Supplier dependence: impact on supplier's participation and performance

Abstract

PurposeThe purpose of this paper is to extend our understanding of the importance of supplier dependence on the buyer's firm and its relationship to supplier training and supplier involvement in product development with respect to the supplier's performance.Design/methodology/approachA random sample of 231 firms provided the data that were analyzed for this study. Using structural equation modeling, a sub‐set of the sample consisting of 166 manufacturing firms was used to test the five hypothesized relationships in the model.FindingsThe main findings indicate that supplier dependence is a significant contributor to increasing supplier participation in buyer supported training and increasing supplier involvement in product development. Also, supplier training and supplier involvement are significant contributors to the supplier's operational performance.Research limitations/implicationsThe model tested in this study used a random sample of US manufacturing firms. Thus, future studies should include a random sample of non‐manufacturing firms and firms outside of the USA. The study explored the buyer's perspective only; a study of suppliers may provide further insights to extend this study. Although the use of supplier training was relatively low, significant relationships were identified.Practical implicationsBased on this research, key suppliers can better understand the relationships among supplier dependence, supplier training, supplier involvement in product development and their effects on supplier's operational performance.Originality/valueAlthough supplier development has emerged in previously published studies as a critical factor in improving performance, the role of supplier dependence on the buyer has not been empirically examined. Further, an integrated research model that investigates the relationships among supplier dependence, supplier training, supplier involvement in product development and supplier's operational performance has not been offered.