Accepted Manuscript

Understanding how the functional integration of purchasing and marketing

accelerates new product development

Carmen González-Zapatero, Javier González-Benito, Gustavo Lannelongue

PII: S0925-5273(17)30288-8
DOI: 10.1016/j.ijpe.2017.09.004
Reference: PROECO 6817

To appear in: International Journal of Production Economics

Received Date: 8 November 2016

Revised Date: 16 August 2017
Accepted Date: 6 September 2017

Please cite this article as: González-Zapatero, C., González-Benito, J., Lannelongue, G., Understanding
how the functional integration of purchasing and marketing accelerates new product development,
International Journal of Production Economics (2017), doi: 10.1016/j.ijpe.2017.09.004.

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 ACCEPTED MANUSCRIPT
TITLE PAGE

MANUSCRIPT TITTLE

Understanding how the functional integration of purchasing and marketing

accelerates new product development

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AUTHORS CONTACT INFORMATION

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Carmen González-Zapatero, IME – Salamanca University, carmengz@usal.es
(Corresponding Author). Cell phone: (34) 676 770 241

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Javier González-Benito, IME – Salamanca University, javiergb@usal.es

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Gustavo Lannelongue, IME – Salamanca University, lannelongue@usal.es
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Postal Address: Facultad de Economía y Empresa de la Universidad de
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Salamanca.
Departamento de Administración y Economía de la Empresa.
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Campus Miguel de Unamuno s/n. 37007 Salamanca. Spain

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Tel: (34) 923294400 Ext. 6837

Fax: (34) 923294715
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Understanding how the functional integration of purchasing and

marketing accelerates new product development

HIGHLIGHTS

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• Purchasing-marketing functional integration is broken down into three components.
• One component completely mediates the effect the others have on the speed of NPD.

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• The crucial component is the one that ensures optimal decision alignments.

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ABSTRACT

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In the context of ever more demanding customers, and companies’ growing dependency on
external suppliers, the importance of purchasing-marketing integration has been highlighted
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by recent research. However, further theoretical and empirical development is still much in
need. Grounded in Information Processing Theory, we present a model that provides a new
breakdown of the components of functional integration and explains how the interaction
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between them accelerates new product development (NPD). The model was tested on a
sample of 141 Spanish firms using structural equation modelling (SEM). The study makes
several contributions: It provides empirical evidence of the benefits of purchasing-marketing
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integration; it identifies its three components: shared information on purchasing, shared

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information on marketing, and the alignment of decisions, and it uncovers the complete
mediation of aligned decisions on the effect shared information has on speed in NPD.
Additionally, it contributes to solving the lack of consensus on the conceptualization of
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functional integration as reported by the literature.

Keywords: Purchasing-Marketing Functional Integration, Innovation Speed, New Product

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Development, Mediation Analysis

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1 INTRODUCTION

The integration of different pairs of functions, such as R&D-marketing or marketing-

manufacturing, has been extensively studied in the literature (e.g., Gupta et al., 1986; Swing

& Song, 2007). The purchasing function has only recently been included in these dyadic

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relationships (Piercy, 2009; Smirnova et al., 2011; Lindgreen et al., 2016), possibly because

its role has often been perceived as administrative and residual. However, different economic

and business trends are increasing corporate dependency on external resources and

capabilities for both manufacturing and innovation activities, and include the following

highlights: (1) Growing production outsourcing; for example, 90% of the manufacturing of

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Boeing 787s is subcontracted to a global network of 900 suppliers (Sheth et al., 2009); (2)

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Greater prominence of initiatives that involve intense collaboration with suppliers, such as

networking, open innovation, and reverse logistics (West et al., 2014; Cannella et al., 2016;

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Tachizawa & Giménez, 2010); (3) Global competition for supplies (Sheth et al., 2009;

Schoenherr et al., 2012); and (4) Growing awareness of the non-replicability of competitive

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advantages derived from relationships with suppliers, due to their idiosyncratic nature
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(Lawson et al., 2009). This ever greater reliance on suppliers’ resources is shifting managers’
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perception from viewing the purchasing function as residual to understanding it to be

strategic (e.g., Cousins et al., 2006; Schoenherr et al., 2012) and linked to financial
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performance (Schoenherr et al., 2012).

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This development, along with ever more complex, difficult to predict, and demanding
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markets, has drawn increasing attention to the benefits and inevitability of integrating the

supply expertise of the purchasing function with the customer consultancy role of the
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marketing function (Williams et al., 1994; Sheth et al., 2009; Lindgreen et al., 2016).
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Moreover, scholars have argued that this internal link is necessary to complement external

integration initiatives with customers or suppliers. Purchasing-Marketing integration would

allow transferring the benefits obtained through any of these external integration practices to

the other end of the company’s internal value chain. The need to co-manage these two

functions is therefore being highlighted by the literature (Lindgreen et al., 2016). This co-

management would imply, for instance, simultaneously assessing a company’s need to be

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customer-oriented, supplier-oriented, or both at the same time (Wagner & Eggert, 2016;

Ziggers & Henseler, 2016). Some authors have developed conceptual frameworks to assess

when each one of these options would be more expedient (Wagner and Eggert, 2016). Others

provide evidence of the beneficial effects of simultaneously implementing both strategies

(Ziggers & Henseler, 2016). Yet this co-management would also require assessing which

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interfaces these two functions could use to coordinate their interdependent tasks.

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Accordingly, some authors have proposed different combinations of integration mechanisms

to manage this link in different situations (Toon et al., 2016: Matthyssens et al., 2016;

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Gonzalez-Zapatero et al., 2016).

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However, the literature on purchasing-marketing integration still has sundry shortcomings:
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(1) much of this research has remained largely conceptual (e.g., Piercy, 2009; Lindgreen et

al., 2016: Toon et al., 2016; Wagner & Eggert, 2016), (2) it remains at a business or
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functional level (Ziggers & Henseler, 2016, Smirnova et al., 2011), (3) there are few

empirical studies that show their disaggregated impact in different performance indicators;
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the few that exist rely on economic performance measures such as market share or market
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growth (Smirnova et al., 2011), or on aggregated performance measures that mix different
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operational indicators that may conceal certain effects (e.g., volume flexibility, delivery

speed, delivery reliability/dependability, product conformance to specifications, and customer

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satisfaction) (Ziggers & Henseler, 2016).

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Our main objective, therefore, is to help to fill the above gaps by providing an empirical

analysis of the purchasing-marketing link within the specific framework of new product

development (NPD). NPD has been identified as one of the main areas of interaction between

these two functions (Williams et al., 1994), and so there is a need for studies that incorporate

this unit of analysis. The empirical analysis provided in this paper focuses on a specific

performance measure, namely, the speed of NPD. This speed is an operational performance

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indicator that has been typically linked to NPD success (e.g., Swink, 2003, Griffin, 2002,

Gerwin and Barrowman, 2002).

Functional integration or coordination has been identified as an NPD accelerator in previous

studies (e.g., Gerwin and Barrowman, 2002, Chen et al., 2010). However, in many cases

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these analyses have focused on studying the impact that certain specific functional integration

antecedents have on the speed of NPD, such as the creation of cross-functional teams (e.g.,

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Zirger & Hartley, 1996; Carbonell & Rodríguez, 2006) or the use of certain integration

methods or technologies such as Computer Aided Design (CAD) or Quality Function

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Deployment (QFD) (Swink, 2003), and not on the impact of functional integration per se.

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Studying functional integration per se helps to understand how these antecedents achieve
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their goals, and hence the reason it is this paper’s approach. However, it poses an important

challenge, for although this concept has been around for decades, authors often contend that it
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remains poorly understood (Kahn & Mentzer, 1998; Pagell, 2004; Chen et al., 2009; Frankel
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& Mollenkopf, 2015). Among other shortcomings, scholars have noted a lack of consensus
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over the concept itself, and have called for theoretical grounding to provide context for

understanding its role.

