Success factors for sourcing teams: How to foster sourcing team … · 2019-04-08 · effectiveness are expected to be mediated by (d) ‘‘team processes’’ (e.g., effort and

European Management Journal (2014) 32, 288– 304

Business SchoolAdam Smith

journal homepage: www.elsevier .com/ locate /emj

Success factors for sourcing teams: How to fostersourcing team effectiveness

Boudewijn A. Driedonks, Josette M.P. Gevers *, Arjan J. van Weele

Eindhoven University of Technology, The Netherlands

0263-2373/$ - see front mattehttp://dx.doi.org/10.1016/j.e

* Corresponding author. Tel.E-mail address: j.m.p.geve

r ª 201mj.2013

: +31 40rs@tue.

KEYWORDSSourcing teams;Purchasing organiza-tions;Cross-functionality;Team effectiveness

Summary Cross-functional sourcing teams have become a popular coordination mecha-nism to organize company procurement activities. However, many of these teams failto meet management�s long-term expectations. A lack of sourcing-specific team researchobstructs a clear understanding of the factors that drive sourcing team performance. Inthe present study, we identified three major dimensions of sourcing team success. Apartfrom general overall team effectiveness and supply base management effectiveness,sourcing teams need to effectively cooperate with other stakeholders within the firm inorder to secure purchasing cost savings and supplier contracts. Additionally, we identifiedfactors that underlie sourcing team success, based upon extensive survey data taken frommembers, leaders, and managers of 59 (cross functional) sourcing teams in twelve large,multinational companies. Our study revealed that different success factors drive differentsourcing team effectiveness dimensions. Also, we found a seemingly contradictory needfor both autonomy and formalization to ensure sourcing team effectiveness on all threedimensions. The latter seemed particularly important for teams with high levels of func-tional diversity.ª 2013 Elsevier Ltd. All rights reserved.

Introduction

Strategic purchasing is at the forefront of contemporarycompany practice. The purchasing profession now has astrategic role in the firm (Carr & Pearson, 2002). Strategicpurchasing, or sourcing, is part of the purchasing functionthat aims at selecting and managing the external suppliersin line with the strategic objectives and goals of the firm(Van Weele, 2010). Evidence shows that organizing purchas-ing activities through a separate purchasing department isno longer appropriate in today�s business context; whenorganizing for complex buying decisions alignment withother functions is critical (Brown & Cousins, 2004; Seth,

3 Elsevier Ltd. All rights reserved.01.009

247 4178.nl (J.M.P. Gevers).

1996). This also seems true when multidivisional corpora-tions want to create purchasing leverage among their globalbusiness units (Trautmann, Bals, & Hartmann, 2009). Sourc-ing thus requires effective management of both externalsuppliers and internal stakeholders, and occurs as a cross-functional, boundary-spanning activity (Handfield, Peter-sen, Cousins, & Lawson, 2009). Flexibility and horizontaland cross-functional communication must increase, whilelead times must decrease, to ensure purchasing�s value-added contribution to business success (Trent & Monczka,1998). While taking advantage of emerging technologiesfor collaboration, knowledge-sharing and communication,new organizational structures are emerging to meet thesenew objectives.

Multinational firms adopt cross-functional, cross-busi-ness unit team structures to deploy their sourcing strate-

.

http://dx.doi.org/10.1016/j.emj.2013.01.009

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Success factors for sourcing teams: How to foster sourcing team effectiveness 289

gies, to manage their suppliers, and to harmonize their sup-ply operations. Team-based organizational structures withpurchasing professionals working alongside representativesfrom other functional areas (e.g., research and develop-ment, quality, engineering, finance, depending on the spe-cific sourcing category), replace traditional purchasingdepartments and mono-functional buying center structuresand processes (Ellram & Pearson, 1993; Giunipero & Vogt,1997; Johnson, Robert, Michiel, & Fearon, 2002; Monczka,Trent, & Petersen, 2006; Seth, 1996; Trent & Monczka,1994; Trent & Monczka, 1998), a trend that is forecastedto continue (Zheng, Knight, Harland, Humby, & James,2007).

Scholars emphasize the role of team structures to alignthe interests of all internal stakeholders within a companywith respect to sourcing and to deal with potential conflictsof interest among the stakeholders involved (Hardt, Rei-necke, & Spiller, 2007). Team structures allow for moreflexibility and improve horizontal- and cross-functionalcommunication for complex purchasing decision-making.Such decision-making should result in better purchasing per-formance in terms of cost, quality, and innovation, and ulti-mately improve a company�s financial results (Carr &Pearson, 2002).

The use of team structures in purchasing organizationsseems to correlate with positive performance outcomes.However, success has no guarantee and extant researchindicates that the implementation of sourcing teams knowsmany challenges. Companies that implement sourcingteams face the risk that, within months after start-up,teams� ambition levels decrease as motivation and cohesive-ness among team members flag (Johnson & Leenders, 2004).Also, not uncommonly teams report to lack a mandate,which delays projects significantly when the teams try toclose a contract (Englyst, Jorgensen, Johansen, & Mikkel-sen, 2008). Similar concerns were voiced in the companieswe visited.

Effective management of sourcing teams is a key leverfor increasing the purchasing function�s contribution tocompany profitability. Although quite some research hasbeen devoted to buyer–supplier relationships (e.g. Gadde& Hulthen, 2009; Hald, Cordon, & Vollmann, 2009; Pent-tinen & Palmer, 2007), the internal organization of thepurchasing function has achieved far less attention (Trent& Monczka, 2003). Ideas from prescriptive literature inthe area of sourcing team management (e.g., Banfield,1999; Philippart, Verstraete, & Wynen, 2005) have hardlybeen tested empirically. Of course, team effectivenesshas been studied extensively in other settings, such asin manufacturing, new product development, and serviceorganizations. Yet these studies provide limited guidancefor sourcing team management, since their contexts andperformance requirements differ from those of sourcingteams in a number of ways. A combination of part-timeteam member allocations and cross-functional andcross-business unit team compositions characterizes thecontext of sourcing teams, whereas the teams referredto above often reside in one business unit, or have full-time dedicated members (Trent, 1998). Sourcing teamsoften deal with conflicting interests of different stake-holders, who may perceive the purchasing function tobe of limited strategic importance (Carr & Pearson,

2002). At the same time, sourcing teams depend on oth-ers external to the team, since operational buying activi-ties typically occur elsewhere in the organization(Karjalainen, Kemppainen, & van Raaij, 2009). Prior re-search has not explored how this purchasing context af-fects different antecedents of team effectiveness.Empirical research could identify success factors underly-ing sourcing team effectiveness, and provide insight intothe mechanisms that drive sourcing team effectivenessin practice.

This article presents the results of a large-scale field sur-vey study addressing the effectiveness of sourcing teams.Drawing a sample from a variety of companies that switchedfrom more traditional purchasing structures to team-basedstructures, our aim was to identify critical success factorsfor these sourcing teams and to provide insight into the rela-tionships between input factors, team processes, and spe-cific dimensions of their effectiveness. The studytranslates implications from prior team effectiveness re-search in other areas into purchasing settings and offersguidance for companies that have introduced or plan tointroduce sourcing teams.

The article proceeds as follows. In the next section wedescribe a conceptual framework and review literature forfactors of potentially high impact on sourcing team effec-tiveness. In section three we describe the method weused to test this framework empirically. Section four,then, presents the results. Finally, in section five, wesummarize the findings, discuss the implications and limi-tations of the study and we raise additional questions forfuture research. The focus and scope of the present re-search do not allow for a detailed description of the setup, context, and activities of the sourcing teams understudy. The interested reader is referred to an article byEnglyst and colleagues (2008) for an elaborate casedescription of a sourcing team similar to the ones westudied.

