IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v180y2016icp25-37.html
   My bibliography  Save this article

Building the supplier's trust: Role of institutional forces and buyer firm practices

Author

Listed:
  • Hemmert, Martin
  • Kim, DaeSoo
  • Kim, Jisun
  • Cho, BooYun

Abstract

We advance the knowledge on trust building in supply chains by studying the interplay between institutional forces and firm level practices. Based on institutional theory, we propose a conceptual model for investigating the influence of institutional forces on building the supplier's trust, mediated by buyer firm practices. Through an extensive review of the literature in various disciplines, we extract key latent variables of our research constructs. We consider legal protection, government support, and social networks as institutional forces, and assistance, procedural justice, and distributive justice as buyer firm practices. Based on survey data obtained from 122 suppliers in the South Korean manufacturing sector, the partial least squares (PLS) analysis result without mediating buyer firm practices shows that legal protection and government support, not social networks, are positively related to supplier's trust. However, the result with mediating buyer firm practices indicates that the influence of legal protection on trust is mediated by all three buyer firm practices, while the impact of government support is mediated by assistance and procedural justice. Moreover, social networks have an indirect effect on building the supplier's trust through its buyer firm's distributive justice. Overall, the study contributes to the literature on institutional theory and trust building, by examining how institutional forces enhance the supplier's trust via buyer firm practices.

