Purchasing within SMEs - IPSERA 2014 Abstract

 A Conceptual Model & Analytical Framework for Studying

                                          Purchasing & Supply Management within SMEs

The central objective of this conceptual paper is to gain a better understanding under what circumstances purchasing and supply activities within Small & Medium-sized Enterprises (SMEs) are managed.

Purchasing & Supply Management (PSM) within SMEs differs from that in large enterprises. SMEs have different organisational settings and are not small versions of large enterprises. Whilst there is abundant literature on SMEs as well as on PSM, there is only little literature on PSM within SMEs. PSM research within SMEs must consider specific characteristics such as informal organisation, less specialization in business functions and less available resources. SME management focuses more on the overall operations and less on specific business functions. Their approach to inward-bound purchasing and supply activities is often holistic; their approach to outward-bound purchasing and supply activities is characterized by a relative dependent position in supply chains.
This paper proposes a conceptual model to explain the relationship between the governance of purchasing and supply activities and their purchasing and supply performance. The paper adopts the Transaction Cost Theory (TCT) with levels of integration to describe five governance types. To explain the relation between these governance types and performance, the paper includes the TCT-related moderating variables general uncertainty (macro and meso environment) and asset specificity (meso environment). It also introduces the moderating variables SME characteristics and management characteristics and business model. From this conceptual model the paper then develops an analytical framework which describes the five governance types and the circumstances under which they are ideal-typically sustained.  This framework can be used as a segmentation tool.
The conceptual model and analytical framework combine different domains of literature to enhance the understanding of the different forms of purchasing and supply activities within an SME context. Combining these different domains gives beneficial insights that cannot be found in the separate literature domains. In the empirical research the applying model and framework will enable the design of management instruments. Hence this paper forms a starting point for our purchasing and supply management research within SMEs aimed at supporting SMEs in their performance. (Back to posting).

This competitive paper was presented at the IPSERA 2014 conference in South Africa. 
Authors:  Dr. Geoffrey Hagelaar, Professor in Purchasing and Supply Management at Windesheim University of Applied Sciences, Zwolle (NL), email j.hagelaar@windesheim.nl. Mr. Anne Staal BEng MA DMS MBA, PhD researcher at Auckland University of Technology in Auckland (NZ) and senior lecturer at Hanze University of Applied Sciences Groningen, (NLD), email astaal@aut.ac.nz. Mobile phone: 0064 22 38 944 62. (AUT City Campus; WD209; 55-57 Wellesley Street Auckland 1010 New Zealand), corresponding author. Mr. Richard Holman, Assistant Professor in Purchasing & Supply Management at Windesheim University of Applied Sciences, Zwolle, (NL), email rdp.holman@windesheim.nl. Mr. Gert Walhof MBA, Professor in Purchasing Management at Hanze University of Applied Sciences, Groningen (NL), email g.h.walhof@pl.hanze.nl. The research is supported by theDutch  NEVI Research Foundation.

Kiwi XMAs and our PhD journey

Time really flies when we are having fun. Our second KIWI Xmas is now approaching fast. The family and the PhD have both been on a fast-lane lately. Sibren reached the finals with his Belmont Intermediate water-polo team; Edsard survived a set of daunting rugby matches & Aletta is busy working in Devonport Pharmacy. Guess they are all having great fun although Edsard decided to switch from rugby to sailing or to football. Which I can quite understand.

We are busily planning our first KIWI walkabout in the holiday season – Tauranga, Gisborne, Napier, Rotorua and Hobbiton with our Honda Honnepon. The boys and I have been sailing in the Hauraki Gulf in our Hokie-Pokie, our 40+ year trailer sailor. She’s a fair-weather Magnum 20 and the crew is a fair-weather crew. (So not exactly as on the famous picture). We will sail around Waihiki island during the first part of our Xmas break. To me the Hauraki seems like the best sailing water in the world. Beautiful islands all over, a blazing sun and water with the distinct colour of old Roman glass. Good water for swimming, snorkeling and fishing.

