Academy of Strategic Management Journal (Print ISSN: 1544-1458; Online ISSN: 1939-6104)

Research Article: 2022 Vol: 21 Issue: 2S

The Influence of Organizational Learning and Purchasing Social Responsibility With the Moderating Effect of Internal Integration Towards Purchasing Performance

Kittisak Jermsittiparsert, Dhurakij Pundit University

Keywords

Organizational Learning, Purchasing Social Responsibility, Purchasing Performance, Food Industry

Citation Information

Jermsittiparsert, K. (2022). The Influence of Organizational Learning and Purchasing Social Responsibility with the Moderating Effect of Internal Integration towards Purchasing Performance. Academy of Strategic Management Journal, 21(S2), 1-12.

Abstract

This research aims to explore the direct association between organizational learning (OL), purchasing social responsibility (PSR) and purchasing performance (PP) and internal integration (INI) as a moderator in Thailand’s food sector. Furthermore, with the help of simple random sampling process, we collected data from 281 supply chain managers, who were employed in the food sector of Thailand. Thus, our study yields a response rate of 87.81 per cent. Smart PLS-3.0 and structural equation modelling approach was utilized to interpret the results. The finding has shown a significant and positive association between OL and PSR towards PP. Moreover, in relation between OL, PSR and PP, INI had no moderating effect. The results suggest that suppliers and purchasers may be affected by PSR adoption. Besides, the influence of purchasing strategies on PP, organizations should also be aware of the effects of PSR practices. This research adds to existing literature in order to draw empirical conclusions. There are also specified research limitations and further research directions.

Introduction

Recently, supply chain management has obtained superior importance that has increased its dependence for the suppliers (Modak & Kelle, 2019). Alternatively, sustainable supply chain management practices are now being implemented by the companies. Companies are facing environmental and social challenges (Cambra Fierro, 2008). Regarding this, an operating business offers a good foundation for competitive advantage in a globally competitive market, especially when it comes to corporate sustainability (Hong, 2018; Tuttle & Heap, 2008). In addition to addressing difficulties like workplace security and employee benefits, the company needed an organisation-wide supply chain (SC) model. Inside the organization, economic performance should not be the focus, but a supply chain friendly environment should also be created. Important businesses in the global industry are looking to improve the supply chain management (SCM) performance of their organizations in order to maximize their productivity. For example, a project named “Unilever sustainability living plan for 2020” has been adopted by multinational company Unilever in order to improve the well-being of more than a billion people. In addition, unilever has received 100 percent buying performance, due to armed eco-friendly practices (Unilever, 2012). The “supplier responsibility standard” and “apple supplier conducting code” from Apple’s have also been mentioned. Studies have shown that “sustainable supply chain management” (SSCM) practices can also accomplish minimum risk and comparative advantage by reducing cost (Hanifan-Gary, 2012). Currently in this research, SSCM practices are related to the outcomes that involve buying role in corporate social responsibility context (Carter & Jennings, 2004). Past research has demonstrated that the association between socially responsible SC and organizational performance has gained little attention. Furthermore, PSR can enhance supplier performance, thus leading to internal integration or cost reduction (Carter-Neil & Mol-Arthur, 2006) inside the firm. However, the actual relationship among purchasing social responsibility, OL and PP is still uncertain. In the Thailand food industry, OL and PSR can encourage organisations to improve their efficiency. In addition, the association among purchasing social responsibility practices, OL and PP is moderated by internal integration. The absence or presence of internal integration can affect or hinder PSR, organisational learning and purchasing efficiency. Accordingly, the moderating influence of INI is scarce on these relationships. Thus, the moderating influence of INI on the relationship between purchasing social responsibility, organisational learnings and PP in food context has been addressed in this research. The moderating influence of INI has been considered significant, particularly in the literature on purchase management.

