Impact of relational norms, supplier development and trust on supplier performance

Abstract

Supplier relationship management and supplier development initiatives assume a fundamental role in enterprise supply chain management. An important aspect of effective supplier relationship management is the role of trust. This paper seeks to understand whether supplier relationship management or supplier development initiative should be emphasized as a firm strives to achieve superior supplier performance. The analysis and discussion draws upon sourcing strategy literature and is based on empirical survey-data of mid to upper level managers with responsibility for supply management initiatives in their respective organizations in Denmark and in the USA. It examines the interrelationships among “relational norms”, “trust”, “supplier development initiatives” and ensuing “supplier performance”. The data analysis shows that firms must emphasize relation and trust building activities before investing in supplier development initiative. Supplier perception audits must be routinely performed to gauge the level of trust and strength of relational norms.