Critical influence of relational governance on relationship value in strategic supply management

Abstract

Purpose This paper aims to explore the enhancement of value-added characteristics in strategic supply management by considering manufacturers’ willingness, opinions on relational governance and the effect of relational governance on relationship value. Design/methodology/approach After a literature review, this study identified the antecedents of relational governance affecting manufacturers, and explored the effect of relational governance on relationship value, taking relationship quality and interfirm learning as the intervening constructs. Data collected from 259 valid questionnaires completed by purchasing managers for the top 2,000 Taiwanese manufacturers were assessed using a structural equation model. Findings The results indicated that relational governance is directly and positively correlated with relationship quality and interfirm learning; relational quality and interfirm learning are directly and positively correlated with relationship value; and consumer orientation and management innovation are directly and positively correlated with relational governance. Research limitations/implications The high explanatory power of the results of the deduced model in this research helps to explain the relational governance of manufacturers toward the suppliers. However, the factors affecting the sustainability of cooperative relationships in service contexts might differ. Practical implications Relational governance complements the adaptive limits of contracts by fostering the continuance of exchange and entrusting both parties with mutually agreeable outcomes. Relational governance affects manufacturers’ ability to flexibly adapt and overcome uncertainty in the supply chain relationship. Originality/value This study investigated the relationship among governance features that support interorganizational relations and developed precise measures of relational governance. The effect of relational governance on the evaluation of relationship value was examined.