Literature Review

Relationship between OL and Purchasing Performance

Purchasing performance refers to the measurement of how effectively the purchasing department operates against the current budget of the department (Saengchai & Jermsittiparsert, 2020). If the cost of purchase falls within the budget, the performance of the purchasing department can meet its goals. Purchasing is indeed a strategic function. The contribution and importance of purchasing to organisational performance and strategy have been addressed in the purchasing literature for decades (Gonzalez-Benito, 2007; González, 2007). It is generally accepted that efficient purchasing performance improves market, financial and operational performance and creates value in the company. In addition, empirical evidence shows that strategic buying have increasingly contributed to corporate performance in recent years (Tchokogué, 2017). In particular, given the current ambiguity and uncertainty of the global economic situation, the key objective of purchasing is to maximize cost structures, particularly given the increased disaggregation of the supply value chain and the increasing external cost ratio relative to internal costs. In line with information based review (Grant, 1996), we expect purchasing expertise to play a decisive role, based on the correct configuration of information to deliver higher levels of performance (Barney) in purchasing performance in strategy and cost savings.

Purchasing Social Responsibility

According to Carter (2005), recently studies have been broadened and described PSR as “the discipline which involves philanthropy issues, human rights safety, resourcing from minority owned suppliers and environmental purchasing related to supply chain management”. PSR can also offer important performance benefits in addition to addressing the social needs of the supply chain. Carter (2005) found that PSR practices decrease costs by enhancing supplier performance and firm learning. Additionally, it has a positive impact on organisational financial performance. Environmentally-friendly sourcing practices would also encourage firms to work with their suppliers and to make variations in packaging, product process and design, thus having a direct effect on the performance of suppliers (Carter, Kale, & Grimm, 2000). Moreover, buying organisations will enhance their overall performance by working directly with minority suppliers and their development. Socially based supplier management can therefore have a significant effect on the critical association with suppliers from a shareholder viewpoint, decreasing dramatically the transaction costs as well as generating inimitable relational sources (Williamson, 2008). More specifically, it is right to play socially, the different components of PSR, the same as CSR, will enhance the firm goodwill and reputation and brand image among the main stakeholders, as it takes a significant amount of time to improve and develop goodwill, reputation and image it is tough for competitors to imitate. PSR will ultimately serve as a significant resource for businesses to have a sustainable competitive edge.

Organizational Learning

Simon (1953) claimed that OL refers to employees who have successively reconstructed organisational problems in which the performance is the output of the organization. OL was the knowledge to develop an association among organisational outcome, behaviour and the recognition of environmental impacts. Morgan and Ramirez (1983) have stated that OL describes employees who are confronted with problems and anticipate their solution through general learning. OL just depend on the individual's learning. Even though individual learning does not ensure OL, OL cannot be started without individual learning. Shaw and Perkins (1992) Shaw and Perkins (1992 ) argued that OL is the competence of a firm that is inspired by other experiences and experiences, and that they transform knowledge into practicable. Garvin (1993) suggested that learning firms with OL skills should be aware of communication, collection and creation of knowledge. They change firm behavior through knowledge and act on new perspectives and knowledge. Sinkula, Baker, and Noordewier (1997) have stated that the process of OL in which employee communicate information to other employees and to the firm, in return for other employees in the firm, can make use of the information. According to the literature, OL refers to the method of enhancement and it regularly improves work efficiency and improves techniques. This relates to the accumulation of firm knowledge. Firms can therefore adapt to environmental changes.

Internal Integration (INI)

INI demonstrates to how effectively an organisation manages the various organisational procedures (Chen & Paulraj, 2004). Managers can use information or business resources planning systems to assimilate information from departments across their organisation to achieve INI into an organisation (Zhao, 2011). Information systems allow specialists to understand and search information in real time; therefore, when necessary, adjust the operating settings. Managers may further develop an integrated procedure to enhance the spread of information and goods across various operational areas and departments within the firm (Flynn, 2010). The protocols would include how information and/or goods could be transferred from one department to another and between employees. Project managers integrate procedures covering operational areas and act as mediators to determine how the processes are combined and how the new organisation is optimized. Knowledge sharing also refers to how proprietary and critical information is well communicated within the organisation (Li, Rao, Ragu-Nathan, & Ragu-Nathan, 2005). Research shows that when staff in firm and supply chain cohorts shares information, this reduces behavioural uncertainty and improves decision making (Kwon & Suh, 2005). Lastly, training concerns procedures that promote the transfer of information. Managers utilize training to teach staff to highlight risks and deal with anomalies once they have happened.