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The paper’s second objective is therefore to help to fill these gaps in the general literature on
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functional integration. In order to do so, we rely in Information Processing Theory, which

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allows us to provide a multidimensional concept of functional integration, stress the

optimization approach that it should have, and study the interaction between its different

dimensions.

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Our two main objectives will also contribute to the Purchasing and Supply Management

(PSM) literature. A panel of leading scholars in PSM have recently identified the challenges

and research opportunities in this field (Schoenherr et al., 2012). Among others, they have

pointed out the need to seek opportunities to engage in cross-functional research on PSM.

They have also highlighted the need to identify best practices to leverage the supply base for

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innovation. Our study singles out the alignment of suppliers’ knowledge capabilities with

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market knowledge as a way of improving the supply base’s innovation potential.

The rest of the paper is structured as follows: section 2 reviews the theoretical background

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that informs the study and identifies the components of functional integration. Section 3

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presents an explanatory model of the relationship between these components as predictors of
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speed in NPD. Section 4 describes the methodology used to verify the model. Section 5

presents the paper’s findings, and section 6 discusses their implications. Finally, section 7
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summarizes the main conclusions.

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2 LITERATURE REVIEW

2.1 New Product Development

New product development (NPD) processes have been defined as communication networks,

as well as problem-solving or decision-making chains (Brown & Eisenhardt, 1995; Song &

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Montoya Weiss, 2001) involving different stages - e.g., opportunity identification or the

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selection of ideas, the appraisal and approval of the product’s final prototype, production, and

distribution - which should be completed for a product to be introduced to the market. Each

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functional area (e.g., marketing, R&D, finance, manufacturing, purchasing, etc.) brings its

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particular expertise to the process, and coordinates with the others to develop the best
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possible new product. This process may have different drivers, such as technology push,

demand pull, or suppliers’ proposals (Souder & Sherman, 1993; West et al., 2014).
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Depending on multiple factors, such as industry context or the kind of innovation

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(incremental vs. radical), these NPD stages may adopt either a sequential or a concurrent
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approach (Swink & Song, 2007; Valle & Vázquez-Bustelo, 2009). In a sequential approach,

coordination occurs precisely between the functions responsible for adjacent stages, and no
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stage will begin until the preceding one has been completed. For example, in a demand-pull

situation, marketing would scan the customer market to identify the latest customer
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preferences, and then coordinate with R&D to translate customers’ preferences into product
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specifications, R&D then coordinates with production for designing the productive process,

and finally, purchasing would receive a set of requirements regarding the necessary

components and raw materials. Traditionally, both academic and professional circles have

noted the scarce involvement and integration of this last function (Carbone, 1995; Dyer,

1996; Sheth et al., 2009; Piercy, 2009). This last interaction has therefore been described in

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terms of procurement requirements being “thrown over the wall” to purchasing (Carbone,

1995; page 38).

A more simultaneous, or concurrent, approach stresses that besides coordinating with the

functions responsible for the consecutive stages, these selfsame functions should share

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information and accommodate their decision-making with the functions that will come into

play in subsequent stages. This will enable all the functions involved to be briefed sooner on

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what is expected of them, increase their reaction time, and be assured of the opportunity to

contribute ideas and requirements from the very onset of the process (Abdalla, 1999; Swink

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& Song, 2007). Analyzing the integration of purchasing and marketing during NPD is

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particularly relevant from this concurrent perspective, as these functions often represent the
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two opposite ends of the process as interpreted from the sequential approach described above.
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2.2 Speed in New Product Development

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Sundry publications in the academic and business literature suggest that firms managing to
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reduce the time spent on the production, sale, distribution or development of new products
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achieve a major competitive advantage (e.g., Clark & Fujimoto, 1991; Chen et al., 2010).

This competitive approach has been referred to as time based/oriented competition, first-
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mover strategy, fast-follower strategy, fast product development cycle time, on-time schedule
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performance, speed to market, and innovation speed (Kessler & Chakrabarti, 1999; Menon et

al., 2002, Chen et al., 2005).

The contribution this celerity makes to a firm’s competitiveness is based on several effects.

On the one hand, it has a positive bearing on costs: speedier NPDs involve shorter

timeframes, and therefore consume fewer resources. On the other hand, this speed impacts

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favorably on sales through several mechanisms: (1) speedier NPDs register a higher novelty

ratio, and innovative products appeal to consumers (Clark & Fujimoto, 1991). What’s more,

innovative products lead to an increase in sales via pricing, as they allow a premium to be

added due both to their original characteristics and to their prompt availability (Clark &

Fujimoto, 1991; Gupta et al., 1992); (2) speedier NPDs also lead to an increase in sales

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through a greater adjustment of the new products to customers’ expectations. This is because

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more streamlined or shorter NPDs may be launched closer to the time the product is

consumed, and therefore respond to more recent information on consumer preferences. This

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reduces the risk of not adjusting to the latest customer preferences (Fisher, 1997; Wathne &

Heide, 2004). Finally, (3) speedier NPDs provide more time for selling the new product

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before its lifecycle ends, and therefore increase the return on sales.
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Scholars have pointed out, however, that trade-offs may exist between these time-based
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strategies and other business objectives such as quality or costs (Meyer & Utterback, 1995;

Gupta et al., 1992; Swink et al., 2006, Chen et al., 2010). In any case, two important
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questions need to be kept in mind. The first one is that many NPDs may have enough margin
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to be accelerated without compromising other objectives, such as cost or quality (Gupta et al.,
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1992). Applying new approaches (e.g., functional integration, waste and error reduction, and

overlapping activities) could be performance-enhancing in multiple dimensions

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simultaneously. The second question is that these trade-offs may simply represent different
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ways of competing. Swink et al. (2006) note that organizations with major trade-offs between

different performance-indicators (quality-speed-quality) are still successful companies.

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2.3 Functional Integration and Information Processing Theory

Functional integration has been referred to in a number of different ways in the literature:

collaboration, coordination, teamwork, unity of effort, connectivity, alignment, internal

integration, or cross-functional integration (Chen et al., 2009; Frankel & Mollenkopf, 2015;

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Swink & Schoenherr, 2015). Although the concept has been around for decades under

different denominations, studies frequently appear claiming it still remains poorly understood

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(e.g., Pagell, 2004; Frankel & Mollenkopf, 2015; Swink & Schoenherr, 2015). Among other

shortcomings, researchers bemoan the following: (1) concept operationalizations that refer to

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the presence or absence of integration antecedents or enablers, rather than to the degree of

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integration achieved (Pagell, 2004; Turkulainen & Ketokivi, 2012); (2) the absence of a
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theoretical grounding that helps to understand how it works and provide arguments to

identify the means by which the attributes of integration are linked to performance indicators
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(e.g., Turkulainen & Ketokivi, 2012; Frankel & Mollenkopf, 2015); and (3) the lack of

consensus about the concept itself (e.g., Pagell, 2004; Frankel & Mollenkopf, 2015) .
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We overcome the above limitations through the following three approaches: (1) avoiding

defining, or operationalising, the concept by using antecedents that may, or may not, promote
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functional integration, such as joint participation, collocation, Information and

Communication Technologies (ICTs), integrating incentives, socializing activities, or

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integrating managers (e.g., Leenders & Wierenga, 2002); and (2) grounding our definition in
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Information Processing Theory (IPT), which allow us to (3) synthesize previous functional

integration definitions by identifying their two differentiated and essential components, as

well as provide arguments for our hypothesis.

