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Department of Management Sciences, Fisher College of Business, The Ohio State University, Columbus, OH 43210, USA
b
Pennsylvania State University-Erie, 5091 Station Road, Erie, PA 16563, USA
Received 25 September 2002; received in revised form 19 September 2004; accepted 24 September 2004
Available online 18 November 2004
Abstract
Research on supplier satisfaction in buyersupplier relationships has been primarily conceptual. One purpose of the research
described in this paper is to empirically test the influences of supply chain power on supplier satisfaction. Exploration of the
effects of power on factors of supplier satisfaction will provide the key to understanding the power-satisfaction link in supply
chain relationships. This paper shows how the buyerseller relationship affects supplier satisfaction. In doing so, previous
satisfaction and power literature is pulled together to demonstrate that the power-satisfaction variable must be included in any
examination of supply chain partnerships. The three primary objectives of this research are to establish how the different bases
of power affect the satisfaction of selling firms, investigate how power driven relationships affect supplier satisfaction, and
measure the effect of power influences on supplier satisfaction in the automobile industry. Each of these research objectives was
achieved. This study establishes the first empirical evidence for the measurement of power-driven supplier satisfaction. In each
of the nine models studied, the power-affected buyersupplier relationship was found to have a significant positive effect on both
performance and satisfaction. The paths between performance and satisfaction, however, were consistently found to be nonsignificant.
# 2004 Elsevier B.V. All rights reserved.
Keywords: Supply chain management; Influences of power on satisfaction; Supplier satisfaction
1. Introduction
Historically, the operations function has been
targeted as a cost center within most industrial firms.
* Corresponding author. Tel.: +1 614 292 8868.
E-mail addresses: benton.1@osu.edu (W.C. Benton),
mjm111@psu.edu (M. Maloni).
1
Tel.: +1 814 898 6102.
0272-6963/$ see front matter # 2004 Elsevier B.V. All rights reserved.
doi:10.1016/j.jom.2004.09.002
2. Background
The primary purpose of this section is to examine
shortcomings of the supply chain literature in
addressing the influences of buyer power on supplier
satisfaction.
As shown in Table 2, the idea of relationships
among firms seeks to move away from the concept of
discrete transactions, breaking down traditional interfirm barriers to a supply chain orientation. Maloni and
Benton (1997) offered an extensive review of supply
chain partnership literature. Later, Chen (2002)
Table 2
Discrete vs. relational business strategies
Contractual element
Discrete orientation
Relational orientation
Duration
Transferability (switching parties)
Attitude
Communication
Information
Planning and goals
Benefits and risks
Problem solving
One time
Completely transferable
Independent, suspicious
Very little
Proprietary
Individual, short-term
Individual
Power driven
Long-term
Extremely difficult to transfer
Open, trusting, cooperative
Complex
Shared
Joint, long term
Shared
Mutual, judicious
Table 3
Elements of supply chain relations and traditional thinking
Traditional supply relationships
Influences of power on the buyersupplier relationship and subsequent effects of this relationship upon
supply chain performance expose the potential of
power as a tool to promote integration of the chain
and empower higher levels of performance. This
performance 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.
hypothesized in the current study that buyer performance will lead to supplier satisfaction. The formal
hypothesis is given below:
H3. Buyer performance has a significant positive
effect on supplier satisfaction.
2.4.4. Supply chain satisfaction and supplier
satisfaction.
Lee and Billington (1992) suggest that supply chain
metrics must be linked to satisfaction. According to
Lee and Billington, many companies do not monitor
the supply chain performance metrics often enough.
This measurement is needed to integrate the customer
specifications in design, customer quality, cost control
and process control. The formal hypothesis is given
below:
H4. Supply chain performance has a significant positive effect on supplier satisfaction.
Table 4
Summary statistics for relationship elements
(A) (B) Power variable (C) Statement
2
4
69
70
71
9
10
11
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
5.45
5.85
6.18
2.66
5.36
6.50
6.72
6.14
4.83
4.61
2.43
4.22
2.83
3.85
3.39
3.28
4.89
3.01
4.83
2.49
2.59
3.50
4.76
Cooperation
1.39
1.10
1.03
1.67
1.18
0.95
0.67
1.15
1.52
1.49
1.61
1.47
1.56
1.59
1.54
1.51
1.15
1.43
1.31
1.70
1.61
1.74
1.61
15.78
25.46
32.05
12.18
17.47
39.68
61.04
28.11
8.24
6.20
14.76
2.31
11.34
1.44
6.05
7.24
11.74
10.47
9.53
13.44
13.30
4.34
7.15
***
***
***
***
***
***
***
***
***
***
***
**
***
***
***
***
***
***
***
***
***
***
(A) Question number; (B) variable of measurement; (C) abbreviated statement from survey; (D) arithmetic mean; (E) S.D.; (F) T-statistics
calculated as (D4)/(E*sqrt (229)); (G) significance*** indicate significance at 0.01, ** at 0.05, and * at 0.10; (H) XXX = Honda, DaimlerChrysler.