Development of Hypotheses

CSR enhances organisational standards performance across borders on social and environmental problems in the global economy (Closs, 2011; Porter & Kramer, 2006). The larger an enterprise, the more responsibilities (Maqbool & Zameer, 2018) that could be a competitive edge for a firm to boost brand reputation and image (Agan, 2016). Proactive supply chain can build self-satisfied staff, in return it will enhance the corporation value. Staff at the firm should be motivated and encouraged to strengthen knowledge, capabilities and skills in the process of learning. Organisation should always take their views into account in the same way (Maqbool & Zameer, 2018). Such activities are incredibly difficult to replicate and therefore proper knowledge should be generated in order to entice potential staff in these firms (Hoejmose & Adrien-Kirby, 2012). OL has been a significant resource with competitive edge in the current business firms. In addition to participating and assisting staff and enhancing environmental performance and organisation learning improves total corporate sustainable growth (Beske, Land, & Seuring, 2014; Klassen & Vereecke, 2012; Rothenberg, Pil, & Maxwell, 2001). Major fields have been directly discussed, including the motivation and risk function of different forms of supplier-based environmental initiatives (Cousins, Lamming, & Bowen, 2004). Beske et al. (2014) indicated that purchasing social responsibility does not have a significant impact on business costs and has major indirect influence on organisational learning, which in turn influences the performance of suppliers. Consequently, the purchaser associated with the suppliers has a significant role to play within the firm. Based on the above discussions, we have proposed this hypothesis to support study observations.

H1: Organizational learning is positively and significantly related to purchasing performance.

Purchasing performance involves the firm and its supply chain. Purchasing evaluation involves the actual and target price of materials, delivery time, quality of the products purchased (Chao, Scheuing, & Ruch, 1993). Customers have a crucial role to play in the relationship of the service delivery (supplier), this efficient purchasing has been the main concern. Leire and Mont (2010) stress on the aspect of PSR, which promotes cost reduction and coordinates with suppliers that can boost social performance. Trust and commitment between suppliers and buyers were needed to enhance the capabilities and performance of the supplier and the purchasing performance of the firm (Agan et al., 2016; Worthington, Ram, Boyal, & Shah, 2008). With regard to the supply chain social issues, Klassen and Vereecke (2012) underlined our consideration towards three main social management abilities such as innovation, collaboration and monitoring. Thus, we propose the following hypothesis:

H2: Purchasing social responsibility is positively and significantly related to purchasing performance.

Moderation Influence of Internal Integration between PSR, OL and PP

The aim of internal integration was to enhance purchasing practices and business priorities. The relationship between purchasing practices and manufacturing performance was found to be moderated by purchasing integration (Narasimhan & Das, 2001). Moreover, the existing body of knowledge has established that internal integration has an important relationship with the performance outcomes (González-Benito, 2016). However, PP focuses on the relationship with the different practices needed to achieve superior performance. Firm sustainability has recently been recognized by companies with more strategic objectives to improve their competitiveness (Stank, Daugherty, & Ellinger, 1999). Social wellbeing and environmental protection are main areas of focus for CSR. Because of these factors, it is expected that the PSR will have a significant influence on PP.

H3: The association among purchasing social responsibility and PP is positively moderated by internal integration.

H4: The association among organisational learning and PP is positively moderated by internal integration

Research Framework

The purchasing role and the role of supply chain management are known as key aspects of organisational sustainability by helping to address social and environmental concerns. If the purchasing is made with corporate social responsibility, then it is known as purchasing social responsibility. Purchasing social responsibility practices has five components: safety, human rights, community and philanthropy, diversity and environment. In the current research, sustainability supply chain management has been characterized by Carter and Jennings (2004) in order to understand the influence of purchasing social responsibility on purchasing performance, particularly in the food sector of Thailand. In comparison, many other activities within the company can have a relationship with purchasing social responsibility, OL and purchasing performance. This analysis utilized internal integration in the relationship between independent and dependent variables. A theoretical model in this study for analyzing the moderating impact of internal integration on purchasing social responsibility, OL and purchasing performance has been developed in the food sector of Thailand.

