Justice in triad: Revisiting supplier involvement in new product development

Recognizing the importance of involving suppliers in the new product development (NPD) process, extensive studies have examined this issue at a buyer–supplier dyadic level. However, how supplier involvement leads to better NPD performance is not clearly explained. Additionally, extending the dyadic relationships to triadic relationships and addressing how to manage the two competing suppliers with fair conduct remains unexplored. To answer these questions, this study developed a conceptual model theorizing the role of supplier involvement, information sharing, and justice in the NPD process within a buyer–supplier–supplier triadic relationship. Based on survey data collected from 200 U.S. firms, Structural Equation Modeling is used to test the hypothesis. The results first confirmed the criticality of involving both primary and secondary suppliers during NPD. Second, the positive effect of triadic supplier involvement on innovation performance is fully mediated by information sharing. Finally, this study explored the different roles of procedural justice and distributive justice; the results confirmed that procedural justice acts as a moderator for the relationship between triadic supplier involvement and information sharing, whereas distributive justice moderates the effect between information sharing and innovation performance. Our findings contribute to the literature of triadic supplier involvement-new product development and relationship management. Accordingly, these findings highlight key implications for managers and policymakers.     

Do Firms Spend More on Suppliers That Have Environmental Expertise? An Empirical Study of U.S. Manufacturers’ Procurement Spend

Stakeholders expect focal firms to improve their environmental performance. While firms may be able to accumulate the environmental expertise needed to achieve this goal internally, doing so may require significant time and resource commitments. Alternatively, buyer firms can leverage their suppliers’ existing environmental expertise and gain access to such expertise when they purchase products and services from these suppliers. The purpose of this study was to develop and test theory regarding under what conditions suppliers’ environmental expertise influences a buying firms’ procurement spend with these suppliers. We ground our study in transaction cost economics and agency theories and empirically test our hypotheses using a unique buyer–supplier dyadic data set. We find that buyer firms are willing to increase their overall business spend with suppliers that have strong environmental expertise, particularly when the buyer firms are more profitable and have higher levels of absorptive capacity. However, we find the opposite effect when the buyer firm’s executive compensation is linked to the firm’s environmental, social, and governance (ESG) performance. Likewise, we also find that the buyer firm’s environmental concern ratings negatively moderate the relationship between the supplier’s environmental expertise and the buyer’s procurement spend with the supplier.     

Relationship Quality and Performance Outcomes: Achieving a Sustainable Competitive Advantage

As firms strive to develop a sustainable competitive advantage, the relationships formed among supply chain parties become a critical consideration. Firms seek to establish relationships that can provide the desired level of performance and competitiveness. Relationship quality provides a global measure of buyer–supplier relationships and can be used to assess the types of relationships a firm has within its supply chain. This research examines the impact of relationship quality on supply chain operational performance and satisfaction with strategic performance while considering both buyer and supplier perspectives and collaborative and arm’s length types of relationships.     

Coping With Dependence: A Logistics Strategy Based on Interorganizational Learning for Managing Buyer–Supplier Relations

The rise of outsourcing has heightened interest in the role of logistics managers in coping with dependence in buyer–supplier relations. Buying firm dependence on a supplier potentially reduces supplier performance to expectations because the buying firm cannot leverage power to capture value in the relationship. Drawing from interorganizational learning theory, we advance a logistics strategy that consists of supplier cost analysis and supplier integration as a means to create value and thereby mitigate the negative effects of dependence. By facilitating the acquisition and use of knowledge, supplier cost analysis and supplier integration enable buying firms to identify improvement opportunities while engaging in collaborative supplier relations. Using survey responses from 222 buying firms, we find that while buyer dependence decreases the buyer's perceived supplier performance, supplier integration suppresses these negative effects. Furthermore, we show that supplier cost analysis is a valuable knowledge acquisition tool that logistics managers can use to enable supplier integration as a relational form of governance. As such, we provide new insights into interorganizational learning theory and suggest to logistics managers the important role supplier cost analysis plays in managing buyer–supplier relationships.     

Impacts of supplier–buyer relationships on modularization in new product development

Globalization of markets and new business practices are prompting high-tech firms to reconsider their strategic thinking, especially in supply chain and R&D management. This paper examines the effects of supplier–buyer relationships on modularization by evaluating the opportunities of modularization and corresponding interface constraints of a product at four different levels: component, module, sub-system, and system. The scope of modularization sensitivity is assessed in terms of the product's architecture, interface compatibility effects, component customization, value inputs, and supplier–buyer interdependence. The example of windshield wipers controller for Chrysler Jeeps illustrates that, higher opportunities for modularization can be attained through a more collaborative form of supplier–buyer partnership.     

