Although considerable research is dedicated to influence strategies and supplier development, a lack of empirical support exists of their effects on supplier satisfaction and commitment. This exploratory study aims to fill this gap by investigating first-tier suppliers in the German automotive industry. Supplier reactions to three different influence strategies and two types of supplier development efforts are examined. Results indicate that supplier commitment is affected by the use of promises and both human- and capital-specific supplier development, while supplier satisfaction is affected by indirect, other direct influence strategies and capital-specific supplier development.
Manufacturers have become aware of the role suppliers play in achieving competitive advantage, and have started to rethink their sourcing relationships, characterized as being at arms’ length transaction in the past (Maloni and Benton, 2000). Supply chain management literature stresses that supplier commitment and satisfaction are important elements to establish successful exchange relationships (Andaleeb, 1996; Wong, 2000). Tracey and Tan (2001) state that manufacturers should build relationships with suppliers, and encourage their involvement in the supply chain. They recommend further study of how to involve suppliers in supply chain activities and its effect on performance. Kannan and Tan (2002) analyze the effect of supplier selection and assessment to business performance, while Swink and Zsidisin (2006) link focused commitment strategies with business performance.
Influence strategies as well as supplier development efforts are used to affect supplier behavior and improve supplier performance. Influence strategies center on the communication of a firm to associated chain members (Frazier and Rody, 1991) in order to influence the behavior or decision-making process (Bandyopadhyay, 2004; Simpson and Mayo, 1997). Supplier development is characterized as any effort of a buying firm with a supplier to increase its performance and/or capabilities and meet the buying firm's short- and/or long-term supply needs (Krause and Ellram, 1997). Wagner (2006) distinguishes between direct and indirect supplier development. The latter depicts situations in which the buying company only invests limited resources to a supplier in order to enforce supplier improvement and offer incentives. Direct supplier development includes the investment of human and capital resources of the buying company in a particular supplier.
Several studies have shown the impact of influence strategies and supplier development efforts on suppliers’ and buyers’ performances and buyer–supplier relationships from the buyer perspective (Humphreys et al., 2004). However, the examination of influence strategies and supplier development and buyer–supplier relationships from the perspective of the supplier is still scarce (Cousins and Lawson, 2007; Goffin et al., 2006). Also, the outcomes of direct influence strategies, especially promises, seem inconclusive (Bandyopadhyay, 2004). Promises have been associated with both positive and negative relationship outcomes (Boyle et al., 1992; Frazier and Rody, 1991). Gelderman et al. (2008) recently reported that dominant suppliers regard promises as very effective, contributing to a more positive image of the supplier. Therefore, the focus of our study is an analysis of the impact of promises and other direct and indirect strategies on supplier commitment and supplier satisfaction in a highly competitive network of mutual dependences. Our study provides new insights into the effect of influence strategies and supplier development on supplier commitment and supplier satisfaction.
The next section provides a literature review, resulting in hypotheses to be tested. A description of the methodology is presented, followed by a discussion of the results and the implications. Finally, conclusions are presented as well as limitations and directions for future research.
The purpose of this study was to investigate the role of influence strategies and relationship-specific supplier development and its impact on first-tier suppliers’ satisfaction and commitment in the German automotive industry. A correction was made for supplier's dependence. Indirect, other direct influence strategies and capital-specific supplier development seem to have a positive effect on supplier satisfaction. Promises, capital- and human-specific supplier development were found to have a positive effect on supplier commitment.
Limitations with regard to the results can be summarized as follows. The study must be considered exploratory, due to its sample size of 47 first-tier suppliers, with limited generalizability and explanatory power. Therefore, further research is needed to replicate the study with larger and more representative samples.
Additionally, the two constructs regarding relationship-specific supplier development were created specifically for this study and need to be further validated. These constructs measured the frequency with which the manufacturer employed the supplier development activities. However, this frequency may not always be a good predictor for increased satisfaction or commitment. Future research could investigate suppliers’ perception with respect to the usefulness or appropriateness of supplier development activities.
With regard to influence strategies, the frequency of the used influence strategies was measured. However, the nature of the requests may have an impact on the outcomes. Additionally, in practice, a sequential use of influence strategies is typically used. Therefore, future research could focus on these aspects. A longitudinal study, which investigates the effects of influence strategies and supplier development over a specified time period, is warranted.
Manufacturer–first-tier supplier relationships in the automotive industry seem to differ in various aspects from other buyer–supplier relationships, with respect to power, dependence and the degree of collaboration. Thus, it would be interesting to analyze, for example, how lower-tier suppliers, suppliers of more standardized items, or of different industries, perceive supplier development efforts and influence strategies.
