Research paper

Using e-procurement applications to achieve

integration: what role does firm size play?
Dawn H. Pearcy
Eastern Michigan University, Ypsilanti, Michigan, USA, and
Larry C. Giunipero
Florida State University, Tallahassee, Florida, USA

Abstract
Purpose – The purpose of this research is to empirically investigate the role of firm size in the use of e-procurement applications that vary in their
ability to facilitate supply chain integration.
Design/methodology/approach – The sample was drawn from members of the Institute for Supply Management (ISM). Purchasing professionals
employed in 33 different industries completed a self-administered questionnaire.
Findings – A total of 128 useable surveys were received. The data revealed a significant relationship between firm size and e-procurement application.
Specifically, larger firms were more likely to use integrative types of e-procurement.
Research limitations/implications – The study was limited in that it excluded purchasing professionals employed in the service sector. In addition, it
only focused on the relationship between a single variable and e-procurement application.
Practical implications – This research provides support for studies that suggest that firm size is related to IT use. In addition, it tests the framework
developed in a previous research study conducted on supply chain IT. Finally, previous research has linked supply chain process integration with
operational agility, lower costs, superior product/service design, and enhanced profitability. The findings of this research might prompt decision-makers
to ask themselves if their firms forgo such potential benefits when integrative forms of e-procurement are not used.
Originality/value – This research contributes to the understanding of an emerging phenomenon by investigating firm size as an explanatory variable
in the e-procurement application decision. In addition, evidence is still lacking with regard to the prevalence of actual implementation of e-procurement
in firms. This study examines actual usage of 13 different e-procurement applications across various industries. Finally, this research focuses on the use
of e-procurement in achieving integration. This is important to practitioners, as effective supply chain integration has been linked to enhanced business
performance.

Keywords Procurement, Supply chain management, Companies, Electronic commerce

Paper type Research paper

Introduction E-procurement continues to grow and was projected to

Firms in diverse industries use electronic procurement
(e-procurement) in an attempt to increase the efficiency of the
purchasing/supply management function and to reduce costs.
Presutti (2003, p. 221) defined e-procurement as “a technology
solution that facilitates corporate buying using the internet.”
Min and Galle (2003) defined e-procurement as “business-to-
business purchasing practice that utilizes electronic commerce
to identify potential sources of supply, to purchase goods and
services, to transfer payment, and to interact with suppliers”.
E-procurement is part of a broader concept called information
technology (IT), which the American Heritage Dictionary (2005)
defines as “the development, installation, and implementation
of computer systems and applications”.
The current issue and full text archive of this journal is available at
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Supply Chain Management: An International Journal
13/1 (2008) 26– 34
q Emerald Group Publishing Limited [ISSN 1359-8546]
[DOI 10.1108/13598540810850292]
reach $3 trillion in transactions in 2004, up from $75 billion
in 2002 (Verespej, 2002). Presutti (2003) refers to a Deloitte
Consulting survey of 200 multi-national firms, which suggests
the use of e-procurement is growing. Approximately
30 percent of firms in the sample had at least a basic
e-procurement system in place. A total of 61 percent of the
sample had planned to implement e-procurement systems or
were at least considering it (Presutti, 2003).
While many firms adopt e-procurement in an attempt to
achieve the proposed benefits of lower costs and improved
efficiency, it should be noted that the use of e-procurement
does guarantee positive outcomes for buyers or suppliers. For
example, Emiliani and Stec’s (2005) study of reverse auction
use in the wood pallet industry found that suppliers realized
few, if any benefits from participation, suppliers engaged in
retaliatory pricing when the opportunity presented itself,
buyers encountered unanticipated costs, and less-than-
optimal buyer-supplier relationships resulted. Some
additional challenges associated with the effectiveness
of e-procurement include information sharing within and
across firms, overcoming the “silo mentality” within the firm,
sharing proprietary information with supply chain members,

26
 Using e-procurement applications to achieve integration
Dawn H. Pearcy and Larry C. Giunipero
and intellectual property matters. Astute decision-makers
recognize that successful implementation of e-procurement
applications relies not only on the capabilities of the
application itself, but also on non-technical factors such as
realignment of the procurement function, integration of the
e-procurement system with other relevant systems, redesign of
the procurement process, realignment of the purchasing
organization, and integrating suppliers at an early stage (see
Puschmann and Rainer, 2005).