The Effects of the Economic Downturn on Interdependent Buyer–Supplier Relationships

The management of strategic buyer–supplier relationships is a critical concern for sourcing managers. The selection of key suppliers and how relationships with these suppliers are managed and incentivized can dramatically affect the buying company's performance. While the extant literature focusing on industrial buyer–supplier relationships is significant, the severe economic downturn beginning in 2008 tested buyer–supplier relationships in unprecedented ways, yielding new insights. The research presented in this paper uses dyadic cases to investigate transformations within industrial relationships during the economic downturn. Propositions are formulated that focus on why and how firms responded to the downturn. Three primary types of relationships are identified. The results indicate variation in the ways buying companies managed their key supplier relationships during the downturn: some firms behaved more cooperatively and found ways to jointly confront the effects of the downturn, while others responded by behaving competitively to maximize their individual outcomes. The results further suggest that researchers need to revisit existing models of relationship development and dissolution to understand how these relationships evolve or devolve. The research also raises questions about the value of physical and human asset specificity, and social investments in curtailing opportunistic behavior in times of severe economic stress.     

The dyadic structure of exchange partners' governing-agency social capital and opportunism in buyer–supplier relationships

Extant literature on opportunism examines its antecedents in dyadic relationships in business networks. With firms also developing relationships with government agencies, these connections can influence firms' propensity for opportunism in business exchanges. This study investigates how the governing-agency social capital on both sides of the buyer–supplier relationship affects firms' opportunism tendency toward their counterparts. In particular, we divide the governing-agency social capital of both parties into two dimensions: the asymmetry of governing-agency social capital and joint governing-agency social capital. We postulate that both the asymmetry of governing-agency social capital and joint governing-agency social capital promote the focal firm's propensity for opportunism through dyadic power and network power, respectively. Moreover, we propose that both dimensions interact to magnify each other's impact on the focal firm's propensity for opportunism. We test the hypotheses using 322 matched data of buyer–supplier dyads in China. Empirical results provide support for the research hypotheses.     

Do the magnitude and asymmetry of specific asset investments matter in the supplier–buyer relationship?

Abstract

Despite a body of literature on specific asset investments, the extant literature falls short of exploring the magnitude and symmetry of specific asset investments in supplier–buyer relationships. This paper builds on prior research to identify and examine the impact of total and asymmetric specific asset investments on commitment, trust, and conflict in supplier–buyer relationships. Covariance structure analysis is used to analyse survey data. The results show that total SAI are positively related to commitment and trust, while asymmetric SAI are negatively related to trust and positively related to conflict in supplier–buyer relationships. Decision-making uncertainty affects trust, commitment, and conflict more than any other variables. Therefore, firms should work to strengthen their relationships by increasing the magnitude of specific asset investments with the aim of increasing trust and commitment. We also discuss the limitations of this study and suggestions for future research.     

Boundary spanner turnover in professional services: Exploring the outcomes of client retention strategies

Abstract

Studies suggest that the termination of the interpersonal relationship between boundary spanners at buyer and seller firms can have a damaging effect on the inter organisational relationship. Few studies have addressed this issue in detail, but those that do, advise supplier firms to implement strategies such as service teams and boundary spanner rotation to lessen the negative effects of boundary spanner turnover. By creating multiple bonds between the two firms, dispersing client-specific knowledge widely throughout the supplier firm, and preventing the development of a close bond between buyer and seller boundary spanners, individual interpersonal relationships become less important. However, a review of relationship literature on trust, commitment, social bonds, and knowledge suggests the potential for negative outcomes from the implementation of the strategies. Using case studies and one-to-one interviews with design buyers and their agencies, this paper explores the outcomes of the two strategies, and the contexts in which these outcomes occur. Adopting a critical realist approach, findings are presented in the form of context–mechanism–outcome models. Agency size, agency culture, client experience, and boundary-spanner autonomy are amongst the contexts that influence the outcome of strategy implementation.     

