How does relationship quality translate into better organisational performance: an empirical check

Abstract

This paper examines the impact of relationship quality on organisational performance by testing the relationship quality-relationship outcome conceptual model. Organisational performance is measured in terms of relationship outcomes. A survey was used to collect data from pharmaceutical companies in India. Relationship quality is comprised of trust, commitment, communication quality, and, relationship satisfaction. Relationship outcomes conceived as a dependent variable for this study was also measured using suitable non-financial and relationship centred measures. The research instruments were refined and validated. The data were analysed using structural equation modelling. The results indicate that only communication quality and relationship satisfaction emerge as significant predictors of relationship outcomes in the current research context. This study provides valuable insights into the importance of communication quality and relationship satisfaction in sustaining the relationships and deriving required benefits from it. It also advocates the use of non-financial measures as indicators of organisational performance.