How supplier exercised power affects the cooperative climate, trust and commitment in buyer-supplier relationships

Abstract

Facing rapid changes in technology and the globalisation of markets, it is now increasingly important for firms to work together to survive. Cooperation between buyers and suppliers helps to improve the efficiency of a supply chain as a whole for the benefit of all the parties involved, the exercise of power by suppliers is a critical factor that influences such cooperation. This study aims to investigate how supplier use of power affects the cooperative climate between a buyer and a supplier, buyer trust in the supplier, and buyer commitment, all from buyer's perspective. The relationships are hypothesised and investigated based on the empirical data collected from companies in the Taiwanese semiconductor industry. The results demonstrate that the supplier's use of non-coercive power can improve cooperation and trust between the buyer and supplier, and this can then enhance buyer's commitment. Practical suggestions are made based on the insights derived in this paper with the aim of achieving closer buyer-supplier relationships in highly competitive environments.