Teaching-wise has been quite busy as well. I lectured Asset & Facilities Management for 30-odd AUT postgrad students from the Master in Construction Management or Master in Engineering Project Management. Students said they very much enjoyed the classes and the interaction with Facilities Management practitioners. More or less in parallel I ran FMANZ master classes. Both the Built Asset & Facilities paper and the FMANZ master classes will continue to run in 2015. I really love the interaction and discussions in the class room – and always learn some new things myself. Moreover I met quite some nice people! (We feel less like a tourist now-a-days, but more like a Dutch Kiwi).

Our Dutch research on procurement within SMEs makes steady progress. Our IPSERA paper was ranked TOP 10 (see abstract) at the IPSERA 2014 conference. Unfortunately the paper was not accepted for publication in the Journal of Purchasing & Supply Management. The up-side is that we gained some valuable feedback which we use for the next phase of our Dutch case study research and the upcoming Delphi study, which have both been planned in 2015.

 My own PhD research has of course taken most of my time & efforts. In November I submitted my doctoral research proposal (PGR9 in good AUT jargon) to my supervisors which both signed the beast off. Hence I will present and defend my proposal on 28 January 2015. I guess I am on schedule but condensing an 80 page text back to 20 pages was quite some work. Nevertheless writing a shorter text sharpened the structure, and also sharpened my thoughts on research design and topic. The research title now is: Procurement of non-incremental sustainable technology innovations - the case of entrepreneurial firms supplying the New Zealand construction industry.

I will present this research proposal as a conceptual paper at the upcoming entrepreneurship ACERE conference (Australian Centre for Entrepreneurship Research Exchange) in Adelaide Australia.
For any European blog-readers: this is a 5-hour flight to a totally different country. Again palm trees, but then also roos and bears.

I hope to learn as much at the upcoming ACERE as I did at the past IPSERA conference, and meet lots of nice and interesting people. As I will return the 8^th of February, I will also bring some birthday gifts home for both Aletta and Edsard. They both have their birthday on that same day.

But first we will have our second KIWI Xmas. Without snow, slate, cold rain, slippery roads, and dark wet-windy evenings. To a certain extent we will miss that good old Dutch feeling. However, we hope to compensate that with a traditional KIWI XMAS beach pick-nick.

The Staal-family-downunder wishes you a good 2015!

Abstract for ACERE 2015 conference

Traditionally construction industries in New Zealand and abroad have a low track record for successful sustainable innovations. This has a negative impact on private and government spending, and on quality, society and the environment.

This conceptual paper posits that the construction industry needs non-incremental (i.e. architectural, system, radical, modular) sustainable technology innovations to make drastic improvements. Such innovations often come from entrepreneurial (small) firms from other industries or at the beginning of supply chains and must be procured and adopted further into such chains. However, after an extensive literature review it remains unclear how entrepreneurial firms procure non-incremental sustainable technology innovations for the construction industry. The paper focuses on procurement activities of entrepreneurial firms in the New Zealand context. These activities interact with (internal and external) innovation activities for an optimal firm performance. They are affected by clusters of internal and external variables.

The ACERE paper discusses extant literature, a conceptual framework, main propositions, research aims and the choice for a focus group method.  The picture below shows the current conceptual framework with dominant variables as found in literature. These will be tested in alternating rounds of focus group studies and case studies. The research is part of a doctoral project. (Back to XMAS post).

After the IPSERA Conference - back in New Zillan

After the IPSERA conference my family and I enjoyed a nice holiday at the KariKari peninsula.  Our Honnipon, our old 4WD Honda had some long rides over white and very empty beaches which were covered with sea shells and other things two boys will enjoy. We probably enlarged or sea shell collection by at least 2 kilos. (What to do with them…). The boys also caught two snappers which we fried battered. For me it went down well with a local beer; the boys had their Australian Bunderberg. 

 We visited the Northern-most point of New Zealand, Cape Reinga. Although it rained and was foggy we did not feel the mysterious Maori souls going up to heaven. But then the boys loved sand surfing from the high dune tops. A good family holiday.

Getting back into the normal rhythm of AUT campus life proved somewhat more difficult. The IPSERA was a past highlight and then one has to focus on new goals. In part these were hidden in the literature: (1) on quality: how to ensure academic rigour and managerial relevance, and (2) on the content: how to further delineate the topic and improve the conceptual model. This took re-reading and additional lit review and (I hope) will strengthen my research proposal.

