Impact of relational norms, supplier development and trust on supplier performance

Supplier relationship management and supplier development initiatives assume a fundamental role in enterprise supply chain management. An important aspect of effective supplier relationship management is the role of trust. This paper seeks to understand whether supplier relationship management or supplier development initiative should be emphasized as a firm strives to achieve superior supplier performance. The analysis and discussion draws upon sourcing strategy literature and is based on empirical survey-data of mid to upper level managers with responsibility for supply management initiatives in their respective organizations in Denmark and in the USA. It examines the interrelationships among “relational norms”, “trust”, “supplier development initiatives” and ensuing “supplier performance”. The data analysis shows that firms must emphasize relation and trust building activities before investing in supplier development initiative. Supplier perception audits must be routinely performed to gauge the level of trust and strength of relational norms.     

Supplier development and cost management in Southeast Asia—Results from a field study

This paper is about supplier development when international companies have production sites in Southeast Asia and look for opportunities to switch from international suppliers to local suppliers. We conducted a field study involving site visits to companies in Thailand and Vietnam, and interviews at corporate supply chain departments. Some key observations are: cost management was a dominant motive for taking local supplier development initiatives. Furthermore, local sourcing and local supplier development were important for international companies to improve access to local customer markets. Firms deliberately assessed whether a particular supplier would likely be able to improve sufficiently to warrant investing in supplier development, which typically involved a combination of initiatives, requiring the international firm to take considerable efforts. Local sourcing strategies and priorities for supplier development initiatives tended to focus on items with low supply risk and low volume. These findings are discussed based on transaction cost economics, and we suggest that firms use several ways to reduce the risk of transaction-specific investments in supplier development initiatives.     

The effects of supplier-to-buyer identification on operational performance—An empirical investigation of inter-organizational identification in automotive relationships

Over the past decade conceptual and empirical research in operations management has embraced the idea that collaborative supplier-buyer relationships are a source of competitive advantage for manufacturing firms. Anecdotal evidence from the Japanese and U.S. automotive industry and emerging research suggests that inter-organizational identification of suppliers with their buyers, termed supplier-to-buyer identification, is an unexplored factor of relational advantage. This study presents a model and empirical test that supplier-to-buyer identification fosters superior operational performance by enhancing trust, supplier relation-specific investments, and information exchange. Through a survey of 346 automotive supplier-buyer relationships, the findings show that supplier-to-buyer identification directly impacts supplier relationship-specific investments and information exchange, although most of the latter effect is mediated by trust. The findings also indicate that supplier relation-specific investments and information exchange play different but complementary roles in influencing operational performance. The results suggest new directions for supplier-buyer relationship research in operations management and important managerial implications.     

Supplier involvement in new product development and innovation: Taking stock and looking to the future

This paper provides a comprehensive and critical review and synthesis of the current state of empirical research into supplier involvement in new product development (NPD). The paper begins by defining supplier involvement in NPD and evaluating the rationale for supplier involvement in NPD. This suggests that early and extensive supplier involvement in NPD projects has the potential to improve NPD effectiveness and efficiency, however, existing research remains fragmented and empirical findings to date show conflicting results. The paper takes stock of the research on supplier involvement in NPD, tracing the origins of the literature to the late 1980s, and evaluating the development of the field up to the present day. From this broad base of empirical research the analysis identifies a set of factors affecting the success of supplier involvement projects. The paper concludes with a discussion of two emerging themes: (1) supplier relationship development and adaptation; (2) supply network involvement in product innovation.     

Examining supply chain relationships: Do buyer and supplier perspectives on collaborative relationships differ?

Firms are building collaborative relationships with their supply chain partners in order to achieve efficiencies, flexibility, and sustainable competitive advantage. However, it is unclear if collaborative relationships provide benefits that compensate for the additional expense associated with such relationships. Further, it is unclear what factors promote successful collaborations. This research examines collaborative relationships in two separate studies using structural equation modeling: one study examines buyers’ perceptions and the second study examines suppliers’ perceptions. The two studies are then compared using invariance testing in order to determine economic and relational factors that drive satisfaction and performance from each party's perspective. Results show that collaborative activities, such as information sharing, joint relationship effort, and dedicated investments lead to trust and commitment. Trust and commitment, in turn, lead to improved satisfaction and performance. Results from the two independent studies exhibit similarities and differences; while the conceptual model is highly similar, certain paths vary in their significance and/or their importance across buyer and supplier firms such that buyers focus more on relationship outcomes while suppliers look to safeguard their transaction specific investments through information sharing and joint relationship effort. Managerial and theoretical implications of the findings are discussed.     

