Buyer-supplier relational strength and buying firm's marketing capability: An outside-in perspective

Extant literature in marketing capability with an inside-out perspective stresses existing internal resources as the basis for developing marketing capability. This study, taking an outside-in perspective, argues that starting from external environment and developing strong buyer-supplier relationship can help formulate strong marketing capability of the buying firm. Using survey data from 199 Chinese manufacturing buyers who identified 937 suppliers, we found that strong buyer-supplier relationship can breed strong supplier information sharing and supplier flexibility, which fully mediate the effect of buyer-supplier relationship on buying firms' marketing capability. The findings provide support to the outside-in approach and reveal how external inter-firm relationship can be turned into intra-firm capability, and suggest that strong upstream buyer-supplier relationship can be a necessity for building downstream buyers' marketing capabilities. The findings also suggest an alternative strategy for developing marketing capabilities starting from external suppliers, and may help close the gap between marketing capability and dynamic external environment.     

The effect of buyer behaviors on preferred customer status and access to supplier technological innovation: An empirical study of supplier perceptions

Buying firms are increasingly looking to suppliers for technological innovations that enhance the competitive position of their new products. However, extant research provides limited guidance on how buying firms may gain access to suppliers' innovative technologies. To address this gap in the literature, we draw from social exchange theory to posit sequential relationships among buyer behaviors, preferred customer status, and supplier's willingness to share technological innovations. We test our assertions by applying structural equation modeling statistical analyses to survey response data from 233 sales personnel of production good suppliers in the U.S. automotive industry. Whereas our results show that two buyer behaviors – early supplier involvement and relational reliability – positively affect preferred customer status, a third behavior – share of sales – has no effect. In turn, we find that preferred customer status is positively associated with supplier's willingness to share new technology with the buyer. Further, our findings indicate that preferred customer status fully mediates the benefits exchanged within a buyer–supplier relationship. Hence, our study highlights why buyers seeking innovations should take care that their behavior is appropriate for managing suppliers' perceptions. Accordingly, our results provide specific guidance to buyers as to how they may increase their access to suppliers' new technologies.     

Strategic Suppliers' Technical Contributions to New Product Advantage: Substitution and Configuration Options

Current theory lacks clarity on how different kinds of resources contribute to new product advantage, or how firms can combine different resources to achieve a new product advantage. While several studies have identified different firm‐specific resources that influence new product advantage, comparatively little research has explored the contribution of strategic supplier resources. Combining resource‐based and relational perspectives, this study develops a theoretical model investigating how a strategic supplier's technical capabilities impact focal firm new product advantage and how firms combine different resources to gain this advantage. The model is tested using detailed survey data collected from 153 interorganizational new product development projects in the United Kingdom within which a strategic supplier had been extensively involved. Empirical results support our research hypotheses. First, supplier technical performance is shown to have a significant positive impact on new product advantage. Next, we show that while supplier technical capabilities have a positive influence on supplier technical performance, the a priori nature of the supplier's task moderates the relationship. Finally, our data support our hypotheses related to the positive relationship between relationship‐specific absorptive capacity and new product advantage, and the proposed negative moderation of supplier technical capabilities on this relationship. Based upon these findings, we encourage managers to recognize that strategic suppliers' with greater technical capabilities perform better regardless of the degree of creativity required by their task; but that strategic suppliers with lower technical capabilities may partially compensate (substitute) for their lack of technical capabilities, if they are able to respond to high problem‐solving task requirements. Furthermore, we suggest that the firm's development of relationship‐specific absorptive capacity is much more important when a strategic supplier is less technically capable. A buying firm's relationship‐specific absorptive capacity can, according to our data, substitute for low supplier technical capabilities. On the other hand, where the supplier has strong technical capabilities, investments in relationship‐specific absorptive capacity have no effect on new product advantage. Our findings reinforce recent calls for research on how firms can combine different resources and capabilities to achieve superior performance.     

