Continuous Supplier Performance Improvement: Effects of Collaborative Communication and Control
Published 1/1/2009
Author: Ashwin W. Joshi
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Executive Summary
The benefits of establishing long-term relationships with suppliers has been extensively examined and widely endorsed in prior literature on manufacturer–supplier relationships. Increasingly, however, there is evidence that these long-term relationships have a potential “dark side” that is manifest in the form of reduced levels of supplier performance improvement as they come to take their relationship with the manufacturer for granted. In this research, the author sheds light on two key mechanisms—collaborative communication and control—that manufacturers can and do use to curb the dark side potential, thus ensuring that they continue to reap the benefits of establishing long-term relationships with their suppliers. The study is designed to address two key questions: (1) How does collaborative communication in the manufacturer–supplier relationship foster continuous supplier performance improvement? and (2) What are the combined effects of collaborative communication and control on the outcome?
The results show that collaborative communication enhances continuous supplier performance improvement by (1) enhancing supplier knowledge of manufacturer expectations, thus giving the supplier clear performance targets at any point in time, and (2) enhancing the supplier’s affective commitment toward the manufacturer, thus making the supplier motivated to take the actions necessary to grow and evolve the supplier relationship. With respect to the combined effects of collaborative communication and control, the most critical effect pertains to capability control. Of the three forms of control that are investigated—output, process, and capability—only capability control has moderating effects on both the effects of supplier knowledge and supplier affective commitment on supplier continuous performance improvement. Specifically, the results demonstrate that collaborative communication enhances the effects of both these factors on the outcome. n terms of action implications for marketing managers, two messages are key: First, marketing managers should ensure that they foster a climate of collaborative communication with their suppliers in which they are honest, forthright, and supportive in their dealings with suppliers. Second, although there may be costs associated with its implementation and despite the lack of immediate benefits, marketing managers deploy capability control in relation to their suppliers such that they invest in developing supplier skills, competencies, and knowledge base because these actions will yield a significant payoff in the long run for manufacturers in the form of continual improvement in supplier performance. As a result, manufacturing firms will be able to develop products that outperform the competition in the downstream markets, thus enhancing manufacturer revenue and profitability.
Biography
Ashwin W. Joshi is Associate Professor of Marketing at the Schulich School of Business in York University (Toronto, Ontario, Canada) where he is also the director of the MBA Program. He received his PhD from Queen’s University (Kingston, Ontario, Canada). His research interests are in the area of new product development, sales force management, and relationship marketing. His research on these topics has been published in Journal of the Academy of Marketing Science and Journal of Marketing. In addition to his teaching, research, and administrative responsibilities, he consults internationally with organizations such as American Express, Beijing TV, Bankseta, Citibank, and China Life, among others.
Journal of Marketing, Volume 73, Number 1, January 2009
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