Do dependent suppliers benefit from buying firms’ sustainability practices?

In view of the limited understanding and research on the effect of sustainable supplier development practices on supplier performance, this study examines the impact that the implementation of assessment and collaboration practices have on supplier performance outcomes. In addition, we investigate the role that supplier dependence has on the performance outcomes of assessment on and collaboration with suppliers. Based on a sample of 129 Chinese manufacturing firms, we run a series of OLS regressions to test our theoretical models. The findings suggest that collaboration improves supplier performance, while assessment causes a deterioration. In addition, supplier dependence could be leveraged for suppliers to gain performance improvements through collaborative practices.     

Making tough choices: A policy capturing approach to evaluating the tradeoffs in sustainable supplier development initiatives

This research explores the tradeoffs that decision makers are willing to make when implementing development initiatives to improve supplier sustainability performance. We employ a policy capturing methodology in which respondents are forced to choose between multiple potential sustainable supplier development initiatives. Data were collected from traditional and executive MBA students. The results suggest that when confronted with tradeoffs, decision makers value improvements in supplier cost savings and injury reduction equally, which was somewhat unexpected. Further, both improvements in supplier cost savings and injury reduction were valued over supplier emissions performance. Because we measure individual tradeoff preferences, multi-level regression analysis was used to better understand the impact of respondent value structure regarding sustainably developing suppliers. Our findings suggest a hierarchy of tradeoff preferences for decision makers as they pertain to sustainable supplier development. As the pressure to ensure supply chain sustainability increases, more firms will engage in sustainable supplier development. The outcomes of the choices they make when choosing between initiatives, and how managers make these choices, will be of increasing interest in both industry and academia. This research answers previous calls for further examination of decision maker tradeoff preferences in sustainable supply chain development.     

How to stimulate supplier innovation? Insights from a multiple case study

Drawing on the literature on supplier innovation, supplier development, and the relational view, we bring forward the concept of stimulation of supplier innovation, which refers to the buyer company's actions which aim to enhance its suppliers' innovativeness, guide its suppliers' innovation processes, and/or encourage its suppliers to share their innovations. Through four case studies about purchasing categories in three companies, we study how the stimulation focus is determined and what methods can be used for stimulating supplier innovation. We propose that stimulation comprises indirect and direct forms of knowledge-sharing and governance with an emphasis on indirect methods and suggest that the concept sheds light on the research gap on the push model of supplier innovation. We also elaborate the literature on supplier development and relational view in the context of supplier innovation.     

Supplier relationship-specific investments and the role of safeguards for supplier innovation sharing

The vast majority of the supplier innovation literature has focused on how buying firms can effectively “pull” innovations from their suppliers. Yet, we know remarkably little about the factors that contribute to a supplier voluntarily “pushing” innovations to its customers. The present study addresses this research gap in the context of industrial buyer–supplier relationships and with a specific focus on relationship-specific investments. Drawing on theory from the relationship-marketing literature and on transaction cost theory, we devise and test a proposed theoretical model that links the level of a supplier's relationship-specific investments to its sharing of innovative ideas regarding products and processes with customers. The model also considers the role of contract length, relationship age, and buyer–supplier cooperation as possible safeguards. The empirical results suggest that a supplier's relationship-specific investments encourage a supplier to suggest ideas of process innovations but to refrain from suggestions about product innovations. The latter effect, however, can be attenuated by appropriate formal and informal safeguards.     

An exploration of supplier selection practices across the supply chain

The US auto industry has undergone tremendous changes during the past decade. Companies have increased their level of out-sourcing and are relying more heavily on their supply chain as a source of their competitive advantage. Thus, determining which suppliers to include in the supplier chain has become a key strategic consideration. However, previous studies of supplier selection have not considered a company's position in the supply chain. In this paper, we compare supplier-selection practices based on a survey of companies at different levels in the auto industry. Our findings rebut the common thinking that indirect suppliers who are more involved in commodity purchasing emphasize initial price and de-emphasize relational considerations. We learned that selecting suppliers based on the potential for a cooperative, long-term relationship is just as important to direct and indirect suppliers as it is to the auto assemblers. We also learned that price is one of the least important selection items, regardless of position on the supply chain. Further, contrary to the existing understanding that quality and delivery are separate constructs, they formed a single construct in our study. To summarize the empirical results, no differences among the auto assemblers, direct suppliers, and indirect suppliers were found for the importance placed on consistency (quality and delivery), reliability, relationship, flexibility, price, and service. Statistically significant differences were found between the auto assemblers and indirect suppliers on the importance placed on technological capability and financial issues.     