The effects of distributor relationship commitment and relationship exploration on opportunism: The moderating roles of exchange uncertainties and network factors

Channel management entails both the evaluating of incumbent business partners and simultaneously seeking potential new partners. In supplier–distributor exchanges, distributors can explore alternative suppliers while still committing to incumbent suppliers. While the current literature has demonstrated the importance of relationship commitment, the consequences of relationship exploration and whether that exploration is harmful to any incumbent relationships remain unclear. Drawing from relational governance and social network theories, this study thus examines how distributor dual relationship strategies of commitment and exploration influence their opportunistic behavior. The findings from a survey of 328 distributor firms indicate that relationship commitment leads to reduced opportunism; yet relationship exploration exerts no significant main effect on opportunism. More interestingly, these effects are subject to two types of uncertainty and two characteristics of distributor network wherein the focal exchange relationship resides. Specifically, behavioral uncertainty—an internal source of uncertainty—aggravates the opportunism that arises from both strategies, whereas, environmental uncertainty—an external source of uncertainty—alleviates both these effects. The distributor's network density weakens the effect of relationship commitment on opportunism, but network centrality strengthens this effect. By contrasting relationship commitment with relationship exploration under multiple moderating conditions, this study advances the extant channel relationship management literature and practice.     

The role of trust and relationship structure in improving supply chain responsiveness

In order to reduce cycle times between supply chain entities, managers must work to create new relational forms that rely on trust to a greater extent. We present a model suggesting that to build relationships based on trust, suppliers must invest in site-specific and human assets, and buyers must judiciously apply contracts to control for relative levels of dependence within the relationship. Our model also suggests that buyer-dependence, supplier human asset investments, and trust are all positively associated with improved supply chain responsiveness, defined in this study as the supplier's ability to quickly respond to the buying party's needs. This model is tested with data gathered from a sample of purchasing managers in North American manufacturing firms. The results suggest that even in cases when buyers do not have a great deal of control over their suppliers, working to build trust within the relationship can improve supplier responsiveness.     

Key supplier relationships and product introduction success: The moderating roles of self-enforcement and interdependence between buyer and supplier

This study investigates the extent to which strong relationships between a firm and its key suppliers promote effective new product introduction. Building on the relationship marketing literature, we identify self-enforcement and interdependence as two contingent relational variables that influence the strength of the buyer–supplier relationship. We use data from a survey of 2331 manufacturing firms in China to test the hypotheses. The results show that strong relationships with key suppliers correlate with product introduction success and that this positive effect is contingent on the two relational variables identified. Self-enforcement strengthens the utility of strong supplier relationships for these Chinese manufacturers, and buyer–supplier interdependence enhances this relationship.     

Barriers and bridges to the adoption of environmentally-sustainable offerings

This research identifies the factors that inhibit the incorporation of environmentally-sustainable offerings into firms' operations, while outlining strategies that environmentally-sustainable suppliers can use to overcome such adoption barriers. A discovery-oriented approach analyzes twenty in-depth interviews with mid- and senior-level managers whose firms were faced with, and yet overcame, adoption barriers. Results indicate that supplier related barriers, such as associated costs, ease of use, suppliers' credibility, and their offerings' creativity and execution, and intraorganizational barriers, such as organizational structure and culture, inhibit adoption. The refinement and alignment of suppliers' actions, communications, and offerings were suggested to aid in overcoming the barriers. This research yields insights for both research and practice, as it provides a series of testable research propositions, supports several theories, and furnishes supplier firms with strategies to better position their firms and offerings.     

