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Deep, sticky, transient, and gracious: an expanded buyer-supplier relationship typology.

INTRODUCTION

Several leading buying companies (i.e., LJA, (1) Apple, Boeing, and LG Electronics) reportedly are reconsidering how they strategize their supplier relationships. On the one hand, they are seeing signs of deterioration in some of their long-standing relationships with cooperative suppliers. On the other hand, they are witnessing arms-length suppliers emerging as a source of innovations. What are the limits of long-term, cooperative buyer-supplier relationships? Could arms-length relationships actually be beneficial and, if so, when? What is the underlying relationship typology that can capture such emergent buyer-supplier dynamics?

To explore these questions, we first make an observation from the existing literature, namely that the prevailing buyer-supplier relationship typology focuses on the cooperative-adversarial relationship dichotomy (e.g., Carter, Smeltzer & Narasimhan, 1998; Dong, Carter & Dresner, 2001; MacDuffie & Helper, 2003; Monczka, Petersen, Handfield & Ragatz, 1998). Typically, the cooperative relationship has been associated with closely tied relationships (lap, 1999; Wilson, 1995), while the adversarial relationship has been equated to arms-length relationships (Ellram & Cooper, 1990; Zaheer, McEvily & Perrone, 1998a). We propose, however, that a cooperative relationship is really distinct from a closely tied relationship, and an adversarial relationship is distinct from an arms-length relationship. In practice, two cooperative partners may not necessarily be closely interlinked in their daily operations, and it is not always the case that two firms highly interdependent in their daily operations are mutually accommodating. Theoretically, the cooperative-adversarial dichotomy is limited to reflecting relational posture in buyer-supplier relationships. Our study intends to expand the prevailing buyer-supplier relationship typology by simultaneously considering two different aspects of business relationships--relational posture and relational intensity.

The relational posture (cooperative versus adversarial) captures two parties' mutual attitude and behavioral motivation toward each other (Dyer & Singh, 1998; Johnston, McCutcheon, Stuart & Kerwood, 2004), while the relational intensity (closely tied versus arms-length) reflects the strength and amount of interfirm transactions (Dyer & Nobeoka, 2000; Hinings et al., 2003). Our expanded typology combines the two relational dimensions with polar anchor points and thereby expands into four ideal types of buyer-supplier relationships: deep, stickty, transient, and gracious (see Figure 1).

The four types are theorized as embodying different combinations of the anchors underpinning the two relational dimensions. We empirically examine the four types and validate the relational outcomes associated with each type. Under the "deep" relationship (closely tied, cooperative), the buyer and supplier tend to benefit from stabilized operations (e.g., JIT manufacturing) but may suffer from the partner's behavioral rigidity, over the course of time. In the "sticky" type (closely tied, adversarial), two parties tend to linger in their relation, often engaging in a power game, and the advantages for the more powerful party may be neutralized by the weaker party's covert retaliation (Basti, Johnson & Choi, 2013). A buyer and supplier in the "transient" relationship (arms-length, adversarial) focus on obtaining short-term gains (e.g., price advantage) and enforcing contractual terms, while both parties remain strategically adaptable. The "gracious" buyer-supplier relationship (arms-length, cooperative), while relatively most intractable, can be a fountainhead of innovation for the parties.

Therefore, we propose an outcome trade-off for each of the four relationship types. The deep type would entail "stable" but "rigid" interactions. The sticky type is characterized by its "lack of synergy" and ample "opportunism." The transient type would involve high levels of both "relational ambiguity" and "strategic flexibility." The gracious type would allow for only a limited partner "control" yet high prospects of "innovation" through the partner. Our empirical evidence generally supports these hypothesized tradeoffs. In the next section, we ground this expanded buyer-supplier relationship typology and the outcome tradeoffs in the literature.

AN EXPANDED BUYER-SUPPLIER RELATIONSHIP TYPOLOGY

Prevailing Typology

Many buying firms have been working toward establishing long-term, cooperative relationships with their key suppliers (Dyer & Singh, 1998; Liker & Choi, 2004; Mesquita & Brush, 2008). These suppliers tend to enjoy deep working relationships with their buyers, characterized by close communications, long-term contracts, and a sense of co-prosperity. These suppliers are often asked to make relation-specific investments and thereby maintain high levels of interdependency (Bensaou & Anderson, 1999). In contrast, these buyers may keep other suppliers at arms-length and under short-term contracts or on standby as needed, with less frequent interactions (Kotabe & Murray, 2004). These suppliers are viewed as expendable, which often entails adversarial relationships. Many of these suppliers send their sales people to the buying company in the hopes of upgrading their statuses to key suppliers. In practice, buyer-supplier relationship approaches still revolve around this dichotomy of long-term, cooperative versus short-term, adversarial relationships.

The extant literature generally endorses this dichotomous typology. Much of the buyer-supplier literature has long underscored the importance of developing long-term partnerships with selected, trustworthy suppliers (e.g., Ellram, 1991; McCutcheon & Stuart, 2000; Monczka et al., 1998; Peleg, Lee & Hausman, 2002). Alternatively, some other researchers have highlighted the instrumental value of multiple sourcing, competitive bidding, and use of short-term contracts, even though these practices can induce mutual antagonism (e.g., Hahn, Kim & Kim, 1986; Spekman, 1988; Stuart, 1993). Numerous scholars and practitioners as such have based discussions of buyer-supplier relationships primarily on the cooperative-adversarial dichotomy (Heide & Stump, 1995; McCutcheon & Stuart, 2000).

