The Influence of Buyer and Supplier Relationships towards Supply Chain Performance

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a) Trust The need of trust between partners is the most important key and a basic requirement in maintaining a relationship between buyer and supplier because it indicates a person’s reputation for trustworthiness on both a professional and personal level as well as credibility in a business situation (Melody et al). Moreover, in the research of Luciana, Ely, Andrew and Rafael (2013), trust is a key for the development of partnerships between the different agents of a supply chain, distinguished between interpersonal and inter-firm trust. According the research of Melody et al, personal trust and organizational trust are the two major aspects of trust. Personal trust basically less formally defined rights and obligations whereas the proper contracts are just as a backing of legal commitment. For that reason, some researchers conclude that the non-use of written contracts characterize the mutual trust among the channel members. For organizational trust, it usually ensures their first-time customer’s credit history before business transactions and credit position. In a nutshell, credibility or trustworthiness is the based to further ensure the security and reliability in business dealing, while also a significant effect on long-term relationship. When buyer and supplier trust each other in dealing business, the degree of complexity in their negotiations will reduce. Therefore, both parties save time and resources. Besides, if a high level of trust exists in both parties, buyer will tends to increase purchases from the suppliers which have the resources and commitment to produce a quality product of value for their customer (Stephen, Jeff and Laurent, 1999). In addition, higher levels of trust should result in improved financial... ... middle of paper ... ...gration as a key driver of corporate strategy and promotes the need for a better understanding of the integration process. ~ Exploitation of the supply chain by the power partner may lead to dissension and under performance, in consequence hurting the power holder. Similarly, a judicious use of power may serve to benefit the power holder. ~ Influences of power on the buyer–supplier relationship and following effects of this relationship upon supply chain performance expose the potential of power as an instrument to promote integration of the chain and empower higher levels of performance. It benefit incites the power holders to take a second look at their positioning of power within supply chain strategy and urges a more conscious, considerate use of power. Therefore, the hypothesis as below: H5: Power-dependence is positive related towards supply chain performance
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