Chain reactions of a collaborative buyer-supplier relationship: the mediating role of relationship quality on innovation performance

This paper explores a collaborative buyer-supplier relationship (BSR) at multiple echelons of a supply chain by considering contractual fairness and power imbalance at the final stage as enablers and relationship quality as a mediating factor. A research model investigates the effects of contractual fairness, power sources, and relationship quality in terms of normative and instrumental relationship quality on chain reactions of a collaborative BSR and supplier innovation performance. The research results based on the data from 209 first-tier supplying firms in South Korea find that collaborative BSR with the buyer facilitates collaborative BSR with the supplier. Contractual fairness and referent power source enhance collaborative BSR by increasing the supplier's normative relationship quality to the buyer. Diffusion of collaborative BSR along the supply chain leads to higher innovation performance of the supplier. The findings of this study provide useful insights about how to enhance innovation capabilities through building a collaborative BSR and relationship quality along the entire supply chain.