Relational strength variability of the supplier network and its effect on buyer’s supplier-facing process capabilities

Abstract

Draw on social capital theory, this thesis investigates how a buying firm’s varying levels of relational strength toward its suppliers in the supplier network affects its supplier-facing process capabilities―process alignment capability and partnering flexibility capability, and examines the impact of buyer’s supplier-facing process capabilities on its supply risk management performance. The survey data from 191 Chinese manufacturing firms and their supplier networks are used to test our predictions. We found that relational strength variability of the supplier network negatively affects a buyer’s process alignment capability, but positively affects a buyer’s partnering flexibility capability. Furthermore, we found that the impact of relational strength variability is moderated by network structure (i.e., network density and average relational strength of buyer-supplier relationships) and network composition (i.e., technology difference among suppliers and geographic dispersion of suppliers). Specifically, we found that the negative impact of relational strength variability on a buyer’s process alignment capability is enhanced by network density, technology difference among suppliers and geographic dispersion of suppliers; the positive impact of relational strength variability on a buyer’s partnering flexibility capability is enhanced by average relational strength and geographic dispersion of suppliers, but is reduced by network density. In addition, we also find that both a buyer’s process alignment capability and partnering flexibility capability positively affect its supply risk management performance. And a buyer’s process alignment capability has a greater positive impact on its supply risk management performance than a partnering flexibility capability does. Additional analysis further suggested that the process alignment capability fully mediates the relation between relational strength variability and the supply risk management performance. Thus, our thesis enriches our understanding of the consequences of relational strength variability of the supplier network.