Such a relational dichotomy has served as a powerful typology--it is simple and easy to apply. However, we submit that this simple classification falls short of capturing the emerging dynamics of buyer-supplier relationships. In today's hypercompetitive business environments, buyers and suppliers are employing more subtle and sophisticated relationship strategies. For instance, in spite of buyer-specific investments, some suppliers would rather give up the sunk costs should better opportunities with different relational options arise. In fact, as some industry examples attest, long-standing relationships can turn sour. We have observed that a celebrated relationship between a renowned buyer and its long-term supplier shows signs of deterioration--the buyer says the supplier is becoming rigid in its ways, while the supplier counters by saying the buyer is uninformed and inflexible (Interview, 2009a). At the same time, some arms-length buyer-supplier relationships often pay dividends as two parties work on short-term projects together. For instance, we learned recently about a U.S.-based buyer discovering a Canadian supplier kept at arms-length as a good source of novel ideas and shifting market trends (Interview, 2009b).

Two Underlying Relational Dimensions; Posture and Intensity

Our expanded buyer-supplier relationship typology brings together two distinct facets of business relationships. One is relational "posture," and the other relational "intensity." The relational posture addresses the affective aspect--how the buyer and supplier regard and behave toward each other, either as a cooperative partner or an adversary. The relational intensity captures the operational aspect--how interlinked two parties are in their daily transactions--either closely tied or arms-length.

Relational Posture. The basic constructs of a relational posture include commitment, trust, information sharing, relational norms, and conflict resolution, which together represent relational quality or attachment. Cooperative business relationships in essence stem from strong mutual commitment, which reflects both partners' long-term perspectives toward the relationship (Larson, 1992). Steensma and Lyles (2000) and Dhanaraj, Lyles, Steensma and Tihanyi (2004) characterize cooperative partnerships as anchored in high commitment by both partners to not exploit the other party's weaknesses for short-term gains. Thus, commitment is a key relational element for successful buyer-supplier relationships (Gundlach, Achrol & Mentzer, 1995; Wilson, 1995). Trust reflects partner reliability and faithfulness (Larson, 1992; Moran, 2005) and is viewed as the generic opportunism-deterring mechanism (Andersen & Kumar, 2006; LIzzi, 1996). In an interfirm alliance context, trust emerges between two firms as they learn about each other over a course of time (Gulati, 1995).

The research also portrays long-term, cooperative interfirm relationships as providing a foundation for information sharing that represents partners' reciprocity (Larson, 1992). In interfirm settings, long-term ties are generally equated with fine-grained information sharing (Gulati, 1998; Rowley, Behrens & Krackhardt, 2000). Specifically, in a buyer-supplier context, information sharing is viewed as affecting relational risks and rewards (Ellram, 1991) and facilitating joint problem solving (Stuart, 1993; Womack, Jones & Roos, 1990). Long-term, cooperative relationships are also argued to involve relation-specific norms, which embody shared expectations regarding behavior (Axelrod, 1986; MacNeil, 1980). Generally, relational norms serve as an interfirm governance mechanism, and thus curtail unilateral behaviors defying mutual gains (Siguaw, Simpson & Baker, 1998; Spekman & Davis, 2004). Further, in cooperative relationships, conflicts between parties are more likely to be resolved amicably, where parties are willing to meet halfway and try to prevent relationship stagnation (Morgan & Hunt, 1994). These indicators jointly explain how two parties posture toward each other and nurture the desired relational ambience (Andersen & Kumar, 2006). However, scholars have increasingly realized the need for another relational dimension, above and beyond the posture, which considers "strength of the connections (between firms)" (Gulati, Nohria & Zaheer, 2000: 206) or "an inherent aspect of interaction procedures" (Andersen & Kumar, 2006: 524). We refer to this second dimension as relational intensity.

Relational Intensity. Relational intensity addresses transactional strength and volume, reflecting economic interdependence between a buyer and supplier. In conceptualizing this dimension, we primarily turn to the "tie strength"--a concept grounded in the social network and organizational network literature. Granovetter (1973) early on pointed to the amount of time in exchanges as a measure of the strength of interactor ties. Following that idea, many researchers (e.g., Marsden & Campbell, 1984; Rowley et al., 2000) have since defined interaction frequency as a key indicator of the strength of exchange ties. In the literature, others (e.g., Capaldo, 2007; Lavie, 2006) have also considered levels of asset-specific resource commitment by partners as an indicator for exchange tie strength. Partners' levels of operational interdependence (i.e., a partner's economic value and substitutability) have also been used to capture the depth of economic impact and thus the strength of exchange ties (Gulati & Sytch, 2007). Considering a similar concept of coupling, Perrow (1984) describes how tightly coupled ties restrict substitutions as behavioral standards are specified and enforced, while loosely coupled ties can allow for fortuitous substitutions. Multiplexity, which refers to the number of different interaction domains between firms, has been used as another indicator of tie strength (Coleman, 1988; DiMaggio & Louch, 1998; Marsden & Campbell, 1984). Multiplex interaction domains often accompany strong interorganizational ties, but relational quality is not necessarily contingent on the number of ties (Brass, Butterfield & Skaggs, 1998). Interfirm ties characterized by multiple exchange domains tend to be stable, because there are multiple bonds between the parties (Beckman & Haunschild, 2002). As such, these four indicators--interaction frequency, asset specificity, operational interdependency, and multiplexity--jointly represent intensity of interfirm exchange and determine its commercial importance (Marsden & Hurlbert, 1988).

