The impact of specific supplier development efforts on buyer competitive advantage: an empirical model

Abstract

This paper examines the relationships between supplier development efforts and buyer competitive advantage from the buyer's perspective, and seeks to understand how specific supplier development efforts may impact on a buyer's operational performance. We conducted a survey of 142 electronics manufacturing companies in Hong Kong, and applied structural equation modeling (SEM) to test a structural model that postulates the impacts of various efforts of supplier development on buyer competitive advantage. The results indicate that each effort of supplier development has a different effect on different dimensions of buyer competitive advantage. Specifically, we found that joint actions and trust appear to be the two most critical elements to enhance the operational effectiveness of a buyer, while asset specificity improves the market responsiveness of a buyer slightly. However, supplier development efforts like increasing supplier performance goals and recognizing supplier progress do not appear to be an effective means and thus should be practised with caution. This study provides significant insights into the specific impact of various supplier development efforts for both academics and practitioners.