Different theoretical approaches can shed light on and explain different nuances of the

functional integration concept (Frankel & Mollenkopf, 2015). This paper is grounded in IPT

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in particular because it provides us with the basis to present functional integration as a two-

step process that should aim for optimal decision-making. Initially adapted by Galbraith

(1973) from developmental psychology, IPT assumes that companies are open social systems

that deal with uncertainty. As they grow, they organize themselves into specialized,

interdependent subunits, with information processing then occurring within and between

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these subunits for dealing with this uncertainty (Galbraith, 1974; Tushman & Nadler, 1978).

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Information processing is viewed accordingly as an internal integrating concept achieved

through different antecedents (e.g., rules and programs, hierarchy, joint planning, formal

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information systems, and lateral relations) (Galbraith, 1974; Tushman & Nadler, 1978). The

application of IPT to different situations, at different levels of analysis, with different

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performance indicators and with diverse concept operationalizations, is helping to develop
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the literature on functional integration or internal integration in different ways:
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Swink and Schoenherr (2015) have relied on IPT to argue for the ability that internal

integration has to increase different kinds of productivity (ROS, ROA, ATO). Schoenherr and
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Swink (2012) have relied on ITP to argue for its ability to moderate the effect of customer
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and supplier integration on different kinds of operational productivity. Swink et al. (2007)
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have grounded their reasoning in IPT to explain the effect of four different strategic

integration activities on manufacturing plant performance, and therefore on business

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performance. Hult et al. (2004) have developed a model that explains how the firm’s
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information processing capacity can improve its supply chain performance. They have

highlighted how the shared meaning attained through information processing could decrease

cycle time. Our study joins this stream of literature and also relies on IPT, albeit with the aim

of undertaking a more itemized analysis of the workings of functional integration. While

some of the above authors have relied on a unidimensional concept of functional integration

in their application of IPT (Schoenherr and Swink, 2012; Swink and Schoenherr, 2015), we

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will use IPT arguments to identify and define the different components of internal integration.

This would permit us to argue for their disaggregated and two-step effect on NPD speed.

As Kahn and Mentzer (1998) reported nearly twenty years ago, most functional integration

definitions rely either on an interaction/communication perspective or on a collaborative

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perspective, or even on both. Following this approach, reinforced by numerous subsequent

proposals (see Table 1), we identify two core components in functional integration.

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Table 1: Conceptualizations of Functional Integration.

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Authors Concept

Integration is a process of interdepartmental interaction and interdepartmental

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Khank & Mentzer, 1998
collaboration that brings departments together into a cohessive organization.
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Participants work cooperatively toward a win-win solution by bringing all relevant
issues into the open, sharing information and analysing the situation objectively. In
Xie et al., 1998 the NPD process, collaboration it is more to lead to sound decisions on NPD
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selection, design and launch because it facilitates integration of diverse skills,

resources and perspectives, resulting in the most jointly optimal solutions.
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Integration is a process of interaction and collaboration in which manufacturing,

Pagell, 2004 purchasing and logistics work together in a cooperative manner to arrive at mutually
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acceptable outcomes for their organization.

Product-process integration is the process of co-developing product and processes

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Swink et al., 2007

and sharing specification information and related knowledge.

Internal process integration refers to the management of restructuring activities that

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aims at seamlessly linking relevant business processes and reducing redundant

Chen et al., 2009
processes within a firm. Thus, two key dimensions of internal process integration are
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internal process connectivity and internal process simplification.

Schoenherr & Swink, 2012;

Internal integration refers to cross-functional intra-firm collaboration and information
Swink & Schoenherr, 2015
sharing activities that occur via interconnected and synchronized processes and
(Information Processing
systems.
Theory)

We have labelled the first one “information shared and understood”. Most definitions include

this element under different denominations, such as interaction (Kahn & Mentzer, 1998),

communication (Swing & Song, 2007), or connectivity (Chen et al., 2009). This information

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should not just be shared, as its implications for the other function should also be understood

(Calantone et al., 2002). This first component aligns perfectly with the integrating concept of

IPT, as it has been described as “the gathering, interpreting, and synthesis of information that

occurs between interdependent functions in the context of organizational decision making”

(Tushman and Nadler, 1978). We have chosen this label because this expression it is included

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in most functional integration definitions, and it is self-descriptive, facilitating the

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presentation of our arguments.

Our second component has been labelled “aligned decisions”. This component replaces the

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intuitive concept of collaboration or cooperation often included in functional integration

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definitions. In their concepts of functional integration, different authors have recently stressed
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that it should generate efficiencies -costs, technology, processes, competitive position, etc.

(Chen et al., 2009; Swink & Schoenherr, 2015)-, by reducing redundancies (Chen et al.,
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2009), by exploiting each department’s competencies and strengths (Schoenherr & Swink,

2012), and by arriving at mutually acceptable outcomes, or at least the best ones for the firm
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(Xie et al., 1998, Pagell, 2004). Our “aligned decisions” component reflects this efficiency
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trend, differentiating it from other possible kinds of collaboration or cooperation. Xie et al.
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(1998) explain that there is a whole range of interfunctional coordination options (e.g.,

avoidance, accommodation, competition, etc.). Accommodation, for example, consists of one

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party yielding to the wishes of the other, rather than combining two diverse viewpoints and
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making common sense of them. The decision may therefore fail to consider important

information. Accommodation may be due to the greater personal charisma of the professional

of the other party, or greater political power within the company. Decisions inspired by

accommodation, and other ineffective options (Xie et al., 1998), may provide a sense of

collaboration, cooperation, teamwork, shared meaning or unity of effort that would

nevertheless be far from optimally aligning the two functions’ requirements and capabilities,

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and far from generating efficiencies for both parties and for the NPD process. IPT signals that

information processing aims to create more robust and optimal strategies, and prevents

unexpected problems that require workarounds (Galbraith, 1974), and avoid redundancies

(Swink & Schoenherr, 2015). In their development of IPT, Swink and Schoenherr (2015)

have stressed that this optimization is reflected in different profitability indicators. IPT

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therefore allows us to stress that collaboration or shared meaning should be one that generates

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optimization. By stressing this, we go one step further from the works that rely mainly on the

shared meaning that processing information achieves (Hult et al., 2004; Swink & Schoenherr,

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2012). In some situations, as in the purchasing-marketing case, this shared meaning could be

a mere accommodation to the other party’s will. Given the traditionally different status of

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these two areas within companies, purchasing professionals have often complained that when
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they interact with marketing they do not do so on a level pegging (Williams et al., 1994). To
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differentiate our second component from previous proposals that relied on a concept of

collaboration that could conceal non-optimal decisions, we have chosen this new label:
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“aligned decisions”.
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Based on the above discussion, we derive the following definition of functional integration
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for this specific research:

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Purchasing-Marketing Functional Integration implies information shared and understood

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with/by the other function, and this information being translated into aligned decisions.

Aligned decisions are the optimal ones that achieve efficiencies by making the most of both

function’s resources and capabilities, avoiding redundancies and reworking, and obtaining

advantageous results for both parties or, at least, for the firm.