The two relational dimensions--posture and intensity--explain different facets of buyer-supplier relationships. We posit that these two dimensions, while both addressing buyer-supplier relationships, are conceptually orthogonal to each other. Hence, we bring them together in a two-by-two matrix (see Figure 1). This matrix captures our new, expanded typology of buyer-supplier relationships. In Figure 1, the four quadrants represent four different buyer-supplier relationship archetypes. Each type is associated with a set of unique relational characteristics that are described in the next section.

Expanded Typology

"Deep" Relationship--Closely Tied and Cooperative. In a "deep" buyer-supplier relationship, the two firms are closely synchronized in their operations through specialized interfaces and remain highly responsive to each other (e.g., JIT manufacturing). Typically, both parties dedicate a significant portion of their internal resources to the relationship, which allows efficient communications and coordinated production activities. Consequently, they become highly dependent on each other, both operationally and strategically. The two parties are thus less likely to engage in unilateral power play and more likely to cooperate for mutual benefits.

"Sticky" Relationship--Closely Tied but Adversarial. In a "sticky" relationship, the parties essentially consider each other as a necessary evil, as their exchange tie persists. The more powerful party may streamline and systemize exchanges to increase efficiency to its advantage (e.g., vendor-managed inventory) in interfirm operations. The weaker party may often be forced into relation-specific investments and thus is put in a hostage position. The dominant party leans toward using adversarial tactics to seize a larger share of relational rents at the cost of the other party, but the weaker party at the same time tries to "get even" via covert means, akin to what Rossetti and Choi (2005) refer to as "guerrilla warfare."

"Transient" Relationship--Arms-length and Adversarial. Buyers and suppliers in a "transient" relationship are relatively clear about how they interact with the other party. Mostly based on discrete transactions, their business deals are struck through competitive tendering and aggressive price negotiations, and the contacts are mostly short-term, as in open commodity markets. With short-term gains (e.g., price advantage) as their primary focus, parties prefer to enforce and adhere to contractual terms, leaving open markets as the recourse in case the relationship fails. Consequently, it is largely confrontational or, at best, indifferent.

"Gracious" Relationship--Arms-length but Cooperative. Two firms in this type of relationship may not work together intensely but hold each other in high regard and maintain goodwill. They may engage in intermittent and short-term yet recurrent collaborations. That is, business deals between two firms might take place infrequently, but they occur endearingly. The supplier in such a relationship is less reliant on the buyer and typically is resourceful and has diversified product offerings and a balanced customer base. Generally, both parties retain autonomy in their respective operations, while remaining positive toward each other over a course of time.

Relationship Outcome Trade-offs

Based on the aforesaid general characteristics of the expanded typology, we predict a pair of the most salient outcomes for each type. As discussed earlier, each type is built on two orthogonal dimensions, and the outcome pairs are captured in the form of a trade-off. The deep relationship entails a stable but rigid interaction. The sticky relationship features lack of synergy and ample (supplier) opportunism. The transient relationship is characterized by high relational ambiguity but at the same time high (strategic) flexibility. The gracious relationship would allow low (partner) control yet afford high innovation prospects.

"Deep" Relationship--Relational Stability and Supplier Rigidity. A closely coordinated, cooperative relationship facilitates orderly, reliable flows of information and material, which can help two parties align their relational goals and achieve operational objectives. Consequently, the buyer attains high consistency in product quality and lead time and avoids incurring unnecessary transaction costs (Helper, 1990; Sako & Helper, 1998). Also, two parties' cooperative behaviors lead to less conflict in communication and negotiations and allow effective adjustments of relational variations (Jeffries & Reed, 2000). By reducing transactional uncertainty and boosting operational efficiency, the "deep" type provides both parties with relational stability.

The stability benefits notwithstanding, the "deep" type may experience diminishing returns. Due to their high sunk costs and vested interest in the relation, two parties can become so cohesive that they develop distorted perceptions of circumstances outside the relationship (Coleman, 1957; Jones, Hesterly & Borgatti, 1997; Tajfel & Turner, 1985). Such in-group inclination, although useful for inducing cooperation, tends to constrain an individual party's access to diverse perspectives. It favors the time-honored norms or practices that have been proven to work in the relationship (Hansen, Mors & Lovas, 2005; Uzzi, 1997). That is, both parties tend to cling to existing belief systems and replicate successful internal routines even when the external business environment changes (Gupta, Smith & Shalley, 2006; March, 2006). Having invested in resources dedicated to the relationship (i.e., customer-specific assets and work procedures), the supplier is particularly likely to resist change. Further, knowing it would be difficult for the buyer to find another supplier to make such investments, the supplier may even show complacency and begin to take the relationship for granted. Consequently, the firm would likely become less enthusiastic about venturing out. From the buyer's perspective, the supplier would appear to be increasingly rigid and set in its way.

"Sticky" Relationship--Lack of Synergy and Supplier Opportunism. The "sticky" relationship type is characterized as close but adversarial. It usually involves contractual disparities and becomes visible when the buyer imposes a unilateral demand on a long-term supplier (Mudambi & Helper, 1998). The buyer could mandate a more aggressive cost reduction schedule or even try to force the supplier to give away its technologies or other capabilities. The increasing information asymmetry and animosity would keep the parties from building a sense of commitment and trust, regardless of how integrated they may be at the operational level (Cox, 2001; Hoyt & Huq, 2000). In an extreme case, a buyer may audit its supplier to prevent the supplier from earning excessive profits and to redistribute relational rents disproportionately in its own favor (Yli-Renko, Autio & Sapienza, 2001). As one party gains at the expense of the other, this type of relationship lacks the synergy associated with concerted efforts to create surplus benefits and their fair distribution.

