Determinants of Supplier Willingness to Invest in Supporting a Manufacturer's Line

Abstract

This study examines the significance of supplier's expectation of continuity of its relationship with a manufacturer, perception of manufacturer's reputation, trust in manufacturer's credibility, trust in manufacturer's benevolence, and dependence on manufacturer as determinants of its willingness to invest in supporting a manufacturer's line. Data collected from Malaysian and Korean auto suppliers indicate that expectation of continuity of relationship, manufacturer reputation, and trust in manufacturer's credibility are significant determinants of supplier willingness to invest, while supplier dependence and trust in manufacturer's benevolence are not.     

Formation of Reputation in Business Markets

ABSTRACT

Purpose: This study adopts a relational perspective on reputation. We investigate how relationship characteristics impact a customer’s judgment of supplier reputation. We include characteristics at both the interfirm and interpersonal levels, and we additionally link these characteristics to interfirm trust in order to explore similarities and differences between reputation and interfirm trust.

Methodology/approach: A survey was conducted among firms in the Norwegian offshore oil and gas industry. We assessed the measurement model and tested the hypotheses by applying LISREL.

Findings: The results show that the customer’s dependence on the supplier, common knowledge, and interpersonal trust are positively related to reputation, while opportunism is negatively related to reputation. Reputation is positively linked to interfirm trust, and both reputation and interfirm trust impact the customer’s satisfaction with the supplier.

Research implications: This study sheds light on the role of relational mechanisms in reputation formation. It suggests that reputation primarily consists of cognitive components, while interfirm trust consists of more affective components. Reputation is an important factor in developing interfirm trust.

Practical implications: This study underscores the importance of a firm’s core relationships to customers for developing its reputation. Managers need to carefully develop their relationships to customers in such a way that these relationships are consistent with and confirm the reputation they want to build.

Originality/value: The study supports the view that relational characteristics play important roles in the formation of reputation in business markets.     

The Value of Information Integration in Meeting Delivery Dates

In this article, we consider the value of shared information within a business network. To make the problem concrete, we focus on a specific operational problem: How the final supplier to the customer determines promised delivery dates. In a traditional supply chain, the final supplier has little or no information on the delivery performance of intermediate suppliers and thus, has limited information with which to set delivery dates. On the other hand, in an information-integrated business network, the final supplier's enterprise resource planning (ERP) system can interact with all the intermediate suppliers' ERP systems to determine exactly how far ahead or behind schedule the network is in meeting the needs of a specific customer. This information should improve the final supplier's ability to set realistic delivery dates. We attempt to quantify the value of this information and determine precisely why it is valuable so that management can best exploit information integration.

We use a modeling approach in this research, beginning with simple analytic models and progressing to more realistic simulation models. Our analytic model establishes an important principle: Information integration not only significantly improves the average on-time delivery performance of a business network, but also dramatically improves its worst-case performance. Because customer dissatisfaction is generally associated with worst-case performance, information integration may be highly beneficial even if its effect on average on-time delivery is small. Simulation models allow us to compare the performance of more realistic business networks. These models suggest, for example, that the value of information integration is dependent on both the structure of the network itself (whether serial or arborescent) and on the typical customer order date in the production cycle. These insights allow us to begin to identify the types of business networks in which information integration will have the highest value.     

Shared Vision in MNE Subsidiaries: The Role of Formal,Personal, and Social Control in Its Development and Its Impact on Subsidiary Learning

Given the strategic importance of achieving global integration and worldwide learning for most multinational enterprises (MNEs), this article focuses on “shared vision” as a critical mechanism for realizing both goals. Specifically, this paper investigates the impact of three types of control mechanisms—formal (headquarters imposed rules and decisions), personal (the presence of expatriates), and social (social interaction among subunits) control—on building shared vision in subsidiaries and examines the subsequent impact of having shared vision on subsidiary learning. Overall, data from 99 subsidiaries located in the United States and headquartered either in Europe or Japan show that personal and social mechanisms of control are effective in building shared vision whereas formal control mechanisms have no impact. Results also support a significant relationship between shared vision and subsidiary learning. © 2012 Wiley Periodicals, Inc.     