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3 MODEL AND HYPOTHESIS

Figure 1 shows the conceptual model proposed. It depicts the sequence in which each

component of functional integration has a bearing on speed in NPD. Firstly, Information

Processing Theory (IPT) establishes a negative relationship between information processing

and uncertainty (Galbraith, 1974; Tushman and Nadler, 1978). The more uncertainty present

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due to environment circumstances, or to the interdependency among specialized subunits, the

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more information processing is needed. NPD is a mainstream task that involves several

functional areas that have to consider environmental variables such as customers and

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suppliers. Specialized functional areas are therefore highly interdependent during NPD, and

subject to high uncertainty. IPT consequently establishes that the different specialized

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subunits, by jointly gathering, synthesizing and interpreting information, can reduce this
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uncertainty and achieve optimal strategies (Galbraith, 1974; Tushman and Nadler, 1978;
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Swink and Schoenherr, 2015). In this sense, IPT argues that information processing enhances

visibility and reduces the uncertainty derived from functional interdependency, which
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reduces the potential limitations of myopic perspectives and decreases bounded rationality
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(Galbraith, 1974; Tushman & Nadler, 1978). This broader perspective allows making the

optimal combination of both functions’ resources and requirements. Although the possession
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of such information does not guarantee aligned decision-making, due to different barriers
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such as conflicting reward systems, these decisions will nonetheless be difficult to coordinate
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if their ramifications for the other function are unknown.

Therefore, by applying these IPT arguments we can posit a positive relationship between our

two identified functional integration components, namely, information shared and understood

and optimal decision alignment in the purchasing-marketing case. Sharing information on

customers and suppliers and understanding its implications for the other function would

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reduce uncertainty and lead to the optimal alignment of both functions’ resources and

requirements. These arguments allow us to formulate the following hypothesis:

H1: A higher degree of information shared and understood regarding the purchasing

and marketing functions is positively correlated to the degree of alignment of the

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decisions involving both functions.

FIGURE 1. Conceptual Model

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Purchasing-Marketing
Functional Integration

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Components AN
Information
Shared and
Understood
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Speed
H1
H3 in NPD
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Aligned
H2
Decisions
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Secondly, the model considers that aligned decisions avoid time-wasting and delays during
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NPD. In their developments of IPT, scholars have signaled that more robust and optimal
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strategies prevent unexpected problems that require workarounds (Galbraith, 1974), and

avoid redundancies (Swink & Schoenherr, 2015). Since workarounds consume time, and

redundancies double the time needed, it can be logically deduced that aligned decisions

reduce time cost. Hult et al. (2004), grounded in IPT, state that in those contexts in which

subunits are interdependent (e.g., the supply chain) the shared meaning of concepts such as

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quality and timeliness needs to be resolved so that effort can be focused on necessary

activities. As a consequence, cycle time will be reduced (Hult et al., 2004). Likewise, NPD

task interdependency requires aligned decision-making on aspects such as quality, timings or

cost in order to focus effort and avoid time-wasting and delays. Even though this alignment

requires time, decision-making lacking this consistency will imply reworking and time-

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wasting.

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In the purchasing-marketing case, failure to consider the purchasing function’s requirements

and capabilities may promote the development of products that are very attractive for

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consumers, but for which there is no production availability on the supplier market, or having

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to wait for the necessary components to be made, or having to redefine the product’s
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specifications to adapt it to the materials available or to more economical ones (Freeman &

Cavinato, 1990; Carbone, 1995). This causes extra work and leads to delays or waiting times.
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Likewise, this lack of alignment may lead purchasers to initiate processes for finding and

selecting suppliers whose resources are not in demand on customer markets. This will lead to
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the subsequent abandoning of the suppliers, with the resulting waste of time. Based on these
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arguments, we formulate our second hypothesis.

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H2: A higher degree of alignment in the decisions involving the purchasing and

marketing functions is positively correlated to speed in the NPD process.

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Thirdly, the model presents a third hypothesis that reflects the positive impact of functional

integration on NPD speed, but making explicit that this is a two-step effect between

interdependent functional integration components. Galbraith (1974) reported a relationship

between information processing and lead time, contending that if an organization’s

information processing capacity to handle events is overloaded, a possible response might be

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to extend delivery dates until they are long enough to keep the scheduling problem within the

organization’s information processing limits. Consequently, it may be deduced that the

greater the information processing capacity, the shorter the lead times an organization can

provide. Due to the interdependent nature of NPD tasks, the related information processing

capacity occurs through and between the integration of specialized and interdependent

PT
functions (Tushman & Nadler, 1978). This information processing capacity, as argued in the

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previous hypothesis, relies on two interdependent components; each one needs the other in

order to achieve the positive effect of functional integration, namely, NPD speed. Without

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any information on the other function, it will be difficult to make decisions in a coordinated

or aligned manner. Furthermore, sharing information will be of no use either unless it is taken

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into account through an aligned decision-making process. Both components complement
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each other, and there is a relationship of prevalence between them. Sharing information on
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the market and on suppliers is required for coordinating these two markets from the start, and

thus expediting the NPD process. This means that the impact of shared information on speed
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in NPD arises through the complete mediation of aligned decisions. Information is important,
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but translating information into knowledge becomes critical to reduce cycle time (Hult et al.,

2004). This notion informs our third hypothesis.

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H3: The alignment of decisions completely mediates the relationship between the
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information shared and understood and speed in the NPD process (i.e., sharing
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information helps to expedite the NPD process inasmuch as it allows aligning the

decisions between the purchasing and marketing functions).

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4 METHODOLOGY

4.1 Data

To test this model, a population of manufacturing firms was chosen. In order to ensure better

response rates, our aim was to identify firms in which we could expect NPD activity, and

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were large enough to be organized into specialized functions working in a coordinated

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manner during NPD. To meet the first criterion, we identified the SICs with a high rate of

patent applications. As patent applications were not listed by SIC, we chose those that were

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related to the “top ten technological areas in terms of patent application” as per the 2013

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ranking of the OEPM (Spanish Office of Patents and Brands) 2013 . This led to the selection
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of the following three sectors: fabricated metal products, except machinery and transport

(SIC 34), transportation equipment (SIC 37), and electronic and other electrical equipment
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(SIC 36). To meet the second criterion, firms with more than 50 employees were chosen.

Based on these criteria, the ORBIS database provided a total of 578 firms.
D
TE

Purchasing Managers were chosen as key informants for this study, as they are

knowledgeable about the issues being researched and are expected to be willing to discuss
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them (Kumar et al., 1993). Purchasing has a long tradition in expecting and receiving

information and requirements from other functions and adapting to them (e.g., Williams et
C

al., 1994, Carbone, 1995, Matthyssens et al., 2016), while marketing may not perceive the
AC

need to receive information on purchasing and aligning with it. Purchasers seemed therefore

more able to evaluate both flows of information and alignment. Purchasers’ reward systems

are frequently related to suppliers meeting delivery dates, so they are well aware of the

deadlines involved in the NPD process. The response rate and low levels of missing dates

reported below confirm their competency as informants. A comparative analysis considering

both perspectives will certainly be a useful extension of our analysis.

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A questionnaire was sent out according to the approach contained in Dillman’s Total Design

Method (1978). In order to increase the response rate, whenever possible, contact was made

over the phone. An email was then sent to introduce the research project, with a link to the

virtual questionnaire. Those firms that so requested (3%) were sent a questionnaire by post,

together with a stamped addressed envelope for returning the completed questionnaire. Two

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rounds of reminder calls were made to those firms that had not answered after two weeks.

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This process identified 43 firms in the initial cohort that no longer conducted purchasing

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activities, either because these operations had been rerouted through the parent companies in

other countries or because they had abandoned their manufacturing operations and devoted

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themselves solely to commercialization. This reduced the study’s cohort to 535 firms. We
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received 197 questionnaires. Of these, 56 were unusable due to the high rate of missing data,

five surveys had a missing value, and the rest were properly completed. We contacted the
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respondents by phone or email to ask them to provide the missing answer in the case of the
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five surveys noted. By the end of this process, we had three surveys with one missing value,
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which was replaced by the mean score. We therefore ended up with 141 completed

questionnaires, which means a response rate of 26%. We obtained satisfactory results while
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assessing the sample’s representativeness. The sampling error was ±7.08%, with a 95% level

of confidence. An ANOVA test on the available demographics that could impact our
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analysis, such as size, showed no significant differences between the sample and the
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population, or between the first 25 respondents and the last 25 (Wagner and Kemmerling,

2010) (see Table 2).