Therefore, the more powerful party ought to be mindful of the opportunism of the weaker. This is because the "sticky" relationship type does not always favor the power-advantaged party; the weaker party can engage in covert retaliation to hurt the dominant party (Rossetti & Choi, 2005). According to the literature, even in on-going business relationships, if there is a power imbalance, opportunism may be alive and well (Wong, Tjosvold & Yu, 2005). In this type of relationship, usually the supplier has accumulated a good understanding of the buyer's operations and business needs, as well as the terms of their contract agreements. Hence, the supplier is well equipped to engage in covert opportunism with potentially substantive consequences. Moreover, given its very nature, the opportunism cannot be easily checked or monitored (Stump & Heide, 1996). For instance, the disadvantaged supplier may purposely withhold critical parts and key information or fail to follow through the quality procedures prescribed in the contract.

"Transient" Relationship--Relational Ambiguity and Supplier Flexibility. In a typical "transient" relation, the buyer and supplier relate to each other based on their short-term preferences (e.g., matching cost or delivery requirements). Both parties would ostensibly have alternative options. Thus, both the buyer and supplier have little motivation for closer information sharing or meaningful joint activities (Anand & Ward, 2004). Also, as their interactions are mostly driven by short-term, discrete contracts, two firms would have only a casual understanding of each other's business strategies, needs, and operations, resulting in high ambiguity when facing partner behavior (i.e., relational ambiguity).

However, this "transient" type can provide some strategic advantages, particularly when it comes to problem solving. Being kept at arms-length from the buyer, the supplier is likely to be exposed to varied encounters and perspectives through its widespread business ties and have other options in its extended business network (Stam & Elfring, 2008). Consequently, the supplier would likely become highly adaptable, rather than rigidly keeping to a particular course of action, in tackling different problem situations (Volberda, 1996; Zahra & Filatotchev, 2004). Embracing a spectrum of opinions and perspectives can help firms cope better with changing rules of business competition and become more resilient over the long run (Paul & Strbiak, 1997). Through its relationship with such a supplier, the buyer can also have enhanced access to diverse perspectives.

"Gracious" Relationship--Lack of Control and Supplier Innovation. In a typical "gracious" relationship, the supplier may not do much work for the buyer, but maintains an amicable relationship. While the buyer may see advantages in maintaining a tie with the resourceful supplier (Axelrod, 1984; Parkhe, 1993), it holds little leverage over the supplier, because the tie is weak. The supplier may have connections to various other companies, even to the buyer's rivals (Das & Teng, 1998; Parkhe, 1993). Typically, the buyer would likely be in a holding pattern to see whether its link with this supplier would pay off in the future (Axelrod, 1984). For instance, there is a filming-technology supplier that works with LJA (Interview, 2009b). This supplier does not regard LJA as a major customer in terms of total sales, and LJA has little need for operational control over the supplier. They interact occasionally. However, they hold each other in high regard. LJA values this supplier, because while the technology, called "hydro-graphics," is peripheral to the primary functioning of a car, it affects the finish on the product and has a range of applications. The supplier values LJA since working with a reputable customer firm lends credence and could open up opportunities.

Interestingly, a supplier in this "gracious" relationship type can potentially be a great source of innovation for the buyer. Given the weak-tie relationship, the supplier has the potential to serve as a conduit for new ideas and market information. The supplier can vigorously engage in exploration and boundary-spanning activities (Fleming, Mingo & Chen, 2007). Such activity is important, because innovative information often resides outside the buying firm or its immediate ties. It tends to come from extended networks of diverse relationships (Rosenkopf & Nerkar, 2001). The merit of the "gracious" relationships stems from the high likelihood of introducing the buying firm to otherwise disconnected fields of businesses (Burt, 1992). That exposure to far-flung ties or even totally different industries is what can potentially bring novel information or resources to the buyer.

Based on the above theoretical considerations, we offer four propositions concerning relational outcome trade-offs pertaining to the expanded typology.

Proposition 1: A "Deep" buyer-supplier relationship archetype is greater in relational stability and supplier rigidity, compared with the other archetypes.

Proposition 2: A "Sticky" buyer-supplier relationship archetype is greater in lack of synergy and supplier opportunism, compared with the other archetypes.

Proposition 3: A "Transient" buyer-supplier relationship archetype is greater in relational ambiguity and supplier (strategic) flexibility, compared with the other archetypes.

Proposition 4: A "Gracious" buyer-supplier relationship archetype is greater in lack of (partner) control and supplier innovation, compared with the other archetypes.

METHODS

To test these propositions, we collected data from the large Japanese automaker ("LJA") and its supply base in North America. Employing more than 2,700 people, LJA is engaged in producing close to twenty different vehicles and engines, and oversees multiple parts manufacturing plants across North America. It has about 400 direct-parts suppliers in its North American supply base. In this study, we apply the new, expanded buyer-supplier typology (see Figure 1) to organize LJA's supply base. We then examine the relational outcomes of the four groups of suppliers in light of our propositions.

Sample and Data Collection

As the primary data collection method, we conducted a multiphase empirical study, beginning with a series of surveys involving LJA and its direct-parts suppliers. Subsequently, field interviews were conducted at select suppliers to obtain contextual information on the four buyer-supplier relationship archetypes.

