Year

2017

Degree Name

Doctor of Philosophy

Department

School of Management, Operations and Marketing

Abstract

In today’s dynamic market, firms are encouraged to establish beneficial collaborations to maximise their value creation in the supply chain by developing unique supply chain strengths. Despite their popularity, supplier development efforts have not always been a success story. This current study seeks to enhance the understanding of successful supplier development by developing and testing a model of supplier development success.

Based on the dynamic capability view, the relational view and the investment model, as well as a review of the supplier development and market orientation literature, the study investigates how: (1) market orientation moderates the relationship between supplier development and performance improvement; and (2) capability improvement, relationship satisfaction and relationship commitment mediate the relationship between supplier development and performance improvement.

The multiple relationships between key constructs were analysed using structural equation modelling. The sample consisted of suppliers that received direct or indirect supplier development from original equipment manufacturers (OEMs) in Indonesia automotive industry. Of 158 completed responses, 151 responses from 100 suppliers were usable, and the response rate was 34%. The empirical results point to the importance of market orientation as a key moderating variable that strengthens the supplier development and performance improvement relationship. Supplier development indirectly improves supplier’s performance through capability improvement, relationship satisfaction and relationship commitment, especially when the supplier has low market orientation. However, when the supplier has high market orientation, supplier development has a direct and indirect influence on performance improvement. In addition, supplier development is found to have a positive influence on relationship satisfaction and relationship commitment regardless of the level of supplier’s market orientation. Furthermore, direct involvement supplier development, supplier evaluation, future business incentives and customer support in inter-supplier collaboration are correlated between these constructs, suggesting that customers manage these activities in their attempt to develop their suppliers.

This study is one of the early empirical attempts to examine the influence of market orientation on the relationship between supplier development and its outcomes. The study has managerial implications for suppliers seeking external performance improvement resources as well as for customers that are programming supplier development.

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