Research Methodology

The present research is cross-sectional and correlational in nature. In addition, the quantitative approach used to analyze the association between independent, dependent and moderating constructs in the Thailand food sector through a self-administered questionnaire. A questionnaire is more reliable for collecting the data, particularly if researchers are aware of the variable and how these will be assessed. Approximately 1600 SC managers were employed in the food sector of Thailand during the data collection time. In the present analysis, the sample size of 320 supply chain managers was chosen using a random sampling method from Krejcie & Morgan (1970). The probability and non-probability sampling methods were employed. In non-probability sampling, the element has no equal chance of occurring; and in probability sampling, each element has an equal chance of occurrence. The probability sampling is better than the non- probability sampling. Therefore, a simple random method has been employed for the present analysis to boost the generalization of findings. To this end, 320 self-administered questionnaires have been distributed between supply managers. The return of 281 questionnaires resulted with a response rate of 87.81 percent.

Research Measurements

The primary data for the present analysis were gathered on a five-point Likert type scale ranged from 1 to 5 (“strongly disagreeable” - “strongly agree”). Questionnaire was updated from prior researches. Purchasing social responsibility scale has been adapted by these studies (Thornton, 2013). The indicators for organizational learning are adopted from Carter (2005), additionally, the scale of purchasing performance has been adopted from González-Benito et al. (2016), and internal integration scale has been adopted from González-Benito et al. (2016) research. The questionnaire was translated into English before data collection.

Analysis of Data

During the analysis of direct and indirect association of latent constructs, most of the previous researches have used partial least squares structural equation modelling technique (Pham, Thanh, Tucková, & Thuy, 2020; Singjai, Winata, & Kummer, 2017) The hypotheses of this analysis have also been tested by using partial least squares structural equation modelling technique. The smart PLS-3.0 has been used to test the structural modeling analysis of the research. In case of small sample size and non-normal data, partial least squares structural equation modelling technique approach is appropriate (Rouf & Akhtaruddin, 2018). Secondly, we can assess and measure many interrelated relationships simultaneously and the latent variables measurement.

Research Results

Constructs Validity and Reliability

Validity and reliability of the constructs must be assessed before evaluating the model of the study (Hair, 2019). Therefore, discriminant validity and convergent validity (CV) of the outer model has been evaluated. The degree to which the observations are consistent with time and the exact representation of the entire sample population is called reliability and the analysis instrument is considered accurate, because the outcomes of the test can be replicated using a specific technique. Validity defines whether the study actually tests what it seeks to test or whether the findings of the research are accurate. Researchers usually assess their relevance by answering a variety of questions and also try responses for other people through their study. The research outer model evaluation has been provided in Table 1. To achieve indicator reliability, every indicator loading <0.5 has been removed from our model. All variables have derived average variance extracted (AVE) more than 0.5, while composite reliability (CR) has been greater than 0.60, which determined the model's CV (Hair Jr, 2016). We assed discriminant validity through Fornell-Larcker and heterotraite-monotrait ratio. For Fornell-Larcker criterion, the square root of AVE should be more than the construct relationship with opposite constructs, and for HTMT criterion every value should be less than a 0.85 (Hair Jr, 2017). Correlations between constructs indicate that each construct shares greater variance values in comparison to other measures, with its own measures. The Fornell & Larcker and HTMT criterion findings have shown that the constructs discriminant validity was established as shown in Table 2 and Table 3.

