Relational Capability in a Key Outsourced Supplier–Buyer Relationship

Abstract

The strategic partner relationship has been depicted as a key competitive tool in the business market. Numerous researchers have described business relationships as ranging from arm’s length transactions to collaborative partnerships (Anderson and Narus 1991; Day 2000; Jap and Mohr 2002). Although there is widespread agreement that a seller’s relational capability is a complex construct, the literature, for the most part, is silent on how this should be explicated. The aim of this paper is to develop a scale that taps into the continuum of closeness between a supplier and a buyer with the presumption that the closer the supplier is to its most important buyer in a key relationship, the more likely it will be to have other similarly valued relationships. A quantitative methodology using a survey was adopted to collect data. The final sample size was 349 valid responses, from owners of or top-level management in manufacturing firms operating in Thailand. We used AMOS (Arbuckle and Wothke 1999) to test the confirmatory factor models and evaluate the measurement data from the final survey. In developing the construct, we reviewed relevant industrial marketing literature and followed standard scale development procedures (Churchill 1979; Gerbing and Anderson 1988). The work of Cannon and Perreault (1999) enabled us to identify the sub-dimensions that should be presented. In particular, Cannon and Perrault indicate that operational linkages, legal bonds, cooperative norms, information exchange, seller adaptation, and buyer adaptation are six critical facets in capturing the extent to which a seller interrelates and conducts business with a buyer firm. However, important social aspects of relationships not anchored behaviorally did not fall within the scope of their conceptualization. And, because this study is based in a collectivistic context on which social aspects of relationships have great bearing, we incorporated scales that tapped into trust, commitment, long-term orientation, and power. Kumar et al. (1995) suggest that benevolence trust and honesty trust are important facets of exchange in collectivist cultures, so those two scales were incorporated, along with scales for commitment (Wilson and Vlosky 1998), long-term orientation (Ganesan 1994), and power (El-Ansary 1972). These eleven factors were identified for initial investigation. The results show that the relational capability construct consists of the proposed three primary dimensions, i.e., governance, cooperation, and social mechanisms. In addition, relational capability is a multilevel factor, and some of the primary dimensions have sub-dimensions associated with them in business practice. In conclusion, the data fit the multi-dimension and multilevel model well and suggest that the relational capability scale can be utilized to tap into the closeness exhibited within an industrial dyad.