Strategic Management in State Government Two Servants of the Same Master: Procurement and Finance

This paper investigates the interaction between procurement and finance functions of an organization. Traditionally, procurement has been seen as a back-room operation that helps the finance perform its tasks. However, the role of procurement has evolved, and it now plays a strategic part as a main function of the organization. Although evidence shows the importance of a working relationship between the procurement and finance, it is either not recognized, or ignored, or not clear, or not fully understood by the finance. This research argues that the function of public procurement contributes to the strategic management of an organization when procurement works as it should with the other functions in the organization, especially the finance function. Using strategic management framework, this research investigates the determinants of the relationship between the procurement and the finance, and identifies five factors that not only enhance the working relationship between procurement and finance but also affect the ability of the organization as a whole to achieve its mission, vision, and strategic goals.