COMMITMENT, TRUST, AND MUTUAL ADAPTATION BY FIRMS: AN EXAMINATION OF SUPPLIERS AND BUYERS RELATIONSHIPS.

Abstract

The article examines the mutual adaptations by firms that take place within the context of dependence, communication, joint decision-making, trust and commitment. Adaptation is of two kinds: supplier adaptation and buyer adaptation. Interorganizational trust is the extent to which organizational members have a collectively held trust orientation toward the partner firm. For the research setting, a national sample of U.S. automotive parts and components industries were used. Data for the study were collected using a self-administered questionnaire. Path analysis was used to test the causal model to the extent the observed variables were representative of the latent constructs of the proposed model. As expected, dependence impacts supplier adaptation. Joint action and buyer adaptation are associated because of the high degree of operational coordination required once adaptation has occurred. Productivity gains in value chain are possible when firms are willing to make transaction-specific investments. Trust acts as a major mitigating factor to reduce risk. If the relationship is to go beyond the core economic dimension, then sociological factors become important. Communication, commitment and trust constitute the sociological dimension of the relationship.