Table 1
Item Loadings, CR and Ave Of The Measurement Model
Constructs Items Loadings CR AVE
First Order
Purchasing Performance PP_1 0.761 0.834 0.51
PP_2 0.751    
PP_3 0.672    
PP_4 0.743    
PP_5 0.762    
Internal Integration INI_1 0.631 0.85 0.53
INI_2 0.615    
INI_3 0.694    
INI_4 0.652    
INI_6 0.72    
INI_7 0.723    
INI_8 0.64    
INI_9 0.741    
Organizational Learning OL_1 0.874 0.853 0.64
OL_2 0.822    
OL_3 0.736    
Purchasing Social Responsibility Diversity PSRD_1 0.752 0.58 0.819
PSRD_2 0.774    
Purchasing Social Responsibility Safety PSRS_1 0.911 0.81 0.882
PSRS_2 0.779    
Purchasing Social Responsibility Human Right PSRHR_1 0.822 0.62 0.821
PSRHR_2 0.72    
PSRHR_3 0.772    
Purchasing Social Responsibility Environment PSRE_1 0.612 0.52 0.822
PSRE_2 0.782    
PSRE_3 0.742    
PSRE_4 0.752    
Second Order Construct
Purchasing Social Responsibility PER_1 0.751 0.55 0.832
PER_2 0.728    
PER_3 0.812    
PER_4 0.702    
Table 2
Discriminant Validity (Fornell-Larcker Criterion)
Constructs 1 2 3 4
PP 0.84      
INI 0.33 0.73    
OL 0.24 0.51 0.7  
PSR 0.42 0.58 0.43 0.74
Note: *Significance Level = 0.05
Table 3
Discriminant Validity (HTMT) Ratio
Constructs 1 2 3 4
PP        
INI 0.461      
OL 0.374 0.77    
PSR 0.572 0.75 0.603  
Note: *Significance Level = 0.05
 

Testing of Hypotheses

Using smart PLS 3.0, PLS-SEM was applied in order to test the hypotheses. Two exogenous variables have been described in this model: organizational learning and purchasing social responsibility. Purchasing performance was treated as an endogenous one. The coefficient of determination (R2) value was 0.47 without the interaction term, which points out the substantiality of the model. In comparison, tests of PLS bootstrap algorithms which has confirmed the relationship between purchasing social responsibility and purchasing performance (beta value = 0.245; t-value = 3.012 and p-value, 0.002) and this has supported the hypothesis 1. The study results have indicated an important and significant relationship between organizational learning and purchasing performance (beta value=0.344; t-value=3.662; p-value=0.001). H1 and H2 were accepted in this research considering the direct relationships as shown in Table 4. These findings were consistent with past research by Thornton et al. (2013).

Table 4
Results of Direct Effects
Relationships (β) SE t-value p-value Result
Purchasing-Social-Responsibility → Purchasing Performance 0.245 0.08 3.012 0.002 Significant
Organizational-Learning → Purchasing Performance 0.344 0.091 3.662 0.001 Significant
Note: *Significance Level = 0.05

The Moderation of Internal Integration

The study model has proposed that internal integration has a moderating influence between exogenous (organizational learning, purchasing social responsibility) and endogenous variable (purchasing performance). A moderator is a third variable that influences the relationship's intensity between an independent and a dependent variable and the association between two variables is influenced by a moderator. If x is the predictor variable in the causal relationship and y is the outcome variable, then z is the moderator variable which affects the casual relationship of x and y. The causal relationship is calculated with the correlation coefficient for certain moderator variables. The moderator variable can weaken or strengthen effect from x to y if it is found to be significant. With the two-stage method, the moderation analysis has been employed. This method is in line with Hair Jr et al. (2017), where there was a moderation impact between independent and dependent constructs substantially. In this regard, our research has utilized the Baron-Reuben and Kenny-David (1986) criterion to analyze the moderation hypothesis in order to decide if there is any moderation condition. Before and after moderation, the value of R2 was same (0.47).

Table 5
Hypotheses of The Study
Relationships (β) SE t-value P-value Result
PSR → INI → PP 0.105 0.074 1.115 0.213 Insignificant
OL → INI → PP 0.13 0.102 1.267 0.202 Insignificant
Note: *Significance Level = 0.05

The results of this analysis showed that internal integration does not significantly moderates the relationships between purchasing social responsibility and purchasing performance (beta value=0.105; t-value=1.115 and p-value=0.213), therefore H3 is not accepted. Moreover, internal integration has no moderation influence between the relationships of organizational learning and purchasing performance (beta value=0.130; t-value=1.267 and p-value=0.202). Thus, H4 was not significant. The results show that internal integration in the Thailand food industry was not an important moderator between exogenous and endogenous variables. The conflict in the result could be because of other variables are overlapping. All possible relationships should be examined in future research. Table 5 have shown all of these findings.

