Supplier development and buyer’s relative relationship value – a dyadic examination in an emerging market
Ngoc Luu, Liem Viet Ngo, Jack CadeauxPurpose
Fierce competition in many industries has prompted buying firms to participate in supplier development by sharing information (SDI) and by improving suppliers’ capabilities (SDC). Building upon transaction cost theory and social exchange theory, this study aims to examine the double-sided effects of SDI and SDC on buyer’s relative relationship value (BRVA), which measures the value buyers perceive from the relationship relative to that suppliers perceive.
Design/methodology/approach
The analysis is based on questionnaires received from managers of 110 matched dyads of buying and supplying firms in Vietnam.
Findings
The study finds that SDI exhibits a positive but decreasing returns-to-scale effect on BRVA, while SDC follows a U-shaped pattern. Moreover, the solidarity norm moderates these relationships in distinct ways.
Practical implications
The results imply that buying firms should be cautious about their investments in SDI and SDC because their effects on BRVA are nonlinear and contingent on relational governance conditions.
Originality/value
This paper introduces BRVA as a dyadic perspective for assessing the nonlinear outcomes of different supplier development investments on both buying and supplying firms.