Suggested Citation

  • Hemmert, Martin & Kim, DaeSoo & Kim, Jisun & Cho, BooYun, 2016. "Building the supplier's trust: Role of institutional forces and buyer firm practices," International Journal of Production Economics, Elsevier, vol. 180(C), pages 25-37.
    • Handle: RePEc:eee:proeco:v:180:y:2016:i:c:p:25-37
    DOI: 10.1016/j.ijpe.2016.05.023
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527316300937
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2016.05.023?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kevin Zheng Zhou & Laura Poppo & Zhilin Yang, 2008. "Relational ties or customized contracts? An examination of alternative governance choices in China," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(3), pages 526-534, April.
    2. Lane, Christel, 1997. "The Social Regulation of Inter-firm Relations in Britain and Germany: Market Rules, Legal Norms and Technical Standards," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 21(2), pages 197-215, March.
    3. Lockström, Martin & Lei, Liu, 2013. "Antecedents to supplier integration in China: A partial least squares analysis," International Journal of Production Economics, Elsevier, vol. 141(1), pages 295-306.
    4. Chung-Leung Luk & Oliver H M Yau & Leo Y M Sin & Alan C B Tse & Raymond P M Chow & Jenny S Y Lee, 2008. "The effects of social capital and organizational innovativeness in different institutional contexts," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(4), pages 589-612, June.
    5. Wicks, Andrew C. & Berman, Shawn L., 2004. "The Effects of Context on Trust in Firm-Stakeholder Relationships: The Institutional Environment, Trust Creation, and Firm Performance," Business Ethics Quarterly, Cambridge University Press, vol. 14(1), pages 141-160, January.
    6. Steven Tadelis & Oliver E.Williamson, 2012. "Transaction Cost Economics [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    7. Seung Ho Park & Yadong Luo, 2001. "Guanxi and organizational dynamics: organizational networking in Chinese firms," Strategic Management Journal, Wiley Blackwell, vol. 22(5), pages 455-477, May.
    8. Seung-Hyun Lee & Kyeungrae Oh, 2007. "Corruption in Asia: Pervasiveness and arbitrariness," Asia Pacific Journal of Management, Springer, vol. 24(1), pages 97-114, March.
    9. Vijayasarathy, Leo R., 2010. "Supply integration: An investigation of its multi-dimensionality and relational antecedents," International Journal of Production Economics, Elsevier, vol. 124(2), pages 489-505, April.
    10. John Child & Guido Möllering, 2003. "Contextual Confidence and Active Trust Development in the Chinese Business Environment," Organization Science, INFORMS, vol. 14(1), pages 69-80, February.
    11. Okada, Aya, 2004. "Skills Development and Interfirm Learning Linkages under Globalization: Lessons from the Indian Automobile Industry," World Development, Elsevier, vol. 32(7), pages 1265-1288, July.
    12. Joanne E Oxley & Bernard Yeung, 2001. "E-Commerce Readiness: Institutional Environment and International Competitiveness," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 32(4), pages 705-723, December.
    13. Wang, Longwei & Yeung, Jeff Hoi Yan & Zhang, Min, 2011. "The impact of trust and contract on innovation performance: The moderating role of environmental uncertainty," International Journal of Production Economics, Elsevier, vol. 134(1), pages 114-122, November.
    14. Ludwig Bstieler & Martin Hemmert, 2010. "Trust formation in Korean new product alliances: How important are pre-existing social ties?," Asia Pacific Journal of Management, Springer, vol. 27(2), pages 299-319, June.
    15. Arrighetti, Alessandro & Bachmann, Reinhard & Deakin, Simon, 1997. "Contract Law, Social Norms and Inter-firm Cooperation," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 21(2), pages 171-195, March.
    16. Gao, Tao & Sirgy, M. Joseph & Bird, Monroe M., 2005. "Reducing buyer decision-making uncertainty in organizational purchasing: can supplier trust, commitment, and dependence help?," Journal of Business Research, Elsevier, vol. 58(4), pages 397-405, April.
    17. Yeung, Jeff Hoi Yan & Selen, Willem & Zhang, Min & Huo, Baofeng, 2009. "The effects of trust and coercive power on supplier integration," International Journal of Production Economics, Elsevier, vol. 120(1), pages 66-78, July.
    18. Jeffrey H. Dyer, 1997. "Effective interim collaboration: how firms minimize transaction costs and maximise transaction value," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 535-556, August.
    19. Mike W Peng & Denis Y L Wang & Yi Jiang, 2008. "An institution-based view of international business strategy: a focus on emerging economies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(5), pages 920-936, July.
    20. En Xie & Yuan Li & Zhongfeng Su & Hock-Hai Teo, 2010. "The Determinants of Local Suppliers’ Trust Towards Foreign Buyers," Management International Review, Springer, vol. 50(5), pages 585-611, October.
    21. John Hulland, 1999. "Use of partial least squares (PLS) in strategic management research: a review of four recent studies," Strategic Management Journal, Wiley Blackwell, vol. 20(2), pages 195-204, February.
    22. Ingmar Björkman & Carl F Fey & Hyeon Jeong Park, 2007. "Institutional theory and MNC subsidiary HRM practices: evidence from a three-country study," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(3), pages 430-446, May.
    23. Akbar Zaheer & Bill McEvily & Vincenzo Perrone, 1998. "Does Trust Matter? Exploring the Effects of Interorganizational and Interpersonal Trust on Performance," Organization Science, INFORMS, vol. 9(2), pages 141-159, April.