Discussion and Conclusion

The research was aimed at studying whether the relationship between purchasing social responsibility, organisational learning’s and PP in food context of Thailand was significantly moderated by internal integration. This research has evaluated four hypotheses in order to achieve this target: 2 hypotheses have represented a direct influence between constructs, while the remaining two has addressed the indirect influence of the constructs between the independent and the dependent variable. This study generally provides a thorough understanding of corporate social responsibility of purchasing in the firm by evaluating the moderation influence of internal integration in Thailand’s food industry. The study findings have supported two hypotheses which have supported the empirical links between direct variables studied in the research. These results have been in consonants with past studies (Yawar-Sadaat & Seuring-Stefan, 2017). However, the moderation influence of internal integration was not empirically supported in the connection between purchasing social responsibility, OL and PP.

One possible reason might be that due to less financial and time constraints, there is no adequate system. These findings have supported Carter and Jennings (2002), who did not find any indirect link between purchasing social responsibility and purchasing performance. However, these findings have been in contrast with (González-Benito et al., 2016), who established the moderating influence of internal integration in his research. Such conflicting findings require further investigation. In short, purchasing performance can be improved by integrating PSR and organizational learning during planning and decision-making processes of an organisation.

Lastly, internal integration has not moderated the relationship among two of the exogenous variables, such as PSR and organizational learning towards the endogenous variable (e.g. purchasing performance). It means that in Thailand, managers should not need to be focused on internal integration when deciding about purchasing. Nevertheless, there is a need for an understanding of corporate social responsibility. The results of this research have added to the current literature that can be utilized to explain the role of PSR and OL in strengthening PP. The results of the study may also be useful in the business performance of manufacturing companies. This analysis offers a groundbreaking roadmap for future scientific studies as different techniques of dynamic and operational capability should not be overlooked. Both dynamic and operational capabilities are directly related to environmental and financial performance. For this purpose, organisations need to build both organisational and complex strategies for ambidextrous performance. However, such abilities must be handled in different ways. Shareholders and managers must also consider the importance of diverse strategies to tackle environmental issues.

Limitations and Directions for Future Research

This research is not free from limitations and thus future explorations are required for more knowledge. First, the work centered on Thailand food sector and can thus offer a distinctive viewpoint for the analysis of Thailand peculiar purchasing performance. Therefore, prospective scholars should carry out similar studies in other Thailand service sector, such as banking, hotels and education and health industries through verifying the recent research results. This research restricts a cross-sectional scope and the data have been collected for the purpose of providing insight into the responses. However, this is preferable to assess changes in response at different times and to determine the causal relationships between variables through a longitudinal study. In addition, data were collected from 320 food supply chain managers. Further investigations must broaden the size of the sample and should balance the amount of purchasing and the other supply chain managers so that a comparative analysis should be performed between the two management groups. The data collected for this study used a self-reported questionnaire that could be used to identify the typical bias issue during the analysis. Prospective research may therefore provide alternative techniques, such as qualitative and hybrid approaches to conducting quantitative or qualitative analytical assessments, in such a way that the level of performance of food personnel should be maintained. However, in this analysis no moderation was observed between the exogenous and endogenous variables. Future researchers also need to examine the contradictory effects of moderation. Eventually, this would be important to carry out extensive research in order to gain insight into cultural and organizational factors, by integrating cultural and ethical variables in the existing study paradigm. Only the food industry was the focal point of the current study, and a future comparative study should be conducted to properly generalize the results.

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 Received: 29-Oct-2021, Manuscript No. ASMJ-21-9178; Editor assigned: 2- Nov -2021, PreQC No. ASMJ-21-9178 (PQ); Reviewed: 16- Nov -2021, QC No. ASMJ-21-9178; Revised: 22-Nov-2021, Manuscript No. ASMJ-21-9178; (R); Published: 29-Nov-2021

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