Hypotheses development

Companies create sourcing teams when a certain productcategory represents both significant annual expenses for acompany and large cost savings potential. Sourcing teams�assignments include finding, selecting, contracting, andmanaging one or more suppliers for the category on a glo-bal scale (Johnson et al., 2002). Such teams are responsi-ble for the strategic part of the purchasing process,commonly referred to as sourcing (Samli, Browning, &Busbia, 1998). However, the sourcing team typically doesnot execute operational purchasing activities, which occurinstead in decentralized units. Thus, to complete thesourcing team�s task, others external to the team mustcomply with a sourcing team�s recommendations, byimplementing agreements reached by the team, and byplacing orders against previously arranged contracts at se-lected suppliers. Team performance requirements typi-cally exist in terms of cost savings, but other objectivesmay include improved supplier relationship management,supply base responsiveness and access to suppliers� knowl-edge and expertise.

Sourcing teams typically assemble representatives ofinternal stakeholder groups, so members may come from

290 B.A. Driedonks et al.

different functional departments, or may represent adecentralized purchasing unit (Johnson et al., 2002; Trent& Monczka, 1998). Furthermore, sourcing team mem-bers typically have part-time assignments to the team,either because they retain their regular responsibilitiesin their home departments, or because they work onmultiple sourcing projects simultaneously (Englyst et al.,2008; Trent, 1998). Since purchasing professionals in-volved in a multinational�s global sourcing activitiesmay work all over the world, virtual team structureshave become a regular phenomenon (Van Weele,2010).

These characteristics of sourcing teams suggested theoutlines of an explanatory framework for sourcing teameffectiveness. Our model draws on Hackman�s (1987) in-put-process-output (IPO) model of group effectiveness andemploys a three stage process in which input factors affectthe team processes that evolve over time and impact teamoutcomes (see Figure 1). In line with Cohen and Baily�s(1997) heuristic model, the framework also allows for directrelationships between input- and output factors (Campion,Papper, & Medsker, 1996; Cohen, Ledford, & Spreitzer,1996).

We conducted an extensive, cross-disciplinary literaturereview, including research on other types of teams, whichidentified a number of potential success factors for sourc-ing teams. The selected input factors appear as (a) ‘‘em-ployee involvement context’’, which includes factors thataim to enable and support a sense of ownership and con-trol by team members, (e.g., rewards and authority); (b)‘‘organizational context’’, involving factors that provideteams with guidance regarding task execution (e.g., teamleadership and formalization); and (c) ‘‘team composi-tion’’, referring to the team�s staff (e.g., functional diver-sity). The effects of these input factors on sourcing teameffectiveness are expected to be mediated by (d) ‘‘teamprocesses’’ (e.g., effort and communication). The frame-work is presented in Figure 1. The framework draws onleading articles contributing to team performance theo-ries. The next sections explain all hypothesized relation-ships that follow from this framework on the basis ofextant literature.

Indirect effects

Employee involvement context: - Reward structure

member rewards team-based rewards

- Authority internal authority external authority

Organizational context: - Team leadership

transformational leadership initiating structure

- Formalization

Team composition: - Functional diversity

Process- Effort- Comm

InEx

Figure 1 Conceptual framework f

Sourcing team effectiveness

This study distinguishes between two dimensions of sourcingteam effectiveness. The first dimension, general overallteam effectiveness, adapts measures widely used in teamperformance studies. This dimension covers general ele-ments of team effectiveness, like quality and quantity ofwork, efficiency, planning, and overall performance (Bar-rick, Stewart, Neubert, & Mount, 1998; Campion et al.,1996; Cohen & Bailey, 1997; Cohen et al., 1996). In orderto also cover more specific strategic sourcing task elements,a second dimension, supply base management effectivenesscovers aspects such as improved quality of purchased items,improved supply base responsiveness, relationship manage-ment, and support for innovation (Trent & Monczka, 1994).

Employee involvement context

A correct team approach enables and allows a group ofemployees to execute a certain task (Giunipero & Vogt,1997). Employee involvement context factors representempowerment and appreciation. ‘‘Reward structure’’ and‘‘authority’’ may contribute to a sourcing team�s sense ofownership and control (Murphy & Heberling, 1996; Trent,1998; Trent & Monczka, 1994). Motivation and systems the-ories suggest positive relationships with sourcing teameffectiveness: the more of each element the sourcing teamenjoys, the more employees will feel ownership and respon-sibility for their work, motivating them to perform. More-over, systems theories emphasize the importance of theinternal congruence of these organizational design elements(Cohen et al., 1996). Sourcing team members typically workin a matrix structure, and their part-time allocation to theirteams creates a challenge for management to get the re-ward structure right and to involve non-purchasing membersin the team. Two elements comprise the framework�s re-ward structure: (1) who is rewarded, and (2) the basis ofthe rewards. First of all, the reward structures of all mem-bers should include the team�s work (Robbins & Finley,1995). If not, team members will prioritize their individualtasks instead, since these will have a more direct effecton their performance evaluation and reward. In this study,

Total effects

Indirect effects es: unication

ternal communication ternal communication

Sourcing team effectiveness

Direct effects

or sourcing team effectiveness.


‘‘Member rewards’’ refers to the factor representingwhether or not all team members receive rewards and rec-ognition for contributions made to the team. Second, theserewards can be based either on individual performancewithin the team, or on collective team performance. Giu-nipero and Vogt (1997) find that firms do not adapt rewardstructures sufficiently to sourcing team structures: althoughcollective team performance is the desired outcome, indi-vidual performance is rewarded. Such a situation may fostercompetition rather than collaboration among team mem-bers. Based on the foregoing, we hypothesize positive rela-tionships of member rewards and team-based rewards withsourcing team effectiveness.

Hypothesis 1. Member rewards relate positively withsourcing team effectiveness.

Hypothesis 2. Team-based rewards relate positively withsourcing team effectiveness.

Receiving appropriate authority (Kirkman & Rosen, 2000)increases team effort and effectiveness in general, and forcross-functional teams in particular (Holland, Gaston, &Gomes, 2000). We distinguish here between internal- andexternal authority. A team�s internal authority refers to itsability to control internal team processes and activities;greater internal authority improves the flexibility of teams,and allows teams to deal with complex end-user demandsand resource issues more effectively (De Jong, De Ruyter,& Lemmink, 2004; Gonzalez-Padron, Hult, & Calantone,2008). A team�s external authority is its ability to makesourcing decisions without the approval of others externalto the team. The team cannot deliver high quality resultswithout a proper level of external authority. In the earlynineties, researchers reported insufficient internal- andexternal authority as barriers to sourcing team success(Trent & Monczka, 1994). Therefore, we hypothesize posi-tive relationships of both internal and external authoritywith sourcing team effectiveness.

Hypothesis 3. Internal authority relates positively withsourcing team effectiveness.

Hypothesis 4. External authority relates positively withsourcing team effectiveness.

