Inter-firm network capability: how it affects buyer-supplier performance

Purpose - The purpose of this paper is to offer a view that a firm's critical resources and capabilities span firm boundaries, and are embedded in inter-firm resources and routines. Design/methodology/approach - Building on a capability view the paper argues that firms can engender sustainable competitive advantage by enabling firms to build and leverage inter-organizational relationships to generate relational rents by: fostering close working relationships with a limited number of suppliers; building effective network structures, and developing a long term orientation. Using PLS path modelling, the paper empirically tests a number of hypothesized relationships based on a sample of 176 Dutch firms. Findings - The results demonstrate that inter-firm network capability significantly and substantially affects supplier performance as well as buyer performance, thereby providing evidence of the predictive validity of the inter-firm network capability construct. Originality/value - The study contributes to a more complete understanding of a firm's collaborative capabilities in developing and leveraging inter-organizational relationships and enhances the knowledge of the drivers of rent generating capabilities that contribute to the firm's performance.