Effect of supplier appraisal on firm performance in Ghana: Views of employees of selected manufacturing firms

Abstract

In Ghana, recent financial sector clean-ups and reforms have impacted the operations of several corporations in the business-to-business market. Coupled with this, several issues have been reported concerning procurement practises in the past few years. Regardless of corporate governance practises and public procurement regulations, institutions in Ghana are yet to fully realise the relevance of supplier appraisal. Grounded by the resource base theory, the study examines the effect of appraisal of suppliers’ financial stability, technical capacity to produce, adherence to systems and procedures, conformance to legislation, and suppliers’ supply chain on the performance of industrial firms in Ghana. A sample of 171 employees was drawn from a total of 250 employees. Data processing and analysis were undertaken through the partial least squares structural equation modelling (PLS-SEM) estimator. The results clearly suggest that firms’ technical capacity does not constitute firm resources that translate to firm performance. However, firms’ financial stability, adherence to systems, conformance to legislation, and supply chains are regarded as firm resources that contribute to the overall performance of the firm. We conclude that supplier evaluation is a significant predictor of manufacturing firms’ performance.

Keywords

• Supplier appraisal techniques
• Manufacturing firms
• Firm performance