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Table 2. ANOVA Test for non-response bias.

Population 25 first vs. 25

vs. Sample last
F F
Number of Employees. ,023 (p=,880) .007 (p=,932)
Total Assets. ,009 (p=,926) .027 (p=,871)

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The respondents’ experience in their current position was distributed as follows: 11% more

than 20 years; 23% between 10 and 20 years; 26% between 5 and 10 years; 23% between 2

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and 5 years, and 11% less than 2 years. Table 3 includes information on respondent

distribution per SIC, and size in terms of the number of employees and assets.

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Table 3. Sample demographics.

SIC Code Number of Number of

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Number of Number of Total Assets. Total Assets.
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companies companies % Employees Employees Million Euro. Million Euro.
(Average) (S.D) (Average) (S.D.)
34 45 32% 113 (65) 25 (27)
36 43 31% 321 (644) 82 (167)
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37 53 38% 674 (1784) 241 (790)

Total 141 100% 387 (1169) 124 (500)
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As a single data source was used, and to avoid common method bias, while designing the
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questionnaire we followed the recommendations made by Podsakoff et al. (2003): the

questions regarding dependent variables were placed before those related to the independent
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variables in the survey. The Harman Test (Podsakoff et al., 2003) revealed that our model’s
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variables do not load in a single factor. Instead they load in many factors, six of them with an
AC

eigenvalue higher than 1, with each one of them accounting for a low percentage of the

variance. These results therefore indicate that common method bias does not seem to be a

significant problem.

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4.2 Metrics

The unit of analysis was the development of a new product that met the following

requirements: (1) already for sale with data on its level of success, and (2) for which the

purchasing department had managed the suppliers (raw materials, components, subcontracted

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production, etc.). Those surveyed were asked to respond to the questionnaire in terms of the

latest NPD process that fulfilled those requirements, with the aim being to avoid covering

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only success stories.

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Components of Functional Integration. Multivariate testing was used to measure the two

components of functional integration: information shared and understood, and aligned

U
decisions. Accordingly, the heads of purchasing were asked to use a Likert-type scale (from 1
AN
-not at all- to 7 -completely-) to assess the extent to which the statements contained in Table
M

4 applied to their experience during the NPD selected. These statements aim to measure

integration per se, or achieved integration, and avoid measuring integration antecedents, such
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as for example the exchange of reports or the existence of integrating managers. They were
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inspired by previously selected items that were consistent with our approach or were inspired

in the works used to conceptualize our variables.

EP

With a view to scoring the information shared and understood, use was made of the first four
C

items in Table 4, inspired by similar items used by Schoenherr and Swink (2012) and the
AC

work by Gupta et al. (1986). The measurement of the decisions’ degree of alignment involved

the next four items, which have been inspired by adapting them from the work by Xie et al.

(1998) and Chen et al. (2009). The two last items were reverse coded, and the responses were

therefore reverted before proceeding to the analysis.

A confirmatory factor analysis (CFA) revealed that the structure of the data observed did not

properly fit our proposed identification of two components of functional integration. We

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therefore considered an exploratory factor analysis (EFA). The latter’s results are shown in

Table 4. This analysis revealed that the information shared and understood was in turn

subdivided into two sub-dimensions, with the first focusing on commercial data, and the

second on data related to purchasing. This result was consistent with previous literature.

Traditionally the purchasing function has been less involved in NPD than other areas

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(Carbone, 1995; Di Benedetto & Calantone, 2003), and purchasers have reported that they do

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not interact as equals with marketing professionals (Williams et al., 1994). These arguments

lead us to conclude that the two streams of information may not necessarily behave in the

SC
same way, and they should therefore be analyzed separately. This disaggregated analysis is

also consistent with previous works that identify different components, and analyze them

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separately (e.g., Khan and Mentzer, 1998; Chen et al., 2009).
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M

A further CFA, whose results are also shown in Table 4, shows that when we consider three

components of functional integration, covering this breakdown of the information shared and
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understood, we obtain a good fit with the structure of the data observed. Therefore,
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purchasing-marketing functional integration is broken down into three components.

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This CFA also confirms the unidimensionality of the three dimensions, providing proof of
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their convergent validity and reliability. It was also verified that each construct’s average
AC

variance extracted (AVE) is higher than the square of its estimated correlation with other

factors, which reflects a suitable discriminant validity (Fornell & Larcker, 1981).

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TABLE 4 Purchasing-Marketing Functional Integration Components: Exploratory and Confirmatory

Factor Analyses

Exploratory Factor Confirmatory Factor

Analysis Analysis

F1 F2 F3 F1 F2 F3

Marketing Purchasing managers/professionals received enough .195 .869 .136 .82

Information commercial information (e.g., Product strengths and

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Shared and weaknesses, trends, market threats and opportunities) to
Understood. efficiently play their role during the NPD process.

Purchasing managers/professionals reached a high degree .168 .860 .190 .80

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of understanding on the commercial implications of the
decisions made during the NPD process.

Purchasing Marketing/Commercial managers/professionals received .081 .103 .896 .66

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Information enough purchasing information (e.g., Available suppliers,
Shared and materials and components, costs, quality, deliveries) to
Understood. efficiently play their role during the NPD process.

Marketing/Commercial managers/professionals reached a .175 .228 .839 .92

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high degree of understanding on the purchasing
implications of the decisions made during the NPD
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process.

Aligned The decisions made regarding marketing and purchasing

Decisions issues throughout the NPD process.
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- Try to favor equally the goals of both areas .802 .254 .194 .86
(purchasing and marketing)
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- Draw the most from both functions’ capabilities. .637 .469 .171 .76

- Did not generate rework or the need to repeat tasks. .838 -.023 .173 .67
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- Did not cause task duplication in either functional .752 .205 -.042 .61
area.
Varimax Rotation Χ2/g.l.=1.351 GFI=.961
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AGFI=.917 TLI=.975
Explained Variance CFI=.985
74.51%

Cronbach’s Alpha: .797 .756 .809

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Composite Reliability: .818 .797 .777

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AVE .533 .663 .641

Squared correlation estimates:

F2: Purchasing information shared .220

F3: Aligned decisions .193 .346

Speed of the NPD. The speed of the NPD was contained in a multivariate construct adapted
from Kessler and Bierly (2002). The heads of purchasing were asked to use a Likert-type
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scale (from 1 -very low- to 7 -very high-) to assess the extent to which they met the standards
of speed stipulated by the firm for each one of the specific stages in the NPD process. This
procedure ensured that all the respondents considered the same stages of the process, as
recommended by Chen et al. (2005).

This yardstick for measuring speed meets the conditions of formative scales (Diamantopoulos

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and Winklhofer, 2001; Jarvis et al., 2003): (1) each item measures a different aspect of the
speed in NPD; (2) a change in any one of the items would involve a change in the construct,
and not the other way around; and (3) consideration needs to be given to each and every one

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of the items in order to have a complete view of the speed of the process. We therefore built
the measurement construct by computing the mean of the scores assigned to the different

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items contained in Table 5. Some authors recommend testing for multicollinearity in
formative scales to discard repetitive items. However, Diamantopoulos and Winklhofer

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(2001) stress that theoretical arguments should prevail in formative scale building to
statistical inference. In our case, each item refers to a conceptually different stage of NPD, so
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discarding items does not seem reasonable. We relied on a mean of scores to compute the
scale. This kind of scale makes interpretation and replication easier.
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TABLE 5. Speed in NPD

D

Speed in NPD Speed in the stage involving brainstorming and the selection of ideas as regards the
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preset time for this phase/stage.