A Temporal Model of Vertical Relationships

Purpose: The authors developed a model framework for buyer–supplier relationships and used it to extend theory in 4 areas: (a) maintenance of long-term relationships; (b) conversion of relationships from adversarial to cooperative; (c) changes in relationships over their lives; and (d) levels of commitment and trust between partners.

Methodology/approach: The authors analyzed existing research on buyer–seller relationships and theoretical concepts in various disciplines to develop a 3-stage temporal relationship model consisting of pre-deal (t–1), deal enactment (t), and deal continuation (t+1) stages. From the model and existing research, the authors drew propositions for relationships in the areas of buyer and seller power, several forms of commitment and trust, intellectual capital, and financial performance.

Findings: Briefly, the authors proposed that (a) at the pre-deal stage, increased buyer power may instigate supplier input commitment or vice versa; (b) at deal enactment, both parties may commit to a written contract and build contractual trust through a low degree of relational commitment; and (c) in the deal continuation stage, contractual trust, and attitudinal commitment of one of the parties is likely to foster attitudinal commitment in the other party. The authors found that buyer's and supplier's total commitment fosters goodwill trust and helps build intellectual capital and financial performance, and that the weaker party in the relationship likely gains more from the partnership than the stronger party.

Research implications: In addition to existing research, the authors used several actual situations to provide support for our propositions. However, more research should be done in all areas to additionally confirm our propositions and otherwise add to theory development.

Practical implications: By looking at buyer–seller relationships in three stages, the authors developed several implications for both parties. These included long-term results of short-term actions, importance of industry factors on buyer and seller commitment, and the role of commitment in determining whether long-term relationships are developed.

Originality/value/contribution: The authors extended and coordinated existing theory by consolidating the implications of previous research into a cohesive buyer–supplier relationship model. This model should enable both researchers and managers to better comprehend the dynamics of vertical relationships with a multi-dimensional, reciprocal approach. The results should also provide managers an additional tool to gauge and forecast the fate of a relationship by analyzing levels of trust and commitment as the relationship progresses.     

Supplier Role Conflict: An Investigation of Its Relational Implications and Impact on Supplier Accommodation

Existing research on supply chain relationships suggests that one of the underlying tensions between supply chain partners is that of opposing perspectives and goals in the customer?supplier relationship. In today's business world with requirements in constant flux, suppliers are often asked to accommodate “special” requests made by their customers, not part of the contractual agreement. Suppliers frequently fill requests to protect the relationship with the customer, even if they fall outside of what they consider their role as a supplier. Issues of supplier role conflict emerge when customers and suppliers have different views of what the supplier's role should entail. There is little research examining the potential for supplier role conflict in supply chains. Specifically, this research draws on literature from multiple disciplines to consider supplier role conflict that may stem from accommodation and the impact of this role conflict and supplier accommodation on the supply chain relationship and future accommodation behavior. Hypotheses are tested using two scenario‐based experiments. Results suggest that supplier adaptation and flexibility both have positive relational effects. If suppliers perceive accommodation requests as outside of their contracted role, supplier role conflict can have detrimental effects on the supplier's relationship perceptions and their willingness for future accommodation.     

Volatile Environments and Interfirm Governance: Does Trust Matter?

Purpose: Manufacturers in volatile environments should rely on governance mechanisms to reduce the risks inherent in those environments. However, it remains to be determined which governance mechanism a given manufacturer will develop in volatile environments in order to manage the relationship with its supplier. The principal objective of this study is to explain circumstances in which different governance mechanisms function under volatile environmental conditions.

Methodology: The empirical test was conducted with manufacturing companies in the context of manufacturer-supplier relationships. Construct measures were based on existing measures and previous research. Measurement reliability and validity were established using exploratory and confirmatory factor analysis and an overall measurement model was assessed with structural equation modeling using LISREL 8.54.

Findings: The results of this study showed that manufacturers should consider the level of trust they bestow on their suppliers to select an appropriate governance mechanism to deal with environmental volatility. When a manufacturer does not trust its supplier under conditions of environmental volatility, the manufacturer should consider adopting unilateral governance. If a manufacturer trusts its supplier, it should consider bilateral governance to respond in a timely manner to changes in the resource market.