A wide variety of Internet-based technologies are available
to firms attempting to improve their business position (e.g.
on-line catalogs, on-line auctions). Internet-based
technologies vary in many respects, including the ability to
facilitate process integration within and across firms.
According to the American Heritage Dictionary (2005), to
integrate is to “make into a whole by bringing all parts
together; to unify or to make part of a larger unit”. Some
firms adopt technologies that involve applications within a
single function (e.g. electronic requisitions), while others use
e-procurement applications that provide for process
integration across multiple functions within a single firm
(e.g. enterprise resource planning systems (ERP)), yet others
use e-procurement applications that facilitate integration
across organizations (e.g. electronic data interchange (EDI)).
Purpose
The fact that firms adopt e-procurement applications that
differ in the ability to facilitate supply chain integration
prompted the researchers to examine a possible explanatory
variable in the e-procurement adoption decision, namely
firm size. Therefore, the purpose of this study is to
empirically investigate the role of firm size in the adoption
of e-procurement applications that vary with respect to their
ability to facilitate supply chain integration. The underlying
research question is as follows: “Is there a significant
relationship between firm size and the type (more or less
integrative) of e-procurement application adopted?”
Significance of the research
Researchers’ interest in the factors that impact adoption of
innovations/technology has spanned several decades, with
Rogers (1967) providing the foundation for later study. In an
attempt to explain e-procurement adoption decisions,
previous research has examined factors such as
organizational readiness (Min and Galle, 2003), supplier
support (Deeter-Schmelz et al., 2001), degree of
centralization (Moon, 2005), competitive environment (Wu
et al., 2003), and the firm’s technical capabilities (Zahay and
Handfield, 2004). Clearly, developing an understanding of
the factors that impact e-procurement adoption decisions is
important, and strides have been made in the academic
literature. However, e-procurement is an emerging technology
and much remains to be discovered about additional factors
impacting adoption. This research contributes to the
academic literature in that it investigates a potential
explanatory variable (firm size) in e-procurement adoption
decisions.
This study is important to practitioners because previous
research suggests that supply chain integration has the
potential to positively impact operational efficiency, revenue
growth, coordination, and collaboration (Rai et al., 2006;
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Supply Chain Management: An International Journal
Volume 13 · Number 1 · 2008 · 26 –34
Themistocleous and Love, 2004). Patterson et al. (2003)
noted, “integration of supply chain activities and the
technologies to accomplish it have become competitive
n e c e s s i t i e s i n m o s t i n d u s t r i e s ” . I f I T, i n c l u d i n g
e-procurement has the potential to play a pivotal role in
business outcomes and competitiveness, it is critical for
managers to understand which e-procurement applications
best suit their firms’ goals in achieving intra – and inter-firm
integration. In addition, some purchasing/supply managers
might simply employ e-procurement in an attempt to achieve
the proposed benefits of reduced administrative and
purchasing costs. By considering the different types of
e-procurement applications investigated in this study,
managers might also recognize a need within their firm to
employ e-procurement applications that make the task of
integration easier. Finally, this research provides information
that allows managers to compare the type(s) of e-procurement
used in their firms to e-procurement use in firms of
comparable size.
In order to examine this topic, a review of the existing
literature is presented along with the research hypothesis.
This is followed by an explanation of the methodology, results
of the research, and a discussion of the findings. The paper
concludes with managerial implications, limitations, and
opportunities for future research.
Literature review
The importance of supply chain integration
The integration of key business processes is essential to
effective supply chain management (see Lambert et al., 1998)
and the extent to which e-procurement applications facilitate
integration is an important focus of this study. The
importance of integration in supply chain management
(SCM) can only be fully appreciated with an understanding
of how SCM has been conceptualized. The term became
popular in the early 1980s and interest in SCM on the part of
academicians and practitioners has grown over the last two
decades. Themistocleous and Love (2004) indicated that
SCM involves the integration of businesses, information
flows, and people. Metz (1998) described SCM as “a process-
oriented, integrated approach to procuring, producing, and
delivering products and services to customers . . . .” Finally,
Lambert and Cooper (2000, p. 66) defined SCM as “the
integration of key business processes from end user through
original suppliers that provides products, services, and
information that add value for customers and other
stakeholders”. While different definitions exist, it is clear
that integration is a key aspect of SCM.
