CULTURE AND THE EFFECTIVENESS OF SUPPLIER DIVERSITY PROGRAMS: A TEST OF PREDICTORS

CULTURE AND THE EFFECTIVENESS OF SUPPLIER DIVERSITY PROGRAMS: A TEST OF PREDICTORS Gwendolyn Whitfield, Ph.D. Western Michigan University, 2003 Increased globalization and diversity has brought with it unique interdependencies. As we experience demographical shifts unlike any other in U.S. history, the growth rate of minority-owned businesses may represent unprecedented opportunity for corporate buyers to partner with minority suppliers. According to the Minority Business Development Agency, the minority population will represent 37.4 percent of the total U.S. population by the year 2020, and will yield purchasing power of $3 trillion. Moreover, it is estimated that between the years 2000 and 2050 the majority of new business starts will originate in the minority business community (U.S. Small Business Administration 1994). Minority-owned firms grew from 7 percent of all U.S. firms to 15 percent between 1982 and 1997. These changes have implications for the corporate supply chain, and relationships with minority suppliers have become increasingly important. Supplier diversity is defined as a proactive business process that seeks to provide all suppliers equal access to supply management opportunities (NAPM, InfoEdge 2001). Supplier diversity programs have been used by firms for over 30 years, yet few minority suppliers have found their way into mainstream processes. One research study found major impediments in supplier diversity programs (Dollinger & Dailey 1989). For example, minority suppliers face higher transaction costs, experience difficulty in dealing with complex bureaucracy, and sometimes had to deal in a hostile environment. Other studies have found major problems with communication (Krause et. al 1999; Kauffman 2001) and commitment (Krause et. al 1999; Carter et. al 1999). Past research has also emphasized the important role of corporate culture for implementing supplier diversity programs (Min 1999; Carter et. al 1999). This dissertation examines the relationship between corporate culture and supplier diversity effectiveness. The study examines how buyer’s attitudes toward diversity influence spending levels with diverse suppliers. The general hypothesis is that organizations that have constructive cultures for diversity will have higher levels of spending in supplier diversity programs. The research was conducted using a sample from 250 buyers within a large U.S. heavy-equipment manufacturing firm. The research involved collecting attitudinal data using an Internet-mediated survey questionnaire. Effectiveness was measured based on total spending with minority suppliers and was collected using semi-structured interviewing and archival research. CULTURE AND THE EFFECTIVENESS OF SUPPLIER DIVERSITY PROGRAMS: A TEST OF PREDICTORS by Gwendolyn Whitfield A Dissertation Submitted to the Faculty of The Graduate College in partial fulfillment of the requirements for the Degree of Doctor of Philosophy Department of Sociology Western Michigan University Kalamazoo, Michigan December 2003 UMI Number: 3133550 Copyright 2003 by Whitfield, Gwendolyn All rights reserved. ________________________________________________________ UMI Microform 3133550 Copyright 2004 ProQuest Information and Learning Company. All rights reserved. This microform edition is protected against unauthorized copying under Title 17, United States Code. ____________________________________________________________ ProQuest Information and Learning Company 300 North Zeeb Road PO Box 1346 Ann Arbor, MI 48106-1346 Copyright by Gwendolyn Whitfield 2003 ii ACKNOWLEDGMENTS First and foremost, I am thankful to God for giving me the faith, ability, resources and strength to pursue higher dreams. With God nothing is impossible. I would like to thank my chair, Dr. Tom Vanvaley and the members of my dissertation committee, Dr. David Hartmann, Dr. Robert Landeros and Dr. Subash Sonnad. Thank you for the support, guidance and time you generously provided. I would also like to thank Dr. Dan Farrell, Dr. Bruce Ferrin and Dr. David Litinsky for the unique ways in which they helped me frame my research. Thanks also to Dr. Joseph Cavinato and the Institute for Supply Management for providing a dissertation grant to help make the completion of this research possible. Finally, I would like to thank my daughter Mariah and my parents Joe and Virginia Whitfield for their belief in me and their unwavering love and support. Gwendolyn Whitfield. iii TABLE OF CONTENTS ACKNOWLEDGMENTS ii LIST OF TABLES vi LIST OF FIGURES vii CHAPTER I 1 OVERVIEW OF THE RESEARCH 1 Introduction 1 Supplier Diversity Overview 2 Primary Research Questions 4 Theoretical Framework 6 Research Methodology 8 Scope of the Dissertation 11 Contribution of the Research 12 CHAPTER II 13 LITERATURE REVIEW 13 Introduction 13 Purchasing and Supply Chain Management 13 Minority Business in the U.S. 17 Supplier Diversity 22 Organizational Culture 26 CHAPTER III 30 RESEARCH DESIGN 30 iv TABLE OF CONTENTS—continued CHAPTER III Introduction 30 Research Propositions 31 Measures 31 Research Design and Data Collection 34 Design Issues for Mixed Methods 35 Sample 36 Research Methodology 38 Data Collection 38 Internet-Mediated Research 39 Validity Issues 41 Reliability Issues 43 CHAPTER IV 45 DATA ANALYSIS 45 Introduction 45 Summary Statistics 45 Analysis at the Organizational-Level 50 Results of Factor Analysis 58 Results of Reliability Test 59 Analysis for Individual Units 59 Humanistic 59 Qualitative and Quantitative Data Analysis: A Combined Approach 61 v TABLE OF CONTENTS—continued CHAPTER IV Data Displays 62 Results 64 CHAPTER V 66 DISCUSSION OF THE RESULTS 66 Introduction 66 Managerial Contributions 66 Academic Contributions 67 Limitations of Research 69 Future Research 69 BIBLIOGRAPHY 70 vi LIST OF TABLES Table 1. Types of Cultures 9 Table 2. Unit Levels of Spending 10 Table 3. Minority Population, 2000 18 Table 4. Firms by Race and Ethnic Origin, 1997 18 Table 5. Minority-Owned Firms by Industry, 1997 19 Table 6. Growth in Number of Minority-Owned Firms, 1982-1997. 