The impact of perceived buyer justice on the diverse supplier-buyer relationship building

Abstract

The origins of supplier diversity in the U.S. can be traced back to the Civil Rights Movement in the 1950s and 1960s, with legislations promulgated and agencies established to facilitate market participation of many groups. Since that time, companies have been incorporating diverse supplier businesses into their procurement strategy and supplier selection decisions. However, how buying companies manage diverse suppliers in supplier diversity programs is under-researched. This research takes the perspective of a diverse supplier and investigates how the diverse supplier perceives the relationship with the buyer. Drawing on justice theory, the impact of the diverse supplier’s perception of the buying company’s justice behavior (distributive, procedural, interpersonal, and informational justice) on the supplier’s commitment to, and investment in, the diverse supplier-buyer relationship is investigated. Survey data from 131 women-owned businesses were used to test theoretically derived hypotheses. Analysis shows that perceived buyer distributive justice and interpersonal justice positively affect supplier commitment, and perceived buyer informational justice positively relates to diverse supplier investment in the relationship. Perceived buyer procedural justice, however, has a negative effect on diverse supplier commitment. Diverse supplier commitment and supplier investment positively influence the diverse supplier’s relationship performance. The results contribute to a nuanced understanding of different justice dimensions and offer managerial insights to buying companies on better managing diverse supplier-buyer relationships to increase inclusivity in the supply chain.