Intra- and inter-firm integration of processes is imperative
because it can increase the overall performance of individual
firms and the supply chain (Vickery et al., 2003; Spekman
et al., 1998; Gattorna, 1998). Internal integration is achieved
when firms effectively coordinate multiple processes on an
enterprise-wide basis. Narasimhan and Kim (2002) noted the
ability of distinct functions working together to create
seamless interfaces across processes is fundamental to the
success of the firm and the supply chain. To achieve
integration across enterprises (external integration), firms
must recognize the importance of suppliers as an integral part
of the supply chain and engage in collaborative efforts with
them (Narasimhan and Kim, 2002). Some potential benefits
of effective supply chain integration include efficiency in
 Using e-procurement applications to achieve integration
Dawn H. Pearcy and Larry C. Giunipero
interaction among supply chain members, increased supply
chain visibility, and operational efficiency (see Rai et al., 2006;
Power, 2005). Sanders (2005) asserted that the advent and
growth of various forms of IT (including e-procurement) has
played a vital role in allowing supply chain members to
achieve inter-firm coordination and integrate business
processes. The use of IT has the potential to promote
supply chain integration by providing efficient, timely, and
transparent business information to the appropriate parties
(Cagliano et al., 2003).
It should be noted that integration within and across firms
alone does not guarantee improved overall supply chain
performance. A key factor contributing to enhanced supply
chain performance is strategic fit. A firm should seek to build
supply chain capabilities (including the selection of various e-
procurement applications) that support the overall corporate
strategy (Wisner et al., 2005). Without this consistency,
improved performance cannot be achieved. According to
Wisner et al. (2005), additional factors that impact supply
chain performance include decisions in the areas of facilities
(location, number, capacity), inventory (economies of scale,
ability to meet demand), and transportation (mode, network).
While the use of e-procurement applications can assist firms
in achieving integration, it also has the potential to impede
supply chain coordination, cooperation, or integration. In
fact, a key concern about on-line reverse auction use among
practitioners and academicians (e.g. Emiliani and Stec, 2005;
Brittan, 2001; Porter, 2000) is that suppliers might become
less cooperative because they view this e-procurement
application as a means for the buyer to extract price
reductions, often to the detriment of their own profit
margins. For example, Pearcy et al. (2004) found under
certain circumstances, the use of on-line reverse auctions was
significantly related to a lack of supplier cooperation in
assistance with designing processes that reduce cost, cycle
time, and time to market.
Types of e-procurement applications
This research focuses on the impact of firm size on the
adoption of 13 e-procurement applications that vary in the
ability to facilitate supply chain integration. Given the
differences in e-procurement applications, a number of
researchers have developed taxonomies to classify them
based on differences in their characteristics, benefits, and
goals of use (e.g. Frohlich and Westbrook, 2002; deBoer et al.,
2001; Kehoe and Boughton, 2001; Whitaker et al., 2001).
The following describes a classification scheme that provides
for the categorization of e-procurement applications on the
basis of integrative capacity.
Wang et al. (2004) recognized that internet-based supply
chain technologies vary in the ability to facilitate process
integration. The researchers identified five categories of IT
adoption. The first category was labeled “essential functions”.
This category included IT that is used to carry out tasks such
as documentation using basic software packages. The second
category was identified as “single department/operation
process”. This category included computer-based
information systems that are relevant to one particular
function or process (e.g. accounting information systems).
Wang’s third category of IT adoption was “cross departments/
multi-processes integration”. IT adoption at this level allows
firms to integrate processes across several functions or
departments (e.g. transportation, inventory management,
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Supply Chain Management: An International Journal
Volume 13 · Number 1 · 2008 · 26 –34
and sales departments). The fourth category, labeled
“enterprise integration process” includes IT, which is used
to integrate business processes across the entire organization
(e.g. ERP systems). The final category identified by Wang
et al. (2004) was “B2B integration/collaborative business”. IT
systems in this category span firms and allow communication,
collaboration, and integration among multiple supply chain
members, including suppliers and customers.
The relationship between firm size and IT adoption in
the SCM literature
Patterson et al. (2003) developed a conceptual model of the
factors impacting adoption of supply chain technologies. The
model included key environmental and organizational factors,
including firm size. The authors noted that larger firms not
only have access to greater financial resources, but are also
better positioned to assume the risk of investing in various
technologies and to take advantage of the benefits of
economies of scale from adoption (e.g. Grover and Gosler,
1993). Patterson et al. (2003) further cited previous research
that has consistently revealed a positive relationship between
firm size and the adoption of technology (e.g. Daugherty et al.,
1995; Dawe, 1994; Germain, 1993; Rogers, 1990; Dewar and
Dutton, 1986). Consistent with previous research, Patterson
et al. (2003) hypothesized that a positive relationship exists
between firm size and the adoption of supply chain
management technologies. The researchers did not test the
proposed model. However, they developed a survey to
evaluate the adoption of supply chain technologies that
ranged from basic to integrative (e.g. bar coding and ERP,
respectively).
