Supplier–supplier relationships in buyer–supplier–supplier triads: Implications for supplier performance

A growing number of studies and evidence from industries suggest that, besides managing the relationship with its suppliers, a buyer needs to proactively manage the relationships between those suppliers. In a buyer–supplier–supplier relationship triad, the buyer, as the contracting entity, influences the suppliers’ behaviors and the relationship between them. By considering the relationships in such a triad, we are able to gain a richer and more realistic perspective of buyer–supplier relationships. In this study, our goal is to examine supplier–supplier relationships in buyer–supplier–supplier triads, focusing on how such relationships impact the supplier performance. We frame the supplier–supplier relationship as co-opetition—one in which competing suppliers work together to meet the buyer's requirements. We investigate the role of the buyer on such relationships, and how the buyer and co-opetitive supplier–supplier relationships affect supplier performance. We find mixed empirical support for our hypotheses. However, we are able to demonstrate the dynamics of supplier–supplier co-opetition in the buyer–supplier–supplier triad. We point out the need for further studies in this area.     

The linkage between profit sharing and organizational citizenship behaviour

The study investigated the effects of profit sharing (cash-based, stock-based and combined-total profit sharing) on organizational citizenship behaviour (OCB). It also examined the mediating role of organizational commitment on the relationship between profit sharing and OCB. Data were collected from 426 employees of 35 information electronics companies in Taiwan. Results showed that whereas cash-based profit sharing had no effect on OCB, both combined-total profit sharing and stock-based profit sharing positively influenced OCB. We also found that organizational commitment mediated the relationship between profit sharing (stock-based and combined-total profit sharing) and OCB.     

Environmental purchasing and supplier management (EPSM): Theory and practice

The purpose of this research is to explore current literature and practice specifically in environmental purchasing and supplier management (EPSM) in order to understand current activities and also to suggest avenues for future research. First, an assessment of the current literature in environmental purchasing was completed which showed that most of the research in environmental purchasing is not grounded in theory, and is just beginning to appear in premiere business journals, as defined by the Financial Times journal list. This was followed by an examination of company practices in environmental purchasing by assessing a targeted cross-industry subsection of 68 corporate sustainability reports. This analysis revealed that the organizations studied are still in the relatively early stages of environmental purchasing and supplier management, and practices vary by industry predominantly because of external pressure towards environmental sustainability. The authors conclude that given the relatively early stage of development of environmental purchasing practice and research, there is significant opportunity in this area to develop theory and to influence practitioner behavior.     

Supplier–supplier relationships in the buyer–supplier triad: Building theories from eight case studies

Many researchers have studied how the buying company manages its relationship with suppliers (i.e. buyer–supplier relationship). Extending this genre of study, researchers have recently shown interest in investigating how the buying company manages relationships between the suppliers (i.e. supplier–supplier relationship). In other words, just as the relationship with the suppliers does, the relationships between suppliers have strategic implications for the buyer. We present in this study eight cases that describe supplier–supplier relationship dynamics. Using theory building through case studies, we identify five archetypes of supplier–supplier relationships. Each type of relationship is a unique configuration of the relational characteristics. We also present working propositions that associate the antecedent conditions that lead to these archetypes and eventual performance implications.     

The relationship between product market competition and unemployment with profit sharing

We investigate the implications of product market imperfections on negotiated wages and equilibrium unemployment under profit sharing. We show that intensified product market competition reduces equilibrium unemployment in a strictly monotonic way when the trade union's bargaining power exceeds the profit share. If the profit share exceeds the trade union's bargaining power, the effect of product market competition is ambiguous: there is a threshold for the benefit–replacement ratio above (below) which intensified product market competition increases (decreases) equilibrium unemployment. The profit share and the union's bargaining power affect the wage mark-up, and thereby equilibrium unemployment, in different directions.     

Neutrality of buyer and seller commissions to auction house profit

This paper presents an examination of optimal revenue management of a monopoly auction house through which a seller sells goods via a second‐price auction. The house charges commissions to both the buyer and seller. Results demonstrate that a continuum of combinations of optimal buyer and seller commission rates exists, all of which yield the same expected profit of the house. Additionally, we discuss several possible factors that lead to the prevailing custom of zero buyer commission, such as commission aversion of buyers, the house's incentive to maximize the hammer price, and seller and buyer preferences for apparently lowered commission rates.     

Governing buyer–supplier relationships through transactional and relational mechanisms: Evidence from China

Building on economic and social exchange theories, this study investigates the different roles transactional and relational mechanisms have in hindering opportunism and improving relationship performance in an emerging economy. Our study applied to manufacturer–distributor dyads in China and used matched survey data (225 paired sample firms) to test our hypotheses. Our hierarchical multivariate regression and semipartial correlation analyses suggest that transactional mechanisms are more effective in restraining opportunism while relational mechanisms are more powerful in improving relationship performance. This performance is improved more significantly when both contracts and relational norms are used jointly than when used separately. Likewise, opportunism is curbed more effectively when both contracts and trust are used jointly than when used individually.     