Negative default dependence in supplier networks

The financial defaults of suppliers in a supplier network are significant risks and causes of uncertainty for buying firms. Hitherto, it has been largely neglected that default probabilities of suppliers in supplier networks are not independent of each other. We aim to overcome this shortcoming by studying negative supplier default dependencies: situations where a surviving supplier may benefit from the default of another supplier, resulting in a lower default probability. We use empirical data from the automotive supplier industry and copula functions, a method of representing joint distribution functions with particular marginals, to capture the default dependency between automotive suppliers and simulate various scenarios with negative default dependency. We also conduct a comparative static analysis illustrating the significant impact of negative default dependence. Our findings should spur managers to analyze their supplier networks with respect to default dependencies, and to take this phenomenon into consideration when making sourcing decisions.     

Distributors' customer-driving capability under supplier encroachment

Suppliers in business-to-business (B2B) markets often directly approach end customers in addition to using third-party distribution channels. This phenomenon, known as supplier encroachment, poses an increasing challenge to the distributor's profitability in the supply chain. However, little research has adopted the distributor's perspective to examine how it can overcome this challenge. This study addresses this gap by adopting the dynamic capability and network embeddedness theory to postulate the critical role of the distributors' customer-driving capability in tackling encroachment. Using survey data from 125 distributor firms in the semiconductor industry, we show that distributors' customer-driving capability significantly improves firm performance and that the impact strengthens when supplier encroachment is high. Moreover, we delineate the positive impacts of supplier relationship exploration, distributor relational embeddedness, and customer service excellence on distributors' customer-driving capability. Interestingly, supplier encroachment weakens the effects of supplier relationship exploration and customer service excellence but strengthens that of distributor relational embeddedness, indicating the importance of leveraging peer relationships under high supplier encroachment.     

Decomposing the effect of supplier development on relationship benefits: The role of relational capital

Buyers invest considerably in developing their suppliers, yet the performance effects of such investments are not universal. Drawing on social capital theory, this research investigates whether the relationship between supplier development and relationship benefits may be facilitated by the generation of relational capital. The authors examine mediating and moderating roles of relational capital in the relationship between two aspects of supplier development (capability development, supplier governance) and two dimensions of relationship benefits (supplier benefits, buyer benefits), using survey data collected from 185 suppliers of a large manufacturing firm. Investment in supplier development does not automatically result in benefits for the supplier or reciprocated benefits for the buyer. Rather, relational capital “bridges” supplier development and relationship benefits. Without relational capital, benefits from capability development do not accrue, and the impact of a supplier governance regime can be even detrimental. In conditions of high relational capital, capability development results in lower perceived buyer benefits. The results can help managers ensure that the benefits from their supplier development efforts fully materialize.     

Demand‐side strategy,relational advantage,and partner‐driven corporate scope: The case for client‐led diversification

Research Summary: We advance research on corporate diversification by joining insights from the demand‐side and relational views in strategy to offer a novel theory of client‐led diversification. We propose that client‐led diversification results from a combination of the customer‐driven opportunities emphasized in the demand‐side view and the creation of added value through relational assets that is a central tenet of the relational view. Furthermore, we hypothesize that suppliers’ client‐specific knowledge, clients’ relational commitment to suppliers, and growth opportunities in clients’ markets (relative to the suppliers’ own markets) will magnify the client‐led diversification effect. We test our hypotheses using a longitudinal dataset on patent law firms and their diversification into new domains of patent prosecution work for their corporate clients. Managerial Summary: Explanations of why firms diversify into new lines of business have largely concerned the redeployment of underutilized resources, with little regard to opportunities or influences stemming from firms’ existing customers. In our article, we show how the changing scope of business needs from a knowledge‐based supplier firm's set of existing clients is a central driver of supplier‐firm diversification, and this is especially the case when the level of relational assets shared between a supplier and its clients is higher. In a competitive landscape where suppliers compete intensively for the business of clients, our results show how managers can increase the likelihood of capturing additional business from its existing exchange relationships rather than bearing the risks of seeking new exchange relationships.     