Lancioni et al. (2003) examined internet use in several
supply chain decision areas, including purchasing and
procurement. While the Lancioni et al. (2003) study
considered seven purchasing and procurement applications,
the current study investigates 13. Of the e-procurement
applications analyzed in the present research, only two were
also included in the Lancioni et al. (2003) study. Lancioni’s
research involved data collection in two separate studies to
compare changes in internet use by firm size over a two-year
period. The survey data were collected from approximately
190 Council of Logistics Management (CLM) members. The
authors established firm size by considering the number of
employees and the firms’ annual sales. Firms with less than
500 employees were considered small, while firms with more
than 500 employees were classified as large. Firms whose sales
volume was under $250 million were considered small, those
with sales exceeding $250 million were considered large. In
both the 1999 and 2001 studies, smaller firms (using sales
volume) were more likely to use the Internet to communicate
with suppliers on finished goods inventory levels and on out-
of-stock issues. Conversely, Lancioni et al. (2003) found that
larger firms used the internet to make on-line catalog
purchases and provide suppliers with evaluations of carriers’
performance. In addition, the researchers found that larger
firms (using employment figures) were more likely to use
Internet-based technologies to communicate with customers
on order status and to manage the outsourcing of customer
service functions.
The research of Wang et al. (2004) made a unique
contribution to the understanding of the firm size-technology
adoption relationship. The premise behind Wang et al.’s
(2004) research was that firm size impacts which type of
 Using e-procurement applications to achieve integration
Dawn H. Pearcy and Larry C. Giunipero
e-procurement application is adopted. Specifically, Wang et al.
(2004) hypothesized that firm size is positively related to the
implementation of more integrative types of IT. The data,
which were collected from a sample of 121 Taiwanese firms,
provided support for the research hypothesis.
The present study of the relationship between firm size and
e-procurement application builds on previous research
including the classification framework of Wang et al.’s
(2004). Therefore, the following is hypothesized:
H1. A significant relationship will exist between firm size
and e-procurement use. Specifically, larger firms will
be more likely to use integrative e-procurement
applications.
Methodology
Survey participants
The sampling frame consisted of members of the Institute for
Supply Management (ISM), an organization that is composed
of supply management professionals and academicians in the
US. The potential survey participants were drawn from 11
different standard industrial codes, including: food products,
paper products, chemicals, petroleum, rubber, primary
metals, transportation equipment, fabricated metals,
computer equipment, measuring and analyzing instruments,
and electrical equipment.
The data used in the present study were collected as part of
a larger investigation of on-line reverse auction use.
Therefore, it was necessary to identify and select firms that
used the technology. The firms were identified by an extensive
review of the trade literature, informal discussions with
individuals who were experienced with on-line reverse auction
use (including reverse auction providers), and a review reverse
auction providers’ web sites that make reference to the names
of their clients.
Questionnaire and mailing
Previous studies have taken different approaches to measuring
firm size, including assessment of: total assets (e.g. Wang et al.,
2004); number of purchasing employees (e.g. Min and Galle,
2003); purchase volume (Min and Galle, 2001); and the
number of warehouses and factories (e.g. Daugherty et al.,
1995). For the purpose of this study, firm size was established
using business unit revenues. Firm revenues or sales were also
used as an indicator of firm size in studies conducted by
Wagner and Hansen (2005), Lancioni et al. (2003), Dresner
et al. (2001), and Carr and Smeltzer (1999). The rationale
behind the use of business unit revenues is that it provides an
indicator of firm resources, which previous research has found
to be related to the adoption and use of technology (e.g.
Zaheer and Venkatraman, 1994). Firm size was assessed by
asking the respondent to indicate (in millions of US dollars)
the approximate annual revenues of his/her business unit.
The set of items used to assess “electronic-procurement
use” was developed by the researchers. The survey items were
developed using 13 different internet-based procurement
applications as identified by Antonette et al. (2002). The
authors identified these e-procurement applications through
an extensive review of the trade and academic literatures as
well as numerous in-depth case studies of firms operating in
widely diverse industries. Respondents were asked to respond
to the following: “We use internet-based technologies to . . .”
