Abstract
Building on sustainable supply chain management and operations strategy literature, our study seeks to identify structural relationships between switching cost and sustainable supplier relationships from a demand-side perspective. More specifically, this study looks at the impact of the switching cost on process monitoring, operation integration, and sustainable supplier relationships. To test the structural relationships in our research model, we used Manufacturing Productivity Survey data from Korea to conduct an empirical analysis based on 351 data that fit our study’s purpose. The results show that the indirect effect of switching cost on sustainable supplier relationships through process monitoring and operational integration is positively valid. Additionally, the results emphasize that the social exchange theory can be explained in the perspective of the switching cost.
Highlights
To the best of our knowledge, there has been no attempt to (a) use both the process monitoring and operational integration for mediators to explain the relationship between switching cost and sustainable supplier relationships, or (b) adopt the concept of switching cost, which has been used in the marketing area
Our research model is expressed in mathematical expressions as follows: η3:Sustainable Supplier Relationship =
Buyers have recognized that switching costs are high, it can be judged as a good sign that monitoring and operational integration practices for long-term supplier relationships positively correlate with switching costs
Summary
A sustainable supplier relationship has been a concern for firms seeking long-term and secure supply chain relationships. Switching cost does not bring about a sustainable supplier relationship without fail; instead it is just one of several aspects. The findings of Helper et al [7] show that upgrading contracted organizations themselves through mutual orchestration and collaboration while monitoring each other’s performance is achieved through learning by monitoring This can be understood by the fact that the higher a switching cost (maintaining current supply contracts) is spent, the higher monitoring the effort required. Simatupang and Sridharan [9] indicate that the integration of supply chain processes generates long-term relationships with suppliers and provides a variety of data that could be used, while showing supply chain visibility and risk-sharing.
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