The effect of buyers’ socialization efforts on the culture of their key strategic supplier and its impact on supplier operational performance

Abstract

This paper investigates if inter-organizational socialization mechanisms initiated by a buyer organization towards a strategic supplier can influence the culture within that supplier organization to ultimately improve supplier performance to the buyer. Using a quantitative sample of 279 UK companies from across a variety of industry sectors, statistical techniques were utilized to examine the effect of informal and formal socialization mechanisms on the culture of a strategic supplier as measured by their organizational practices and the subsequent supplier performance outcomes. It was found that both informal and formal socialization efforts by a buyer organization have a significant influence on the culture of the supplier organization as measured by their organizational practices. Socialization efforts by the buyer organization influence the organizational practices of the supplier to be more result-oriented, employee-centred, open, pragmatic to customer needs and market focussed. These organizational practices were found to positively influence supplier operational performance in the eyes of the buyer organization as measured by on time delivery, conformance to product specifications, flexibility to respond to changing customer needs and cost reduction initiatives. Modelling the influence of informal and formal socialization efforts by a buyer on the organizational culture of a key supply chain partner provides new insights to academics. Firstly, this work makes a significant contribution to the extant research on socialization in the supply chain literature. Secondly, it raises the importance of understanding the influence of culture on supplier operational performance. Although the study used a dyadic method to validate the cultural insights, our study only took a snapshot of culture at one point in time. Organization culture as displayed through organizational practices is a complex construct that changes over time. Therefore, to further understand the intricacies of organization culture, a longitudinal study would be useful in the future. Secondly, future studies could develop into themes such as the green supply chain and sustainability issues. Finally, our study was undertaken in the UK. It would be useful to replicate this study in a different setting, including Eastern countries. Organizations should engage early with their key supply base from a socialization perspective. The importance of joint away days, cross function teams alongside effective communication and on site visits have been fund to have a significant influence on shaping a high performance culture along the supply chain. Therefore, a buyers’ early understanding of their key supplier’s culture via these mechanisms appear critical for long-term supply chain success. Measuring supplier culture at the visible level of organizational practices removes the ethereal qualities often attributed to culture as a concept; buyers can influence supplier culture. This paper presents an empirically tested model which includes informal socialization, formal socialization, deconstructed organizational culture and supplier operational performance in a supply chain setting.