Impact Of Social Capital On Buyer Supplier Relationships In A Multi-cultural Context

Abstract

Both manufacturers and service companies rely heavily on their suppliers to provide quality products and services. The management of these suppliers can be critical to the success of an organization. In this research study, the relationship between buying firms and their suppliers is examined and how it contributes to the overall performance of the buying firm. Prior research has confirmed that a strong buyer supplier relationship can have a positive impact on the buying firm's performance. However, these studies primarily examined relationships within the context of a western country. This study examines the similarities and differences in business practices that contribute to a strong buyer supplier relationship in both a western culture (United States) and an eastern culture (China.) This is done utilizing theories from three different disciplines to study the relationship and its impact on performance: buyer supplier relationship from operations management, social capital from management, and cultural impact from international business. The survey data was collected from United States and Chinese executives. The data was analyzed and compared using a variety of techniques including linear regression, confirmatory factor analysis, and structural equation modeling. Similar to studies performed in various western countries, the relationship between a buying firm and their supplier was found to improve the buying firm's performance in both the United States and China. However, the activities that contribute to a successful relationship vary by country. Cultural differences between the United States and China help explain the differences in business practices that are most advantageous in each specific country.