The design of early stage buyer–supplier relationships and its implications for formalized cooperative understanding: a process model

Buyers and suppliers engage in relationship exchange, which may lead to value creation for both parties in the supply chain activities. The relational view in operations research points to the importance of these work relationships, but has thus far overlooked the process whereby they emerge. We advance this line of research and theory by delineating a process model that explicates how relationships develop during the early stages of the exchange between buyers and suppliers. Using a grounded theorizing effort, based on open, in-depth interviews with 88 buyer and supplier agents from a variety of organizations, our research reveals a multi-level process by which work relationships emerge and enable formalized cooperative understandings. First, the findings shed light on how early stage work relationships in markets of customizable differentiated products/services are designed and delineate that the genesis of buyer–supplier relationships lies in early interaction between individual agents of buyers and suppliers. Second, relationships between individuals, amplified by relational affect, can lead to authenticity, conductive through sharing of rich-context information to alignment of interests between the respective parties. Third, relational authenticity and the alignment of interests can serve as the foundation for understanding between buyers and suppliers at the organizational level, attained through co-active issue-selling efforts.