Organizational context

Conform findings in other areas of team research, organiza-tional context factors that provide guidance and supportteams in executing their tasks, including ‘‘leadership style’’and ‘‘formalization,’’ may strongly impact sourcing teameffectiveness. Sourcing team specific empirical evidence islacking, however. The team leader�s role is believed to becritical (Hult, Ferrell, Hurley, & Giunipero, 2000; Trent,1996). Keller (2006) studied the impact of the two leader-ship styles ‘‘transformational leadership’’ and ‘‘initiatingstructure’’ on team performance. The characteristics oftransformational leadership include intellectual stimula-tion, charisma, and an eye for individual team memberneeds and interests. Initiating structure, on the other hand,

relates to how a leader defines, directs, and structures theroles and activities of subordinates toward the attainmentof a team�s goals. Initiating structure as a leadership styleresembles transactional leadership, in which the focus lieson control, standardization, formalization, and efficiency(Bass, 1985). The results of Hult et al. (2000) point towardstransformational leadership as the most effective style in apurchasing context, since transformational leadership al-lows for developing a shared vision with internal users aswell as external suppliers. Keller (2006) suggests that trans-formational leadership is more effective when knowledgefrom outside the team is required; initiating structure, how-ever, is more effective when the required information lar-gely resides within the team.

Both transformational leadership and initiating structuremay enhance sourcing team success. The transformationalleadership style allows for effective communication amongteam members, with internal stakeholders, and with suppli-ers (Hult et al., 2000; Jassawalla & Sashittal, 2000; Lowe,Kroeck, & Sivasubramaniam, 1996). At the same time, con-ducting high quality analyses by sourcing teams requiresstructured roles and activities, and a leader who initiatesstructure well (Keller, 2006). Moreover, creating trust,cohesion, and a clear vision in sourcing teams requires bothtypes of leadership style (Kayworth & Leidner, 2001). There-fore, we hypothesize a positive relationship with sourcingteam effectiveness for both leadership styles.

Hypothesis 5. Transformational leadership relates posi-tively with sourcing team effectiveness.

Hypothesis 6. Initiating structure relates positively withsourcing team effectiveness.

Formalization refers to the emphasis a firm places on fol-lowing rules and procedures in performing a team�s task.Prior research has shown that formalization relates posi-tively to the effectiveness of cross-functional teams (Pinto,Pinto, & Prescott, 1993), virtual teams (Workman, 2005),and boundary-spanning service teams (De Jong, De Ruyter,Streukens, & Ouwersloot, 2001). Clear and fair rules andprocedures can create internal support for team outcomes(Andrews, 1995; Chan & Mauborgne, 2003). This support iscritical for sourcing team success, since sourcing teams typ-ically rely on others in the organization to implement con-tracts and achieve compliance. Therefore, formalization isexpected to relate positively to sourcing teameffectiveness.

Hypothesis 7. Formalization relates positively with sourc-ing team effectiveness.

Team composition

Purchasing�s increasing strategic importance requires inte-gration with other functions (Van Weele & Rozemeijer,1996). Besides expertise on purchasing, a sourcing teammay need expertise from the fields of research and develop-ment, quality, engineering, finance, or other functionalareas, depending on the specific sourcing category. Teams�ability to combine knowledge and skills from people with


different functional backgrounds is an important driver formoving from a functional approach in purchasing to across-functional team approach. But cross-functionalitycan also create team stress, damaging cohesiveness (Keller,2001). Nevertheless, given their tasks, sourcing teams needknowledge from diverse functional backgrounds to performeffectively, which favors cross-functional team composition(Hensley, Irani, & Satpathy, 2003; Monczka et al., 2006).Functional diversity in a team enhances communicationacross functional boundaries and increases the availabilityand number of sources of information, and is, therefore, ex-pected to result in higher team effectiveness.

Hypothesis 8. Functional diversity relates positively withsourcing team effectiveness.

Mediating team processes

The factors under discussion may impact sourcing teameffectiveness through several mechanisms. Effort, internalcommunication, and external communication seem particu-larly important. Trent (1998) argues that encouraging teammembers� effort is one of the most important issues thatsourcing teams face as a result of part-time member alloca-tions. Team members often represent different stakeholderinterests, and those interests might not necessarily be inline with a sourcing team�s objectives, as, for instance,when decentralized (national) units perceive compatibilityof their interests with centrally organized sourcing team ini-tiatives to be low, and do not want to give up direct controlover spending (Riketta & Nienaber, 2007). Motivational the-ory suggests that reward structure and authority predict thelevel of effort brought to a team�s task, and thus teameffectiveness (Cohen & Bailey, 1997; Hoegl & Gemuenden,2001). Fair member rewards and adequate authority, bothinternal and external to the team, likely increase levels ofeffort. Hence, the hypothesized relationships of memberrewards, team-based rewards, internal authority, andexternal authority with sourcing team effectiveness areexpected to be mediated by the level of team membereffort.

Hypothesis 9. Team member effort mediates the effects ofmember rewards, team-based rewards, internal authority,and external authority on sourcing team effectiveness.

Communication is another likely mediator for sourcingteam effectiveness, as it appears essential for all sorts ofteams (Cohen & Bailey, 1997; Hoegl & Gemuenden, 2001).As sourcing is a boundary spanning, cross-functional activityand team effectiveness relies heavily on the effectivenessof communication both within and across team boundaries.Sourcing teams need to communicate extensively withinternal stakeholders outside the team and with suppliers.Effective communication enhances gathering relevant infor-mation and knowledge, sharing information and knowledgewithin the team, and follow up activities after team deci-sions. Communication, therefore, seems especially importfor sourcing team success.

Unlike effort, effective communication cannot besecured by the implementation of a (team-based) rewardsystem, nor will it thrive through the implementation of

formalized rules and procedures. Effective communicationrequires that team members are enabled to set up andmaintain effective channels of communication both withinthe team and with important stakeholders outside theteam. Therefore, we suggest internal authority, functionaldiversity, and transformational leadership as likely anteced-ents of communication. Internal authority, for example, im-plies that the team coordinates all tasks and activitiesautonomously, which offers the team the opportunity to se-lect ways of working that enhance their internal communi-cation in particular. Functional diversity, on the other hand,offers access to more stakeholder groups, which likely en-hances external communication. Finally, transformationalleadership is expected to enhance both internal and exter-nal communication. A transformational leader is more com-municative in general, and stimulates members to activelyparticipate in decision making and to discuss issues withinthe team (Lowe et al., 1996), which will likely improveinternal communication. The open and inviting style ofthe transformational leaders, however, may also enhanceexternal communication. Not only would team membersfeel empowered to go beyond team boundaries, the shareddecision making may also raise the awareness of the need todo so. Therefore, our final hypotheses read as follows.

Hypothesis 10. Internal communication mediates theeffects of internal authority and transformational leader-ship on sourcing team effectiveness.

Hypothesis 11. External communication mediates theeffects of transformational leadership and functional diver-sity on sourcing team effectiveness.

Methods

Sample and procedure

Sourcing team members, leaders, and managers in twelvelarge West-European multinational companies (headquar-tered in Sweden, Germany, Finland, and the Netherlands)took part in a cross-sectional survey to empirically testthe conceptual framework in Figure 1. Participants were392 individuals from 64 teams at companies from a widerange of industries, including the construction, manufactur-ing, telecom, medical service and banking industries. Com-pany sizes ranged from 17,000 to 95,000 employees, allhaving a billion plus revenues (EUR), although we also re-cruited some teams from smaller, specialized companyunits. Companies in the sample were participating in oneof two existing purchasing roundtables (one in the Nether-lands and one in Sweden) and were selected for having in-stalled centralized sourcing teams. All participantsoperated in team-based structures (rather than a traditionalsourcing department) with varying degrees of cross-functionality.

