Combined effect of trust, commitment and supplier development on buyer-supplier performance in textile industry

Abstract

Large scale manufacturing organizations in developed and developing countries utilize supplier development practices to cope with increased competition and cost pressure. Understanding the effect of supplier development approaches on buyer-supplier performance remains a critical problem for these large scale manufacturing buying firms. There is a need to understand the effects of supplier development approaches combined with buying firm’s trust and commitment on the buyer-supplier performance in the textile industry of a developing country. This study investigates the effect of supplier development approaches on buyer-supplier performance, combined effects of buying firm’s trust with supplier development approaches on buyer-supplier performance, and combined effects of buying firm’s commitment with supplier development approaches on buyer-supplier performance. A research framework was developed by integrating indirect supplier development approach through goal-setting theory and influence strategy, direct supplier development approach through transaction cost theory and knowledge-based view on buyer-supplier performance, the moderation of buying firm’s trust on relationship of indirect and direct supplier development with buyer-supplier performance, and the moderation of buying firm’s commitment on relationship of indirect and direct supplier development with buyer-supplier performance. Regression analysis was performed on a cross-sectional data of 345 firms in the textile industry of Pakistan and the findings showed that the supplier development approaches were positively related to the improvement of buyer-supplier performance. Moreover, the buying firm’s trust and commitment positively moderated the relationship of supplier development approaches with buyer-supplier performance. The combined effects of buying firm’s trust and commitment with supplier development approaches resulted in the improvement of buyer-supplier performance. The findings are significant in order to understand the effect of supplier development approaches on buyer-supplier performance, and the combined effects of supplier development approaches with buying firm’s trust and commitment on buyer-supplier performance specifically in the context of the textile industry.