In parallel with much re-reading our joint Dutch research on purchasing within SMEs went into the empirical phase with cross-case studies conducted by a number of graduating bachelor students. At the same time we designed a Dephi study. These activities are all closely related to my own PhD research and help me on research content and on research methodology.

What also greatly helps is the fact that our IPSERA competitive paper has been shortlisted as an article for the Journal of Purchasing and Supply Management.
Asterix & Obelix would have said Hurray! 
Being shortlisted gives us some proof on the relevance and quality of our paper. In parallel Gert Walhof and I have been working on a paper discussing four purchasing case studies in Dutch SMEs in 2013. This all means writing, reflecting and re-writing.

Quite another strand of work has been preparing four sets of Master Classes for the Facilities Management association in New Zealand, the FMANZ. This builts on work of Hanze FM-graduate Herma Schutte. Developing these classes was done with some highly-motivated FMANZ & AUT people and some colleagues from my Hanze university. The Master Classes will run from September – December 2014. Moreover, we will try to get some Hanze graduates to NZ for an FM traineeships within NZ companies.

My research proposal now focusses on entrepreneurial construction firms and how they I purchase (procure / acquire) non-incremental 'green' innovations. I plan to defend my proposal in September, after having obtained some valuable feedback from people in Holland and in New Zealand. My empirical phase will then start with interviewing a number of experts and innovative entrepreneurs in the NZ construction industry. This promises to be a dynamic and interactive phase of my research.

Some work – Master classes and the IPSERA Purchasing Conference in South Africa

Preparing the post-grad supply management master-classes at the University of Pretoria was some hard work. Amazing that while lecturing this course for the 3rd time it still needed modifications on course contents and process. In the previous two years my colleague Marius van der Woude and I flew together from Amsterdam. This year my procurement professor Gert Walhof flew in from the Netherlands, and I flew all the way from Auckland. A horrible 24 hours flight. At least I can tell that saw the huge ice-masses of the Antarctic.

For me it was the third time to visit South Africa, a country with all the contrasts of a rainbow. On the streets one sees poverty and richness in one wink of the eye: beggars and BMWs. During the master-class we had a good discussion on ethics and fraudulent behavior. (See also PWC reports).  In fact at the IPSERA one week later, some presentations covered the same topic.  The highlight of the course was a tri-party negotiation game on trying to divide money between three football associations.

Gert and I were very happy with the hospitality of Mr. Wesley Niemann and his colleagues. We tasted some excellent wines over two excellent diners.

Rewarding work over the last months for meeting IPSERA deadlines for both my PhD proposal for a doctoral workshop and for our competitive paper. At the IPSERA conference it was nice & inspiring also to meet my research colleagues of Windesheim University: Geoffrey Hagelaar and Richard Holman. And of course lots of other nice people.
One of my areas of interest: innovation and procurement  is on the rise compared to a few years ago. The conference had some interesting presentations. Last year Spina et al. (2013) did a literature review and found that innovation is still in the second position, and costs are still leading. Let’s hope that in future our profession will not only the famous cost-cutter but can also bring new stuff to the table via e.g. supplier innovation. And increase top and bottom line relevance.

Modestly I must admit that my IPSERA presentations went smoothly but at the same time feedback from IPSERA attendants yielded in extra months of work. The informal networking over a glass of wine or a cup of coffee proved almost as valuable as the ‘formal’ feedback during the two presentations. Moreover, I feel that participating in other people’s presentations is very useful for an early-career researcher like me. The setting in the African wilderness was ‘awesome’ and for me IPSERA was a great success.

Wet and cold work. Our two boys Edsard and Sibren also experienced some hard work when they went surfing at the west coast near Auckland. (Tip top beaches in Bethels, Muriwai, and Piha). It was late in the season and the see was already quite cold. But the higher the surf, the more our boys enjoy their encounter with nature. It's good then that Aletta and I can enjoy the stunning & empty views with warm cups of coffee and sandwiches (with sand). Amazing that one can see this nature only a 30 minutes drive away from Auckland. New Zealand (to be pronounced ‘New Zillan’) is an amazing country. (Please click on the specific NZ dialect and the use of the hyperbolic word awesome).