After having been informed about the research by theirown team leader, respondents received a personalized invi-tation through e-mail that gave access to an online ques-tionnaire. In case of no response, or an incompleteresponse, the respondent received two reminders. Assuredanonymity of respondents and non-disclosure of team scores


encouraged a ‘‘high’’ (Baruch, 1999; Cook, Heath, &Thompson, 2000) overall response rate of 70.2%. Eventually,193 team members, 38 team leaders and 44 managers,referring to 59 teams, completed a total of 275 question-naires (see Table 1). The average number of completedquestionnaires per team was 4.7, with a minimum of one(in 10 teams) and a maximum of 14 respondents per team.Management ratings of team effectiveness were availablefor 32 of these 59 teams. Analyses involving managementratings were based on this smaller sample.

We discussed the study extensively in a roundtable meet-ing with purchasing executives from the participating com-panies to improve interpretation of results in consultationwith experts from the field.

Measures

The survey developed for this research drew largely onscales validated in prior research (items are presented inthe Appendix). All scales use a 7-point Likert scale, rangingfrom ‘‘completely disagree’’ to ‘‘completely agree’’, ex-cept for the measure of cross-functionality, which consistsof a single open-ended question.

Two items on the questionnaire verified whether all teammembers received rewards for their contributions to mea-sure the member rewards factor. The metric for team-basedrewards comprised a scale (4 items) developed by Sarin andMahajan (2001). We adopted Kirkman, Tesluk and Rosen�s(2004) scale (3 items) for internal authority (autonomy),while an item adopted from Trent and Monczka (1994) mea-sured external authority. Transformational leadership andinitiating structure by the leaders were assessed by Keller�s(2006) measures based on Bass�s (1985) Multifactor Leader-ship Questionnaire (MLQ) and the Leader Behavior Descrip-tion Questionnaire (Stogdill, 1963). Formalization wasmeasured by De Jong�s et al. (2001) selection of two itemsfrom Ferrel and Skinner�s (1988) instrument. Functionaldiversity was not measured on an attitudinal scale. Instead,the answer to an open-ended question in the leader ques-tionnaire formed a formative scale to assess the absolutenumber of functional representations in the team.

Four items from Hoegl and Gemuenden (2001) assessedeffort. Communication involved internal communication (1item) and external communication (3 items), both takenfrom Keller (2001). Finally, the operationalization of sourc-ing team effectiveness involved items from two dimensionsdeveloped by Trent and Monczka (1994): general overallteam effectiveness (9 items) and supply base managementeffectiveness (13 items).

These items comprised questionnaires for team mem-bers, team leaders, and managers. All questionnaires werein English, since all respondents operated in an international

Table 1 Response rates.

Group Respondents contacted Respondents who

Team members 276 193Team leaders 52 38Team managers 64 44Total 392 275

environment and depended on English language skills to dotheir work. The questionnaire for team members held allthe items described above, except the item measuringcross-functionality. The questionnaire for team leaders didnot include questions about leadership styles, but theirquestionnaire included the question about cross-functional-ity. The logic here was that team leaders generally have agood overview of the functional backgrounds of individualteam members. The managers� questionnaire showed onlythe items relating to sourcing team effectiveness. Itemswere randomized in all questionnaires.

Validation and reliability

In order to test for unidimensionality, we validated the mod-els including the employee involvement context factors andthe organizational context factors by means of exploratoryfactor analysis. We used principal component analysis withVarimax rotation to optimize the distinction between factorsand avoid problems withmulticollinearity. Items selected forfurther analysis showed: (1) a factor loading above .5 on the apriori dimension, which is generally necessary for practicalsignificance (Hair, Black, Babin, Anderson, & Tatham,2006); and (2) no other factor loadings above .5. Items thatdid not meet these criteria were dropped from further anal-ysis (see items in italics in the Appendix). All items loadedon the a priori dimensions, except for some items referringto sourcing team effectiveness and reward structures, whichare discussed in the next paragraphs.

Sourcing team effectiveness was operationalized throughitems from two dimensions developed by Trent and Monczka(1994). However, the exploratory factor analysis showedthat these items actually relate to three dimensions. Thefirst two factors corresponded to the a priori dimensions‘‘general overall team effectiveness’’ (GOTE) and ‘‘supplybase management effectiveness’’ (SBME). However, theitems relating to the ability to cooperate with others withinthe company, but outside the team, represented a third un-ique factor. Both literature and practitioners suggest thatsourcing team success depends highly on a team�s abilityto cooperate effectively with people external to the team(Hoegl, Weinkauf, & Gemuenden, 2004; Hult & Ferrell,1997; Senior & Swailes, 2007). Without effective coopera-tion with the wider organization, a team�s output will nothave an effect on company performance, due to a lack ofalignment with strategy, poor implementation, and lowcompliance levels (Senior & Swailes, 2007). Therefore, welabeled this third dimension ‘‘external cooperation effec-tiveness’’ (ECE), and included it in further analyses. Cross-loadings of items suggested that best-in-class supplier selec-tion and cost reductions related to both general overallteam effectiveness and external cooperation effectiveness.

filled out the questionnaire completely Response rate (%)

69.973.168.870.2

Table 2 CFA results.

Model General overall teameffectiveness

Supply base managementeffectiveness

External cooperationeffectiveness

Employee involvement context X2: 284.76 X2: 280.17 X2: 201.19df: 161 df: 181 df: 124GFI: .90 GFI: .90 GFI: .92AGFI: .86 AGFI: .87 AGFI: .88RMSEA: .054 RMSEA: .046 RMSEA: .049NFI: .93 NFI: .94 NFI: .93

Organizational context X2: 866.58 X2: 813.07 X2: 736.98df: 362 df: 362 df: 284GFI: .75 GFI: .76 GFI: .76AGFI: .70 AGFI: .71 AGFI: .70RMSEA: .091 RMSEA: .087 RMSEA: .097NFI: .93 NFI: .93 NFI: .93

Note: Each tested model included all process factors. Separate models have been tested for each output factor, in line with the regressionanalyses. Models for the organizational context, including the leadership styles, are based on a sample excluding the team leaderresponses.


Member rewards and team-based rewards appeared toload on the same factor, with positive and negative load-ings, respectively. These statistical results suggested thatmember rewards and team-based rewards refer to the samelatent factor. A close examination of the items (as advisedby Hair et al., 2006) convinced us that there is a conceptualdistinction between the measures that should not be dis-carded. More specifically, the items of the member rewardsfactor measure the extent to which all members receive areward for their work on the team. The items of theteam-based rewards factor measure whether rewards arebased on individual contributions to the team (in compari-son to other members� contributions) or on the accomplish-ments of the team as a whole. Thus, whereas the secondfactor implies within-team competition for rewards, thefirst does not. Also, the correlation between the two mea-sures was not so strong (r = .41, p < .01) as to suggest a sin-gle construct. Consequently, team processes and outcomesmay be affected differently by the two factors. Because acombined measure may obscure such effects, we consid-ered it important to maintain the distinction between thetwo aspects of rewards (i.e., whether team members are re-warded and the basis for their rewards) in subsequentanalyses.

The results showed some Cronbach�s alphas to be just be-low .7 (see Table 3). These reliability scores are acceptablesince prior research successfully validated these scales (Kel-ler, 2001; Kirkman, Rosen, Tesluk, & Gibson, 2004) or, incase of external cooperation effectiveness, because of thescale�s exploratory nature (Robinson, Shaver, & Wrights-man, 1991).

