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BUYER-SUPPLIER RELATIONSHIP DEVELOPMENT: AN EMPIRICAL STUDY AMONG DUTCH PURCHASING PROFESSIONALS

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BUYER-SUPPLIER RELATIONSHIP DEVELOPMENT: AN EMPIRICAL STUDY AMONG DUTCH PURCHASING PROFESSIONALS
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  Journal of Enterprising CultureVol. 18, No. 2 (June 2010) 107–137DOI: 10.1142/S0218495810000537 BUYER-SUPPLIER RELATIONSHIP DEVELOPMENT:AN EMPIRICAL STUDY AMONG DUTCHPURCHASING PROFESSIONALS MARJOLEIN C. J. CANIËLS, ∗ , † , § CEES J. GELDERMAN ∗ ,  ¶ and JAN M. ULIJN ∗ , ‡ ,  ∗ Faculty of ManagementsciencesOpen University of the Netherlands, The Netherlands †  Netherlands Laboratory for Lifelong LearningOpen University of the Netherlands, The Netherlands ‡  Eindhoven University of Technology, The Netherlands § marjolein.caniels@ou.nl  ¶ kees.gelderman@ou.nl   jan.ulijn@ou.nl Casestudybasedliteratureonrelationshipdevelopmentpresentsin-depthinforma-tiononcontextualfactorsinrelationshipdevelopment.However,little quantitativeevidenceisavailableaboutkeyaspectsofbuyer-supplierrelationshipsineachstageof its development, such as the level of trust/commitment, buyer’s and supplier’sdependence.The studywill try to fill this gapby identifyingand quantifyingtheseaspects from the buyer’s perspective in each development stage. A comprehen-sive surveyamong238 Dutch purchasingprofessionalsprovidesevidenceon howthesecharacteristicsofrelationshipschangewhenrelationshipsdevelopovertime.The results largely confirm the hypotheses, which stem from the extant literatureabout organizational dependence and trust/commitment. A notable finding is thatthe buyer perceives to be dependent on the supplier, even in a desirable relation-ship. Managerial implications are that: (1) industrial marketers should be awarethat professionalpurchasersfeel dominatedby them,evenin relationshipsthat arepositively evaluated and therefore desirable in the view of the buyer; and (2) thatpurchasers should be aware that dependence implies vulnerability, even when therelationship is still developing in an otherwise desirable way. Keywords : Buyer-supplier relations; trust; commitment; dependence; relationshipdevelopment. 107   Marjolein C. J. Caniëls, Cees J. Gelderman and Jan M. Ulijn INTRODUCTION Overthelast30yearstheresearchoninter-firmrelationshipshasbeenboom-ing. This growing body of literature was brought about by a general shift of interest towards issues such as resource accessing and sharing among firms,co-operative approaches to markets and positioning of the firm in a globalmarket. Academic writers generally believe that global competition is mak-ing business too complex and too expensive for one firm to undertake it onits own (Ellram, 1998; Vaaland and Heide, 2007; De Leeuw and Fransoo,2009).Firmsarefoundtobenefitfromenteringintoavarietyofrelationshipswith different suppliers (Cunningham and Homse, 1982; Bensaou, 1999;Lilliecreutz and Ydreskog, 1999). Each type of relationship offers specificbenefits to buyer-firms (Hines, Lamming, Jones, Cousins and Rich, 2000).Moreover, supplier-relationships change while they develop. Studying thenature of buyer-supplier relationships should therefore include an examina-tion of their development over time. In a seminal paper on the developmentof buyer-supplier relationships Ford (1980) introduced a five-stage modelfor the analysis of buyer-supplier relationships. A rich and growing body of literatureonthis topichas emerged eversince. Themodelsdescribedtend tobeeitherconceptualorbasedlargelyoncasestudyresearch, seeforexampleDwyer, Schurr and Oh (1987). The vast and rich case study based literatureon relationship development presents us with in-depth information on con-textual factors in relationship development. However, there appears to belittle quantitative evidence on the intensity of key aspects of buyer-supplierrelationships in each stage of its development, such as the level of trust,commitment, buyer’s and supplier’s dependence.Entrepreneurs and business owners are very much interested in possibil-ities for relationship development between buyers and suppliers. By consti-tuting one segment in a supply chain, entrepreneurs have to relate to theirsuppliers as well as their buyers. By using evidence from two Dutch multinational companies (MNCs) Walrave  et al.  (2009) illustrate that corporateentrepreneurshipneedstodevelopasupportivecultureforinterfirmcoopera-tion,andthisincludesthedevelopmentofbuyer-supplierrelations.However,current studieshavebeen focusingmainlyon relationshipdevelopmentwithbuyers or customers/clients from the viewpoint of the supplier. In a casestudy of the Swedish Anoto (developer of the digital pen) Harryson (2008)clearly demonstrates that entrepreneurship is navigating from creativity tocommercialization through relationships with customers. Building success-ful relationships with customers early on is found to be crucial to survivalandsuccess, especiallyforstart-upfirms.ThestudiesofElfringandHulsink 108   Buyer-Supplier Relationship Development  (2003and2007)ontheroleofnetworksforITstart-upsindicatethatrelation-shipformationanddevelopmentwithcustomersisthelifebloodofemergingfirms. Still, thepurchasers viewpointhas seldom been stressed. Quantitativeevidence on this score is even scarcer.The underlying study addresses this other perspective: how buyers seesuppliers with regard to relationship development on the key aspects of trust, commitment, and buyer’s and supplier’s dependence. The quantitativeresearch designincludesasurveywhichisdevelopedtodistinguishbetweenseveral developmental stages of a buyer-supplier relationship. The aim isto identify and quantify the level of trust and dependence from the buyer’spoint of view, by using a large, representative sample of actual relationshipsbetween suppliers and their business customers.The organization of the paper is as follows. The next section reviewsthe literature on buyer-supplier relationships and generates an overview of relationship development studies and the methodologies applied in them.Subsequently, we map out key factors that characterize buyer-supplier rela-tionshipsanddevelophypothesesonhowthesekeyfactorswillchangewhenrelationshipsdevelopovertime.Afterexplainingourresearch methodology,we present the results of our study and discuss the findings and their man-agerial implications. The conclusion offers the limitations of the study aswell as suggestions for further research. In particular we will pay atten-tion to the relevance of this study for small and medium sized enterprises(SMEs). LITERATURE REVIEW Research on supply chain management provides many models that describethenatureofinter-firmrelationshipsinthesupplychain.Theliteratureshowsa strong belief and a general consensus that companies require a variety of relationships,whileno general best typeofrelationshipexists(Cunninghamand Homse, 1982; Young and Wilkinson, 1997; Gadde and Snehota, 2000;Holweg  et al. , 2005).The literature about buyer-supplier relationships is characterized by abroad spectrum of contributions that vary to the extent in which they focusonrelationshipdevelopment.Onestrandofresearch concentratesonvarioustypologiesfor theclassification and managementof buyer-supplierrelation-ships. Academic writers in this line refer to these models as classificationmodels.Thesemodelsarestaticinnatureandtheirmainfocusisonexploringthecharacteristicsofbuyer-supplierrelationships.Well-knownexamplesare 109   Marjolein C. J. Caniëls, Cees J. Gelderman and Jan M. Ulijn portfolio models (Kraljic, 1983; Caniëls and Gelderman, 2007; Terho andHalinen,2007;Gok,2009),relationshipstypematrices(Krapfel etal. ,1991;Mota and de Castro, 2005; Liu  et al. , 2010), partnership models (Lambert,Emmelhainz and Gardner, 1996), simple tier-structure models (Jones andWomack, 1986; Womack and Jones, 2005), and market-hierarchical gover-nance approaches (Williamson, 1975; 1999; 2005). All these models havein common that they zoom in on the state of a relationship at one specificmomentintime.Theirmainpurposeistoprovidemanagementrecommenda-tionsontheappropriatestrategicbehaviorindifferenttypesofrelationships,and in that sense they do not put much emphasis on the dynamic characterof relationships.A second line of research is made up by studies that take the researchon buyer-supplier relationships a step further by not only classifying rela-tionships into certain types, but also explicitly focusing on the provision