Purchase-Related Factors and Buying Center Structure

Purchasing Organization and Design: A Literature Review

“…Kotteaku, Laios, and Moschuris (1995) found further support for this relationship and showed that the degree of influence depends on the phase of the buying process as well. Lau, Goh, and Phua (1999), in contrast, could not confirm a significant relationship between purchase complexity and the degree of structural complexity, formalization, and centralization of purchasing. A third product characteristic that has frequently been studied in prior research is the product type purchased by the organization.…”

“…Spekman and Stern (1979) and Juha and Pentti (2008) further pointed out that specialization is an important measure to reduce risks in the purchasing process, as it enables individuals to react more quickly to changes in the environment. A further discussion of this variable can be found in Lau, Goh, and Phua (1999). The structural variable configuration refers to the design of the authority structure of the organization and includes dimensions such as vertical and lateral spans of control, criteria for segmentation, and numbers of positions in various segments (Pugh, Hickson, Hinings, Macdonald, Turner, and Lupton 1963;Pugh, Hickson, Hinings, and Turner 1968).…”

“…In this context, researchers hypothesized that in case the employees involved in the purchase experience high time pressure, the structure of the purchasing function may be designed to enable quick decision making. Lau, Goh, and Phua (1999), for example, showed that an increase in time pressure reduces formalization of the PO and simultaneously increases its level of complexity and centralization. The authors argued that in order to speed up purchase decisions, specialized departments on relatively high hierarchical levels are necessary which have the information needed for completing the purchase readily available, and that formal regulations may be abolished to reduce the time spent on adhering to formal procedures.…”

“…The authors argued that in case a purchase is considered important by the organization, more technical personnel and specialists are involved in the process, which increases the size of the buying center. Johnston and Bonoma (1981a) and Lau, Goh, and Phua (1999) further showed that an increase in purchase importance leads to an increase in complexity, formalization, and centralization, which they identified as measures to assure that the objectives of the company are achieved and the information required for the purchase is readily available. A fourth contextual variable in this group is the buyphase, which defines the decision process from problem recognition through intermediate steps, such as search for a supplier and contract award, to the post-purchase stage (Mattson 1988).…”

“…Johnston and Bonoma (1981a) Lynn (1987) and Dawes, Dowling, and Patterson (1992) hypothesized the same relationship, but were unable to confirm it empirically. Lau, Goh, and Phua (1999) and Juha and Pentti (2008) finally studied the relationship between the novelty of a purchase and several structural variables of purchasing. While both works identified a positive relationship between both the degree of novelty and complexity and the degree of centralization of the buying center, Lau, Goh, and Phua (1999) found a negative correlation between novelty and formalization.…”