Contribution: This study introduced trust to explain governance mechanisms in an uncertain environment and showed that interorganizational trust is a condition for influencing a manufacturer's propensity toward a specific governance mechanism.     

Trusting and Monitoring Business Partners throughout the Relationship Life Cycle

Purpose: The goal of this research is to understand the theoretical and empirical confluence of multi-dimensional trust with the role of monitoring as business partnerships unfold and evolve dynamically throughout the course of the relationship life cycle.

Methodology: A pilot study is run in which in-depth interviews are conducted with managers to glean their insights regarding the theoretical questions and to verify terminology for survey items. A large-scale survey study is then conducted to test hypotheses about the relationships among the focal constructs. The participants in both studies are real procurement professionals reporting on their primary supplier relationships. The qualitative study and the samples of real world managers enhance the external validity of this research.

Findings: In early stages of business relationships, monitoring and benevolence trust interact to positively impact business performance. Continued monitoring in later stages interact with benevolence trust to performance detriment. Conversely, monitoring and competence aspects of trust hurt business performance in earlier life stages.

Research Implications: Theoretical frameworks that include the constructs of multidimensional trust, monitoring, and relationship life cycle stages can build on the nuanced 3-dimensional contingencies established in this research. In particular, this research furthers the concepts of monitoring and the relationship life cycle.

Practical Implications: There is a time and a place to trust one's business partners, and a time and a place to verify their trustworthiness. As business partnerships are forged, monitoring and benevolence trust can be particularly fruitful.

Contribution: In this research, the authors build on the business marketing literature that has begun to delineate the benevolence and competence dimensions of trust in business relationships; they demonstrate the role that partner monitoring has in maintaining business commitments; and establish how these effects are modified over the stages of the relationship life cycle; i.e., from exploration, to build-up, maturity, and decline.     

Exploring Supply Managers' Intrapreneurial Ability and Relationship Quality

This article examined the degree to which a supply manager's intrapreneurial ability influences the quality of individual-level relationships with internal customers and the supplier's account executive. The moderating influence of the buyer's firm-level commitment to the supplier and how these relationships subsequently impact supplier performance were explored. The study assessed the supply manager's intrapreneurial ability using survey data gathered from 110 supply managers across a variety of industries. In key supplier relationships, a supply manager's intrapreneurial ability positively influences the quality of internal and external relationships. The firm's commitment to the supplier weakens the relationship between intrapreneurial ability and relationship quality. The findings highlight the value of individual skills to enhance relationships The ability to behave intrapreneurially shapes the quality of internal and supplier relationships. However, only the supply manager's relationship with the supplier's account executive is related to supplier performance. By examining the impact of intrapreneurial ability on individual-level relationships with internal customers and supplier's account executive, a more comprehensive view of business-to-business relationship management in the supply chain is gained.     

Understanding the Development of IOS-Based Trading Partner Relationships: A Structural Model with Empirical Validation

This study develops a research model that explains the interorganizational system (IOS) network development process in the buyer-supplier relationship. Particular attention is paid to the antecedents and consequences of two types of influence strategies— exercising power and offering IOS support—that a buyer firm often uses in increasing IOS usage with its suppliers. The research model is empirically tested with data obtained through a field survey from a sample of 233 suppliers, each exchanging electronic data interchange (EDI) documents with a nationally known retailing buyer in the United States. We find that the buyer's decision to offer EDI-related support to a supplier is negatively associated with the transaction volume with the supplier but positively with the supplier's IT capabilities as well as the supplier's transaction-specific investments made toward the relationship with the buyer. On the other hand, the buyer's decision to exercise power to a supplier is found to be negatively associated with the transaction volume between the trading partners. Our findings also indicate that offering EDI support, rather than exercising power, is more effectual in inducing greater EDI usage between the trading partners. Finally, the buyer's EDI support is found to be positively associated with suppliers' perceived benefits of using EDI in the relationship that, in turn contributes to more voluntary use of EDI with the buyer.     

Why do buyers share knowledge with suppliers in new product development? current and alternative supplier antecedents

Purpose: Interfirm knowledge sharing has been well recognized to activate the performance and competitiveness improvement of the firms. Previous research has discussed the impacts of current suppliers on buyer–supplier knowledge sharing, but does not explain how this influence occurs. This study aims to disclose the mechanism by which both current and competing suppliers impact buyer–supplier knowledge sharing in buyers’ new product development activities.