An Empirical Study of Buyer–Supplier Relationships within Small Business Organizations

A paradox exists in small business organizations; although effective buyer–supplier relationships are essential to the success of small businesses, these organizations may not have the purchasing and selling power in terms of managerial resources to implement them. This provides us an opportunity for research to determine how well developed are buyer–supplier relationships within small business organizations. Grounded in transaction cost and resource dependence theory, this paper presents and empirically tests a model that examines the relationships between buyer and supplier specificity and long‐term buyer–supplier relationships and the latter's impact on organizational performance from the buyers' perspective. The results of this study provide insight into the development and impact of buyer–supplier relationships within small business organizations. Several managerial implications can be determined.     

Multimarket Contact and the Use of Power in Buyer–Supplier Relationships

Buyers and suppliers often have multiple business relationships with each other across different geographical and product markets, forming a potentially complex web of connections. What happens between the firms in one geographical or product market may influence their interactions in others. Prior research in strategic management has found that similar multimarket contact in horizontal relationships between competitors has important consequences for the firms’ use of market power. However, the consequences of multimarket contact in vertical buyer–supplier relationships remain unexplored. Building on resource‐advantage theory, this study proposes that multimarket contact between buyers and suppliers is linked to their respective propensity to use three types of mediated power in their relationships (i.e., reward, coercion, and legal legitimate) and that the effects of multimarket contact differ between buyers and suppliers. A vignette study with 143 purchasing managers and 137 business‐to‐business sales managers tests the developed hypotheses. The findings show that a higher level of multimarket contact encourages suppliers to use legal legitimate power to a greater extent and encourages buyers to use reward power to a greater extent but legal legitimate power to a lesser extent.     

The impact of individualism on buyer–supplier relationship norms,trust and market performance: An analysis of data from Brazil and the U.S.A.

This study focuses on the impact of the cultural dimension of individualism, face-to-face communication and the effect of relational norms such as supplier involvement and trust on the market performance of buyer firms. We use the culture literature and social exchange theory to test hypotheses using a sample of Brazilian and US manufacturing firms. The data were analyzed using variance-based structural equation modeling, employing nonlinear partial least squares regression. Our findings indicate that individualism is negatively related to the involvement of suppliers in the production process but is not associated with trust in suppliers. In addition face-to-face communication seems to have a positive effect on supplier involvement and trust.     

The Ethical Dimension of Managerial Leadership Two Illustrative Case Studies in TQM

In recent decades, Total Quality Management (TQM) has become an important phenomenon in the world of business, but the implications and scope of quality programs are quite different everywhere. Since different explanations have been given, most authors agree that management commitment and leadership are indispensable elements for a successful TQM implementation. Nevertheless, the study of the literature reflects a terminological confusion on this point. The authors of this paper argue that commitment and leadership are not synonymous terms.While committed managers may lead the process of quality using exclusively their formal authority, those who are leaders generate a kind of influence that goes further than that. This paper suggests a multidimensional perception of leadership and upholds that only by considering the ethical dimension of leadership, together with technical and psycho-emotive ones, it is possible to explain more accurately interpersonal influences beyond the scope of power. As an illustrative example of the importance of considering each dimensions, the authors present two case studies of TQM implementation.     

Selecting quality based programs in small firms

Over the last decades, the quality issues have received increased attention from top managers and academics. The international debate mainly focused on managerial and economical implications resulting from the implementation of TQM programs in large companies, thus not considering peculiarities that such investments present within small firms. As a matter of fact, many small firms have adopted quality based programs and, unfortunately, failed to achieve the planned results: a major reason of the failure of TQM initiatives is due to the lack of effective decisional tools aimed at identifying the most suitable quality related investments.Hence, the objective of the paper is to define a model that supports managers of small firms in the identification of most effective quality related priorities: to this end, a contingent approach that identifies different contexts according to the environment where the company operates and to the relationships between the firm and its stakeholders is suggested. Guide-lines for choosing a specific decisional technique aimed at selecting the most effective choice among the identified feasible priorities are suggested, too.     

Supply chain consortia: the rise of transcendental buyer–supplier relationships

A theoretical, cross-disciplinary model for cooperative buyer–supplier relationships is proposed which integrates information obtained from prior research on organizational culture and transaction cost analysis (TCA). The authors describe key elements of TCA and review the three types of transaction governance structures commonly used to explain relationships within an organization. The authors extend this by applying structure type to buyer–supplier relationships. The researchers propose several types of interorganizational relationships and conclude with an in-depth discussion of a successful supply chain consortium used by Boeing Aircraft Company and several key suppliers.     