Market Orientation and Innovativeness in Supply Chains: Supplier's Impact on Customer Satisfaction

As today's firms increasingly outsource their noncore activities, they not only have to manage their own resources and capabilities, but they are ever more dependent on the resources and capabilities of supplying firms to respond to customer needs. This paper explicitly examines whether and how firms and suppliers, who are both oriented to the same customer market, enable innovativeness in their supply chains and deliver value to their joint customer. We will call this customer of the focal firm the “end user.” The authors take a resource‐dependence perspective to hypothesize how suppliers' end‐user orientation and innovativeness influence downstream activities at the focal firm and end‐user satisfaction. The resource dependence theory looks typically beyond the boundaries of an individual firm for explaining firm success: firms need to satisfy customer demands to survive and depend on other parties such as their suppliers to achieve customer satisfaction. Accordingly, the research design focuses on three parties along a supply chain: the focal firm, a supplier, and a customer of the focal firm (end user). The results drawn from a survey of 88 matched chains suggest the following. First, customer satisfaction is driven by focal firms' innovativeness. A focal firm's innovativeness depends, on the one hand, on a focal firm's market orientation and, on the other hand, on its suppliers’ innovativeness. Second, no relationship could be established between a focal firm's market orientation and a supplier's end‐user orientation. Market orientation typically has within‐firm effects, while innovativeness has impact beyond the boundaries of the firm. These results suggest that firms create value for their customer through internal market orientation efforts and external suppliers' innovativeness.     

Governance of supplier collaboration in technologically uncertain NPD projects

Firms that are searching for new technologies from suppliers through collaborative new product development (NPD) need to devise effective approaches for governing the supplier relationship. Based on in-depth case studies of four collaborative NPD projects, this paper shows that in projects with a high degree of uncertainty (1) firms achieve governance by simultaneously limiting supplier involvement and allowing for high levels of collaboration, (2) transactional and relational governance have distinct roles in achieving limited supplier involvement and establishing high levels of collaboration, and (3) transactional and relational governance are organizationally separated. These findings have implications for the complementary use of relational and transactional governance, as well as for the role of purchasing and R&D in technologically uncertain NPD projects.     

Risky Business or Competitive Power? Supplier Involvement in Japanese Product Design

Notwithstanding the alleged risks of outsourcing design work, leading manufacturers in the Japanese automotive industry collaborate closely with their key suppliers. Despite widespread recognition of the effectiveness of these close-knit supplier networks, however, little research exists on the factors that affect the purchase of design work from suppliers. S. Nazli Wasti and Jeffrey K. Liker fill this gap by exploring the factors that affect Japanese automotive firms' purchase of design work from their component suppliers. Using data from a survey of 122 Japanese automotive component suppliers, their study addresses two key questions. First, what factors lead Japanese buyers to involve some suppliers heavily in design while giving others relatively little control over design decisions? And second, does the Japanese practice of involving suppliers in design offer performance benefits? The study focuses on first-tier suppliers of parts, assemblies, and complete subsystems (e.g., audio, fuel and emissions, heating and air conditioning). The study does not include suppliers of raw materials and chemicals, assembly and processing equipment, indirect materials, tooling and dies, computers and software, or engineering and business consulting services. The study breaks down the broad concept of supplier involvement in design work into three measurable elements: the extent to which the supplier influences decision-making during the early stages of product development; the amount of control the buyer retains over the design; and the frequency of design-related communication between the buyer and the supplier. Factors that have a positive effect on the level of supplier involvement among the companies studied include technological uncertainty of the component and the supplier's in-house technical capabilities. For companies in the study, the level of competition in the supplier market has a negative effect on the degree of supplier involvement in design. The responses indicate that supplier involvement offers performance benefits for both the supplier and the buyer. For the supplier firms studied, increased involvement in the design process permits greater focus on design for manufacturability (DFM). And of course, supplier-generated design improvements clearly benefit the buyers, allowing these firms to capitalize on the experience and the insight that their suppliers have regarding the parts that they supply.     