Secondly, we conducted confirmatory factor analyses(CFA) to test for discriminant validity. All CFA models in-cluded team processes and output factors, and CFA resultscan be found in Table 2. CFA results for the employeeinvolvement context showed a good fit (Hair et al., 2006;Hu & Bentler, 1999). Some of the indices for the organiza-tional context model showed a moderate fit (Hair et al.,

2006; Hu & Bentler, 1999; Markland, 2007). This concernedindices affected negatively by scales including a large num-ber of items, here the scale for transformational leadership(Kenny & McCoach, 2003). However, we considered thescores acceptable given the fact that the respective scaleswere tested extensively in prior research with much largerand more diverse samples than ours, and because the re-tained items showed clear dimensionality in the exploratoryfactor analysis that we conducted.

Data preparation and data analyses

The unit of analysis was the team, conforming to the studyhypotheses and the operationalization of the study vari-ables. Scales in this study referred to attributes of theteam, not individuals; and management ratings also re-ferred specifically to the team. Analysis of variance resultsconfirmed that the variance between teams was greaterthan the variance within teams, justifying aggregation(Danserau & Yammarino, 2000; James, 1982). Average rwg(j)values, all above .5, were satisfactory, but show relativelyhigh levels of disagreement in a substantial number ofteams (James, Demaree, & Wolf, 1984). The average teamscore on the construct served as a replacement variable infurther analyses. Table 3 shows the correlations betweenall constructs.

In order to test the direct and indirect effects in themodel simultaneously, we applied the strategy of Preacherand Hayes (2008). This strategy is appropriate for relativelysmall sample sizes, and assesses the significance of the indi-rect effects by the non-parametric method of bootstrap-ping. In this study, bias-corrected bootstrapping resultsserved to evaluate significance, with all bootstrap resultsfor the indirect effects based on a level of confidence of90% and 5,000 bootstrap samples. For mediation to occur,a significant total effect of the input factor on the outputfactor was a precondition (Mathieu & Taylor, 2006). Giventhe sample size of 59 teams, separate tests analyzed the

Table 3 Means, standard deviations and correlation table.

Mean Std.dev.

N 1 2 3 4 S 6 7 8 9 10 11 12 13 14 15 16 17

1. Member regards 3.80 1.17 59 .752. Team-based rewards 4.73 0.94 59 � 41** .833. Internal authority 5.15 0.68 59 .13 .00 .664. External authority 4 32 1.19 59 .06 �.20 .02 na5. Transformational leadership 4.56 0.93 58 .04 �.28* .34** .20 .96G. Initiating structure 4.72 0.82 58 �.02 �.17 .11 .12 .63** .757. Formalization 4.22 0.84 59 .05 �.30* .09 �.22 .35** .38** .668. Functional diversity 3.64 1.85 36 .12 �.22 .04 .29 .06 �.34* .06 na9. Effort 3 96 1 02 59 .34** �.10 .34** .17 .32* �.17 .19 .43** .8210. Internal communication 4.63 0.97 59 .04 �.13 .42** .10 .40** .30* .30* �.06 .53** na11. External communication 4.51 0.78 59 .08 �.11 .30* �.01 .40** .16 .47** .45** .53** .51** .651 2. GOTE 5.06 0.68 59 .20 �.11 .46** .15 .54** .48** .45** .07 .56** .62** .45** .861 3. GOTE� 4.86 1.11 32 .14 �.11 .22 .17 .22 .36* �.04 �.36 �.02 .30 .26 .28 .8614. SBME 4.71 0.67 59 .10 �.21 .41** .31* 43** 25 .15 .43** .48** .43** .38** .67** .12 .881 5. SBME� 4.99 0.95 32 .30 �.22 .05 .05 .16 .18 .12 �.21 �.13 .08 �.01 .04 .72** �.02 .8816. ECE 5.23 0.61 59 .34** �0.7 .57** �.03 .35** .20 .32* .22 .44** .44** .48** .68** .25 .49** .12 .6817. ECE� 4.99 1.02 32 .20 �.09 .16 �.08 �.03 .25 �.00 �.51* �.20 .18 �.02 .11 .81** �.10 .68** .02 .68

(Alpha coefficients are included on the diagonal).GOTE: General over team effectiveness.SNME: Supply base management effectiveness.ECE: External cooperation effectiveness.*Correlation is significant at the 0.05 level (2-tailed).**Correlation is significant at the 0.01 level (2-tailed).�Management ratings.

Succe

ssfacto

rsforsourcin

gteam

s:How

tofoste

rsourcin

gteam

effe

ctiveness

295


effects of each input factor on the three team processesand on each dimension of effectiveness. These tests in-volved the ordinary least squares procedure.

Results

Table 4 shows an overview of the regression results; Table 5offers a graphical overview of the results of the hypothesistests.

The employee involvement context covered empower-ment and appreciation. Member rewards did not show a sig-nificant total effect on either general overall teameffectiveness or supply base management effectiveness,but related significantly to external cooperation effective-ness (b = .18, p < .01), implying support for H1. Team-basedrewards failed to show any significant relationship withteam outcomes. Hence, the findings fail to support H2.Internal authority showed a significant total effect on allthree dimensions of sourcing team effectiveness (GOTE:b = .46; SBME: b = .40; and ECE: b = .51, all p < .01), sup-porting H3. External authority, however, only showed a sig-nificant positive effect on supply base managementeffectiveness (b = .18, p < .02). This positive effect supportsH4.

The results of the organizational context factors, refer-ring to the guidance that teams receive, indicated that trans-formational leadership had a significant positive impact on allthree dimensions of team effectiveness (GOTE: b = .27,p < .01; SBME: b = .31, p < .01; and ECE: b = .23, p < .03), sup-porting H5. Initiating structure by the leader showed a signif-icant positive effect on management ratings of externalcooperation effectiveness (b = .58, p < .04), implying supportfor H6. Formalization appeared to be positively and signifi-cantly related to general overall team effectiveness(b = .36, p < .01) and external cooperation effectiveness(b = .23, p < .02). These findings imply support for H7.

We assessed the effect of different team compositions interms of cross-functionality as proposed in H8. The total ef-fect of functional diversity on supply base managementeffectiveness was positive and significant (b = .15,p < .01). However, the total effect of functional diversityon management ratings of external cooperation effective-ness was negative and significant (b = �.23, p < .02). Thisstatistical analysis neither confirms nor disconfirms H8.

Finally, results showed to what extent team processesmediate the effects of the input factors as hypothesizedin H9, H10, and H11. In accordance with H9, effort mediatedthe effects of the input factors internal authority (effect oneffort: b = .51, p < .01; effect of effort on GOTE: b = .18,p < .05; effect of effort on SBME: b = .18, p < .05) and trans-formational leadership (effect on effort: b = .11, p < .05; ef-fect of effort on GOTE: b = .11, p < .05). Moreover, effortappeared to mediate the relationship between functionaldiversity and supply base management effectiveness (effecton effort: b = .21, p < .01; effect of effort on SBME: b = .40,p < .01). H9 did not receive support for the reward struc-ture. Although member rewards significantly impacted ef-fort (b = .30, p < .01), the results showed no significanttotal effect of member rewards on general overall teameffectiveness (b = .12) or supply base management effec-tiveness (b = .06), and thus mediation cannot occur.