We were first introduced to eight LJA purchasing managers who were jointly in charge of all of LJA's North American suppliers. With their help, a large-scale, cross-sectional survey was conducted involving LJA's 241 direct-parts suppliers in North America. In the survey, respondents were asked to consider the past three to five years of their relation with LJA to avoid capturing biased responses based on particular episodes of peak performance or short-term negative experiences (Poole, Van de Ven, Dooley & Holmes, 2000). We also conducted surveys of the eight LJA purchasing managers for a combined 32 suppliers (i.e., four suppliers per manager). The results of these 32 surveys were used later for cross-validation of the primary data from the suppliers.

The final usable sample consists of 163 supplier responses with a response rate of 67.6%. Supplier demographics are detailed in Table 1. Profiles of survey respondents at these suppliers appear in Table 2. These tables reflect the diversity in our study sample. The respondents, as shown in Table 2, were mostly executive-level managers. Also, Table 1 shows that the surveyed firms are evenly dispersed with respect to total annual revenue, number of employees, length of relationship with LJA, and reliance on LJA business (as a percent of total business). The demographic information, including the number of employees, primary products, and annual revenue, was cross-checked against such Web sites as Mantra (www.manta.com) and Hoover's (www.Hoovers.com). Specifically, we verified whether the primary product(s) reported in the surveys match the product or industry category information provided in those Web sites, and if the individual suppliers' self-reported data on workforce size and total annual revenue correspond approximately to those available in those Web sites.

We chose to survey a single company's supply base in the same industry over a broader population of general supplying firms. This choice would enable us to disentangle our proposed theories from potentially much greater confounding effects based on industry-specific (e.g., concentration level) or firm-specific factors (e.g., different supplier management strategies across buying firms) (Cook & Campbell, 1979). Additionally, to produce an interrelational type comparison on an equal footing requires a balanced supplier portfolio. LJA's supply base satisfies this condition: the buying company exercises a comprehensive approach to its supplier management, in which suppliers are managed in various interfirm arrangements, depending on their products, trust levels, strategic values, etc.

Subsequently, we assessed potential biases due to the specific sampling scheme. Nonresponse bias was assessed by comparing early with late responses and the first third with the last third responses on key variables via t-tests (Armstrong & Overton, 1977; Lambert & Harrington, 1990). The respondent and nonrespondent firms were also compared across demographic variables (e.g., firm size, firm age, and industry). No significant differences were found. We also checked common method bias. We conducted Harman's (1967) single-factor test using exploratory factor analysis. It showed the most influential factor accounted for <20 percent of the variance in the data, far below the recommended 50 percent threshold (Podsakoff & Organ, 1986).

Measurement Assessment

Measures. The survey items, unless otherwise indicated, were rated on a 6-point Likert-type scale, from 1 = "Strongly disagree" to 6 = "Strongly agree." This scale was adopted to eliminate the possible neutral responses and improve the face validity of measures (Saris & Gallhofer, 2007). All measures were carefully developed based on our analysis of the related literature. All of the measurement items used in the questionnaire for this study are listed in Appendix A.

Our study encompassed two major construct groups--measures for two underlying relational dimensions and measures for individual relational outcomes. Specifically, there are five 1st-order indicators for relational posture--commitment, trust, information sharing, relational norms, and conflict resolution. For relational intensity, we identified four lst-order indicators--interaction frequency, asset specificity, operational interdependency, and multiplexity. After purifying the individual 1st-order indicators for the measurement scales, we created a composite variable for each of the two relational dimensions by averaging the scores (from the survey) on their remaining scale items. There are also four pairs of relational outcome trade-offs: relational stability and supplier rigidity, (lack of) synergy and supplier opportunism, relational ambiguity and supplier flexibility, and (lack of) control and supplier innovation. Table 3 summarizes the operational definitions of the individual measures and the references we used to develop the measurement scales.

We examine the reliability and validity of the measurement scales for the constructs. As indicated, we first purify the original items using EFA (with varimax rotation) and exclude those items with loadings <.5 from the analysis (Kim & Mueller, 1978) (see Appendix A). To assess the reliability of each scale, we calculate Cronbach's alpha (a) coefficient. As shown in Table 5 and Appendix A, a coefficients exceed the generally accepted cutoff values of .7 (for established scales) or .6 (for new scales) (Nunnally, 1978). Convergent and discriminant validities between constructs are also examined based on the average variance extracted values (Dillon & Goldstein, 1984). The measurement model was further validated using a series of CFAs. Given the high number of study constructs, two different measurement models were evaluated (Chen & Paulraj, 2004)--Model 1 constituting only the 1st-order indicators for two relational dimensions, and Model 2 containing the relational outcome variables. Both CFAs yielded an acceptable fit to the data (CFI = .923, RMSEA = .047, [chi square]/df= 848.22/621 = 1.37 for Model 1; CFI = .928, RMSEA = .043, [chi square]/df = 552.45/426 = 1.30 for Model 2) (Hu & Bender, 1999).

Orthogonality Testing for Two Relational Dimensions. We offer an empirical demonstration of the orthogonality of the two relational dimensions--relational posture and relational intensity. We use the item response theoretic approach to construct unidimensionality (Huebner, Gilman & Laughlin, 1999; Lumsden, 1961). At the individual construct level, unidimensionality refers to the internal consistency across a set of indicators of a latent, higher-order construct (Hattie, 1985). Hence, this approach is particularly relevant to testing a multifaceted construct to see whether its multiple indicators measure just one factor (Hattie, 1985).

