Non-financial e-procurement performance measures: Their interdependence and impact on production cost

The purpose of this research paper is to identify the non-financial e-procurement performance measures and find out whether these non-financial performance measures are leading indicator of impact on firm financial performance by adoption of e-procurement in terms of reduction in production cost.

The research model has been tested with the data collected from target procurement professionals in India. Structural equation modelling has been used for testing conceptual model hypotheses including mediation. The phantom model approach for testing multiple mediators has deployed.

The present empirical study found that non-financial performance measure of e-procurement, namely, transparency, coordination, efficiency and effectiveness are leading indicators of the impact of e-procurement adoption on production cost. This paper suggests that managers should try to design the e-procurement platform or opt for third party platform which reduces transaction cost to a minimum for enhanced coordination, work on transparency policy with maximum disclosure of information for enhanced transparency and ask for a fast and responsive system for enhanced efficiency and effectiveness.

This study, first time, attempted to identify non-financial performance measures of e-procurement and tried to understand how these intermediate non-financial performance measures impact the firm financial performance. The interdependence of non-financial performance measures has also been explored, and the research model has been developed to empirically examine the interdependence of these financial measures and its impact on production cost.