A temporal model of vertical relationships

Abstract

Purpose: The authors developed a model framework for buyer-supplier relationships and used it to extend theory in 4 areas: (a) maintenance of long-term relationships; (b) conversion of relationships from adversarial to cooperative; (c) changes in relationships over their lives; and (d) levels of commitment and trust between partners. Methodology/approach: The authors analyzed existing research on buyer-seller relationships and theoretical concepts in various disciplines to develop a 3-stage temporal relationship model consisting of pre-deal (t-1), deal enactment (t), and deal continuation (t+1) stages. From the model and existing research, the authors drew propositions for relationships in the areas of buyer and seller power, several forms of commitment and trust, intellectual capital, and financial performance. Findings: Briefly, the authors proposed that (a) at the pre-deal stage, increased buyer power may instigate supplier input commitment or vice versa; (b) at deal enactment, both parties may commit to a written contract and build contractual trust through a low degree of relational commitment; and (c) in the deal continuation stage, contractual trust, and attitudinal commitment of one of the parties is likely to foster attitudinal commitment in the other party. The authors found that buyer's and supplier's total commitment fosters goodwill trust and helps build intellectual capital and financial performance, and that the weaker party in the relationship likely gains more from the partnership than the stronger party. Research implications: In addition to existing research, the authors used several actual situations to provide support for our propositions. However, more research should be done in all areas to additionally confirm our propositions and otherwise add to theory development. Practical implications: By looking at buyer-seller relationships in three stages, the authors developed several implications for both parties. These included long-term results of short-term actions, importance of industry factors on buyer and seller commitment, and the role of commitment in determining whether long-term relationships are developed. Originality/value/contribution: The authors extended and coordinated existing theory by consolidating the implications of previous research into a cohesive buyer-supplier relationship model. This model should enable both researchers and managers to better comprehend the dynamics of vertical relationships with a multi-dimensional, reciprocal approach. The results should also provide managers an additional tool to gauge and forecast the fate of a relationship by analyzing levels of trust and commitment as the relationship progresses. © Taylor & Francis Group, LLC.