Buyer-supplier relationships: derived value over two decades

Journal of Supply Chain Management, Spring, 2008 by Regis Terpend, Beverly B. Tyler, Daniel R. Krause, Robert B. Handfield

INTRODUCTION

Over the past two decades we have witnessed a surge in the number of academic publications investigating the buyer-supplier relationship, as well as the bifurcation of purchasing and supply chain management as independent streams of research. This increased interest in buyer-supplier relationships is not only apparent in the volume of publications but also in the scope of interest, with scholars in disparate academic fields studying various aspects of the buyer-supplier relationship. In response to the perceived need for a careful consideration of the changes that have taken place, we reviewed this body of literature and analyzed its evolution over the last 20 years. We addressed this need by seeking answers to the following research questions: How have academic studies of buying firms' efforts to maximize the value they derive from their relationships with suppliers changed over the last 20 years? What mechanisms and/or investments were commonly investigated as sources or causes of this extracted value?

In order to answer these research questions, we reviewed the publications in four prominent U.S.-based academic journals that published articles on buyer-supplier relationships between 1986 and 2005. First, we selected the articles published that considered empirical studies of buyer (1)-supplier relationships. Thus, our unit of analysis is the buyer-supplier relationship, and more precisely, we focus on relationships between industrial firms and their suppliers. Next we created a brief description of each article, noted "patterns" revealed in the summaries, and conduced content analysis on the variables investigated in each study. Then we depicted the number of publications that considered the value extraction categories revealed by the coding in a histogram to determine logical time periods. Using these time periods we constructed a table of the variables studied, including the types of values extracted and the buyer practices or buyer-supplier mutual efforts, grouping them under more general categories. Finally, we illustrated these findings by time period, creating figures that are theoretically causally consistent with extent theory.

Three important underlying assumptions are made in this paper. First, that the variables studied by researchers reflect the interests of those researchers and, second, that the date of publication can be used as a proxy for research interest at various points in time. Finally, that buying firms purchase inputs from suppliers because they perceive value in doing so, and generally seek to maximize the value that they derive or extract from these supplier relationships. Thus, we assume that the methods of value extraction studied by researchers are likely to reflect the mechanisms being used by buying firms in practice and that recording the independent and dependent variables studied by researchers from 1986 to 2005 is a reasonable means by which to evaluate the evolution of researchers' interests and firms' practices over that period of time.

We found an impressive increase in the number of publications focused on buyer-supplier relationships over the past two decades. Furthermore, our review revealed that the types of value being extracted from buyer-supplier relationships, as reflected in research, changed between 1986 and 2005, as did the mechanisms implemented to create value in these relationships. A histogram of the four major value extraction types researched during four time periods revealed that in the late 1980s' research was almost entirely focused on operational performance, integration-based research began in the early 1990s, capability-based research emerged during the late 1990s and financial performance did not become a major focus until the early 2000s. Count data of the variables included in the studies reviewed, coded using content analysis, reported a relatively consistent number of studies considering buyer practices over these time periods but an exponentially increased number of studies conducted that investigate the effects of buyer-supplier mutual effects. Moreover, this data revealed an increased number of mechanisms investigated within these two categories. The actual number of studies considering performance-based studies has not grown, while the number considering the other types of value extraction continue to grow. Figures of four time periods illustrate these findings.

In the following section, we briefly describe our methodology, data collection and analysis. Next, we present our findings and the framework that emerged from the review which categorized the value sought, as well as the buyer mechanisms used, to derive value in studies of buyer-supplier relationships across four time periods. We conclude by discussing the reviews implications research and practice.

METHODOLOGY

In order to answer our research questions, we reviewed a small number of prominent U.S.-based academic journals that met two criteria: (1) publish predominantly empirical papers and (2) include buyer-supplier relationships as an area of interest. We subsequently focused exclusively on journals whose primary domain included purchasing, operations management and management. The purchasing link was an obvious choice; the operations management journals were likely candidates because manufacturing operations, especially, use inputs purchased from suppliers. The management journals were included because of their growing focus on cooperative strategies and strategic alliances. Thus, we chose the Journal of Supply Chain Management (JSCM), previously known as the International Journal of Purchasing and Materials Management, because it had focused primarily on the purchasing function and suppliers since its inception in 1964. We also chose the Journal of Operations Management (JOM), the Academy of Management Journal (AMJ) and Strategic Management Journal (SMJ), because they are considered high-quality academic publications and contain a growing number of publications focused on buyer-supplier relationships.