Methodology/approach: This study proposed a conceptual model based on relational exchange theory and developed eight hypotheses. Questionnaire survey was used to collect empirical data from R&D staff of Taiwanese electronics firms. This study distributed 1,475 questionnaires and received 246 eligible questionnaires. Structural equation modeling was used to test and verify appropriateness of the proposed model.

Findings: The findings show that current supplier asset specificity positively and directly influences buyer–supplier knowledge sharing in new product development. The current supplier asset specificity also has indirect positive influence on buyer–supplier knowledge sharing in new product development via the mediating effects of buyer trust, satisfaction, and commitment. However, the attractiveness of alternative suppliers only indirectly and negatively affects buyer–supplier knowledge sharing via the mediating effects of buyer trust, satisfaction, and commitment.

Research limitations/implications: This study surveyed the firms in Taiwanese electronics industry. Nevertheless, new product development activities are executed by electronics firms in numerous countries and firms in various industries. For validating the generalization of this study’s results, future research can investigate firms in other industries and countries to verify the proposed model and hypotheses.

Practical implications: Current suppliers’ asset specificity is found to exert more influence on buyer–supplier knowledge sharing than alternative attractiveness. The findings imply that current suppliers should focus on investing specific assets for buyers other than stress the attractiveness and threat of competing suppliers.

Originality/value/contribution: This study initiates to approach the antecedents and influence mechanism of current buyer–supplier knowledge sharing via both perspectives of current and competing suppliers.     

The Influence of Customer Relationship Marketing Strategies on Supply Chain Relationships: The Moderating Effects of Environmental Uncertainty and Competitive Rivalry

Purpose: A firm's customer relationship marketing strategy also may affect its attitudinal loyalty toward its main supplier. Furthermore, environmental uncertainty and competitive rivalry could moderate this relationship. This research investigates both questions.

Methodology/Approach: The empirical study involves a structured survey of 141 industrial firms. A structural equation technique with EQS 6.1 estimated the causal model. Multi-sample analysis revealed whether environmental uncertainty and/or competitive rivalry act as moderators.

Findings: The influence of customer relationship marketing on attitudinal loyalty toward the main supplier is positive but indirect, working through effective communication, satisfaction, and trust. However, when environmental uncertainty is high, the negative direct effect becomes significantly more intense, and when competitive rivalry is high, the positive indirect effect through satisfaction and trust is less intense.

Originality/Value: This study explores potential new paths in the relationship marketing field. Most scholars focus on the influence of a firm's relationship marketing strategy on customers' loyalty, but no previous works consider its potential influence on the firm's relationship with other partners in the supply chain, notably its strategic suppliers.

Research Implications: Structured academic research on this topic is lacking, even though many firms have implemented customer relationship programs. Supply-side researchers must evaluate the effects of such programs. Furthermore, this study combines different theoretical approaches.

Practical Implications: Practitioners can use the findings to segment their customer base and develop specific programs adapted to each target.     

Innovation as a determinant of suppliers’ roles and performances: an empirical study in the food machinery industry

The basic premise of this study is that suppliers, in order to compete successfully in the marketplace, have to develop certain innovative capabilities that, in turn, depend on the type of relationship that is established with customers (in other words, the strategic role assumed by the supplier in the supply chain). Based on a study of 198 suppliers operating in the food packaging machinery industry, structural equation modelling has revealed that customers actually assign suppliers different roles and give them varying levels of responsibility in the product development and manufacturing stages. These roles are correlated to the supplier's distinctive innovation capabilities. Clustering analysis is used to divide the suppliers into homogeneous groups. Innovative capabilities are not only associated with traditional competencies in R&D and product/process innovation but also in supportive capabilities in the form of absorptive capacity, technological scanning, innovation-oriented culture, skills and know-how of individuals and managerial practices. The impact of different innovative capabilities (both technological and managerial) on critical performance factors such as price, quality, time and flexibility is measured for each type of supplier in turn. The research findings lend support to the hypothesis that the level of investment in technology and the acquisition of specific managerial capabilities are, to a large extent, a determinant of supplier–customer interdependence.     