This statement was followed by a list of the 13 e-procurement
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Supply Chain Management: An International Journal
Volume 13 · Number 1 · 2008 · 26 –34
applications (Table I contains a list of the survey items). The
respondents assessed each item on a five-point Likert scale
from 1 ¼ strongly disagree to 5 ¼ strongly agree.
The questionnaire was pre-tested on a group of supply
management professionals and academicians with experience
in scale development. The survey was evaluated for
comprehensiveness and minor changes were made based on
their recommendations.
A total of 1,025 surveys along with a cover letter explaining
the purpose of the study and a postage-paid envelope were
mailed to potential participants at the addresses listed with
ISM. In an attempt to maximize the response rate, follow-up
postcards were sent to potential respondents two weeks after
the initial mailing.
Results
Response rate and sample demographics
Of the 1,025 surveys mailed, a total of 128 useable surveys
were received, resulting in a 12.5 percent response rate. The
respondents possessed an average of nearly 12 years of
experience in the purchasing/supply management function
and were employed in 33 different industries including
petroleum/gas, transportation, telecommunications,
pharmaceuticals, industrial equipment, and metals/mining to
name a few. The three most commonly reported lines of
business were manufacturing (26 percent), food (12 percent)
and auto parts (11 percent). The respondents held a variety of
positions, with purchasing manager being the most common
(18.8 percent), followed by senior buyer (20 percent) and
director of e-business (19 percent). Six of the seven most
frequently reported position titles suggested that the
purchasing/supply management professionals had significant
responsibilities (e.g. Director, Vice President). Annual
revenues for the respondents’ business unit ranged from
$4.5 million to $45 billion, with a mean of $5.49 billion. The
dollar amount of purchases for which the respondents’ were
responsible ranged from $1 million to $17 billion, with a
mean of $57 million.
Hypothesis test
In order to make comparisons of e-procurement applications
based on firm size, firms whose annual revenues exceeded the
median of $3.5 billion were placed in category I. Firms whose
annual revenues were below the median were placed in
category II. According to the Fortune 500 list, the firm which
holds the number one position (in terms of annual revenues)
had revenues of $339.9 billion and the firm in the number
500 position had $3.9 billion in revenues (www.money.cnn.
com, April 17, 2006). Therefore, the firm holding the 500th
position had annual revenues approximately equal to the
sample median of $3.5 billion. Importantly, firms with
revenues sufficient enough to be placed on the Fortune 500 list
exhibit common characteristics, including the fact that
academicians and practitioners scrutinize these firms to
learn about best (and sometimes worst) business practices.
Thus, it appears that a split at the sample median of $3.5
billion is reasonable.
Testing the research hypothesis that larger firms are more
likely to use integrative e-procurement applications involved
two steps. The first step was to classify each application
according to its ability to facilitate supply chain integration.
The goal was to distinguish between more and less integrative
 Using e-procurement applications to achieve integration Supply Chain Management: An International Journal
Dawn H. Pearcy and Larry C. Giunipero Volume 13 · Number 1 · 2008 · 26 –34

Table I T-test for equality of means category I firms vs category II firms

We use the internet-based technologies to . . . n Mean SD Mean Diff. t Sig.