Kia Ora!

The X-mas (summer) break was good. We visited almost all the beaches at the Hauraki Gulf and had some nice BBQs (in NZ: barbies) with newfound friends and colleagues. Our two kids had a three-day sailing course in small sailing boats called Optimists (in NZ: opties). Our English is improving and every day we hear Kiwi slang with a pronunciation far removed from the Queen’s English we learnt at school.

My research proposal for the PhD workshop at IPSERA in South Africa got accepted. (Hurray!) At the same time I need to further define the exact research subject and the related research design. Luckily I have a bunch of bright people around me (in the Netherlands and here in New Zealand) to help me with that. And Google Scholar can provide me with loads and loads of literature on all aspects of construction management, purchasing, disruptive innovations and sustainability. Sometimes I feel like a kid lost in a candy store. My subject circles around:

The role of purchasing in small construction firms when they want to introduce discontinuous waste-reducing (green) innovations. This focuses on the New Zealand situation but I will use international material for a better assessment.

Some say that the building industry is conservative and resists innovations. That however depends how you look at it (Sexton, 2004, 2006). In most countries the building industry is project-based and works in a complex setting. On a daily basis one sees incremental and day-to-day improvements on construction building sites. My current research proposal states that the construction industry could need discontinuous (or disruptive, or radical) innovations for drastic improvements. (For innovation info, please see the book of Christensen, 1997). I will focus on innovations with a technical nature and that can e.g. be protected by patents. These innovations relatively uncommon but when successful will make a big impact.

These discontinuous innovations I want to investigate complement the more incremental improvements. Definitions differ somewhat, but I see these as new or existent technologies not earlier applied in construction and new to the market or customers. Often the success lies not in the technologies per-se. Rather the success lies in new business models: how companies use these innovations in the market. I hope my research helps to give a better understanding on successfully introducing (absorbing / adopting) green technology. After all we all want good quality houses and buildings which are reasonably priced and can be built with little impact on our environment. Currently however building and living in houses has a huge negative impact on the environment as we use heaps of water and energy and material, and produce too much waste.

Disruptive innovations often come from small firms (Baumol, 2004; Manley 2008; Hardie 2011; Lambert 2010) from outside the industry or at the beginning of supply chains. These innovations must be purchased and adopted into such chains. For instance: innovative building materials that would work in a country without any earth quakes will not be immediately suitable in New Zealand. Just the other week there was a major (6.2) earth quake in Wellington but most buildings have only minor damage. The biggest thing that came down was the Hobbit eagle at display on Wellington airport.

When a small construction firm buys a new technology or product it has to be clever and purposeful and convince several stakeholders before this technology is successfully adopted by his customers, partners and building codes. I think that purchasing has a big role in this. At least that is the case in bigger companies (see e.g. research of Picaud and Johson). Smaller companies purchase their products and services differently (see e.g. research of Ramsey, Morrissey, or Paik). We know from e.g. Manley (2006) that manufacturers do sell technical innovations into construction supply chains. We know from Sexton that small construction firms focus on incremental improvements. Currently I do not know adequately how these small construction firms would successfully purchase and implement disruptive technologies. Let alone green technology. In the next few weeks I hope to find out more about this. Stay tuned on this blog!

BTW: Want to live in a grand mansion on the Dutch countryside? Just follow this link.

BTW: for some fresh family pictures, please visit our Staaltjesdownunder blog.

BTW: Please pose your questions and write down your remarks on this blog!

Starting my PhD - departing harbour, fine weather with sunny spells

TO ALL:
with either an interest in New Zealand; purchasing/procurement; disruptive innovations; or managing a PhD; to all good friends, good colleagues, professionals/researchers.

Where to begin this blog?

My family and I are making a journey. We started from a cosy village in Northern part of The Netherlands, flew around the globe and settled in Auckland New Zealand. We love the climate and the relaxed way of living. What would we want more:  a nice & clean (though small) house, a bay view with only 200 mtrs from the Takapuna beach & cliffs & islands, and the stunning  Hauraki Gulf.  