Speed in the design stage as regards the preset time for this phase.
Speed in the stage involving the appraisal and approval of the final prototype as
regards the preset time for this phase.
Speed in the production stage as regards the preset time for this phase.
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Speed in the transportation stage as regards the preset time for this phase
(from suppliers through to PoS).
C
AC

Control Variables. In order to control for the possible effect that the different contextual

circumstances may have on functional integration, the analysis included the following control

variables.

The participants’ exclusive dedication to the NPD. Taking Carbonell and Rodríguez (2006)

as a reference, the heads of purchasing were again asked to use a Likert-type scale from 1

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(not at all) to 7 (fully) to rate the extent to which those participating in product development

were dedicated full-time to the project.

The participants’ experience in similar NPDs. Also taking Carbonell and Rodríguez (2006) as

a reference, the heads of purchasing were again asked to use a Likert-type scale from 1 (not at

all) to 7 (fully) to rate the extent to which those participating in the selected NPD process had

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a high level of experience in the performance of similar projects.

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Clarity of goals. Based on Swink (2003), we asked the heads of purchasing to use a Likert-

type scale from 1 (not at all) to 7 (fully) to rate the extent to which clear and explicit goals

SC
had been set in the NPD process in question.

Firm size. This was measured according to the organization’s headcount in 2013. These data

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were provided by the SABI database, which contains comprehensive information on
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companies in Spain and Portugal.
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Industry type. Companies SIC codes were used to control for Industry effect.
D

4.3 Analysis
TE

The literature provides different methodological techniques for testing hypotheses on

EP

mediation: (1) the causal steps procedure (Baron and Kenny, 1986), often referred to as B-K

approach, (2) the James et al. (2006) proposal, based on Structural Equation Modeling, also
C

referred to as the JMB approach, (3) normal theory point estimation, known as the Sobel Test
AC

(1982), and (4) bootstrapping relaying methodologies (e.g., Preacher & Hayes, 2004; Zhao et

al., 2010). Of these, the B-K and JMB approaches follow a step-by-step procedure that tests

for both the isolated effects across the variables studied and their combined effect. The two

other techniques mentioned focus especially on testing the significance of the indirect or

combined effect. The two first techniques, therefore, fits better our analysis’s itemized

approach, and allow us to test all the proposed hypotheses. However, in spite of its

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widespread use, several papers in recent years have referred to B-K procedure limitations,

highlighting the JMB’s superiority (e.g., MacKinnon et al., 2000; MacKinnon et al., 2002;

James et al., 2006; Fritz & MacKinnon, 2007; MacKinnon, 2008; Le Breton et al., 2009).

These limitations include the following: (1) it is based on regressions with ordinary least

squares, and assumes the perfect validity of the measurements, and (2) it requires a

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statistically significant relationship between the dependent and independent variables.

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Considering these arguments, we will base ourselves on JMB methodology. Furthermore, as

the JMB approach uses SEM, it will also allow us to simultaneously test the effect of our two

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independent variables.

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The JMB approach (Frazier et al., 2004; James et al., 2006) recommends starting by testing a
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complete mediation effect vs. a partial one, as it is a more parsimonious assumption. This

recommendation perfectly fits our set of hypotheses. Testing for complete mediation implies
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testing the relationships shown in Figure 2: the effect the shared information has on aligned

decisions, as well as the effect the latter have on the speed of the NPD process.
D
TE
C EP
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5 RESULTS

TABLE 6. Mean, Standard Deviation, and Pearson Correlation Coefficients

Mean S.D. 1 2 3 4 5 6 7 8 9 10 11
1. NPD Participants’ dedication 3.6 1.99 1 ** ** **
.094 -.022 -.077 .045 -.157+ .019 .041
.272 .246 .219
2. NPD Participants’ experience 5.59 1.36 .272** 1 **
.144+ -.045 .189* -.140+ .258** .043 .243** .295**
.261
3. NPD Goal Clarity

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4.99 1.56 .246** .261** 1 .161+ .117 -.007 -.115 .291* .201* .268** .257**
4. Organization Size 3.87 11.68 .219** .144+ .161+ 1 .191* -.038 -.161+ .059 -.069 -.011 .022
5. SIC 37 .38 .49 .094 -.045 .117 *
1 -.514**-.531** -.071 .135 -.007 -.109
.191

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6. SIC 36 .30 .46 -.022 .189* -.007 -.038 -.514** 1 -.454** .018 .009 -.011 .107
7. SIC 34 .32 .47 -.077 -.140+ -.115 -.161+ -.531**-.454** 1 .056 .131 .018 .008

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8. Marketing Information Shared
4.50 1.42 .045 .258** .291** .059 -.071 .018 .056 1 .374** .473** .289**
and Understood
9. Purchasing information Shared *
4.82 1.21 -.157 .043 .201 -.069 .135 -.009 -.131 .374** 1 .329** .135
and Understood

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10. Aligned Decisions 4.90 1.11 .019 .243** .268** -.011 -.007 -.011 .018 .473** .329** 1 .292**
11. Speed in NPD .041 .295** .257** .022
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4.66 .89 -.109 .107 .008 .289** .135 292** 1
+p<0.1 *p<0.05; **p<0.01; ***p<0.001. (two-tailed) Pearson correlation coefficients
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The descriptive statistics and correlations for the variables in our study are included in Table

6. The complete mediation model depicted in Figure 2 recorded a good fit, as shown by the
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different indicators: χ2(60) = 77.52 (p = .064), χ2/DF = 1.292, GFI =.931, AGFI= .863, TLI =
TE

.944, CFI = . 968, and RMSEA = .046. These results support our hypotheses 1, 2 and 3,

confirming that aligned decisions completely mediate between information shared and
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understood and speed.

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AC

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FIGURE 2. Model for Analyzing the Complete Mediation of Aligned Decisions in the

Relationship between Information Shared and Understood and Speed in NPD.

Purchasing-Marketing Functional NPD Participants’ dedication

Integration Components
NPD Participants’ experience
-.04
Marketing

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Item 1 Information NPD Goal Clarity .18*
.81***
Shared and
.80***
Item 2 Understood Organizational Size
.16+

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.53*** -.12

Item 5
.77 ***

Item 6 .86***
Aligned Speed

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.27**
Item 7 .66*** Decisions in NPD
.60***
Item 8
.19+ -.02

-.00

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Purchasing
Item 3 .67*** Information
SIC 34 Fabricated metal products,
Shared and except machinery and transport
AN
.91***
Item 4 Understood

SIC 37 Transportation equipment

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Note 1: Standardized Coefficients. Note 2: The items correspond to the statements listed in Table 4 according to
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their order of appearance.

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As additional proof of the robustness of the results, consideration was given to an alternative

model that is shown in Figure 3. As regards the previous model, inclusion was made in this
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case of the direct effects on speed in NPD of the information shared and understood,
C

involving both marketing and purchasing. As is to be expected, given that the two restrictions
AC

are removed, this model’s fit improves: χ2(58) = 76.459, (p = .053), χ2/DF = 1.318, GFI

=.933, AGFI=.860, TLI =.939, CFI =.966, and RMSEA =.048. Nevertheless, the

improvement in the fit is not significant (∆χ2 = 1.061(2), p>0.588), indicating that the

inclusion of these direct effects does not enhance the model. In fact, we can see that the

standardized coefficients of these direct effects on speed in NPD of both dimensions of the

information shared and understood were not significant. Therefore, this additional test simply

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confirms the complete mediation of the aligned decisions in the relationship between shared

information and speed. In other words, the whole influence of information shared and

understood on speed is channeled through the alignment of decisions.