Unidimensionality between two (higher-order) latent constructs refers to whether they (i.e., their respective sets of indicators) are orthogonal to the point of capturing distinct aspects of the same phenomenon under study (Anderson & Gerbing, 1982; Huebner et al., 1999). The test involves comparing the model-fit between two CFA models: a one-factor model and a two-factor model. In the one-factor model, all 1st-order indicators are set to reflect a single (hypothetical) 2nd-order construct and are allowed to covary freely. In the two-factor model, the 1st-order indicators are set to reflect their respective 2nd-order constructs (i.e., relational posture or relational intensity), while the two 2nd-order constructs are set to be uncorrelated. That is, the latter model is much more constrained than the former. The results, shown in Table 4, report that the two-factor model fits the data much better, as evidenced by a higher CFI value and lower values of the RMSEA, Akaike information criterion (AIC), and Bayesian information criterion (BIC). We also apply Bagozzi's (1980) chi-squared difference test. The chi-squared difference between the two CFA models (i.e., the unconstrained and corresponding constrained CFA models) is significant at p = .01 level. Further, we calculated the correlation between the two summative scales for relational posture and relational intensity and found very low theoretical correspondence (Pearson correlation = .12). Taken together, the results strongly indicate that the two dimensions reflect distinct relational aspects and support conceptual orthogonality.

Mapping LJA's Supplier Relationships onto the Expanded Typology

To validate our expanded typology, we categorize LJA's 163 suppliers based on their responses to the survey questions that assess their positions on the two relational dimensions. The two dimensions are used as two axes perpendicular to each other on a 2-dimensional plane (see Ross, Buffa, Droge and Carrington's (2009) "quadrant technique"). In our case, relational posture moves along the x-axis and relational intensity along the y-axis.

Figure 2 offers a mapping of the individual suppliers' placements on the expanded typology. Each of the 163 suppliers is represented by a hollow dot and given a number to ensure anonymity. As exhibited in Figure 2, LJA's supplier relationships are well distributed across the four relationship types. This classification result was verified and confirmed using the survey and interview data obtained from eight LJA purchasing managers.

While the sampled suppliers are scattered across the four quadrants, there are also many located around the center of the axes. In fact, one may interpret this observation as the tendency of the relationships to remain at the center. However, given that the mode of our present study is deductive rather than inductive, the theory points us toward the unique characteristics of the four quadrants. Further, seeing data points near the center of the axes is not unusual in the quadrant analysis approach (i.e., organizational classification along two theoretically separate dimensions, see Ross et al., 2009). Conventional cluster analysis methods presuppose multiple (i.e., more than two) organizational attributes that do not correlate or covary with one another. As a result, they typically yield multiple, distinctly different groupings, and the final number of clusters often remains a contentious issue (Cannon & Perreault, 1999). In contrast, the quadrant technique adopted in our study considers only two primary dimensions that are conceptually orthogonal and may covary. Therefore, the organizations under study would likely be dispersed in a continuous fashion along the two orthogonal dimensions.

Figure 2 indicates that suppliers tend not to migrate toward one end of extremes of either relational posture or relational intensity. Theoretically, it may signify that, at the interfirm level, a pure form of strong or weak tie is scarce. Therefore, we focus on assessing and comparing the relative degrees of relational posture and intensity across the firms in the same supply base and the associated consequences. Our comparative analysis highlights the differences in the means (averages) on each outcome variable across the four archetypes (i.e., cross-group comparisons), rather than across individual buyer-supplier relationships (i.e., cross-subject comparisons). We intend to offer insights into how buyer-supplier relationships would likely behave and perform with respect to the four expanded relationship archetypes.

Based on the results of the analysis, we sampled and visited two representative suppliers from each quadrant. For illustrative purposes, in the discussion section, we will introduce one supplier whose relationship with LJA typifies each relationship type.

There was another set of questions in the survey that measured the various relational outcomes (see Table 3 for their operationalization). For the individual outcome variable, the measurement items, both initial and purified, are presented in Appendix A. The composite reliability is reported in the descriptive statistics shown in Table 5. In the results section, we explore the hypothesized associations between the expanded buyer-supplier relationship types and various relational outcomes. We compare the relative magnitude of each relational outcome across the buyer-supplier relationship archetypes.

RESULTS

We employ multinomial logistic regression analysis to examine how the individual buyer-supplier relationship types are associated in the aggregate with the relational outcome variables and whether they support our propositions. The multinomial logistic regression model is useful to investigate the relationship between a multitude of continuous predictors and a set of categorical responses, while addressing the effects of various potential confounding factors, that is, control variables (Allison, 1999).

The controls used here include individual suppliers' firm size, length of supplier relationship, level of reliance on LJA business, overall performance level, number of LJA models supported, primary product categories (i.e., industry groups), strategic orientations (innovation focus and long-range relationship view), and uncertainty of the market in which each supplier operates. Descriptive statistics are reported in Table 5. An assessment of the bivariate correlations indicates that some of the key variables moderately or significantly correlate with these controls, warranting their inclusion in the analysis.

Cross-Group Outcome Comparisons

The four supplier relationship types are set as the response variables, and the eight relational outcomes as the predicting variables. Our analytical approach enables us to test for cross-group differences in the means of various relationship outcome variables. Table 6 summarizes the results of the multinomial logistic regression analysis, including the relative risk ratios, standard errors, likelihood-ratio chi-squared, and significance level for the four buyer-supplier relationship types.

