Supplier selection and firm performance: Empirical evidence from a developing country's environment

Purpose The purpose of this paper is to examine how the various supplier selections construct impacts on firm's operational competitive capability as well as an overall performance from a developing country's environment. Design/methodology/approach Structural equation modeling was used to study the relationship between supplier selection criteria, competitive operational capabilities and overall organizational performance using survey of informants. Findings In this work, the authors demonstrate that an effective supplier selection will lead to an enhanced competitive capability of the buying firm. Specifically, the authors show that selecting suppliers based on quality will lead to an improved quality of the buying firm, service will lead to improved delivery time and supplier strategic fit will lead to reduced cost, improved delivery time and improved flexibility of the buying firm. Furthermore, the buying firm competitive operational capabilities in terms of improved delivery time will lead overall performance from the Ghanaian business environment. The results indicate no significant difference between the manufacturing and service sectors. Research limitations/implications The results indicate the relevance and the implications of the various supplier selection criteria from a developing country's environment such as Ghana. Practical implications The research shows how supplier selection criteria should be structured to enhance operational competitive capabilities and overall performance of the buying firm. Originality/value The work illustrates and provides some insights and build on the literature in the area of supply selection strategies from a developing country's environment.