Impact of culture on supplier selection decision making

Abstract

Purpose Source location decision making is a contemporary problem facing many businesses as they globalize their supply chains. This paper seeks to empirically determine the influence of culture on the industrial procurement manager's perception of the different characteristics of potential global sourcing locations, with a view to integrating the influence of culture operating at different levels into a global sourcing location decision framework; thereby enhancing managerial insights to the role played by culture in making decisions. Design/methodology/approach The paper applies factor analysis and multiple regression on a survey sample of 181 responses gathered from native eastern and western procurement managers. The authors investigate how 12 procurement attributes drawn from the literature relate to each other with respect to low‐cost regions. Findings The research results show that procurement managers select regions for low‐cost sourcing based on both specific measures and individual and/or group perceptions of the region, whether these perceptions are correct or not. This paper recommends a novel way to look at culture, as a bias of thought that impacts decision making. The research has clearly shows that cultural orientation impacts geographical perceptions which in turn impact criteria ratings of locations. Practical implications The authors have demonstrated that a two‐stage supplier selection decision model is justified as such a model appears to be a practical reality even though not advocated by previous sourcing literature and research. The authors point out the need for both western and eastern managers to be aware of their differences in geographic evaluation, as this could be an effective strategy for minimizing the effects of prejudged reality. Originality/value In this research culture is viewed as a fundamental decision‐making construct. Most research on this construct is found in the social psychology literature. Applying these theories to the business discipline of sourcing is both novel and inter‐disciplinary in nature.

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