In each row of the outcome variables in Table 6, the relationship type of lowest value is assigned a value of 1 as the base or reference category for comparison purposes. Here, relative risk ratios (RRRs) are equivalent to the odds ratios in the ordinary logistic regression model. That is, the RRRs can be interpreted as a multiplier of risk or likelihood. Taking the first row pertaining to the relational stability variable as an example, the "deep" relationship type shows a value of 48.81 with respect to the value of 1 of the "transient" type (the reference category), which indicates that the "deep" relation group is, on average, likely to be 48.81 times more stable than the "transient" relation group. While the "sticky" type shows a higher value (1.77) than the base category of "transient," the insignificant RRR indicates that statistically the two types are not significantly different from each other in relational stability. Likelihood-ratio (LR) chi-squared tests evaluate the overall effect of the individual predictors (i.e., outcome variables). As demonstrated in the significance tests for LR chi-squared (see the last column in Table 6), the four relationship types are, overall, significantly different from one another in all of the eight relational outcome variables.

Four Relationship Types and Their Group-Level Differences

In theory, the "deep" relationship type would entail a stable but rigid interaction. The "sticky" type is characterized by both a lack of synergy and ample (supplier) opportunism. The "transient" type would show high relational ambiguity but at the same time high (strategic) flexibility. The "gracious" type would offer low relational control yet lead to high (supplier) innovation. To demonstrate the unique characteristics of the proposed typology, we display under each relational outcome its scores based on the multinomial logistic regression analysis of the four relationship types, as shown in Table 6.

The bar graphs in Figure 3 reflect the relative magnitudes of the four groups of LJA's supplier relations on each outcome variable (relational stability, lack of synergy, etc.). As mentioned, the lowest magnitude is set to 1 and the other groups' levels are adjusted with respect to this base.

DISCUSSION

"Deep" Relationships: Relational Stability and Supplier Rigidity

As theorized, the "deep" relationship is not a panacea for all supplier management problems. This relationship type enjoys high relational stability, but at the same time, it suffers from supplier rigidity. The stability likely stems from long-standing routines and common understanding of work procedures. However, the routinized interactions and consistent patterns of responses can also lead to rigid behavior. The results shown in Figure 3a and b support this more comprehensive view of the "deep" relationship. The rankings of the relational groups are identical, in which the "deep" type exhibits the highest levels of both relational stability and supplier rigidity. In supplier rigidity, the "gracious" relationship type appears in a close second place (Figure 3b). It is interesting to note that both "deep" and "gracious" represent the cooperative posture (see Figure 1). Ironically, the results seem to imply that a cooperative posture might be more conducive to developing supplier rigidity. At a minimum, it appears that under such conditions, it would be more difficult for the buyer to detect and correct the supplier's dysfunctional behaviors because they are prone to avoid faultfinding and the tendency would be to conform to the status quo.

We visited with one supplier that clearly falls into the "deep" quadrant. This company has been working with LJA for several decades and has remained on very good terms, under the shared business philosophy of the "LJA Way." The two companies interact daily at all levels and, financially, LJA business accounts for more than 50 percent of this supplier's overall sales. This supplier strictly follows the operational procedures and prescriptions of LJA (e.g., checklists and line monitoring practices). According to the VP of marketing of this supplier, its relationship with LJA is "deep and wide" and they "will never shut each other down." However, comments from managers at LJA took a different tone. From the perspective of LJA, this supplier has become too predictable and rigid in its behaviors. The supplier has been pushing back when LJA asks it to bend long-standing practices to meet an urgent need. And often, LJA is forced to allow the supplier's rigidity; given its deep knowledge of LJA's production system, this supplier's counter-arguments for not complying with LJA's requests are usually quite persuasive.

"Sticky" Relationships: Lack of Synergy and Supplier Opportunism

The "sticky" relationship type, as posited, entails a closely tied but adversarial relationship. The four types were compared on relational synergy in Figure 3c. As expected, the "sticky" type shows the lowest aggregate synergy, one-thirtieth the level of the "deep" group. Even compared with the arms-length "gracious" relations, the "sticky" relations involving closely tied interactions have only one-tenth the relational synergy. This seems to suggest that mutual trust and empathy between relational parties are more critical than operational integration in realizing synergy. That is, relational posture seems to matter more than relational intensity in creation of synergy.

At the same time, the power-advantaged party in the "sticky" relation should be wary of the weaker party's covert opportunism; the "sticky" supplier relations collectively show the highest level of supplier opportunism, as seen in Figure 3d. Overall, adversarial types (i.e., sticky and transient) exhibit much greater supplier opportunism than the cooperative types (i.e., deep or gracious). Note here that, in the case of the second-ranked "transient" type, the high partner ambiguity may increase the risk of supplier opportunism. However, given the inherent uncertainty in the "transient" type, supplier opportunism is far from unusual, but given the weak-tie nature of the relationship, the effect would be less consequential for the buyer.

We visited a typical "sticky" supplier. This company became one of LJA's global suppliers in the late 1950s and expanded that relationship to the United States in the mid-1980s. No one doubts that they have a long-term relationship. However, the supplier feels somewhat short-changed. According to the company, LJA has responded unfavorably toward many of its new ideas or prototypes. The supplier believes LJA would have reacted differently if these innovations had come from its keiretsu suppliers. Instead, LJA has kept the company on a series of discrete programs over the years. Through repeated programs and renewed contracts, LJA has kept this supplier on a short leash by applying dual- or multiple-sourcing policies to every product the supplier furnishes. In this relationship, LJA as the buying firm is clearly dominant, and the supplier senses some level of inequity when it comes to how the contract is drawn up. The general language used in their contractual agreements seems, to the supplier, very much one-sided. "Even if something goes wrong in this relation, according to the contract, they [LJA] wouldn't be held accountable at all for almost anything," said the supplier's account director. In a subtle way, this supplier does not act as responsively to LJA's requests as it should. It tends to hesitate to transfer information to LJA; if required, it would comply more slowly than it otherwise might.