    24. Sako, Mari & Helper, Susan, 1998. "Determinants of trust in supplier relations: Evidence from the automotive industry in Japan and the United States," Journal of Economic Behavior & Organization, Elsevier, vol. 34(3), pages 387-417, March.
    25. Chung-Ming Lau & David K Tse & Nan Zhou, 2002. "Institutional Forces and Organizational Culture in China: Effects on Change Schemas, Firm Commitment and Job Satisfaction," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 33(3), pages 533-550, September.
    26. Steve Lovett & Lee C Simmons & Raja Kali, 1999. "Guanxi Versus the Market: Ethics and Efficiency," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(2), pages 231-247, June.
    27. Yang, Jie & Wang, Jinjun & Wong, Christina W.Y. & Lai, Kee-Hung, 2008. "Relational stability and alliance performance in supply chain," Omega, Elsevier, vol. 36(4), pages 600-608, August.
    28. Cindy Wu & John J Lawler & Xiang Yi, 2008. "Overt employment discrimination in MNC affiliates: home-country cultural and institutional effects," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(5), pages 772-794, July.
    29. Huo, Baofeng & Wang, Zhiqiang & Tian, Yu, 2016. "The impact of justice on collaborative and opportunistic behaviors in supply chain relationships," International Journal of Production Economics, Elsevier, vol. 177(C), pages 12-23.
    30. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 2, number 2.
    31. Doonan, Julie & Lanoie, Paul & Laplante, Benoit, 2005. "Determinants of environmental performance in the Canadian pulp and paper industry: An assessment from inside the industry," Ecological Economics, Elsevier, vol. 55(1), pages 73-84, October.
    32. Thomas M. Jones & Lori Verstegen Ryan, 1997. "The Link Between Ethical Judgment and Action in Organizations: A Moral Approbation Approach," Organization Science, INFORMS, vol. 8(6), pages 663-680, December.
    33. Jeffrey H Dyer & Wujin Chu, 2000. "The Determinants of Trust in Supplier-Automaker Relationships in the U.S., Japan and Korea," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 31(2), pages 259-285, June.
    34. J Child & L Chung & H Davies, 2003. "The performance of cross-border units in China: a test of natural selection, strategic choice and contingency theories," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 34(3), pages 242-254, May.
    35. Daniel Z. Levin & Rob Cross, 2004. "The Strength of Weak Ties You Can Trust: The Mediating Role of Trust in Effective Knowledge Transfer," Management Science, INFORMS, vol. 50(11), pages 1477-1490, November.
    36. Reinartz, Werner & Haenlein, Michael & Henseler, Jörg, 2009. "An empirical comparison of the efficacy of covariance-based and variance-based SEM," International Journal of Research in Marketing, Elsevier, vol. 26(4), pages 332-344.
    37. Arie Y. Lewin & Chris P. Long & Timothy N. Carroll, 1999. "The Coevolution of New Organizational Forms," Organization Science, INFORMS, vol. 10(5), pages 535-550, October.
    38. John Child & David K Tse, 2001. "China's Transition and its Implications for International Business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 32(1), pages 5-21, March.
    39. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 1, number 1.
    40. Ramji Balakrishnan & Leslie Eldenburg & Ranjani Krishnan & Naomi Soderstrom, 2010. "The Influence of Institutional Constraints on Outsourcing," Journal of Accounting Research, Wiley Blackwell, vol. 48(4), pages 767-794, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Son, Byung-Gak & Lee, Chang-Hun & Ha, Byoung-Chun & Nam, Hyunjeong, 2019. "Investigating the fair treatment of suppliers and its trust fostering role and performance benefits," International Journal of Production Economics, Elsevier, vol. 216(C), pages 54-66.
    2. Dubey, Rameshwar & Gunasekaran, Angappa & Childe, Stephen J. & Papadopoulos, Thanos & Hazen, Benjamin & Giannakis, Mihalis & Roubaud, David, 2017. "Examining the effect of external pressures and organizational culture on shaping performance measurement systems (PMS) for sustainability benchmarking: Some empirical findings," International Journal of Production Economics, Elsevier, vol. 193(C), pages 63-76.
    3. Zhang, Min & Qi, Yinan & Wang, Zhiqiang & Zhao, Xiande & Pawar, Kulwant S., 2019. "Effects of business and political ties on product innovation performance: Evidence from China and India," Technovation, Elsevier, vol. 80, pages 30-39.
    4. Gao, Yongling & Driouchi, Tarik & Bennett, David J., 2018. "Ambiguity aversion in buyer-seller relationships: A contingent-claims and social network explanation," International Journal of Production Economics, Elsevier, vol. 200(C), pages 50-67.
    5. Ismail Badraoui & Youssef Boulaksil & Tarik Saikouk & G.A.J. van der Vorst, 2021. "The influence of the institutional context on interfirm relationships: A Comparative study between low- and high-income countries," Economics Bulletin, AccessEcon, vol. 41(2), pages 802-815.
    6. Zahid Sarwar & Muhammad Asif Khan & Zhen Yang & Adnan Khan & Muhammad Haseeb & Aaqib Sarwar, 2021. "An Investigation of Entrepreneurial SMEs’ Network Capability and Social Capital to Accomplish Innovativeness: A Dynamic Capability Perspective," SAGE Open, , vol. 11(3), pages 21582440211, July.
    7. Agarwal, Atul & Giraud-Carrier, François C. & Li, Yuan, 2018. "A mediation model of green supply chain management adoption: The role of internal impetus," International Journal of Production Economics, Elsevier, vol. 205(C), pages 342-358.
    8. Surajit Bag, 2018. "Supplier Management and Sustainable Innovation in Supply Networks: An Empirical Study," Global Business Review, International Management Institute, vol. 19(3_suppl), pages 176-195, June.
