Supply chain partners' trust building process through risk evaluation: the perspectives of UAE packaged food industry

Abstract

PurposeThis paper seeks to identify the up‐stream supply chain member's (manufacturers, suppliers, supplier's service providers) characteristics, economics, dynamic capabilities, technology and institutional perspectives of risk in relationship to develop a trust building model through risk evaluation and to address the issue: should a supply chain member strive to build the trust or strive to reduce the risk with its members and from which perspectives?Design/methodology/approachA conceptual framework was developed considering five key perspectives (characteristics, economics, dynamic capabilities, technology and institutions) to evaluate the member's risk in relationship and derived the hypothesis from the framework. A survey was conducted in UAE packaged food industry upstream supply chain covering senior managers of 102 companies. Data were analysed using multiple regression analyses through SPSS. The selected supply chain members of this industry include packaged food products companies as manufacturers, packaging material converters as suppliers of packaging material to manufacturers and packaging raw material suppliers as supplier's suppliers of manufacturer.FindingsFrom the survey results it is found that characteristic and institutional risk perspectives influence significantly to initiate a trustworthy relationship. Economics, dynamic capabilities and technology risk perspectives play a significant role to maintain trust in relationship. No perspective of members is found to be significantly risk‐free.Research limitations/implicationsThis study has identified the perspectives of risk that can initiate and build trust between supply chain members in the context of a global business environment with a strong institutional system. Further research is required to identify the supply chain member's risk‐worthy characteristics, threshold levels of risk bearing capacity and the extent to which the institutions can reduce the membership risk to build trust.Practical implicationsThe study results suggest that the supply chain members should strive to reduce the membership risk levels to build trust rather than striving to build trust to reduce the risk. As long as a member's risk levels are within their bearable limits trust can be considered as a risk coping mechanism and when the risk levels exceed their bearable limits the subject of trust turns into risk management/security management.Originality/valueThis study may be one of the first to develop a trust building model through a risk evaluation process and also one of the first to study the trust in supply chain member's relationship in UAE. Findings from this research should prove useful to management researchers and practitioners.