Buyers' perspectives on improving performance and curtailing supplier opportunism in supplier development: A social exchange theory approach

Abstract

Supplier development initiatives, instituted by buyers, may have both positive (performance improvement) and negative (supplier opportunism) outcomes. Consequently, it is important to understand the factors that increase the likelihood of positive outcomes and decrease supplier opportunism. Drawing on Social Exchange Theory, we introduce and validate a model whereby socially embedded commitments mediate the effects of investment in suppliers on supply chain outcomes. Structural Equation Modelling, utilizing a sample of 204 buyers in the fruit and vegetable supply chain in Vietnam, indicates that supplier development not only improves buyer performance, but also simultaneously increases supplier opportunism. However, the degree to which supplier development initiatives lead to positive or negative consequences depends on goal congruence and long-term orientation. The design of supplier development initiatives should, thus, be geared to fostering suppliers' long-term orientation and goal congruence between parties.