The character of bridgehead relationships

A supplier's development of a foreign market can be better understood when examined in the context of bridgehead business relationships between a supplier and a foreign customer. In addition to intrarelationship factors, the network of business relationships connected with a supplier and its foreign customer is also important in understanding the supplier's bridgehead relationships. The results from a LISREL analysis of 142 international business relationships show that the supplier's bridgehead relationships are conditioned by the personal relations with the foreign customer. The supplier's bridgehead relationships are also dependent on mutual commercial dependence between the supplier and the foreign customer. The results show that the supplier views the foreign customer as a conduit for foreign market development and will commit itself to the business relationship for this reason. A further finding is that the network of business relations connected with a supplier and its foreign customer constitutes an important setting for the supplier's bridgehead relationships.     

A Contingency Model of Supplier-Reseller Satisfaction Perceptions in Distribution Channels

Abstract

It is important for a supplier to be clear as to which customer service attributes are important to the reseller, as well as the supplier performance level as expected and perceived by the reseller. This paper investigates the difference between reseller satisfaction as expressed by the reseller and presumed reseller satisfaction as interpreted by the supplier. The authors formulate and empirically test six hypotheses to determine the influence of certain environmental variables on the difference in perceived satisfaction in a channel context. They find differences in perceived satisfaction levels across matched dyads composed of one reseller and the supplier's representative responsible for that account. All of the environmental conditions tested were significant drivers of a difference in satisfaction. Specifically, sales representatives tend to underestimate reseller satisfaction when product line growth is increasing, when pricing policy is excellent, and when the channel configuration is indirect. Sales representatives overestimate reseller satisfaction when the reseller is larger, when there is more rivalry, and when the reseller perceives itself as more powerful.     

Operationalizing Trust,Reliance, and Dependence in Business Relationships: Responding to the Ongoing Naming and Cross-Level Problems

Purpose: This article is to test the proposition that the 3 conceptually related constructs of trust, reliance, and dependence are distinct from each other and to test the proposition that the quality of business relationships can be measured with a formative index incorporating trust and reliance.

Methodology/Approach: The authors' propositions are tested with a survey sample of 221 firms in the U.K. construction industry. Exploratory and confirmatory factor analyses are used to analyze the survey data.

Findings: The independence of the 3 focal constructs of trust, reliance, and dependence is confirmed. The formative index is found suitable for evaluating the level of relationship quality in which reliance carries more significant weight than trust.

Research Implications: The separation of the overall construct of “trust” into trust at interpersonal level and reliance at interorganizational level, as found in this study, overcomes the problem existing in past studies that researchers rarely specify at which level trust operates. The clear conceptual distinction between reliance and dependence as found in this study implies that although both operate at the organizational level, they do not have overlapping boundaries. The finding that reliance is a more important impact factor than trust in constructing the formative index supports the notions that reliance is a necessary and sufficient condition for developing sustainable business relationships, and trust is an insufficient condition to sustain an ongoing business relationship.

Practical Implications: Reliance sets the keynote of the business relationship. In contrast, trust as the interpersonal variable only acts as the facilitator to create a favorable social environment. Nevertheless, both trust and reliance have a significant and positive weight in the relationship quality index formed. This means that a business relationship with high levels of both trust and reliance is particularly resilient and stable and is the most successful and desirable one which is frequently oriented toward the long run.

Originality/Value/Contribution: The confirmation of the difference between trust and reliance makes an important contribution to the study of trust in business to business marketing by showing that what has traditionally been treated as theoverall construct of trust can and should be regarded as being made up of two separate constructs: interpersonal trust and interorganizational reliance. The difference between reliance and dependence as an additional finding makes another important contribution by providing conceptual clarity of the two constructs and confirming that there is no overlapping boundary between them. The formative index and the relative importance of its components are another important contribution of this study.     

