When supplier development initiatives fail : exploring the causes of opportunism and the role of relational norms

Abstract

Supplier development initiatives refer to actions by buyers to improve a supplier’s performance and/or capabilities, and are often described as a ‘win-win’ for both buyers and their suppliers. However, supplier development initiatives can be ineffective and stimulate opportunistic behaviour by suppliers, so that the investments made by buyers are counterproductive. The thesis investigates this ‘dark-side’ of supplier-buyer relationships. Specifically, it studies (a) the relationships between supplier development initiatives, relational norms, and supplier opportunism, and (b)seeks to understand the factors that increase the likelihood of a positive outcome (improvements in the buyer’s performance) and decrease supplier opportunism. Informed by transaction cost and social exchange theories, and drawing on the case of fresh fruit and vegetable supply chains in Vietnam, the thesis comprises of two studies. The first study utilises thematic analysis and qualitative comparative analysisto analyse the relationships between specific supplier development initiatives and forms of opportunism, considering the role of relational norms. While often regarded as reducing the likelihood of opportunism, the study identifies a specific relational norm, norms of opportunism in supply chain relationships, which sanction a degree of opportunistic behaviour. The second study introduces and validates a model of supplier development, considering both negative and positive outcomes simultaneously. The analysis based on structural equation modelling indicates that supplier development not only can help improve a buyer’s performance, but also simultaneously increases supplier opportunism. However, the degree to which supplier development initiatives lead to positive or negative outcomes depend on goal congruence and long-term orientation. The research contributes to supply chain management theory and aids practitioners by investigating how buyers can address opportunism, so that supplier development initiatives curb supplier opportunism rather than trigger it. Supplier development initiatives should be designed to fostering suppliers’ long-term orientation and goal congruence between parties.