FIGURE 3. Model for Analyzing the Direct and Indirect Effect of Information Shared

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and Understood on Speed in NPD.

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Purchasing-Marketing Functional NPD Participants’ dedication

Integration Components
NPD Participants’ experience

SC
-.03
Marketing
Item 1 Information NPD Goal Clarity .09+
.80***
Shared and
.81***
Item 2 Understood Organizational Size
.15+

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.52*** -.00
.13
Item 5
.86 ***
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Item 6 .77***
Aligned Speed
.24*
Item 7 .66*** Decisions in NPD
.60***
Item 8
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-.09
.19+ -.08

-0.18
Purchasing
Item 3 .66*** Information
SIC 34 Fabricated metal products,
Shared and
D

.92*** except machinery and transport

Item 4 Understood

SIC 37 Transportation equipment

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EP

Note 1: Standardized Coefficients. Note 2: The items correspond to the statements listed in Table 4 according to

their order of appearance.

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Figure 3 shows that the effect of sharing marketing information on the alignment of decisions
AC

is stronger than the effect of sharing purchasing information, .52 (p<0.001) as opposed to .19

(p<0.10), which means that the effect on the speed of the NPD process is greater in the

former case (.52 x .24 = .13) than in the latter one (.19 x .24 = .05).

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6 DISCUSSION OF RESULTS

6.1 Academic Implications

Our results provide an initial group of implications related to purchasing-marketing literature:

Purchasing-marketing integration is proving to have positive effects on economic and

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aggregated performance indicators (Smirnova et al., 2011; Ziggers & Henseler, 2016). In

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order to further understand the potential of the purchasing-marketing link, it is important to

conduct studies that focus specifically on different operational performance indicators (speed,

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flexibility, quality, etc.). It is also important to analyze this link at a different level of

U
analysis. We focus here on new product development, but other levels of analysis, such as the
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individual one (Frankel & Mollenkopf, 2015), for instance, could enrich this knowledge link.

Very few articles have studied purchasing and marketing integration relying on a direct
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measure of this concept (achieved integration) (e.g., Smirnova et al., 2011). However, to do
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so poses different challenges regarding the conceptualization of functional integration, as

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explained in sections 1 and 2.3. In this regard, our results present a second group of

implications for functional integration literature in general. Firstly, in line with other
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scholarly approaches (e.g., Khan and Mentzer, 1998; Chen et al., 2009) this study stresses the

importance of identifying and distinguishing the essentially different components of

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functional integration. The literature keeps offering different proposals to define and/or
AC

operationalize these components (e.g., Chen et al., 2009; Swink & Schoenherr, 2015). Most

researchers generally coincide on the first one, namely, sharing information or interaction.

The second component, however, is more contested. While some researchers rely on a

consensus perspective-shared vision, shared understanding (Kahn & Mentzer, 1998; Hult et

al., 2004)- which can hide merely acquiescing to the other party’s wishes (Xie et al., 1998),

other researchers add an efficiency perspective to this concept (Xie et al., 1998; Chen et al.,

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2009; Swink & Schoenherr, 2015). Since both scholars and practitioners would agree that the

desired integration is the one that procures efficiencies, research efforts should keep

exploring this last option in order to provide a more accurate definition and operationalization

of efficient functional integration.

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Secondly, our results highlight the importance of separately analyzing the possible effects

each component has on different variables. Previous research has analyzed, for instance, the

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impact of integration on speed (i.e., Swink & Song, 2007), or on other performance indicators

(i.e., Turkulainen & Ketokivi, 2012), albeit using an aggregated concept of integration, In

SC
other cases (e.g., Khan & Mentzer), scholars have identified different components of

U
functional integration, albeit studying their effect on a composite measure of performance,
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instead of analyzing separately their impact in different dimensions of this performance (e.g.

cost, quality, speed, flexibility, market share, etc.). Likewise, or results stress the importance
M

of identifying the antecedents of each functional integration component in a differentiated

manner. González-Zapatero et al. (2016) have reported that, in the purchasing-marketing

D

particular case, not all the traditional functional integration antecedents were able to promote
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each one of the three differentiated components. Aggregated concepts of functional

EP

integration or NPD performance may lead to confusion; itemized analyses help to better

understand how this functional integration phenomenon works.

C

Thirdly, our results involve acknowledging the importance of the relationships that may arise
AC

between these two components, and thereby identify possible mediating effects. While most

functional integration definitions and argumentation about its effect on other variables seem

to tacitly assume that the impact of sharing information on other variables needs the

mediating effect of a second functional integration component -e.g., collaboration or shared

meaning (Kahn & Mentzer, 1998; Hult et al., 2004; Swink & Schoenherr, 2015)-, few studies

test this mediating effect in their models (e.g., Hult et al., 2004).

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Finally, as commented in section 2.3, IPT has helped to expand functional integration

literature in different ways. IPT has also allowed us in this study to differentiate functional

integration from its antecedents, to identify their different components, and to explain the

relationship between them and our dependent variable. Our analysis reflects the benefits of

relying on theoretical underpinnings to extend functional integration literature.

PT
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6.2 Practical Implications

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This paper makes a number of contributions of relevance to the business world. Firstly, it

draws managers’ attention to the fact that when speed is necessary for competing, there is a

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special incentive to promote purchasing-marketing integration. These functions deal with
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elements outside the company that must be aligned, and over which they sometimes have
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more limited control, such as customer preferences or suppliers’ availability and capabilities.

This purchasing-marketing integration avoids workarounds and time-wasting, and could

D

allow anticipating work and time-off by synchronizing time planning.

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Secondly, the analysis and breakdown of the concept of functional integration may help top
EP

managers to better understand its workings. Accordingly, it stresses that an initial step is

needed to foster purchasing-marketing integration: the establishment of fora and mechanisms

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to ensure that the purchasing and marketing information of relevance to the NPD process
AC

flows in both directions, and its implications for the other party are understood. González-

Zapatero et al. (2016) have identified the traditional integration mechanisms that are able to

promote each different information flow in the purchasing-marketing case. Joint involvement

in the different stages of NPD and the use of shared databases are effective mechanisms for

promoting both flows of information. However, the mere physical proximity or collocation of

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purchasers and marketers does not ensure the flow of information from purchasing to

marketing, and therefore this mechanism should be reinforced with others.

Nevertheless, integration is not fully achieved, nor are its beneficial effects felt, if the

decisions that affect both functions do not subsequently transform this information into

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aligned decisions that lead to the most efficient solution based on both parties’ needs and

capabilities. This draws attention to the need for top managers to seek mechanisms to ensure

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not only that information flows in both directions, but also that decisions are made in a way

that fosters efficiency or alignment. Implementing a common purchasing-marketing database,

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or joint participation during the different NPD stages, for instance, might not be enough in

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the purchasing-marketing case. Other mechanisms, such as the establishment of common
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incentives (e.g., margins), may be necessary to foster the best possible use of the information

shared through that database. This second step is crucial, and should not be confused with
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other types of interfunctional fit such as, for example, simply adapting or submitting to the

other party (Xie et al., 1998). In certain circumstances, in which the other party enjoys greater
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personal charisma or political power in the firm, a function may tend to follow the other
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party’s indications without defending its own needs or seeking to foster its own capabilities.
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This may translate into a false sense of collaboration and coordination that does not lead to

greater efficiency.
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In the specific case of the purchasing and marketing functions, the traditional role of
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purchases, which waited “on the other side of the wall” for its buying instructions before

accessing the supply market (Williams et al., 1994; Carbone, 1995), may have a bearing on

the fact this function still simply seek to adapt to what other functions ask of it, instead of

proceeding more proactively to ensure the firm can better exploit its specific capabilities and

those of its suppliers. Managers should assess whether the integrating mechanisms they rely

on are actually promoting aligned decisions.