The Role of Trust in the Marketing Activities of Entrepreneurs Establishing New Ventures

The 'credibility gap' is not often cited as a problem by marketers; for this reason marketing texts pay little or no attention to it. Yet, for the entrepreneurial marketer it may well be the most fundamental marketing challenge. Addressing the credibility gap may not have received any previous research interest, but theoretical support for its relevance abounds. Risk and its corollary, making use of trust have been seen as quintessentially entrepreneurial activities. If they do epitomise entrepreneurship, then surely, studying how entrepreneurs use trust ought to provide valuable insights into what entrepreneurs do.

While there is increasing research into trust, particularly from an organisational behaviour perspective, there is none in an entrepreneurial context. This lack of research provides the reason for the exploratory nature of this investigation.

The search for trust in this investigation focuses on entrepreneurs' usage of elements of the marketing mix. Respondents are asked about what they have done, why they have taken that course of action and what the outcomes have been.

We find that there is a wide panoply of ways in which entrepreneurs use trust, for example 'enthusiasm' and 'shared values'. The latter two are particularly important because they can lead to trust in situations where there may not already be existing relationships (the most likely place for finding trust). We also identify the methods entrepreneurs use to build trust - which they can then use to mitigate customers' perception of risk.     

An Examination of Trust Dimensions across High and Low Dependence Situations

Purpose: Relationship marketing literature has provided support of a multidimensional trust construct; however, there is little consensus on its structure. This article builds on existing theory to propose and empirically test a three-dimensional trust construct including ability, integrity, and benevolence dimensions. Furthermore, the article examines this conceptualization of the construct across different relationship types as established by dependence form.

Methodology: We choose to use a scenario/survey data collection method to replicate specific relationship types for a national purchasing agent sample. This method allows us to obtain adequate sample sizes to compare the relative importance of trust dimensions using structural equation modeling.

Findings: We found empirical evidence to support a three-dimensional trust construct for use in further examination of buyer–seller relationships. In addition, we found differential importance of those dimensions across different relationship forms.

Research Implications: By providing empirical support for a multidimensional trust construct and further specifying the importance of each dimension in various relationship forms, we hope to provide a strong foundation on which to build further trust research.

Practical Implications: In examining trust among purchasing agents, we hope to provide a strong foundation for salespeople to understand how their actions impact their long-term relationships. Understanding that trust in a relationship involves more than simple integrity or completing promises should help boundary spanners develop stronger ties.

Contribution: The main contribution of the article is the concept that trust needs to be researched in ways other than simply asking “Do you trust your supplier?”     

The trickle-down effect of trust in business-to-business relationships: How can a supplier ensure cooperation from multiple customers?

Abstract

Although several interfirm cooperation studies have expanded the unit of analysis from dyads to triads (networks), there is scant literature focusing on whether and how a supplier’s relationship with a customer influences its relationships with other customers. Individual relationship dyads are not isolated but interact with one another. Particularly, mutual trust in a supplier–customer relationship dyad may influence other customers’ cooperative behavior. This cross-dyadic influence is called the “trickle-down effect of trust.” A hypothesis for the mechanism by which this effect occurs was generated, focusing on the customers’ demand information offerings as a cooperative behavior. The results of an empirical analysis indicate that (1) a supplier’s mutual trust with its primary customer encourages nonprimary customers to offer their demand information to the supplier and (2) the quality of information from customers helps the supplier to make their new product more meaningful.     

Effect of Customers' and Suppliers' Perceptions of the Market Orientation of Manufacturing Firms on Channel Relationships and Financial Performance

ABSTRACT

This study is designed to investigate the effect of customers' and suppliers' perceptions of the market orientation of manufacturing firms on customers' and suppliers' trust in, cooperative norms in, and satisfaction with the relationship with the manufacturing firm. The findings from a sample of 72 matched sets of suppliers, manufacturing firms and customers in industrial channels in the Netherlands reveal that the perceived market orientation of manufacturing firms engaged in channel partnerships has a positive influence on customers' and suppliers' levels of trust in, cooperative norms in, and satisfaction with the relationship. This study further investigates the effect of the customers' and suppliers' trust in, cooperative norms in, and satisfaction with the relationship on the financial performance of the manufacturing firm. The results reveal that customers' and suppliers' cooperative norms in the relationship positively influence the manufacturing firm's financial performance. Customer's and supplier's trust in and satisfaction with the relationship have no effect on the manufacturing firm's financial performance.