Determinants of sourcing flexibility and its impact on performance

Sourcing flexibility is an increasingly important building block of supply chain flexibility. Our study which is grounded in information processing theory argues that two mechanisms can support firms in building up sourcing flexibility. Based on a survey of 336 manufacturing firms from Europe and the U.S. and using partial least squares (PLS) modeling as well as hierarchical regression analysis, we show that supplier evaluation and selection, and the integration of information systems at the buyer-supplier interface are positively related to sourcing flexibility. Sourcing flexibility, in turn, is curvilinearly related to delivery performance. Finally, delivery performance positively influences the product's financial performance. The strong associations between sourcing flexibility, delivery performance, and product financial performance underscore that sourcing flexibility merits the attention of supply chain managers during supplier selection and purchasing decisions.