20 Table 7. Description of Culture for Diversity Instrument 34 Table 8. Buyer Data 37 Table 9. Construct Validity of the 12 Scales of the Organizational Culture Inventory 42 Table 10. Cronbach Alpha Coefficients for Scales 44 Table 11. Scale Means at the Organizational Level 51 Table 12. Factor Analysis for Culture Styles 58 Table 13. Means for Individual Units 59 Table 14. Aggregate Means for Culture Clusters 60 Table 15. Partially-Ordered Meta Matrix 63 [...]... about these expectations In organizations where there is a great deal of consensus along these measures, these shared behavioral norms demonstrate a strong organizational 9 culture and a defined pattern of underlying values and ways of seeing things (Sathe 1985; Kilmann et al 1986; Cooke & Rousseau, 1988) The effectiveness of supplier diversity was measured using archival methods and was based on the amount... owners On the contrary, Asians and American Indians had business representation equal to or greater than their population numbers American Indians and Alaska Natives constitute 0.9 percent of the population and 0.9 percent of businesses, while Asian and Pacific Islanders constitute 3.6 percent of the population and 4.4 percent of businesses 21 Clearly minority-owned businesses have become a fast growing... critical step towards investigating the theoretical linkages between a firm’s culture and the success of supplier diversity programs The primary purpose is to uncover the cultural reality of each unit in the firm, determine the effectiveness of their supplier diversity program and analyze the relationship between organizational culture and supplier diversity effectiveness 12 CHAPTER II LITERATURE REVIEW... investigating the theoretical linkage between organizational culture and supplier diversity effectiveness The culture of organizations is reflected in shared values and beliefs and guides the behavior of organizational members such as buyers Culture sets the pattern for activities such as supplier diversity programs and it influences the personal styles exhibited by members In this research, these culture. .. integration and collaboration among suppliers and purchasing firms, gave rise to the term “strategic purchasing” Today many say that purchasing has evolved into supply chain management, which implies a broader range of responsibility as well as many layers of negotiation 14 For the purposes of this dissertation, supply chain management has been defined as the integration of supply chain activities to achieve... between culture and supplier diversity To date, no empirical research has been conducted to establish a relationship between culture and supplier diversity This dissertation research takes an important step toward establishing the link between a buying firm’s culture and the effectiveness of supplier diversity programs of that firm 3 Primary Research Questions There has been a great deal of discussion about... suppliers The goal of this dissertation is to investigate the linkage between culture and supplier diversity effectiveness by answering (a) what types of organizational culture exist among buying units (b) is there a relationship between a unit’s organizational culture and the level of spending with diverse suppliers and (c) if there is a relationship, what is its nature? 4 The question of effective supplier. .. supply chain A great deal of the recent literature on supply chain management focuses on integration processes and supplier alliances to create customer satisfaction and realize business goals (Carter 2000) The increased need for supplier integration and partnering has important implications for supplier diversity since it is estimated that the majority of new business starts will originate in the minority... organization determines the ways in which all members of the organization are expected to approach their work and interact with others (Homans 1974) These behavioral norms are typically considered an important part of groups or organizational culture because they reflect the basic assumptions and values held in common by members (Homans 1974; Martin & Schiel 1983; Schein 1985) At the individual level, the. .. and the flow of information They began to consider all members in this chain as critically important The short-term objective of supply chain management is concentrated primarily on increasing productivity and reducing inventory and cycle times The long-term goals are more strategic in nature and include customer satisfaction, increased market share and profits 15 Purchasing is a critical link in the . Western Michigan University Kalamazoo, Michigan December 2003 UMI Number: 3133550 Copyright 2003 by Whitfield, Gwendolyn All rights reserved reserved. ________________________________________________________ UMI Microform 3133550 Copyright 2004 ProQuest Information and Learning Company. All rights reserved. This microform