Search for low-cost suppliers Category II 65 3.68 1.00 0.05 0.25 0.81
Category I 62 3.63 1.19
Visit suppliers web sites Category II 66 4.00 0.98 0.23 1.23 0.22
Category I 62 3.77 1.09
Participate in reverse auctions to reduce purchase prices Category II 66 4.37 0.91 20.07 20.59 0.56
Category I 62 4.44 0.91
Check suppliers’ financial status Category II 66 3.48 1.19 0.32 1.57 0.12
Category I 62 3.16 1.13
Place orders on suppliers’ web sites Category II 66 3.06 1.12 0.24 1.11 0.27
Category I 62 2.82 1.30
Access e-marketplaces Category II 66 3.48 1.12 0.29 1.49 0.14
Category I 62 3.19 1.19
Use software services of an e-purchasing provider Category II 66 3.50 1.23 0.13 0.63 0.52
solution Category I 62 3.37 1.06
Search for suppliers that will allow our firm to Category II 65 2.94 1.17 0.09 0.40 0.69
differentiate our offering from competitors Category I 62 2.85 1.19
Develop an integrated supply chain Category II 66 3.30 1.19 20.33 22.25 0.03 *
Category I 62 3.63 0.99
Plan and schedule production Category II 66 2.88 1.14 20.43 22.79 0.02 *
Category I 62 3.31 1.08
Collaborate with suppliers on product design issues Category II 66 2.79 1.21 20.36 22.24 0.03 *
Category I 62 3.15 1.17
Achieve cross-functional coordination Category II 66 2.76 1.00 20.64 26.56 0.001 *
Category I 62 3.40 1.16
Access suppliers’ on-line catalogs Category II 66 3.83 1.01 0.39 2.01 0.05 *a
Category I 62 3.44 1.22
Notes: Category I=annual revenues . $3.5 billion; Category II=annual revenues , $3.5 billion; 1=strongly disagree; 5=strongly agree; *Statistically
significant at a ¼ 0:05; aDifference not in hypothesized direction

forms of e-procurement. As previously noted, the Table II Classification of e-procurement applications using the
categorization used in this study builds on the work of taxonomy of Wang et al. (2004)
Wang et al. (2004). Table II illustrates the categorization using
Wang et al.’s (2004) taxonomy. Of the 13 e-procurement E-procurement application Category
applications examined in the research, nine were classified as Use of the internet to:
single department/operation processes (non-integrative) and
Search for low-cost sources of supply 2
four were classified as either enterprise integrative or B2B
Visit suppliers web sites 2
integrative/collaborative commerce (see table one). While not
Access suppliers’ on-line catalogs 2
specifically addressed in the research hypothesis, it is
Check suppliers’ financial status 2
notewor thy that the means for the non-integ rative
Place orders on supplier’s web sites 2
e-procurement applications were higher than those of the
Access e-marketplaces 2
integrative ones. This suggests that these applications were
Use software services of an e-purchasing solution
more widely used by the respondents overall.
provider 2
The next step in testing the research hypothesis was to
conduct t-tests between firms in category I (annual revenues Search for suppliers with offerings that will allow our
exceeding $3.5 billion) and category II (annual revenues less firm to differentiate our products/services from our
than $3.5 billion) for each of the 13 types of e-procurement competitors 2
applications. T-tests revealed significant differences in use Participate in reverse auctions to reduce purchase
across firm size in five of the 13 e-procurement applications. prices 2
Four of the five differences were in the hypothesized direction Plan and schedule production 4, 5
(i.e. the resulting mean for category I (larger) firms was higher Achieve cross-functional coordination 4
than that of category II firms). Significant differences in the Collaborate with suppliers on product/service design
hypothesized direction were identified in the use of Internet- issues 5
based technologies to: develop an integrated supply chain, Develop an integrated supply chain 5
plan and schedule production, collaborate with suppliers on Notes: 1 ¼ essential functions (documentation); 2 ¼ single department/
design issues, and achieve cross-functional coordination (see operation process; 3 ¼ cross departments/multi-process integration; 4 ¼
Table I). Importantly, each of the e-procurement applications enterprise integration process; 5 ¼ B2B integration/collaborative commerce
exhibiting significant differences across firms size were

30
 Using e-procurement applications to achieve integration
Dawn H. Pearcy and Larry C. Giunipero
classified as integrative according to the taxonomy of Wang
et al. (refer to Table II). Therefore, the research hypothesis
was supported by the data.
Discussion and conclusions
Given the significant difference in use across the integrative
e-procurement applications, the data suggest that firms in
category II (with revenues less than $3.5 billion) are not as
likely to use integrative e-procurement applications as firms in
category I. Consequently, these firms might forego the
potential benefits of integrative types of e-procurement such
as operational agility, lower costs, superior product/service
design, and enhanced profitability (Folinas et al., 2004). The
literature provides overwhelming support for the notion that
effective SCM relies heavily upon integration and
coordination across functions and enterprises (see Vickery
et al., 2003; Narasimhan and Kim, 2002; Spekman et al.,
1998). Now more than ever, firms rely on internet-based
technologies to achieve this integration. Ultimately, firms who
fail to adopt integrative e-procurement applications might
find themselves competitively disadvantaged. Wang et al.
(2004) supports this view when the authors asserted that
disparate levels of IT adoption and integration capabilities in
the supply chain contributes to “gaps” across firms’ borders.
Furthermore, Wang et al. (2004, p. 86) cite the work of Pant
and Ravichandran (2001) and state, “implementing supply
chain management requires a higher level of IT adoption
(adoption of integrative forms), computer applications and
infrastructure that leverage inter- and intra-firm process and
systems integration”.