of management guidelines about how to move from one type of relationship toanother. This observation implies a sense of relationship evolution and rela-tionship development. Additionally, these studies discuss how to respond tomanagement issues at different stages in the relationship, and also how toselectively manage different types of relationships. Notable illustrations of thisapproacharegivenbytheworkoftheIMPgroup,forexampleCunning-ham and Homse (1982), Fiocca (1982), Cambell and Cunningham (1983)and Baraldi, Brennan and Harrison (2007). Several of these studies explic-itly acknowledge the existence of evolution of relationships. They provideguidelines on how to develop a relationship from one stage towards a higherstage (Fiocca, 1982).Athirdandrelated strandintheliteraturecontainscontributionsthatcon-cern pure relationship development models. These models adopt a specificdevelopment perspective on relationships. In contrast to pure classificationmodels,thenotionthatrelationshipsevolveovertimeformsthebasisofrela-tionship development models. This notion is not to deny the possibility thatrelationshipsmightsometimesfail to developor even regress. Blankenburg-Holm, Eriksson and Johanson (1996) emphasize in this respect that “thedevelopment process is by no means deterministic; the dyadic relationshipis only developed if both parties consider it profitable or otherwise worth-while to engage in future exchange”, (1996: p. 1035). Ford (1980), Dwyer et al.  (1987), Ellram(1991), Wilson(1995)and Parvatiyarand Sheth (2000)present pure relationship development models. Most of these approachesuse comparable stages and emphasize that inter-firm relationships evolve asthe commitment of resources and interdependence between firms increase(Ford, 1980; Dwyer  et al. , 1987). The following stages in relationship 110   Buyer-Supplier Relationship Development  development can be distilled from the literature: (1) Repeated single trans-actions, (2) Development and management of a partnership, (3) Intensifyand strengthen the partnership, (4) Coping with a dissatisfying partnership,(5) Ending the partnership. Appendix 1 of this article gives a description of each stage.Althoughthesemodelsarewellknowninacademicwriting,littleresearchhasbeen carriedoutthatquestionstheiractualoccurrenceandpractical rele-vance. Table1showsthatseminalpapers onrelationshipdevelopmentareillgroundedinempiricalresearch.Thevariousdevelopmentstagesarepredom-inantlyconceptualby nature. In addition,thevariablesthattypifyeach stageare merely based on theoretical thinking and undocumented observations.The empirical study in this paper aims to advance upon the current knowl-edge on relationship development by investigating the change in trust anddependence levels during several developmental stages of buyer-supplierrelationships.Several key elements of buyer-supplier relationships appear from the lit-erature. De Jong and Nooteboom (2000) distinguish three main groups of factors that have both theoretical and empirical support: (1) trust and com-mitment, (2) buyer’s dependence, and (3) supplier’s dependence.Trust and commitment are essential prerequisites for building and devel-oping customer-supplierrelationships(De Ruyter, Moormanand Lemmink,2001; Liu  et al. , 2008). Successful relationships require commitment andtrust (Morgan and Hunt, 1994; Handfield and Bechtel, 2002; Hald  et al. ,2009). Trust and commitment are related concepts, which both lead directly Table 1. Overview of Methodologies in Prominent Relationship Development Studies. Study Methodology Ford (1980) Preliminary interviews for the design of scenarios thatwere presented to (an undisclosed number of)respondents in unstructured interviews.Dwyer  et al.  (1987) Conceptual study, the model is built on exchange theoryand its offspring – marital theory, bargaining theory,and power theory.Ellram (1991) Combining findings from literature review withobservations in 6 firms involved in successfulpurchasing partnerships.Parvatiyar and Sheth (2000) Synthesis of existing literature on relationship marketing.Wilson (1995) Synthesis of existing literature on relationships,partnerships, strategic alliances, and joint ventures.111
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