Internal communication mediated the effects of internalauthority (effect on internal communication: b = .60,p < .01; effect of internal communication on GOTE:b = .25, p < .01), transformational leadership (effect oninternal communication: b = .36, p < .05; effect of internalcommunication on GOTE: b = .17, p < .05), and formaliza-tion (effect on internal communication: b = .34, p < .05; ef-fect of internal communication on GOTE: b = .27, p < .01).Consequently, H10 receives full support. The results par-tially support H11 by showing a mediating effect of externalcommunication for transformational leadership (effect onexternal communication: b = .40, p < .01; effect of externalcommunication on GOTE: b = .20, p < .01; effect of externalcommunication on ECE: b = .38, p < .01). The findings do notsupport a mediating effect on the relationship betweenfunctional diversity and team effectiveness as H11 predicts.Though functional diversity resulted in more external com-munication, a significant total effect to support mediation islacking. Mediation by external communication occurred forinternal authority (effect on external communication:b = .34, p < .05; effect of external communication on ECE:b = .20, p < .05).

Discussion

Increasingly, organizations are moving toward team-basedstructures for organizing company procurement activities.Purchasing professionals work alongside representativesfrom other functional departments to ensure purchasing�svalue-added contribution to business success. However,due to a lack of sourcing-specific team research little isknown about what determines the success of sourcingteams. The aim of the present study was to identify criticalsuccess factors for sourcing teams and provide insight intorelationships between these factors, team processes, andspecific dimensions of sourcing team effectiveness. Thestudy�s findings offer some important insights for theoryand practice.

Theoretical insights

First, our initial analyses revealed that sourcing team effec-tiveness is a three-dimensional construct rather than thetwo-dimensional construct described in earlier research.Besides general overall team effectiveness and supply basemanagement effectiveness, the ability of sourcing teams tocooperate effectively with internal stakeholders appearedto be a unique and critical dimension of sourcing teameffectiveness. Traditionally, the emphasis in supply chainmanagement is placed on building relations with outsidesuppliers and less emphasis is placed on the collaborationwith internal users (Bryde, 2005; Hult et al., 2000). Thecooperation with the internal stakeholders, however, is ofcritical importance for effective supplier management in atime in which organizations are much more dependent onsuppliers (Hult, 1998). Whereas building strategic relation-ships with suppliers supports a company�s innovativenessthrough the supply base and general team effectiveness al-lows the team to deliver a good solution efficiently, exter-nal cooperation effectiveness assures a certain level ofinfluence of the purchasing function to create alignment

Table 4 Regression results.

X Y

Member rewards X-effort.30**

X-internal comm..03

X-external comm..05

Direct effect Total effect Adj. R2

Effort-Y Internal comm.-Y External comm.-YGOTEGOTE

�

.17�.43

.30**

.40.07.48

.05

.23.12.16

.43

.08SBMESBME

�

.21*

�.29.14.27

.09

.02�.01.31

.06

.28.23.02

ECEECE

�

.03�.44

.15

.53.24*

�.11.15*

.25.18**

.20.33.10

Team-based rewards X-effort�.11

X-internal comm.�.14

X-external comm.�.09



�

.20*

�.25.29**

�.06.07.03

�.01�.27

�.08�.16

.43

.07SBMESBME

�

.20*

�.33.14.22

.09

.09�.10�.35

�.15�.28

.25�.02

ECEECE

�

.11�.45

.12

.50.22�.09

.00�.20

�.05�.12

.25

.06

Internal authority X-effort.51**

X-internal comm..60**

X-external comm..34*



�

.18*

�.40.25**

.36.06.40

.20

.29.46**

.43.46.05

SBMESBME

�

.18*

�.24.09.23

.08�.05

.22

.10.40**

.09.27�.09

ECEECE

�

.07�.41

.04

.49.20*

�.20.38**

.30.51**

.28.41.06

External authority X-effort.15

X-internal comm..08




�

.19*

�.43.29**

.39.07.36

.03

.14.08.17

.43

.05SBMESBME

�

.17�.27

.13

.25.13�.09

.14*

.10.18*

.04.29�.08

ECEECE

�

.12�.39

.12

.52.21�.15

�.05�.01

�.02�.06

.26

.03Transfor-mational leadership X-effort

.37*X-internal comm.

.36*X-external comm.

.40**Direct effect Total effect Adj. R2


�

.11*

�.49.17*

.06.20*

.73.09�.10

.27**

�.09.52.13

SBMESBME

�

.09�.35

.04

.18.24�.04

.17

.26.31**

.07.27�.07

ECEECE

�

.01�.39

.04

.25.38**

.13.07.29

.23*

�.43.29.09

Initiating structure X-effort�.06

X-internal comm..09




�

.11�.49

.17*

.06.20.73

.20*

.54.18.49

.52

.13SBMESBME

�

.09�.35

.04

.18.24�.04

.00

.03�.03.13

.27�.07

ECEECE

�

.01�.39

.04

.25.38**

.13.02.49

�.03.58*

.29

.09(continued on next page)


Table 4 (continued)

X Y

Formalization X-effort.23

X-internal comm..34*

X-external comm..43**



�

.23**

�.35.27**

.48�.06.35

.24**

�.20.36**

�.06.50.05

SBMESBME

�

.20*

�.27.15.16

.10

.05�.02.18

.12

.16.23�.08

ECEECE

�

.12�.37

.11

.57.17�.21

.09�.11

.23*

�.00.26.04

Functional diversity X-effort.21**

X-internal comm.�.03

X-external comm..15**



�

.38**

.24.31*

�.52.11

1.73**�.06�.53**

.03�.20

.52

.45SBMESBME

�

.40**

.22.06�.34

.05

.73.06�.26

.15**

�.10.47�.03

ECEECE

�

.28*

�.02.11�.04

.09

.52�.00�.32*

.07�.23*

.28

.18

NOTE: Correlations with non-significant mediators are printed in italic. Significance of mediators is based on BC bootstrapping results of5000 bootstrap samples at a 90% level of confidence and on the premise of a significant total effect. Significant indirect and total effectsare printed in bold.� Management rating.* Significant at a p = .05 level (two-tailed).** Significant at a p = .01 level (two-tailed).

Table 5 Hypotheses tests results.

H Sup-ported Input factor General overall teameffectiveness

Supply base managementeffectiveness

External cooperationeffectiveness

Employee involvement context1 Member rewards X2 Team-based rewards3 Internal authority X X X4 External authority X

Organizational context5 Transformational leadership X X X6 Initiating structure X7 Formalization X X

Team composition8 Functional diversity X

Team processes9 Effort Supported for internal authority and transformational leadership

Not supported for member- and equal rewards, and external authority10 Internal communication Supported for internal authority and transformational leadership11 External communication Supported for transformational leadership

NOTE: Xs indicate a significant total effect of the input factor on the respective effectiveness dimension.


with key business functions and divisions (Giunipero, Hand-field, & Eltantawy, 2006; Handfield et al., 2009), which iscrucial for contract compliance. Indeed, this supports the

view that the buying center, as described in Webster andWind�s (1972) model for organizational buying behavior,does not just include the members of the sourcing team,


but anyone who influences the sourcing decision. Effectivecollaboration between those influencers (including businessmanagers and technical experts) and the team is essentialto create value for the buying company (Cova & Salle,2008; Hult, 1998). Cross-business, cross-functional teamsreplace traditional purchasing departments in order to buildstronger ties within the organization, and our study confirmsthat this ability is a distinct dimension for successful sourc-ing performance.

