Factors affecting supplier performance through the buyer-supplier commitment

Abstract

The objective of this research is to examine the role of buyer-supplier commitment in supplier performance improvement. This study proposed the buyer-supplier commitment based on the two dimensions of buyer-supplier relationships and transaction-specific investment that should exist between buyer and supplier.The research uses survey data obtained on electrical products and components manufacturers in Thailand and testing the relationships with Structural Equation Modeling. This study proposes a model which combines the two mediators; buyer-supplier commitment and supplier development. The results of study reveal that supplier selection has a positive impact to supplier development, supplier development positively impacts to supplier performance improvements, supplier development has a positive impact to buyer-supplier commitment and buyer-supplier commitment positively impacts to supplier performance improvements. However, the study found that supplier selection does not positively impact to supplier performance improvements and buyer-supplier commitment. Furthermore, buyer-supplier commitment does not act as a mediator from supplier selection to supplier performance improvements. Instead, supplier development fully mediates the impact of supplier selection on supplier performance improvements. The result of factor analysis supports that buyer-supplier commitment was based on two key elements; buyer-supplier relationship and transaction-specific investment. Specifically, we found that buyer-supplier relationship is more crucial than transaction-specific investment to enhance the level of commitment between firms.