Given the increasingly strategic role of external resources, acquiring
knowledge about current suppliers and the broader supply market is an
important and demanding task for the purchasing and supply management
(PSM) function of a firm. Performance-improvement-oriented application
of external supply knowledge present further challenges for the
function. To examine this, we draw on the knowledge-based view and
develop a hypothesized model in which supply knowledge acquisition
drives PSM exploration and exploitation orientations which in turn
mediate the organizational status of PSM function in terms of supply
performance. We test the model on an SME-focused and survey-based
dataset, using structural equation modelling. Our results indicate that
an exploitative orientation is associated with knowledge gained from the
supply base, whereas an explorative orientation is predominantly
associated with supply market knowledge and less with supply base
knowledge, suggesting natural pairings. The findings also show how an
exploitative development orientation mediates the positive association
of the PSM function's organizational status with supply performance.
Driven by supply base knowledge, a status-empowered exploitative PSM
orientation may suppress supply market based explorative orientation in
resource-scarce SMEs, thus appearing to serve as the sole path to supply
performance. Our research contributes by pointing out the significance
of the knowledge-resource, and the knowledge-based view, in
understanding performance in PSM.