Kiwis are a friendly folk, and Auckland is full of friendly folk from all over the world.  Not a bad place to live and to study.  We hope to make many trips with our old Honda 4WD (nicknamed Honnepon, which means sweetheart in Dutch) and long strolls along the beach.

Parallel to this physical journey I started my journey on my PhD.

In fact this journey had started much earlier, somewhere in 2009. At that time I was lecturing undergraduates at Stenden University on what we had coined “Green Logistics”. When our students calculated the milage of an average food basket, we realised that big improvements on sustainability would take a long time. A step-by-step approach seemed most feasible (and more convenient).

Later-on at the Institute of Facility Management of Hanze University I became more involved in applied purchasing and supply research supervised by Professor Gert Walhof. My focal area was (and still is) on:  How small firms (SMEs) can improve their purchasing capabilities.

We conducted some interesting case-studies, read some articles and soon realised that this purchasing research area was both relevant to business and new to academics. (See publications of Paik, Ellegaard, Ramsey, Pressey, Morressey).

In 2012 I attended the IFPSM PhD Summer School in Salzburg. (As a matter of fact: now listening to Mozart while writing this blog). This was a mind-breaking experience with a good mixture of experienced professors and ambitious PhD students. I had prepared a powerpoint presentation on “How do small firms (SMEs) purchase innovations”.

However my most important two slides where the famous quote from Alice in Wonderland:  If you do not know where you are going – any road will take you there. And the poem of Robert Frost on Two roads diverged in a wood … And I did not know which one to take….

I came back in Holland exhausted, but then knew I wanted to start a PhD.

I received a good lot of support from many people within the Hanze University. In late November 2012 my wife Aletta and I flew to Australia & New Zealand where I discussed PhD possibilities at a number of great universities.  Nice weather, interesting people, good discussions.

My subject was by then narrowed down to: “How do SMEs purchase patented innovations”.  My research proposal was later reviewed at the WION, the annual Dutch workshop on academic purchasing research. (People were more enthousiastic than I was at the moment, my proposal arriving at its 10th version). The WION is a wonderful environment to discuss research with colleagues.

In May 2013 Professor John Tookey of the Auckland University of Technology (AUT) invited me to submit a (yet amended) research proposal more focused on sustainable innovations in the New Zealand construction industry, which got accepted. My research will [somehow] relate to current SME purchasing research conducted at Hanze University and Windesheim University as sponsored by the Dutch Purchasing Association NEVI.

Meanwhile (still somewhat to my own surprise) the pieces of the jigsaw puzzle came together as my Hanze dean mr. Ron van der Weerd arranged funding by Hanze University, and as John Tookey arranged a scholarship. Together with the family savings this allowed the four of us to walkabout to New Zealand. (Kiwis: sorry for this nice Australian phrase).

We have said good bye to all our good friends, family, colleagues. Departed our save Dutch harbour and landed up North Shore. The academic weather is fine; with some good sailing winds for e.g. editing our South Africa IPSERA paper and reading interesting stuff. Lots and Lots of PhD-things to do in the coming 36 months.  My (current) research question:

“What is the role of procurement on disruptive waste-reducing innovations in

small New Zealand construction firms?”

With this research I hope to give a better understanding of the adoption of radical innovations in Small and Medium-Sized Enterprises (SMEs). The context is the currently booming New Zealand construction industry.  After my literature research I intend to conduct a survey amongst SME owners/users of (non)-patented radical waste-reducing innovations.  Being mode II innovations I will also scan other stakeholders and hope to conduct (action-research) case studies. Meanwhile I will draw parallells to NZ and e.g. Dutch practices. I plan to conclude my PhD in the end of 2016.

 

My next 400-word blogs could cover some thoughts & ideas on:

Dec: Rigor and relevance in academic research.

Jan: Purchasing in Small firms / SMEs.
Feb: Purchasing in Holland; versus procurement in New Zealand.
Mch: Procurement in Construction Industry.
Apr: Innovation with(out) procurement.
May: On IPSERA in South Africa.
Jun:  Purchasing / Procurement Education.
etc.

In parallel we run a Dutch language family blog called Staaltjesdownunder.
Hope you enjoy reading my blog. Look forward to your comments!

Best regards
Anne Staal