Picking on the new kid: Firm newness and deception in buyer–supplier negotiations

This study builds on liabilities of newness theory and moral disengagement theory to investigate deceptive behavior in buyer–supplier negotiations that involve new ventures. Using two purchasing negotiation experiments, it contrasts how negotiators treat employees of new ventures, mature firms, and firms of unknown age. The first experiment examined the behavior of participants in their role as salespeople toward buyers, whereas the second one examined the behavior of participants in their role as buyers toward salespeople. Across experiments, participants shared the belief that their negotiation counterparts were less experienced when these counterparts worked for new ventures than when they worked for mature firms. Moreover, both groups were more likely to deceive negotiation counterparts working at new ventures, although this effect was stronger in magnitude in the first experiment. These findings contribute to the field of behavioral supply management by identifying a new situational variable (firm newness) that promotes deception in purchasing negotiations. Moreover, they provide implications for buyers and suppliers on how to leverage preconceptions associated with their firm's age to gain advantages (or avoid disadvantages) in buyer–supplier negotiations. Finally, we add to liabilities of newness theory by identifying an additional liability that affects new ventures – namely, the increased risk of being deceived.     

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.     

How and when environmental orientation drives corporate sustainable development in a cross-national buyer–supplier dyad

This study aims at relating the role of environmental orientation to corporate sustainable development within a cross-national buyer–supplier dyad. To this end, it specifically proposes and empirically tests a model delineating how the international buyer's environmental orientation would influence its green supplier development (GSD) activities, then its outsourcing supplier's green product strategies (GPS), and finally total relationship value (TRV) of the entire buyer–supplier dyad. It also examines how supplier overall information technology advancement (SOITA) would further moderate the aforementioned influences. Survey results derived from 202 buyer–supplier dyads have provided empirical support for all the hypothesized relationships of the proposed model. To summarize, the findings show that international buyers' internal and external environmental orientations both serve as a major driver for their GSD, which, in turn, significantly advances outsourcing suppliers' practice of GPS and consequently enhances TRV. Moreover, this study has demonstrated that SOITA exerts a significant and positive moderating effect on the GSD–GPS link. Overall, this study provides important insights into understanding the complex and contingent processes underlying the influence of the international buyer's environmental orientation on the joint performance of the dyad.     

Impacts of revenue sharing,profit sharing and transfer pricing on quality-improving investments

We compare revenue sharing with different profit-sharing rules and constant transfer prices in a buyer-seller setting, in which the incompleteness of contracts causes decentralization costs. Our focus is on a situation where a manufacturing department or a supplier of an intermediate product can invest in a quality improvement of the final product and thereby increase customer demand. We analyze the willingness of the supplier to invest under a revenue-sharing rule, three profit-sharing rules and a transfer-pricing scheme. Our analysis shows that the performance of sharing rules is likely to decrease when the sharing basis consists of fewer cost components. Remarkably, this is not true for the revenue-sharing rule. To the contrary, this less prominent scheme can be shown to maximize total profit under a variety of cost combinations.     

The role of buyer and supplier knowledge stocks for supplier-led improvements in logistics outsourcing

In service outsourcing, supplier-led relationship-specific improvements (RSIs) are vital to buyers, yet, often falls short of the buyer's expectations. One explanation for the lack of such RSIs are insufficient relationship-specific knowledge stocks. However, it is not understood how relationship-specific knowledge stocks facilitate RSIs. Our research addresses this gap by providing a nuanced view of knowledge stocks as relationship-specific resources in service outsourcing. This research is based on a multiple case study of ten logistics outsourcing dyads. The findings build on the Relational View of Dyer and Singh (1998) and extend the understanding of how different types of relationship-specific-knowledge stocks and their sub-dimensions affect proactive and reactive RSIs. In this respect, supplier knowledge of the specific value-creating processes (e.g., logistics processes) at the buyer form the foundational layer for RSIs, flowed by a second layer of supplier knowledge of the buyer company and its up- and downstream interconnections with the customers and other suppliers. The third knowledge-layer is formed by more generic relationships-related market knowledge. In addition, the buyer’s knowledge of the service supplier showed vital in facilitating RSIs by removing barriers that hamper the supplier’s improvement efforts.     