    9. Najafi-Tavani, Saeed & Zaefarian, Ghasem & Robson, Matthew J. & Naudé, Peter & Abbasi, Faramarz, 2022. "When customer involvement hinders/promotes product innovation performance: The concurrent effect of relationship quality and role ambiguity," Journal of Business Research, Elsevier, vol. 145(C), pages 130-143.
    10. Mohammad Alghababsheh & David Gallear & Mushfiqur Rahman, 2020. "Balancing the Scales of Justice: Do Perceptions of Buyers’ Justice Drive Suppliers’ Social Performance?," Journal of Business Ethics, Springer, vol. 163(1), pages 125-150, April.
    11. Imranul Hoque & Mohammad B. Rana, 2020. "Buyer–supplier relationships from the perspective of working environment and organisational performance: review and research agenda," Management Review Quarterly, Springer, vol. 70(1), pages 1-50, February.
    12. Xuesong Zhao & Jieyi Pan & Yongtao Song, 2018. "Dependence on Supplier, Supplier Trust and Green Supplier Integration: The Moderating Role of Contract Management Difficulty," Sustainability, MDPI, vol. 10(5), pages 1-14, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. En Xie & Yuan Li & Zhongfeng Su & Hock-Hai Teo, 2010. "The Determinants of Local Suppliers’ Trust Towards Foreign Buyers," Management International Review, Springer, vol. 50(5), pages 585-611, October.
    2. Jia, Flora Fang & Wang, Jeff Jianfeng, 2013. "Marketing channel relationships in China: A review and integration with an institution-based perspective," Journal of Business Research, Elsevier, vol. 66(12), pages 2545-2551.
    3. Zahoor, Nadia & Khan, Zaheer & Shenkar, Oded, 2023. "International vertical alliances within the international business field: A systematic literature review and future research agenda," Journal of World Business, Elsevier, vol. 58(1).
    4. Zhang, Man & Hartley, Janet L., 2018. "Guanxi, IT systems, and innovation capability: The moderating role of proactiveness," Journal of Business Research, Elsevier, vol. 90(C), pages 75-86.
    5. Du, Juana & Williams, Christopher, 2017. "Innovative Projects Between MNE Subsidiaries and Local Partners in China: Exploring Locations and Inter-organizational Trust," Journal of International Management, Elsevier, vol. 23(1), pages 16-31.
    6. Vijayasarathy, Leo R., 2010. "Supply integration: An investigation of its multi-dimensionality and relational antecedents," International Journal of Production Economics, Elsevier, vol. 124(2), pages 489-505, April.
    7. Shou, Zhigang & Chen, Jun & Zhu, Wenting & Yang, Lihua, 2014. "Firm capability and performance in China: The moderating role of guanxi and institutional forces in domestic and foreign contexts," Journal of Business Research, Elsevier, vol. 67(2), pages 77-82.
    8. Weber, Clarissa E. & Maurer, Indre, 2023. "Knowledge acquisition from host-country partners: The interplay of trust and legal safeguards," Journal of World Business, Elsevier, vol. 58(2).
    9. Yadong Luo & Huan Zhang & Juan Bu, 2019. "Developed country MNEs investing in developing economies: Progress and prospect," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 633-667, June.
    10. Ranjay Gulati & Maxim Sytch, 2008. "Does familiarity breed trust? Revisiting the antecedents of trust," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(2-3), pages 165-190.
    11. Carole Couper & A. Rebecca Reuber & Shameen Prashantham, 2020. "Lost that lovin’ feeling: The erosion of trust between small, high-distance partners," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(3), pages 326-352, April.
    12. Boris Bauke & Thorsten Semrau & Zheng Han, 2016. "Relational trust and new ventures’ performance: the moderating impact of national-level institutional weakness," International Entrepreneurship and Management Journal, Springer, vol. 12(4), pages 1007-1024, December.
    13. Wang, Longwei & Yeung, Jeff Hoi Yan & Zhang, Min, 2011. "The impact of trust and contract on innovation performance: The moderating role of environmental uncertainty," International Journal of Production Economics, Elsevier, vol. 134(1), pages 114-122, November.
    14. Fang, F., 2019. "When performance shortfall arises, contract or trust? A multi-method study of the impact of contractual and relational governances on performance in public – private partnerships," Other publications TiSEM 473840ee-6945-4a93-9326-5, Tilburg University, School of Economics and Management.
    15. Son, Byung-Gak & Lee, Chang-Hun & Ha, Byoung-Chun & Nam, Hyunjeong, 2019. "Investigating the fair treatment of suppliers and its trust fostering role and performance benefits," International Journal of Production Economics, Elsevier, vol. 216(C), pages 54-66.
    16. Um, Ki-Hyun & Kim, Sang-Man, 2019. "The effects of supply chain collaboration on performance and transaction cost advantage: The moderation and nonlinear effects of governance mechanisms," International Journal of Production Economics, Elsevier, vol. 217(C), pages 97-111.
    17. Chu, Zhaofang & Wang, Qiang & Lai, Fujun & Collins, Brian J., 2019. "Managing interdependence: Using Guanxi to cope with supply chain dependency," Journal of Business Research, Elsevier, vol. 103(C), pages 620-631.
    18. Zhang, Min & Qi, Yinan & Wang, Zhiqiang & Zhao, Xiande & Pawar, Kulwant S., 2019. "Effects of business and political ties on product innovation performance: Evidence from China and India," Technovation, Elsevier, vol. 80, pages 30-39.
    19. Emanuela Delbufalo, 2012. "Subjective trust, perceived risk and exchange performance in buyer-supplier relationships," Working Papers - Economics wp2012_10.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    20. Susan Velasco Portillo, 2015. "El agotamiento del régimen fordista boliviano y la financiarización de YPFB," Revista Lebret, Universidad Santo Tomás - Bucaramanga, vol. 7, pages 308-325, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:180:y:2016:i:c:p:25-37. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.