Supplier's involvement and success of radical new product development in new ventures

Supplier involvement is essential to a new venture seeking to develop a radical innovation. Despite this, prior literature has not adequately addressed supplier involvement in radical innovation, nor what the antecedents to increased supplier involvement are. We build and test a conceptual model of the antecedents and new product performance outcomes of supplier involvement in the development of radical innovation by new ventures. Antecedent variables (supplier's specific investments and the new venture's qualification of the supplier's abilities) are drawn from the transaction cost analysis literature. We include new venture's relative power and new venture's level of commitment to the supplier as contingency conditions. We develop a set of hypotheses relating supplier involvement to radical innovation performance, relating the antecedent variables to supplier involvement, and also testing the interaction effects of the two contingency conditions. We gather data from both new ventures and their major suppliers for 173 recent radical innovation projects, and use hierarchical regression analysis to test our hypotheses. We find that the contingency conditions moderate achieved levels of supplier involvement, and also find a direct relationship between achieved level of involvement and performance. We conclude with theoretical contributions and managerial implications.     

Capabilities that enhance outcomes of an episodic supply chain collaboration

Firms are increasingly dependent on the knowledge and expertise in external organizations to innovate, problem-solve, and improve supply chain performance. This research examines two capabilities that enable firms to collaborate successfully as a means to combine knowledge and expertise in an episodic collaboration initiative. Building from two theoretical foundations, the knowledge-based and relational views of the firm, we examine the effects of absorptive capacity and collaborative process competence on the outcomes of an episodic collaboration initiative. Using structural equation modeling, we empirically validate the positive effect of absorptive capacity, collaborative process competence and level of engagement on the operational and relational success of a collaboration effort. Results show that collaborative process competence mediates the relationship between absorptive capacity and collaborative engagement, and positively influences both operational and relational outcomes. Finally, we offer suggestions for managers to improve the effectiveness of inter-firm collaboration initiatives and discuss future research opportunities.     

Outsourcing to a non-developed supplier market: The importance of operational aspects in outsourcing

This article investigates how firms manage outsourcing in situations of a non-developed supplier market. This study followed the initial outsourcing activities and strategies of two case companies in the wood product manufacturing industry. The findings show that greater focus needs to be placed on operational aspects associated with non-developed supplier markets, which contrasts with the traditional strategic view of outsourcing. For practitioners, this article suggests that it is important to emphasise that the learning curve for a supplier can be lengthy, and also that alternative outsourcing routes are available when outsourcing to a non-developed supplier market.     

Bring your suppliers into your projects—Managing the design of work packages in product development

Early supplier involvement and integration is important in product development on strategic as well as on operational, project and team levels. Saab Aerospace intended to achieve early supplier involvement and high level of integration on all levels in the redesign of the aircraft JAS 39 Gripen. The research underlying this article shows that the intended strategy was only achieved on the strategic level and not on the operational project and team levels. One major reason for this was that the design of the work breakdown structure (WBS) and work packages (WP) in the product development followed the functional and departmental logic within each company resulting in incompatible structures and preventing communication and information exchange. This article intends to explore how prevailing functionally designed WBS and WP structures created barriers and to demonstrate how supplier integration can be improved by designing collaborative WBS and integrated WP. The Dependence Structure Matrix (DSM) is introduced in order to analyze, visualize and manage interdependencies and information exchange between Saab Aerospace and its supplier on different levels of the WBS and in different phases of the development process, following the logic of interdependencies and information flow, in order to support a strategy focusing on integration of suppliers on the project and team level.     

The micro-processes of supplier satisfaction: A longitudinal multiple case study

Supplier satisfaction has often been argued to be an important determinant for supplier performance in the buyer-supplier relationship. The micro-processes of how supplier satisfaction develops and how it relates to supplier performance, however, are not well understood. By means of a longitudinal multiple case study design of 18 buyer-supplier relationships, this paper provides insights into the micro-processes of how supplier satisfaction develops. Our findings provide several new insights. First, we observed how supplier satisfaction levels showed little change even though the buyer's behavior did not align with the supplier's expectations, thereby nuancing current conceptualizations of supplier satisfaction being a function of expected and realized relational value. Second, we show how intra organizational dynamics at the supplier influence the relationship between supplier satisfaction and supplier performance. Third, our findings give insights into the complex interplay between the relational and economic antecedents of supplier satisfaction.     

