Sustainable Procurement Practices and Organizational Performance: The Moderating Effects of Relational Governance and Top Management Commitment in the public sector of Ghana

Abstract

Sustainable Procurement Practices (SPP) have dominated the global landscape and have been established as an effective means of addressing global sustainability challenges. Experts have emphasized the importance of utilizing procurement activities to address the issues associated with sustainable development. Long-term sustainability as a broad concept is certainly one of the most serious issues of the twenty-first century, as it entails ensuring full economic, environmental, and social growth, as well as the well-being of present and future generations. Sustainable procurement is viewed as a vital tool for achieving considerable success in implementing sustainability strategies and mechanisms in both the private and governmental sectors. SPP's performance in several jurisdictions provides compelling evidence for its implementation in both developing and developed economies. However, corporations and governments in mature economies are more sustainable than their counterparts in developing ones. Although scholars have focused on sustainability for decades, there is still a lack of consensus regarding the effects of sustainable procurement methods on organizational performance, particularly in the public sector of developing countries. Additionally, studies that have examined the impact of SPP on organizational performance have found inconsistent results — in some circumstances, the association is favorable and significant, while in others, it is not. To address shortcomings in the existing literature, this research examines the effect of underlying sustainable practices on an organization's performance. To contribute to the discourse on sustainable procurement and organizational performance, the study examines the moderating role of relational governance and top management commitment. According to the study, relational governance has the capacity to completely control the relationship between sustainable procurement practices and organizational performance. Relational governance has the potential to boost collaborative performance and increase the Relational Capital of stakeholders within a certain procurement network. Nine (9) hypotheses were evaluated using relational exchange theory, network social capital theory, and institutional theory as theoretical lenses. The study collected and analyzed data using a combination of methods. The data was gathered from key informants inside Ghana's public sector procurement landscape. The primary data was gathered through a web-based survey of a group of people, procurement practitioners with active membership details found on the CIPS Ghana procurement portal's database, and a phone interview with procurement experts, practitioners, and senior managers found on the CIPS Ghana procurement portal's database. The questionnaire and interview guide were designed to elicit data and information from respondents in a targeted manner. Five Hundred and Twenty (520) replies were received in response to the Eight Hundred and Seventy-Seven (877) emails sent, accounting for Five Hundred and Eleven (511) completed questionnaires. Additionally, the interviewees included 25 procurement specialists and experts from public sector entities. The collected data was analyzed for common method bias, construct validity, and reliability. These tests suggest that all constructs under investigation satisfy an acceptable threshold for construct reliability and validity. The data collected was used to validate the structural model and to further evaluate the study's hypotheses. The study's subsequent findings reveal that some dimensions of the sustainability framework (economic, social, and environmental) have an impact on organizational performance. Economic sustainability, studies indicate, has an effect on organizational performance. However, socially and ecologically responsible buying practices have little effect on the performance of an organization. Surprisingly, relational governance is capable of mitigating the negative impact of environmental sustainability procurement practices on an organization's performance. Additionally, dedication from senior management moderates the relationship between economically sustainable procurement practices and organizational performance. In summary, the research findings have both theoretical and practical implications. The study's findings contribute to Institutional Theory by emphasizing the importance of both institutional support systems and mechanisms. The commitment of senior management or institutional backing is critical to the transaction and implementation of current technology as well as innovation. It also has implications on how institutional commitment and support shape and modify organizational systems. In a green era, culture and policy take on a sustainability dimension. Additionally, it emphasizes the critical role of network social capital in the performance of the focal firm in an inters-firm alliance. Utilizing network resources has been shown to be advantageous for both focal and peripheral enterprises. Interaction between network players fosters exchanges and strengthens relational trusts, which are critical for the acquisition and transmission of superior knowledge and information via network actors. Engaging players in a firm-supplier network strengthens the compliance skills of the main company and its associated peripherals. The growing involvement of network participants in sustainability networks enhances procurement officers and entire institutions' skills and competencies. Additionally, the study emphasizes the importance of relational exchange, relational trust, and relational capital in organizations' performance, particularly in the public sector. Among network players, relationship exchange is critical for the transfer and dissemination of information and superior knowledge. To improve sustainable procurement practices and its consequence on organizational performance, a network-collaboration model is proposed. The central tenet of this model is to promote inter-departmental and inter-institutional collaboration and cooperation to implement sustainable procurement practices. The model centers on using relational asset for sustainable buying methods. The relational asset of an interorganizational network is believed to influence the performance of both focal and peripheral enterprises. A major feature of this strategy is conflict management. Relationships aside, it also enables resources to be exchanged openly, while at the same time exposing hidden motives. The relational governance model suggested is based on organizational collaboration on the one hand, and network conflict resolution on the other. Establish deliberate partnerships with important suppliers or service providers in the sustainability landscape. Green competence and competences should be used to identify suppliers or service providers. Sustainable procurement provider is selected and procurement network is established. Resource mobilization and exchanges are facilitated by the formation of a green procurement network. It further impacts the interorganizational asymmetry of power and information. Green procurement network puts green agenda in sync with organizational core strengths and competencies.