Service triads: A research agenda for buyer–supplier–customer triads in business services

Service triads, in which a buyer contracts with a supplier to deliver services directly to the buyer's customer, represent an emerging business model. This special issue is dedicated to this theme. To set the context, in this lead article, we first define service triads, both as a phenomenon and a research topic. We then provide a review of different strands of existing research and various theoretical frameworks that can inform our study of service triads. This culminates in an outline of a research agenda that can guide future study. As such, this paper not only introduces the articles in the special issue, but is also intended as a point of reference and motivation for further work on service triads, and on triads in general.     

Exploration of congruence in perceptions of buyer–supplier attraction: A dyadic multiple case study

In long-term complex buyer–supplier relationships, many exchanges are non-contractual, a factor that emphasizes the social dimension of the relationship. Previous studies have shown that attraction is a fundamental aspect of the social dimension and a main driver in non-contractual exchanges. Although attraction is a determinant of a relationship, many studies have examined the relationship only from the buyer's or supplier's perspective. Our study extends this research stream by considering the dyadic aspect of attraction and poses the following questions: Does the success of a relationship require that both parties perceive it to be attractive? How important is it to understand how the company looks in the eyes of the other party? In this paper, we explore the dyadic aspect of buyer–supplier attraction by analyzing six cases, two buyer firms and six supplier firms and by conducting a total of 43 interviews. By using cross-case analyses, we develop a set of proposals for explaining how congruence in perceptions of attraction affects relationship success.     

Financing buyer–supplier dyads: an empirical analysis on financial collaboration in the supply chain

Awareness of capital commitment in the context of supply management has increased tremendously in recent years. However, researchers often only consider the intra-organisational perspective of financing. Consequently, a great optimisation potential, especially in globally dispersed supply chains, remains unlocked. To address this research gap, this paper presents a conceptual research model with hypotheses derived from principal–agent theory to explain the role of collaboration in the context of financing a buyer–supplier dyad and its effect on the resulting financing performance. A cross-industry survey yielding 145 responses was used to empirically test the hypotheses. The results indicate that both strategy alignment between purchasing and finance departments (intra-firm financial collaboration) as well as in the buyer–supplier dyad (inter-organisational financial collaboration) have a significant positive effect on the overall financing performance. These findings provide researchers and practitioners with a clearer understanding of upstream-oriented supply chain finance and the possibilities and constraints in its implementation.     

The effects of volume consolidation on buyer–supplier relationships: A study of Chinese firms

Volume consolidation is a major consequence of supply base reduction. This study explores the relationships between volume consolidation and supply chain outcomes such as buyer coordination costs, supplier performance, buyer environment learning ability, and buyer learning from the supplier. This study also examines the effects of these supply chain outcomes on buyer satisfaction. Based on results derived from an empirical study of 398 Chinese manufacturing companies, it is found that volume consolidation enhances supplier performance, buyer learning from the supplier, and its environment learning ability. It is also determined that coordination costs negatively affect supplier performance and buyer satisfaction. Environment learning ability does not affect buyer satisfaction, while supplier performance and buyer learning from the supplier positively affect buyer satisfaction. As such, the effects of volume consolidation are not limited to enhanced supply chain performance, but also to organizational learning in the supply chain.     

Electronic reverse auction configuration and its impact on buyer price and supplier perceptions of opportunism: A laboratory experiment

Buying organizations are increasingly using electronic reverse auctions (eRAs) to source from suppliers. However, recent quasi-experimental and field research has suggested that the use of this sourcing technique can create perceptions of opportunism among participating suppliers. Yet from the buyer's perspective, online reverse auctions can yield lower purchase prices. Given the many ways in which to configure on-line auctions, we extend existing research by using a laboratory experiment to investigate how different reverse auction configurations jointly influence bid price and suppliers’ perceptions of buyer opportunism.Our findings suggest that supplier bid prices decrease over time as they participate in more eRAs, regardless of the configuration of auction parameters. However, the combination of rank (versus price) visibility, high (versus low) supplier need to win a contract, and six (versus three) competitors was significantly more effective than other combinations of variables in immediately reducing bid prices. The data also indicated that when suppliers’ bids dropped substantially across auctions, their perceptions of opportunism increased. Notably, auction parameter combinations such as price visibility, three competitors, and low need for the contract yielded comparably low bids by the third auction, without any increases in perceived buyer opportunism.     

The effects of major U.S. domestic airline code sharing and profit sharing rule

This paper presents a structural model of code sharing among major U.S. domestic airlines and estimates a profit‐sharing rule. The profit‐sharing rule between partner firms in code sharing is estimated at 0.92, which suggests that the operating carrier acquires around 92% of profits from a round‐trip, and the marketing carrier retains 8% as a commission fee. Meanwhile, the economies of code sharing reduces marginal cost, and firms are able to price at higher markups. This implies that demand increases and consumers have larger surplus if code sharing creates new products.     

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.