While the potential benefits of e-procurement use have
generated substantial interest on the part of practitioners and
scholars, Cagliano et al. (2003) noted that evidence is still
lacking with regard to the prevalence of actual
implementation of e-procurement in firms. This research
examines differences in actual usage patterns across a widely
diverse sample of firms and provides valuable information to
both academicians and purchasing/supply management
professionals regarding the state of e-procurement use.
Over the years, researchers have sought to explain adoption
patterns across various supply chain technologies (e.g. EDI).
Given the emerging nature of e-procurement, research on the
factors impacting its adoption is still growing. This study
contributes to the understanding of the adoption of a wide
range of e-procurement applications by examining the role of
firm size. The findings also provide support for previous
research indicating that a significant relationship exists
between firm size and technology adoption.
This study contributes to the knowledge base of
e-procurement use in the academic literature and differs from
previous research in a number of ways. First, this research
empirically examines the role of firm size in the adoption of 13
different e-procurement applications, whereas previous
research resulted in the development of a conceptual model
(e.g. Patterson et al., 2003), investigated fewer types of supply
chain technologies (e.g. Daugherty et al., 1995), or did not
focus on the ability of e-procurement tools to facilitate
integration (e.g. Lancioni et al., 2003). One similarity
between the present study and Lancioni et al. (2003) is that
both studies revealed that smaller firms were more likely to
access or make purchases from suppliers’ on-line catalogs.
Second, this work extends previous research that developed
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Volume 13 · Number 1 · 2008 · 26 –34
classification schemes for e-procurement applications (e.g.
Antonette et al., 2002; deBoer et al., 2001) by examining
adoption patterns across different types of e-procurement
applications. While Antonette et al. (2002) conducted case
studies to develop their framework, the present study provides
survey data across industries about actual usage of a variety of
e-procurement applications. Third, this study contributes to
an important stream of literature that examines the
relationship between e-procurement use and supply chain
integration, but does not examine the role of firm size in this
relationship (e.g. Rai et al., 2006). Finally, Wang et al. (2004)
e x a m i n e d t h e r o l e o f fi r m s i z e i n t h e a d o p t i o n o f
e-procurement applications that varied in their ability to
integrate supply chain processes. However, the researchers
examined this relationship only within the IT and
manufacturing sectors in Taiwan. This research examines
the relationship between firm size and the adoption of
e-procurement applications that differ with respect to their
ability to facilitate integration in a sample of US-based firms
operating in widely diverse industries.
The prevalence of on-line reverse auction use in this sample
is not surprising. Garcia-Dastugue and Lambert (2003) noted
that the ease of use and potential to provide lower purchase
prices make the reverse auction a popular e-procurement
application among managers. In most instances, the reverse
auction is used in a transactional manner; that is to engage in
a one-time business interaction for a good or service at a
specific price. Garcia-Dastugue and Lambert (2003) refer to
this e-procurement application as a market mechanism.
Garcia-Dastugue and Lambert (2003) classified another
group of e-procurement applications as coordination flows.
Coordination flows, on the other hand, are implemented to
facilitate ongoing relationships. With coordination flows,
managers have already made purchasing decisions and the
goal is to share information that will ensure the flow of
products (e.g. production planning or product development).
The distinction is made here because managers who prefer
e-procurement applications that provide for price bargaining
must recognize that they are achieving “situational” or
temporary integration. When market mechanisms are used,
the concept of integration or “to make whole by bringing all
parts together; to unify or make part of a larger unit” occurs
on a temporary basis for the single transaction. After the
transaction has been completed the buyer and supplier are no
longer unified. Conversely, implementation of coordination
flows allows managers to achieve integration on a sustainable
basis.
Managerial implications
With increasing emphasis on improving firm performance
through effective supply chain management, purchasing
professionals continually search for ways to cut costs, reduce
cycle time, and improve product/service quality. Although this
study did not test outcomes of e-procurement use, it
highlights the importance of supply chain integration, the
use of integrative e-procurement applications, and the
differences in e-procurement use patterns. Purchasing
professionals who make e-procurement adoption decisions
might consider this research and contemplate how (more)
integrative e-procurement applications could be used to
potentially improve the performance of their supply chains.
 Using e-procurement applications to achieve integration
Dawn H. Pearcy and Larry C. Giunipero
Purchasing professionals interested in maximizing the
benefits of increased supply chain integration through
e-procurement use could first consider their firm’s existing
state of e-procurement adoption. Use of a classification
system such as Wang et al. (2004) would assist managers in
the assessment of current e-procurement practices.