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7 CONCLUSIONS

This study explains how purchasing-marketing integration accelerates the NPD process.

Along these lines, and in order to provide this analysis with a solid platform, we relied on

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Information Processing Theory (IPT). IPT permitted us to ground our functional integration

concept in its components, instead of its enablers, to describe this phenomenon as a two-step

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process, and to differentiate efficient integration, referred to in this paper as aligned

decisions, from other kinds of coordination among functions (e.g., accommodation) (Xie et

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al., 1998).

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Our analysis identified three components in purchasing-marketing functional integration:
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marketing information shared and understood, purchasing information shared and

understood, and aligned decisions. Our results reveal that one component completely
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mediates the effect the others have on the speed of NPD. The mere fact that these two
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functions share information will only impact upon the speed of the NPD process inasmuch as
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they are able to transform this information into aligned decisions.

This research is not without its limitations, and we shall now refer to some of the more salient
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ones. It uses a single data source for the model’s main variables. Although our Harman test
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(Podsakoff et al., 2003) reveals that common method bias does not seem to be a significant
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problem in this study, combining different data sources would be a useful extension of this

analysis. It uses perceptual measurements, which although grounded in the literature

inevitably introduce a certain amount of subjectivity. It does not control for contextual

variables that may have a bearing on the importance of the purchasing-marketing link, such

as, for example, the degree of dynamism or complexity of the environment in which the firm

operates, the level of rivalry existing in the market, or the extent to which NPD processes

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depend on suppliers or on outside capabilities and resources. Overcoming these limitations

constitutes a research path and is vital for the orientation of future studies that will enable

delving further into the potential of purchasing-marketing integration.

However, this study has made several important contributions that we summarize here.

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Firstly, it extends prior research on purchasing-marketing integration. The benefits of

aligning purchasing and marketing have recently been stressed in the literature (e.g. Sheth et

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al., 2009; Lindgreen et al., 2016), but they have not been analyzed, or empirically tested in

the specific context of NPD. Sharing information on markets and suppliers, and reaching

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decisions that make the most of that information, avoids redundancies and extra work, allows

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overlapping and anticipation, and provides new product ideas that could be developed
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straightforwardly. Our results prove the importance of this link, inviting practitioners, on the

one hand, to assess the possibility of giving a more proactive role to purchasers in NPD and,
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on the other, inviting academics to investigate this link further. The benefits in the context of

NPD practices, such as postponement or reverse logistics, would make this analysis
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worthwhile. So, too, would their effect on other different operational performance indicators
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(e.g. quality, cost, or flexibility), economic indicators (profitability, sales growth) or

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intangible goals, such as creativity or suppliers’ innovation capability (Schoenherr et al.,

2012).
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Secondly, our study contributes to the debate on the concept of functional integration. As
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discussed earlier, there is a recognized lack of consensus over the concept itself (Pagell,

2004; Chen et al., 2009; Frankel and Mollenkopf, 2015). We have stressed the need to

separately analyze components that are conceptually different, instead of relying on

composite measures, the need to differentiate antecedents from achieved integration and,

furthermore, the need to rely on concepts and operationalizations of functional integration

that reinforce the efficiencies or optimization that it should provide. Our “aligned decision”

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component reflects the importance of this approach and invites academics to further develop

both its definition and operationalization, and identify its antecedents. Sharing purchasing

and marketing information fosters decision alignment, although other mechanisms could

reinforce this link. Managers’ awareness of its potential would certainly help.

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Acknowledgement

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This research was funded by the Spanish Government (Ministerio de Economía y

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Competitividad) through research projects ECO2013-47280-R and ECO2016-76876-R. Aid

was also received from the research project SA027U16 financed by the Consejería de

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Educación de la Junta de Castilla y León (Regional Ministry of Education of Castile and
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Leon).
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Table 1: Conceptualizations of Functional Integration.

Authors Concept

Integration is a process of interdepartmental interaction and interdepartmental

Khank & Mentzer, 1998
collaboration that brings departments together into a cohessive organization.

Participants work cooperatively toward a win-win solution by bringing all relevant issues
into the open, sharing information and analysing the situation objectively. In the NPD
Xie et al., 1998 process, collaboration it is more to lead to sound decisions on NPD selection, design and

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launch because it facilitates integration of diverse skills, resources and perspectives,
resulting in the most jointly optimal solutions.

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Integration is a process of interaction and collaboration in which manufacturing,
Pagell, 2004 purchasing and logistics work together in a cooperative manner to arrive at mutually
acceptable outcomes for their organization.

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Product-process integration is the process of co-developing product and processes and
Swink et al., 2007
sharing specification information and related knowledge.

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Internal process integration refers to the management of restructuring activities that aims
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at seamlessly linking relevant business processes and reducing redundant processes within
Chen et al., 2009
a firm. Thus, two key dimensions of internal process integration are internal process
connectivity and internal process simplification.
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Schoenherr & Swink, 2012;

Swink & Schoenherr, 2015 Internal integration refers to cross-functional intra-firm collaboration and information
(Information Processing sharing activities that occur via interconnected and synchronized processes and systems.
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Table 2. ANOVA Test for non-response bias.

Population vs. 25 first vs. 25

Sample last
F F
Number of Employees .023 (p=.880) .007 (p=.932)
Total Assets .009 (p=.926) .027 (p=.871)

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Table 3. Sample demographics.
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SIC Code Number of Number of Number of Number of Total Assets. Total Assets.
companies companies % Employees Employees Million Euro. Million Euro.
(Average) (S.D) (Average) (S.D.)
34 45 32% 113 (65) 25 (27)
36 43 31% 321 (644) 82 (167)
37 53 38% 674 (1784) 241 (790)
Total 140 100% 387 (1169) 124 (500)

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Table 6. Mean, Standard Deviation, and Pearson Correlation Coefficients

Mean S.D. 1 2 3 4 5 6 7 8 9 10 11
.272**
1. NPD Participants’ dedication ** **
3.6 1.99 1 .246 .219 .094 -.022 -.077 .045 -.157+ .019 .041
2. NPD Participants’ experience 5.59 1.36 .272** 1 .261** .144+ -.045 .189* -.140+ .258** .043 .243** .295**
3. NPD Goal Clarity ** **
4.99 1.56 .246 .261 1 .161+ .117 -.007 -.115 .291* .201* .268** .257**
4. Organization Size .219**

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3.87 11.68 .144+ .161+ 1 .191* -.038 -.161+ .059 -.069 -.011 .022
5. SIC 37 .38 .49 .094 -.045 .117 .191* 1 -.514** -.531** -.071 .135 -.007 -.109
6. SIC 36 .30 .46 -.022 .189* -.007 -.038 -.514** 1 -.454** .018 .009 -.011 .107
7. SIC 34 .32 .47 -.077 -.140+ -.115 -.161+ -.531** -.454** 1 .056 .131 .018 .008

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8. Marketing Information Shared and Understood ** **
4.50 1.42 .045 .258 .291 .059 -.071 .018 .056 1 .374** .473** .289**
9. Purchasing Information Shared and Understood 4.82 1.21 -.157 .043 .201* -.069 .135 -.009 -.131 .374** 1 .329** .135
**
10. Aligned Decisions 4.90 1.11 .019 .268** -.011 -.007 -.011 .018 .473** .329** 1 .292**

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.243
11. Speed in NPD ** **
4.66 .89 .041 .295 .257 .022 -.109 .107 .008 .289** .135 292** 1
+p<0.1; *p<0.05; **p<0.01; ***p<0.001. (two-tailed) Pearson correlation coefficients

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