Performance implication of supplier relationship quality: a structural analysis

Purpose This study aims to examine the impact of supplier relationship quality on curtailing opportunism and promoting cooperation between the exchange partners. It also investigates the contingent impact of contract specificity on the relationships and assesses performance implications of relationship quality for both buyer and its major supplier in the exchange. Design/methodology/approach Confirmatory factor analysis and path analysis were performed based on data collected from manufacturers in a survey. The hypotheses were tested using path analysis. Findings The findings of this study indicate a pivotal role of supplier relationship quality in suppressing opportunism and enhancing cooperation between exchange parties, which lead to dyadic performance. Furthermore, the effect of supplier relationship quality is strengthened by contract specificity. Originality/value This study adds value to the existing streams of studies in several ways. First, informed by the nexus of relational capital theory and transaction cost economics, the authors emphasize the pivotal role of relationship quality in curtailing opportunism and fostering cooperation and the moderating effect of contract specificity on the above linkages. Second, this study provides empirical evidence of the mechanism of the effect of contract specificity on opportunism and cooperation.