Effects of suppliers’ trust and commitment on customer involvement
| Published date | 13 July 2015 |
| Date | 13 July 2015 |
| Pages | 1041-1066 |
| DOI | https://doi.org/10.1108/IMDS-11-2014-0351 |
| Author | Yi Li,Gang Li,Taiwen Feng |
| Subject Matter | Information & knowledge management,Information systems,Data management systems |
Effects of suppliers’trust and
commitment on customer
involvement
Yi Li
School of Management, Xi’an Jiaotong University, Xi’an, China;
The State Key Lab for Manufacturing Systems Engineering, Xi’an, China and
The Key Laboratory of the Ministry of Education for Process Control and
Efficiency Engineering, Xi’an, China
Gang Li
School of Management, Xi’an Jiaotong University, Xi’an, China;
The State Key Lab for Manufacturing Systems Engineering, Xi’an, China and
The Key Laboratory of the Ministry of Education for Process Control and
Efficiency Projects, Xi’an, China, and
Taiwen Feng
School of Management, Northwestern Polytechnical University, Xi’an, China
Abstract
Purpose –The purpose of this paper is to investigate the relationships among suppliers’trust and
commitment, transaction-specific investment, switching cost, and customer involvement within the
context of relational governance mechanism and the social exchange theory.
Design/methodology/approach –The authors use survey data from 214 Chinese manufacturing
firms and employ the structural equation model to verify the conceptual model.
Findings –Relational governance benefits customer involvement. Transaction-specific investment
mediates the relationship between trust and commitment of suppliers. Switching costs negatively
moderate the relationship between suppliers’trust and customer involvement, but positively moderate
the relationship between suppliers’commitment and customer involvement.
Research limitations/implications –The authors focus on two key elements of relationship,
namely, trust and commitment of suppliers, but neglect other relational factors, such as relational
norms and interdependence.
Originality/value –These findings broaden the understanding and present new directions for the
implementation of customer involvement from the perspective of relational governance and social
exchange theory.
Keywords Commitment, Trust, Customer involvement, Relational governance
Paper type Research paper
1. Introduction
More and more suppliersare considering customers as importantsources of information,
knowledge, and competence (Alfaro et al., 2004; Helpman, 1992; Im et al., 2003; Shaw,
1992). Hence, in a business-to-business(B2B) environment, involving customers into new
product development (NPD) is important for suppliers. First, involving customers aids
suppliers in uncovering true latent needs through proactive learning from customers
(Deszca et al., 1999; Leonard and Rayport, 1997; Martin and Horne, 1995; Prahalad and
Ramaswamy, 2000; Thomke, 2003). Second, involving customers helps suppliers gain
competitive advantages over their rivals through lowering product development cost
(Fitzsimmons, 1985), saving product development time (Alam, 2002), improving
Industrial Management & Data
Systems
Vol. 115 No. 6, 2015
pp. 1041-1066
©Emerald Group Publis hing Limited
0263-5577
DOI 10.1108/IMDS-11-2014-0351
Received 29 November 2014
Revised15February2015
18 April 2015
Accepted3May2015
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0263-5577.htm
1041
Effects of
suppliers’
trust and
commitment
productivity, effectiveness, and quality (Lovelock and Young, 1979; Mills et al.,1983;
Mills and Morris, 1986; Song and Adams, 1993). Third, customers involved into the
product process are more likely to be satisfied with the supplier (Bendapudi and Leone,
2003; Fournier and Mick, 1999; Keiningham et al., 1999). Fourth, involving customers
exhibits positive performance effects (Narver and Slater, 1990) and creates continuous
superior marketplace performance for suppliers (Deshpande and Farley, 2000; Prahalad
and Ramaswamy, 2003).
The importance of involving customers in B2B market has been highlighted by
deeper exchange and cooperation between suppliers and customers (Finch, 1999).
It becomes particularly significant when suppliers begin to develop new products.
As a successful strategy for NPD of suppliers (Brockhoff, 2003), involving customers
could enable suppliers to realize in-depth learning of customer needs, which is
necessary for successful NPD (Brown and Eisenhardt, 1995; Craig and Hart, 1992;
Montoya-Weiss and Calantone, 1994). More importantly, through customer
involvement, suppliers gain access to development capabilities and other
resources that they lack in-house (Athaide et al., 1996; Ruekert and Walker, 1987)
and obtain the assistance from customers for product design, development, testing,
and commercialization (Nambisan, 2002).
Although previous studies have suggested involving customers is beneficial to
the success of new products of suppliers (Brown and Eisenhardt, 1995; Ruekert and
Walker, 1987; Nambisan, 2002), few studies have investigated factors driving
suppliers to involve their customers in NPD activities (Lundkvist and Yakhlef, 2004;
Svendsen et al., 2011). Governance coordinates cooperation (Steinicke et al., 2012;
Teng and Das, 2008), influences value-creation (Dyer and Singh, 1998) and minimizes
the risk of opportunism (Hoetker and Mellewigt, 2009). In the existing literature,
governance mechanisms are classified into contractual or relational (Hoetker and
Mellewigt, 2009; Poppo and Zenger, 2002; Roath et al., 2002). Partnership with
customers, governance by suppliers, hard bases for contracts (Lundkvist and
Yakhlef, 2004), and customer collaboration are valued over contract negotiation
(Cohn, 2005). Thus, relational governance is likely to be a more suitable and effective
tool for suppliers to manage customer involvement. Relational governance
emphasizes the roles of trust and commitment to coordinate inter-firm
relationship. Thus, we consider relational governance should mainly include two
dimensions –trust and commitment.
While relational governance exhibits its role in an enduring relationship (Hewett and
Bearden, 2001), the continuity of relationship depends on the value (benefits/costs)
comparison of the current relationship (Grisaffe and Kumar, 1998). Thus, some certain
mechanisms may be in place through which the relationship between relational
governance and customer involvement occurs. Understanding these mechanisms may
offer managers with a more detailed picture of how suppliers involving customers into
NPD effectively. As necessary expenses for suppliers, transaction-specific investment
premises on trust (Yu et al., 2006; Reuer et al., 2006), and shows the signal to
commitment (Krapfel et al., 1991). Therefore, transaction-specific investment may be an
intermediate outcome of suppliers’trust that ultimately leads to suppliers’commitment
and customer involvement. By contrast, switching cost yields benefits, like increasing
customer loyalty, locking partners in the relationship (Burnham et al., 2003). These
benefits may strengthen the effects of relational governance on customer involvement.
However, the mediating role of transaction-specific investment and the moderating role
of switching cost have been overlooked in previous studies. Moreover, trust and
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