Effect of Sustainable Procurement Orientation and Institutional Isomorphism on Firm Performance. Mediating Effect of Organisational Capabilities

Abstract Purpose This study examined the extent to which organisational capabilities condition the impact of; 1) sustainable procurement orientation on firm performance, and 2) institutional isomorphism on firm performance in an emerging economy, Ghana. Design/Methodology/Approach A structured questionnaire was administered across multiple industries to obtain dataset of five hundred (500), who were purposively and conveniently sampled. The study was conducted in Ghana, focusing on firms operating across selected administrative regions and economic sectors of the country. A response rate of 73.4% among top profile managers was reached. Findings The results reveal a positive significant connectivity between SPO and firm performance. It further indicates that ISP has a direct significant association with firm performance. The outcome of the SMART PLS show that ORC mediate the relationship between SPO and FRP as well as the linkage between ISP and FRP. Research Limitations/ Implication- The study used cross-sectional survey to solicit primary data from multiple industries which hinders generalizability. Future research should segment the industries and do industry-by-industry analysis, to see industry particularities. Practical implications- Managers should appreciate and understand that firm performance can further be boosted through the intervening role of organisational capabilities. Social implication- Government policy on procurement must be streamlined to incorporate sustainable elements into its biding/tender documents to increase the level of social acceptability and legitimacy, since governments are critical stakeholders in procurement. Originality/Value- It is a novel study that focused on the interaction between dynamic capabilities theory and institutional theory to explain how ORC conditioned the impact of SPO and ISP on firm performance.