the respective cultures of the buyer and supplier
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organisation recognised as an essential ingredient in delivering the desired performance
outcomes (Barringer and Harrison, 2000; McIvor and McHugh, 2000).
2.2 Cultural fit and performance in buyer-supplier relationships
Despite many differing definitions of culture in the literature, there is a general
agreement among researchers that culture relates to patterns of values and beliefs that are
manifested in practices, behaviours and various artefacts shared by organisational members
(Hofstede, 1980; Trice and Beyer, 1993; Pothukuchi et al, 2002). Organisational cultural fit
is reported as being best measured at the practices level with national culture measured at the
values level (Hofstede et al, 1990; Naor et al, 2010; Shankarmahesh et al, 2003).
Cultural fit is a standard term in the literature (Cartwright and Cooper, 1993; Douma
et al, 2000; Sirmon and Lane, 2004; Weber et al, 1996) although it appears in many guises in
different disciplines including cultural compatibility (Veiga et al, 2000; Weber and Camerer,
2003) and acculturation (Larsson and Lubatkin, 2001). The majority of previous studies have
tended to focus the investigation of cultural fit in differing contexts, such as individual
corporations or national cultures (Hofstede, 1980; Kale and Barnes, 1992; Parkes et al, 2001;
Veiga et al, 2000), and mainly focus on joint ventures or mergers and acquisitions
(Hagedoorn and Sadowski, 1999; Teerikangas, and Very, 2006). Therefore, although the
importance of organisational cultural fit in strategic buyer-supplier relationships has been
reported in the literature as significant (Barringer and Harrison, 2000; Cousins et al, 2006;
Fawcett et al, 2008; Lamming, et al, 2004, Lau and Goh, 2005) research has been inferential
or conceptual. Barringer and Harrison (2000) focused on a theoretical overview of many
types of inter-organisational relationships and reported, in general, that all inter-
organisational relationships are difficult to manage due to the absence of aligned corporate
cultures. Further, they suggested that the inability to align cultures results in relationship
failure. Meanwhile Fawcett et al, (2008), who reported on benefits and barriers to effective
supply chain management made passing remarks that misalignment of cultures in a supply
chain context is a key barrier to success.
From an inter-organisational viewpoint, cultural fit is generally referred to as the
compatibility of two integrating firms’ cultures (Cartwright and Cooper, 1993). With
evidence suggesting that culture dissimilarity between two integrating firms has resulted in
lower productivity, lower financial performance outcomes, lower relationship satisfaction,
and higher levels of conflict (Cartwright and Cooper, 1993b; Pothukuchi et al, 2002; Weber
and Camerer, 2003).
The reported significance of shared values, beliefs and behaviours (cultural fit) on
performance in an inter-organisational supply chain setting is becoming more widespread
(McAfee et al, 2002; Mello and Stank, 2005). Bates (1995) reported a significant relationship
between organisational culture and manufacturing strategy, while Mello and Stank (2005)
develop a useful theoretical framework and report that differing cultural dimensions have
differing influences on buyer -upplier performance outcomes. Further, the authors call for
further research, especially empirical research, in this area. McAfee et al, (2002) investigate
the role of organisational cultural fit in a supply chain setting. Although the focus of the
theoretical study was integrated with developing human resource policies, the study
highlighted the influence of cultural fit between supply chain partners in achieving and
sustaining successful relationship outcomes.
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Therefore, whilst many authors continually refer to the importance of cultural fit in
strategic buyer-supplier relationships few empirical studies are present in the literature.
Deshpandé and Farley (2004) are an exception and investigated the influence of
organisational cultural fit on buyer-supplier performance outcomes. Albeit, the study is
positioned within a marketing/innovativeness context and relies on the buyers’ perception of
their suppliers’ culture in the completed single respondent questionnaire, the study is a global
study and highlights the significant correlation between organisational culture variables and
buyer-supplier performance outcomes. An additional paper by Cousins et al, (2006) refers to
the importance of shared values, behaviours and attitudes between the buyer and strategic
supplier in achieving high performance outcomes.
2.4 Research propositions:
The literature reinforces the authors’ central proposition that inter-organisational cultural fit
within strategic buyer-supplier relationships can be hugely beneficial for all partners in
achieving and sustaining performance outcomes. As Cartwright and Cooper (1993: p.60)
report “The degree of cultural fit that exists between the combining organizations is likely to
be directly correlated to the success of the combination”, for example, a supplier who is rigid
and bureaucratic with many rules and procedures (process driven) may struggle to adapt to
sudden changes in demand patterns, and this inflexibility could negatively impact
responsiveness to customer demand (results).
Therefore, the propositions under study are (see Figure 1):
Proposition 1: Similarity of cultural dimensions between buyers and suppliers will lead to
a high performing supply chain.
Proposition 2: Dissimilarity of cultural dimensions between buyers and suppliers will lead
to a low performing supply chain.
**Insert!Figure!1!here**!
3.#Methodology#
To date much research involving buyer and supplier relationships focuses on one side of the
relationship, i.e. buyers’ or suppliers’ perception of the relationship (Cousins et al, 2008) and
tends to use a positivist (survey) approach alone, with only one respondent, usually the buyer
firm’s purchasing manager, from a range of organisations (Cousins et al, 2006). Such authors
admit to this limitation and call for further research including phenomenological
methodologies and supply chain studies to enrich the findings (Ambrose et al, 2010; O’Toole
and Donaldson, 2002). As cultural fit is clearly a major cause of concern for organisations
involved in strategic buyer-supplier relationships (McHugh et al, 2003; Phillips et al, 2006),
this study attempts to shed additional insight into inter-organisational relationships by
gathering data from beyond the dyad (quantitative and qualitative) from within a buyer
organisation and tier one and tier two strategic suppliers in a best performing and an
underperforming supply chain in the Fast Moving Consumer Goods (FMCG) sector.
To cope with the increasing frequency and scale of changes in technology and
managerial methods, management researchers are frequently calling for a combination of