Building Collaborative Relationships with Distributors in the Dutch Potted Flower and Plant Industry

Abstract

The objective of this paper is to discuss the impact of the information network and trust on collaborative relationships as well as the impact of the collaboration on the performance of suppliers (i.e., growers). Combining network and trust, growers can build collaborative efforts, namely joint action and the norm of flexibility. Network in this paper is analyzed in terms of its information that can support a supplier in coordinating the channel relationship. By means of trust, a grower and his distributor may have adequate mutual understanding and shared experience to creatively solve problems, set up effective planning and be flexible in the day-to-day management. The discussion is based on the network approach to channel relationships and considers elements of the transaction cost economics and marketing channels. One hundred seventy-five growers of the Dutch potted flower and plant industry answered the questionnaires about their relationships with distributors. This data was analyzed through structural equation modeling in Lisrel. The results show the safeguarding effects of the information network to encourage joint action and flexibility. Also, trust influences directly flexibility and indirectly joint action. Flexible growers achieve high profitability and growth rate. This study implies that the network and trust should be considered in making the decision about the degree of collaboration in a channel relationship. To achieve an efficient mechanism of coordination, managers need to draw special attention to the development and maintenance of trust and the network.