10
Table 5
Summary statistics for performance/satisfaction
(A) (B) Power variable
50
51
52
54
41
44
47
42
45
48
43
46
49
(C) Statement
Satisfaction
1.00
1.51
1.41
1.17
1.20
31.23
13.64
24.00
25.68
17.76
***
***
***
***
***
5.23
1.22
15.21
***
4.75
5.18
4.97
1.66
1.31
1.24
6.88
13.63
11.79
***
***
***
4.57
4.96
4.90
1.46
1.26
1.18
5.90
11.55
11.50
***
***
***
4.46
1.33
5.20
***
(A) Question number; (B) variable of measurement; (C) abbreviated statement from survey; (D) arithmetic mean; (E) S.D.; (F) T-statistics
calculated as (D4)/(E*sqrt (229)); (G) significance*** indicate significance at 0.01, ** at 0.05, and * at 0.10; (H) XXX = Honda, DaimlerChrysler.
11
4. Analysis
Given the multiple dependence relationships in the
research models, structural equation modeling (SEM)
is the most suitable statistical tool available to assess
the models. Structural equation modeling (SEM)
measures multiple relationships among independent
and dependent variables, accommodating aggregated
dependence relationships simultaneously in one
comprehensive model.
The causal paths between various types of power
relationships, performance results and supplier satisfaction were assessed. A validated survey instrument
was used to collect responses to the manifest variables.
The manifest variables then served as indicator
variables for the latent factors.
Table 6
Values of Cronbach alpha for reliability assessment
Factor
Variable
Question nos.
Cronbachs alpha
Power
Expert
Referent
Legal legitimate
Reward
Coercive
Commitment
Conflict
Conflict resolution
Cooperation
Trust
Supplier performance
Manufacturer performance
Supply chain performance
Satisfaction
1719
2124
2932
3336
3740
911
5861
6264
2, 4, 6971
5457
41, 44, 47
42, 45, 48
43, 46, 49
5053
0.72
0.83
0.92
0.75
0.87
0.83
0.81
0.86
0.71
0.89
0.83
0.84
0.85
0.80
Relationship
Performance
Satisfaction
12
Y3 g 34 Y4 g 35 Y5 z3
Y2a b23 Y3 z2
Y1 b12 Y2 b13 Y3 z1
where: Yi represents the latent factor i; gji is the
causal effect of exogenous variable i upon endogenous
variable j; bji is the causal effect of endogenous
variable i upon endogenous variable j; zj represents
the error term for the equation for endogenous
variable j.
13
Table 7
Fit Indices for final structural models
Suggested value
Mns
Mnm
Mnsc
Mcs
Mcm
Mcsc
Mrs
Mrm
Mrsc
Chi-square (d.f.)
< 2*d.f.
CFI
NNFI
GFI
RMR
R-sq (endog)
> 0.90
> 0.90
> 0.90
221.64
113
0.95
0.94
0.90
0.08
all sig
190.90
113
0.96
0.96
0.91
0.08
all sig
185.45
113
0.97
0.96
0.92
0.08
all sig
187.40
113
0.97
0.96
0.92
0.11
all sig
195.23
113
0.97
0.96
0.91
0.12
all sig
209.98
113
0.96
0.95
0.91
0.12
all sig
116.98
73
0.97
0.97
0.93
0.08
all sig
121.75
73
0.97
0.96
0.93
0.09
all sig
121.61
73
0.97
0.96
0.93
0.09
all sig
0.83
0.79
0.96
0.40
0.38
0.83
0.76
1.00
0.40
0.40
0.83
0.76
1.00
0.40
0.40
0.83
0.77
0.98
0.40
0.39
0.83
0.77
0.97
0.40
0.39
0.83
0.76
0.97
0.40
0.39
0.80
0.75
0.99
0.33
0.33
0.80
0.74
0.99
0.33
0.33
0.80
0.74
0.99
0.33
0.33
Parsimony
PR
PNFI
RNFI
RPR
RPFI
> 0.60
> 0.90
14
15
Reject H4
>0.10
b12b
b12c
Manufacturer performance
H3
H4
Reject H3
> 0.10
b12a
Supplier performance
H2
Reject H2
Result
Accept H1
p-Value
Path
All models
Relationship
H1
Model
Satisfaction driver
Hypothesis
Table 8
Results of the performance/satisfaction hypothesis tests
Interpretation
16
17
18
6. Conclusions
The purpose of this research was to assess
satisfaction in the industrial supply chain. Four
supplier satisfaction hypotheses were developed.
The first hypothesis examined the effect of the
buyersupplier relationship on supplier satisfaction,
proposing that a stronger relationship should increase
19
Acknowledgments
We wish to thank the following automobile
manufacturing executives for their assistance with
this research: Jeff Trimmer, DaimlerChrysler Corporation, Dave Curry, Honda of America, Gunter
Schmirler, General Motors Corporation, and 229
participating anonymous executives associated with
the supplying firms.
Appendix A
A.1. Final structural modelMnm
20
21
Y3 = 0.1555 Y8 (2.52)
Y2b = 0.3921 Y3 (4.17)
Y1 = 1.4562 Y3 (15.35) 0.0307 Y2b (0.54)
Y3 = 0.1569 Y8 (2.55)
Y2c = 0.4054 Y3 (4.63)
Y1 = 1.4864 Y3 (15.36) 0.0952 Y2c (1.52)
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