Relationship governance mechanisms and collaborative performance: A relational life-cycle perspective

Governance mechanisms protect the investments involved in transactions and thereby facilitate and promote sustainable and cooperative relationships; however, the empirical results of prior research concerning the relationship between governance mechanisms and collaborative performance are inconsistent. Based on transaction cost economy (TCE) and social exchange theory (SET), a relational life-cycle framework that considers the dynamic evolution of collaborative relationships and re-examines the relationship between governance mechanisms and collaborative performance was developed in this study. Evidence from 124 manufacturers in Taiwan indicates that the effects of governance mechanisms on collaborative performance differ according to the current life-cycle phase. In the exploration phase, contractual control exerts a positive impact on cooperative performance. In the buildup and maturity phases, relational control remains positively associated with collaborative performance, whereas the impact of contractual control is insignificant. In the decline phase, both contractual control and relational control have an insignificant impact on collaborative performance. Herein, we discuss the implications of our empirical findings and their relevance to managers.     

Together we share? Competitive and collaborative supplier interests in product development

While supplier involvement in product development projects can contribute with valuable knowledge and expertise, such involvement also poses organizational and managerial challenges, particularly if several rival suppliers are involved. This paper explores these challenges in the wind turbine industry, based on two interrelated Danish case studies. The analysis results in three propositions regarding how supplier rivalry and technological specialization influences roles, coordination patterns and communication between actors in distributed product development projects.     

Strategic interdependence, governance effectiveness and supplier performance: A dyadic case study investigation and theory development

Inter-organizational exchange governance approaches are often characterized as two broad types: relational and transactional. However, in fast changing business contexts, the contextual contingencies do not present ideal conditions for practicing purely relational or transactional approach. Understanding the dynamic of key contextual factors and their effects on a firm's resource capabilities and inter-organizational power structure is crucial for identifying the appropriate governance structure over time. In this paper we explore the exchanges between an OEM and five of its strategic suppliers that operate in high-end, short product life cycle motorbike industry, to understand the key contextual factors and the relationships among business context, governance structure, and exchange practices in a dyadic context. It is observed that firms deviate from the conventional choices of either transactional or relational governance to a combination of contractual and relational aspects to make the governance structure effective. Based on case studies, a theoretical framework is proposed to explain the rationale, feasibility and effectiveness of combining contractual and relational aspects in different contexts. The framework suggests that the degree of strategic interdependence between the trading partners fundamentally drives the effectiveness of governance structure and exchange practices.     

Integrating design metrics within the early supplier selection process

It has been found from the contemporary research in the fields of supply chain management and concurrent engineering that significant benefits can be achieved if suppliers are involved in product development. However, recent investigations in manufacturing industries have revealed that early supplier involvement in the design process is not widely practiced. One issue is the lack of an appropriate customer–supplier interface to assess the suitability of suppliers with reference to design criteria. This paper proposes a mechanism for evaluating supplier involvement during product development. The assessment tool includes four types of distinctive indices to measure supplier involvement in the design process, namely: Satisfaction Index, Flexibility Index, Risk Index, and Confidence Index. These indices measure the extent to which both the customer requirements and the supplier capabilities match or mismatch and therefore reflect the potential or risk of signing a project contract. The proposed methodology is discussed within a multinational telecommunications company and preliminary analysis indicates that the approach provides an effective mechanism for selecting suppliers involved in the product development process.     

A theory of supplier network-based innovation value

To understand how a supplier helps a buying company create value through innovations, studies have focused on a supplier's internal resources or its relationship with a buying company. Building upon this body of literature, we develop a theory of supplier network-based innovation value in this conceptual paper. This theory explains how a supplier's upstream and downstream value network can be a source of competitive advantage for a buying company. Specifically, it proposes that the levels and types of supplier innovation value is contingent on the configuration of a dual-ego value network, characterized by the locus and degree of buyer-supplier structural equivalence. This theory also explains how a supplier's ties with a buying firm's competitors can pose both opportunity and risk to buying company innovation. This theory contributes to the literature by showing when “seemingly undesirable” suppliers, due to a lack of technical capability or strong relationship with a buying company, might still be valuable to a buying company's innovation.