Role of Continuity, Specificity and Frequency of Firm–Supplier Exchanges in Customer Fulfilment: Evidence from Latin America

Abstract

While past studies showcased the importance of supply side capability in customer orientation, not much has been said on matching the specific aspects of customer side fulfilment with supplier side exchange. The present study broadly aims at establishing the linkage between various aspects of customer orientations and nature of supply chain exchanges. It serves to address the dilemma which the firm faces while choosing the nature of its exchange relationship with supplier and how does this relationship can impact various aspects of customer orientations. We test our hypotheses on 2000 firms from four countries in Latin America. We take advantage of the 2017 World Bank Enterprise Survey. In addition to descriptive statistics, multiple hierarchical regressions were used to test the study hypotheses and use robust variance estimator to deal with sources of heteroskedasticity in the data. The findings revealed that in order to achieve market flexibility in the form of tailor-made customer fulfilment, firms not only require specificity in exchange with suppliers, but also they should not engage in deep and frequent exchange relationship with its suppliers. Therefore, the supply side capability of flexibly searching and screening suppliers and forming ad hoc contracts as per requirements is necessary to achieve market side flexibility in the form of tailor-made customer fulfilments. It is necessary for firms to resort to matching their customer orientations with their supply side strategy. Only close matching of supplier side relational strategies with customer orientation by aligning firm’s supply side flexibility with market flexibility works well for the firms. The present study makes theoretical and practical contributions to the strategic market/customer flexibility, supply chain exchange and customer orientation literature and relational capital perspectives.