Second, recognizing multiple dimensions of sourcingteam success opens the possibility that different successfactors drive different team outcomes (Scott-Young & Sam-son, 2008; Senior & Swailes, 2007), which is exactly what wefound. Internal authority and transformational leadershipwere the only two factors that showed positive relationshipswith all three dimensions of sourcing team effectiveness; allother input factors affected some specific dimensions ofsourcing team effectiveness. That is, besides the effect ofinternal authority and transformation leadership, generaloverall team effectiveness was positively related to formal-ization, supply base management efficacy was positively re-lated to external authority and functional diversity, andfinally, external cooperation effectiveness was positivelyrelated to member rewards, initiating structure, and for-malization. Moreover, the suggested mediating mechanismsof effort, internal communication, and external communi-cation all played a role in these relationships. A closerexamination of the specific findings reveals some interestingpatterns.

Internal authority proved to be the strongest predictorfor all three dimensions of sourcing team effectiveness,with effects being mediated by enhanced internal communi-cation and increased member efforts. Different from tradi-tional purchasing departments, sourcing teams representknowledge from multiple backgrounds, which allows theseteams to be more self-managing than more traditionalstructures (Johnson et al., 2002). Offering team membersautonomy in their daily practices thus pays off, not just interms of optimizing internal team dynamics, but also interms of building strategic relationships with suppliers aswell as internal stakeholders. Moreover, external authorityrelated positively to supply base management effective-ness, which confirms earlier findings that teams become lesseffective in closing deals when managers attempt to over-rule final team decisions (Holland et al., 2000; Trent & Mon-czka, 1994). The beneficial effects of team autonomy arealso reflected in the findings that sourcing teams benefittedfrom transformational leadership on all effectivenessdimensions as it enhanced internal and external communi-cation, and stimulated team member effort. Transforma-tional leadership is an inviting, participative style ofleadership in which a communicative leader challengesteam members with high performance standards, whileallowing them to find their own way of making this work(Keller, 2006). All of these results point towards the impor-tance of devolving authority to teams, which has beenshown to allow for greater flexibility, better collaboration,and more efficient and accurate knowledge exchange (Cum-mings & Cross, 2003).

However, notwithstanding the importance of teamempowerment, structure and formalization also emergedas important influences on sourcing team effectiveness.

Interestingly, in the perception of the managers it is aleader�s capability to initiate structure that significantly af-fects the team�s ability to cooperate effectively externally.Moreover, formalization was perceived to improve generaloverall team effectiveness as well as external cooperationeffectiveness. Roundtable participants indicated that clearprocedures and structured leadership reduce ambiguityaround teams� tasks, responsibilities and mandate, resultingin increased accountability and, hence, better team perfor-mance. This is in line with earlier research showing thatclear procedures create support in organizations for teamdecisions (Andrews, 1995) and that formalization alsoimproves cross-functional relationships (Pinto et al.,1993). Thus, initiating structure and formalizing sourcingprocesses seem particularly relevant when a team�s recom-mendations must be implemented and followed up by otherdepartments in the organization.

Regarding team composition, the functional diversity fac-tor generated some interesting results. Functional diversitywas shown to relate positively with supply base managementeffectiveness. Both effort and external communication im-proved as a result of higher diversity, and team membersand leaders perceived their teams� performance to increasedue to the representation of knowledge and skills from differ-ent backgrounds. The positive effect of functional diversityon effort may spring from a team�s increased perception ofthe strategic importance and meaning of its work when man-agers from multiple departments allocate resources to theteam. At the same time, though, there was a negative rela-tionship between functional diversity and management rat-ings of external cooperation effectiveness. Apparently,according to the purchasing managers involved in our study,the representation of more functional backgrounds in asourcing team decreases its ability to cooperate effectivelywith others external to the team. In the roundtable meeting,a number of explanationswere raised for thesefindings. First,the level of functional diversity can reflect the complexity ofthe sourced product or service, serving in effect as a proxy forlikelihood of success. Second, when the team representsknowledge from more functional backgrounds, differentviewpoints and interests and practical limitations will makeboth teamand taskmanagementmore difficult, asmost prac-titioners would admit. Third, when conflicts arise acrossfunctional boundaries, these conflicts often escalate to man-agement. Senior managers are therefore more likely toencounter issues with functionally diverse teams. At leastthese findings suggest that, while functional integrationseems a necessity for further development of the purchasingfunction (Reinecke, Spiller, & Ungerman, 2007; Zheng et al.,2007), purchasing managers tend to perceive this integrationas a troublesome process.

Finally, member rewards were found to have a positiveinfluence on the team�s effort and related positively toexternal cooperation effectiveness. However, with an aver-age score of 3.8 on a 7-point Likert scale the result regard-ing member rewards indicated that, within the companies inthis study�s sample, not all sourcing team members receivedrewards. This may also explain why team-based rewards didnot show a significant impact on any of the effectivenessdimensions. Clearly, team-based rewards may fail to havethe desired (and expected) positive effects when the rewardsystem is not �all-inclusive� (i.e., when not all team mem-


bers get the team-based reward). In the roundtable meet-ing, purchasing managers indicated that their influence onthe reward structures for team members from outside theirown departments is indeed very limited.

Practical implications

This study clearly carries practical relevance for those com-panies that have initiated sourcing teams with high expecta-tions, only to face challenges in implementation (Englystet al., 2008; Johnson & Leenders, 2004). A clear insightfrom the present study is that sourcing team effectivenessrequires proficiency in terms of general overall teamworkprocesses, supply base management, and external coopera-tion. Improving sourcing team effectiveness, therefore, re-quires an assessment of the current situation on all threedimensions as the basis for crafting managerial interven-tions toward enhanced sourcing performance. The measuresused in the present study will enable managers to assess theperformance of their sourcing teams.

Especially when team recommendations must be imple-mented and followed up by other departments in the organi-zation, the findings point toward a seemingly contradictoryimportance of both team autonomy and formalization inthe execution of the purchasing function in teams. On theone hand, sourcing teams require a clear mandate to developand execute a sourcing strategy, a so-called license to act. Onthe other hand,managers should provide sourcing teamswithclarity regarding roles and responsibilities through formal-ized sourcing procedures. Next, managers should appointteam leaders able to clearly structure tasks within the team.

Overcoming potential ambiguity seems particularly impor-tant for teams with high levels of functional diversity.Although increased functional integration seems essential forfurther supply base development (i.e., getting suppliers in-volved in quality improvement, lead-time reduction and prod-uct and process innovation), managers indicated that it maybe difficult to solve the inherent differences of interest andopinions in functionally diverse teams and to secure compli-ance with sourcing decisions. Hence, close monitoring of theeffects of team diversity on the external cooperation dimen-sion of sourcing team effectiveness specifically seems war-ranted when team composition gets more diverse.

Finally, our study indicates that it would be desirable forpurchasing managers to get more influence on the rewardstructures of team members from outside the purchasingdepartment. Rewards were found to have a positive influ-ence on sourcing team effectiveness, but a lack of controlover external members� rewards impedes a fair and trans-parent reward system for the entire team, which may ulti-mately bring down team morale. This points towards theneed to include metrics measuring members� contributionsto sourcing teams to facilitate performance evaluations.

Study limitations and suggestions for futureresearch

This research has a number of limitations. Organizationalcultures in multinational companies reflect, at least

partly, the national values of a company�s home country(Hofstede, 1982). The multinational companies understudy here are all headquartered in Northern Europe,and the majority of the globally operating managers andteam members came from Northern Europe countriescharacterized by low power distance cultures. Previousresearch has indicated that empowerment may be benefi-cial in low power distance cultures (e.g., the USA andNorthern Europe), but not in high power distance cultures(e.g., China and Russia), since professionals from thesecultures may not possess the background and ability toperform well when experiencing an empowerment inter-vention (Eylon & Au, 1999). So, our finding that internalauthority is a key success factor for all three effective-ness dimensions may not be generalizable to every cul-tural setting.