The effects of geographic and network ties on exploitative and exploratory product innovation

Addressing the inconsistent findings in the literature, we first distinguish the type of innovation and study the relationship of industrial clusters with exploitative and exploratory product innovation. Furthermore, we study how focal cluster firms' network ties with their suppliers and buyers in their clusters might moderate these relationships. Our empirical study showed that, while cluster membership enhanced firms' exploitative product innovation, it hindered their exploratory product innovation. Moreover, the results showed that focal cluster firms' network ties with their suppliers and buyers in their clusters strengthened the effects of cluster membership on exploitative product innovation. They also showed that focal cluster firms' network ties with their buyers but not suppliers in their clusters reduced the negative effects of cluster membership on exploratory product innovation. Copyright © 2014 John Wiley & Sons, Ltd.     

A decision method for supplier selection in multi-service outsourcing

Although supplier selection in multi-service outsourcing is a very important decision problem, research concerning this issue is still relatively scarce. This paper proposes a decision method for selecting a pool of suppliers for the provision of different service process/product elements. It pioneers the use of collaborative utility between partner firms for supplier selection. A multi-objective model is built to select desired suppliers. This model is proved to be NP-hard, so we develop a multi-objective algorithm based on Tabu search for solving it. We then use an example to show the applicability of the proposed model and algorithm. Extensive computational experiments are also conducted to further test the performance of the proposed algorithm.     

New product introductions below aspirations,slack and R&D alliances: A behavioral perspective

We develop hypotheses based on behavioral theory that explain how high technology firms' new product introduction (NPI) performance below aspiration levels impact the number of R&D alliances, and how slack moderates this relationship. Using panel data of U.S. biopharmaceutical firms, we find that as firms' NPI performance below historical aspiration levels increases the number of R&D alliances they form increases and slack intensifies this relationship. We contribute to alliance research by providing theory and empirical evidence that increases in the distance of NPI below aspirations serve as a motivation for increases in R&D alliances, and empirically to behavioral theory by revealing that NPI goals act similarly to financial performance goals in their impact on firms' actions and slack intensifies this relationship. Copyright © 2015 John Wiley & Sons, Ltd.     

Relational ties,innovation, and performance: A tale of two pathways

Relational ties are valuable resources that can generate substantial advantages for firms. Multiple studies show that relational ties enhance firm performance, but whether and how innovation intervenes in this process is largely unknown. This study examines how relational ties affect firm performance via two types of innovation. Drawing on the relational ties literature and exploration/exploitation literature, we differentiate between two types of ties (business ties versus political ties) and investigate how innovation (exploration versus exploitation) mediates relational ties and firm performance in two distinct ways. Survey data from China's semiconductor and pharmaceutical industries, both innovation-oriented industries, suggests that firms' business ties with buyers, suppliers, and competitors are more related to exploratory innovation, while their political ties with government officials are more related to exploitative innovation. Interestingly, competitive intensity demonstrates distinct moderating effects on both of these pathways.     

The role of supplier relationships in the development of new business ventures

New business ventures have rather limited resources, generally suffer from liabilities of smallness and newness and rely on external business relationships, typically with suppliers, for developing and acquiring necessary resources. Yet, to date, research on how new ventures develop initial relationships with suppliers and how these affect the nascent business has been limited. Taking the business network perspective and relating it to studies of supply chain and supplier involvement in product development, our study contributes to the rather limited body of knowledge on new ventures' supplier relationships. Empirically, we draw on a longitudinal, in-depth single-case study of the first two years of operation of a start-up. Our study shows that the development of the key initial supplier relationships starts from open-ended expectations of mutual future relational benefits and involves a stepwise ‘inter-definition’ of solutions in interaction between the parties. We observe that interdependences arise between the new venture and its key suppliers and these enable but also limit, the development paths of both partners. We argue that the key initial supplier relationships extend a new venture's resource and capability base and are an integral part of a new venture's business model.