The next step would be to decide which type of
e-procurement application is most appropriate for each
business situation. According to Garcia-Dastugue and
Lambert (2003), some of the bases for selecting the “right”
e-procurement application include asset specificity,
transaction risk, operational performance risk, frequency of
purchase, and item value.
Finally, managers must ascertain whether the use of
integrative e-procurement applications has been inhibited by
factors such as difficulty of use, required financial
commitment, and/or (perceived) risk. Non-integrative types
of e-procurement such as accessing on-line catalogs, placing
orders on suppliers’ web sites, and searching for low-cost
suppliers are simple to employ and do not require significant
financial investments. This would explain why the
present study revealed no significant differences in use of
these e-procurement applications across firm size and the fact
that firms were more likely to use them than integrative
applications. Firms of any size with access to the Internet can
easily engage in these inexpensive, low-risk e-procurement
activities. Conversely, the use of e-procurement applications
to achieve inter- or intra-firm integration poses more
challenge and risk (e.g. collaborating with suppliers on
product/service design issues).
As previously noted, some of these challenges associated
with the adoption and effectiveness of e-procurement
applications include information sharing within and across
firms, overcoming the “silo mentality” within the firm,
sharing proprietary information with supply chain members,
and intellectual property matters. Decision-makers plans to
overcome these and other challenges should include effective
methods to: garner top management support, provide
employee training, secure the necessary financial resources,
address security issues, and encourage trading partners to
invest in the required technologies.
This research addresses actual implementation of 13
different e-procurement applications. The findings of this
research are also valuable to suppliers of e-procurement
solutions (e.g. A.T. Kearney Procurement, Procuri,
Commerce One). Given firms whose revenues are less than
$3.5 billion annually (category II firms) are not as likely to
adopt integrative forms of e-procurement as larger firms; this
category of firms represents a market growth opportunity for
suppliers of e-procurement applications. While revenues in
category II firms are less than those of category I firms, this
category still includes companies with substantial revenues
and associated resources. Therefore, these companies might
be positioned to adopt more integrative e-procurement
applications if they choose to do so. In this case,
e-procurement solution suppliers could specifically target
these firms with information about the availability and
benefits of various applications.
Importantly, purchasing professionals must recognize that
the use of e-procurement is just one component in achieving
supply chain integration. Power (2005) supported this view
and indicated that the “formula” for supply chain integration
is multi-faceted and complex. Accordingly, Power (2005)
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Volume 13 · Number 1 · 2008 · 26 –34
asserted that supply chain integration efforts are optimized by
an appropriate combination of information transfer,
streamlined physical logistics, and collaboration among
supply chain members. It should be further noted that
effective intra- and inter-firm supply chain integration also
relies heavily upon the implementation of sound corporate
strategies and policies as well as the day-to-day practices of
decision-makers and front-line personnel. While this research
explores e-procurement as an important aspect of supply
chain integration, managers are cautioned that
implementation of any technology alone is not a panacea for
achieving integration nor does it ensure enhanced supply
chain performance.
Limitations
The study was limited with respect to the types of respondents
that were included. Purchasing/supply management
professionals employed in the service sector were not
surveyed, which somewhat limits the generalizability of the
data. In addition, the scope of the research was relatively
narrow. The focus was strictly the role of firm size in
e-procurement tool adoption. Finally, use of a random sample
in academic research is ideal. However, the survey was not
relevant to firms who did not engage in e-procurement.
Therefore, the researchers concluded that use of a judgment
sample was a practical and valid method to collect the data
while maximizing the response rate.
Directions for future research
It is important for academicians and practitioners to
understand the role that e-procurement plays in vital
business outcomes. This research could be extended by
investigating whether differences in outcomes such as cost
savings, profitability, and product/service quality exist
between firms that use integrative e-procurement
applications and those who use less integrative ones. In
addition, an examination of a broader range of variables
in e-procurement adoption such as characteristics of the
technology, environmental factors, individual adopter factors,
and organizational factors such as innovativeness, company
policies, corporate strategy, and management behaviors would
provide additional insight in this area. Finally, the survey
respondents in this research were purchasing/supply
management professionals. Supply-side practitioners could
also provide valuable insight into the implementation of e-
procurement. Specifically, it is important to ascertain whether
suppliers find that various e-procurement applications
facilitate coordination flows (sustained integration), market
mechanisms (bargaining), or both.
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Corresponding author
Dawn H. Pearcy can be contacted at: dawn.pearcy@
emich.edu