Although the study used validated measurement scalesthat have high validity, some of these scales did not re-sult in optimal factor structures, and a number of itemswere dropped from further analyses. The items, however,reflected the respective factors well, and showed highface validity. In fact, including more items sometimesonly increases ambiguity (Fields, 2002). Also, Cronbach�salpha scores just below the .7 level may have attenuatedrelationships, but the established relationships counterbal-ance this concern.

The metrics for all effectiveness dimensions were atti-tudinal scales, so common method bias was not cancelledout. Objective measures of team success across compa-nies and industries are, unfortunately, difficult to defineand to obtain. This is an issue not only for researchers,but also for the purchasing organizations involved, whofind it difficult to develop fair performance indicatorsfor their sourcing teams. The management ratings in thisstudy counterbalance this limitation somewhat by provid-ing more objective insights from a different source. Ofcourse, the cross-sectional nature of our research designprevents us from deriving hard conclusions about causaldirections.

Suggestions for further research include longitudinalstudies in the area of sourcing team effectiveness. Themechanisms through which input factors affect team per-formance in executing sourcing tasks, particularly ateam�s external cooperation effectiveness, constitute anarea of interest for further qualitative research. Also,the contrary perceptions by teams and their managerswith respect to the effectiveness of functional diversityare another interesting area for future research. More in-sight into this phenomenon seems critical for effectivesourcing team management. Finally, it is evident thatthe optimization of reward structures for sourcing teamsremains a research need that future research shouldinform.

In summary, this study�s framework and recommenda-tions offer guidance for practitioners to enhance asourcing team�s general effectiveness, its ability tocooperate effectively with others external to the team,and its effectiveness in managing the company�s supplybase.

Appendix.

Employee involvement contextMember rewards (scale developed for present study)1. All team members are rewarded for their work on the team.2. There are no team members on our team that are not rewarded/recognized for their work on the team.

Team-based rewards (scale adapted from Sarin & Mahajan, 2001)1. The best performers on our team receive extra rewards.R

2. All team members are rewarded equally for their work on the team, independent of their individual contribution.3. The rewards team members receive for working on this team are proportional to their contributions to the team�s performance.R

4. Members who perform well on our team are individually rewarded/recognized in the team for their work.R

Internal authority (scale adapted from Kirkman, Tesulk, et al., 2004)1. My team can select different ways to do the team�s work.2. My team determines as a team how things are done in the team.3. My team makes its own choices without being told by management.

External authority (scale adapted from Trent & Monczka, 1994)1. My team is able to make sourcing decisions without the approval of others external to the team.

Organizational contextTransformational leadership (scale adapted from Keller, 2006)

1. Our team leader commands respect from everyone.2. Our team leader is a model for me to follow.3. In my mind, our team leader is a symbol of success and accomplishment.4. Our team leader has provided me with new ways of looking at things which used to be a puzzle for me.5. Our team leader is an inspiration to us.6. Our team leader makes me proud to be associated with him/her.7. Our team leader has a special gift of seeing what it is that really is important for me to consider.8. Our team leader�s ideas have forced me to rethink some of my own ideas which I had never questioned before.9. Our team leader enables me to think about old problems in new ways.

10. Out team leader inspires loyalty to the organization.11. Our team leader excites us with his/her visions of what we may be able to accomplish if we work together.12. Our team leader has a sense of mission which he/she transmits to me.13. Our team leader makes everyone around him/her enthusiastic about assignments.

Initiating structure (scale adapted from Keller, 2006)1. Our team leader asks that team members follow standard rules and regulations.2. Our team leader encourages the use of uniform procedures.3. Our team leader schedules the work to be done.4. Our team leader decides what shall be done and how it shall be done.5. Our team leader maintains definite standards of performance.6. Our team leader assigns team member to particular tasks.

Formalization (scale adapted from De Jong et al., 2001)1. Clear and planned goals and objectives are set for sourcing team performance by upper management.2. Sourcing performance rules and procedures are laid down in clear and understandable written agreements.

Team compositionFunctional diversity (scale developed for present study)1. The number of functional backgrounds (e.g. purchasing, marketing, finance, engineering etc.) that are represented by the

team members is equal to:

Team processesEffort (scale adapted from Hoegl & Gemuenden, 2001)1. Every team member fully pushes the team�s work.2. Every team member makes the team their highest priority.3. My team puts much effort into the team�s work.4. There are conflicts regarding the effort that team members put into the team�s work.

Internal communication (scale adapted from Keller, 2001)1. The amount of task-related communication within our team is high.

External communication (scale adapted from Keller, 2001)1. The amount of task-related communication outside our team but within our purchasing organization is high.2. The amount of task-related communication outside the purchasing organization but within the company is high.3. The amount of task-related communication outside the company is high.


Appendix (continued)

Sourcing team effectivenessGeneral overall team effectiveness (scale adapted from Trent & Monczka, 1994)1. The team has produced a large quantity or high amount of work.2. The team has produced high quality or high accuracy of work.3. The team�s reputation for work excellence is high.4. The efficiency of the team�s operations is high.5. The morale of the team�s personnel is high.6. The team�s ability to meet timing and task schedule targets is high.7. The team�s ability to meet executive management�s performance expectations is good.

Supply base management effectiveness (scale adapted from Trent & Monczka, 1994)1. The team�s ability to reduce purchased item costs is good.2. The team�s ability to improve purchased item quality is good.3. The team�s ability to support the increased use of supplier technical abilities is good.4. The team�s ability to support the achievement of new product performance targets is good.5. The team�s ability to achieve best-in-class supplier selection is good.6. The team�s ability to improve supply base responsiveness is good.7. The team�s ability to provide access to new product and process technology before competitors have access to the technology is

good.8. The team�s ability to develop supplier performance capabilities is good.9. The team�s ability to achieve supply base optimization targets is good.

10. The team�s ability to support early sourcing and supplier participation during product design is good.11. The team�s ability to foster development of new technology by suppliers for company use is good.12. The team�s ability to establish strategic relationships with suppliers is good.

External cooperation effectiveness (items adapted from Trent & Monczka, 1994)1. The team�s ability to communicate and coordinate activities across functional boundaries is good.2. The team�s ability to work with others outside the team is good.3. The team�s ability to develop procurement strategies that directly support business unit strategies is good.

Note. Items in italics were dropped before the analyses.


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BOUDEWIJN A. DRIEDONKS is a consultantat McKinsey and Company. He received hisPh.D. degree from Eindhoven University ofTechnology for his research on the perfor-mance of sourcing teams, conducting bothquantitative and qualitative research in over20 multinational companies. He publishednationally and internationally on the topicof sourcing teams.

JOSETTE M.P. GEVERS is an assistant pro-fessor at Eindhoven University of Technol-ogy, where she received her Ph.D. from thedepartment of Technology Management.Her research focuses on the role of time inorganizations, in particular how temporalissues influence the effectiveness of teamsand workgroups in organizations. Her pub-lished work appears in book chapters andjournals in the fields of organizationalbehavior and applied psychology.

ARJAN J. VAN WEELE holds the NEVI Chairof Purchasing and Supply Management atEindhoven University of Technology. Overthe last 20 years he has published over 100articles and 15 books on business strategyand organization, including purchasing andsupply chain management.

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Success factors for sourcing teams: How to foster sourcing team … · 2019-04-08 · effectiveness are expected to be mediated by (d) ‘‘team processes’’ (e.g., effort and