The Influence of Contractual Governance Mechanisms,Buyer–Supplier Trust,and Supplier Opportunistic Behavior on Supplier Performance

This article explores the influence of contractual governance mechanisms, buyer–supplier trust, and supplier opportunistic behavior on Uganda's public sector supplier performance. Many outsourced contracts are reported to frequently fail to deliver on time, budget, specifications, and quality and do not deliver value to the public. This could be attributed to poor contractual governance mechanisms, lack of buyer–supplier trust, and high levels of supplier opportunistic behavior. A cross-sectional data set collected from 632 staff of Uganda's public sector is used to validate the theoretical model and hypotheses developed from literature review. Findings reveal that contractual governance mechanisms, buyer–supplier trust, and supplier opportunistic behavior are significant predictors of public sector supplier performance. The results also suggest that supplier opportunistic behavior has a stronger influence toward supplier performance than others. The implications for these findings for future research and practice are also discussed.     

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.     

Spillovers through backward linkages and the export performance of business services. Evidence from a sample of Italian firms

We provide evidence on the role of spillovers through vertical linkages in service firms’ internationalisation process. We combine input–output coefficients with region-level information on downstream manufacturing sector exports to build a measure of spillovers through backward linkages, which we assess as a systematic determinant of Italian BS firms’ export status. Once considered firm and sector specificities, export spillovers especially matter for exporting to high-income economies outside Europe. This finding originates from higher sunk costs stemming from greater distance to the destination market and tougher competition within the destination market. Furthermore, the spillovers’ geographical scope is mainly local. We thus contribute to international business theory by generalising existing evidence from case studies on the importance of buyer–supplier relationships for service firms’ internationalisation across several BS sectors. Our research carries important implications for international business practices as well, as joining networks with internationalised customers may play an important role in enhancing BS firms’ exports, regardless of the BS supplied.     

Information Asymmetries as Antecedents of Opportunism in Buyer-Supplier Relationships: Testing Principal-Agent Theory

ABSTRACT

Purpose: A severe problem in supplier selection refers to moral hazard: suppliers not behaving in the expected way once contracted. Principal-agent theory could provide insights on how to reduce this problem. Because buyer–supplier relationships can be interpreted as principal-agent situations, the application of agency theory should facilitate improved supplier selection. Although theoretically compelling, empirical tests verifying this assumption are not prevalent. Regarding the advancement of theory, this paper tests whether both ex ante and ex post information asymmetries influence moral hazard. In particular, in the context of a globalizing economy with a subsequent increase in information asymmetries as a problem in supplier selection, this conceptual approach may be contributive.

Design/methodology/approach: The authors use a set of 87 buyer–supplier relationships to conduct a test, applying a partial least squares model with latent variables. A particularity of the data set is that it contains information on ongoing as well as on discontinued relationships.

Findings: The analysis indicated that both ex ante information asymmetries (operationalized by a reputation variable) and ex post asymmetries (operationalized by a monitoring variable) have shown to be significant and strong antecedents explaining the occurrence of moral hazard. Interestingly, and opposed to the common assumption, the length of a relationship and the amount of direct meetings have not revealed any explanatory significance. Buyer dependency hardly showed influence on supplier opportunism.

Research limitations/implications: Data were collected from a multitude of buyer–supplier relationships from a single firm in the chemical-pharmaceutical industry. Generalizations to other industries still need to be tested. Socially desirable answering behavior cannot fully be excluded because relationship discontinuation is not a desirable situation. In terms of theory implications, this research adds to the notion that both hidden action and hidden intention can lead to moral hazard.

Practical implications: An agency-based analysis can be operationalized with the help of an agency-based supplier classification portfolio. It might be of particular value to firms to discuss those suppliers that scored high in risk of opportunism but did not (yet) reveal any signs of moral hazard. Finally, the strong explanatory power

of reputation alerts buyers to pay more attention to behavioral information on the (potential) supplier available in the market.

Originality/value: Analyzing the occurrence of moral hazard and including terminated relationships adds to the emerging stream of literature on relationship discontinuation in B2B markets. Further, the strong empirical results may encourage researchers to elaborate on principal-agent theory-based assumptions, adding another layer of explanation to buyer–supplier relationships. Findings show that reputation is unduly neglected as supplier selection criterion in current theory and practice.