In pursuit of supplier resilience: The explanatory role of customer leadership style

Abstract

Supply chains are only as strong as their weakest link. Given that most supply chain disruptions occur because of first-tier suppliers, the need to examine supplier resilience in supply chain relationships cannot be overstated. However, our understanding of how customers can engage with their suppliers and facilitate supplier resilience in their relationships is rather curbed. We examine the role of customer leadership styles in inciting supplier extra-role behaviors, such as relational flexibility and relationship-specific investments, by fostering supplier trust, which can then abet supplier resilience. We test our hypotheses using survey data collected from 207 U.S. firms while ensuring our model and findings are relevant to practice through interviews with high-level executives at several Fortune-1000 firms. We find that a customer’s leadership style enhances a supplier’s trust in the customer. Subsequently, the supplier might demonstrate relational flexibility and relationship-specific investments. While relational flexibility enhances supplier resilience, relationship-specific investments might limit the supplier’s alternatives to remedy a disruptive situation and impede its resilience towards its customer. Our study contributes to academic research and practice by showing that a customer can utilize its leadership style to enhance supplier resilience within the specific customer–supplier relationship. Nevertheless, if the mechanism to promote supplier resilience is not clearly understood, a customer’s leadership style might backfire.