"Transient" Relationships: Relational Ambiguity and Supplier Flexibility

A typical "transient" relationship is marked by its passing, short-term nature. The buyer and supplier have little understanding of each other, and they remain strategically independent and adaptable. As expected, the "transient" relationship type displays the highest levels of relational ambiguity and supplier flexibility. Figure 3e shows this relationship's level of ambiguity is nearly nine times that of the "deep" type. Interestingly, the "sticky" type, even with higher relational intensity, ranks second in partner ambiguity, higher than even the "gracious" type with relatively lower relational intensity. This suggests that the perceived relational ambiguity has more to do with factors such as trust and communication than with operational ties.

In Figure 3f, as expected, the "transient" type offers suppliers the highest (strategic) flexibility. The "gracious" type also shows relatively high supplier flexibility. This indicates that a supplier's strategic flexibility (i.e., the amount of leeway for independent business decisions and strategic actions) hinges more on operational ties than on how the supplier regards the buyer. This strategic capability would then be associated with the supplier's adaptability in structuring its own extended network of business relations, independent of the buyer.

We visited one European global supplier that falls into the "transient" quadrant. Although its initial relationship with LJA dates back to the early 1980s, its transactions are largely project-based and have occurred only in occasional spurts. For the components the supplier provides, LJA has continued to look for potential replacements or at least backup sources. According to the supplier, LJA would prefer to use one of its keiretsu suppliers if all else is equal. Being fully aware of these issues, the supplier is always on the lookout for other potential customers. At the same time, the supplier also knows that more business from LJA would help its market share, given LJA's standing as a leading global automaker.

On one hand, this supplier enjoys freedom to make strategic decisions (i.e., mapping out its capabilities and business portfolio) with little scrutiny from the buying company. On the other, the supplier works hard to learn to compete against LJA's other Japanese suppliers. According to the sales director, "the learning curve (in this relationship) is extremely painful," because many things are under-defined. In sum, both LJA and the supplier are keeping their options open as they navigate through intermittent, project-based business encounters.

"Gracious" Relationships: Lack of Control and Supplier Innovation

A typical supplier in a "gracious" relationship is resourceful and well-connected beyond its relationship with the focal buyer. From the buyer's perspective, however, the supplier may appear intractable and too independent. The results from comparing LJA's four supplier relationship groups on relational control support that argument, as can be seen in Figure 3g. While LJA is widely known for its close control of its suppliers' operations, the results indicate that it has less control over its arms-length suppliers (i.e., those in either the gracious or transient groups). Not surprisingly, the "transient" type, due to its passing nature, shows the lowest level of buyer control. As expected, the highest level of buyer control occurs in the "sticky" relationships, where the power-advantaged buyer would have no reservations about making unilateral decisions in the relationship. The second-ranked "deep" type, with its focus on operational consistency, seems to require some level of control over the supplier's operations.

In contrast, the "gracious" type shows relatively low buyer control, but its level (1.67) is not much lower than that of the "deep" type (1.85), as shown in Figure 3g. A plausible explanation is that LJA, given its operational proclivity, may have occasionally sent controlling signals to suppliers to gain information on operations and reduce transactional uncertainty. However, despite any such efforts from the buying firm to synchronize interfirm expectations, the suppliers in the "gracious" group still enjoy the autonomy to not respond to such signals immediately or substantively. These findings indicate that relational intensity is a greater determinant of the buyer's ability to control the supplier than relational posture.

The supplier innovation results, shown in Figure 3h, support our argument for the positive potential of the gracious type of relationships. Of LJA's four supplier groups, the "gracious" relationships show the highest level of supplier innovation, followed by the "deep" type. Given the cooperative postures, arms-length suppliers tend to offer more innovation than those with close ties (see Figure 1). One may initially find that counter-intuitive. One feasible explanation for this is when suppliers are kept at arms-length, they can explore and establish ties with other businesses more freely. Such a supplier would stand a better chance of being exposed to innovative ideas from other firms scattered throughout its extended network.

We visited a U.S.-based supplier of LJA that exemplifies the gracious type. This supplier and LJA began their relationship in the early 2000s. The supplier has a very high level of confidence in its technology and capabilities, and appreciates its interactions with LJA. Naturally, the firms regard each other as partners. This supplier enjoys a balanced customer base and sees no immediate need to develop a deep relationship with any particular buyer, including LJA. For some product lines, IJA has tried to make this supplier compete against other suppliers. However, this supplier has enough confidence in itself to brush off pressures from such competitive engagements. LJA has gained fresh ideas from working with this supplier on a few projects to which they have contributed equally. According to one LJA purchasing manager, this supplier is "not a cost-leader. They want to make only profitable parts, not simple ones, using very delicate, complex, and value-added technologies. We've learned something useful from them." A director from the supplier confirmed that both firms have benefited from the collaboration.

Implications for Future Research

Several scholars have noted that a single-dimensional approach to classifying buyer-supplier relationships is inadequate to describe the complex nature of these relationships (e.g., Cannon & Perreault, 1999). In response, we have offered an expanded buyer-supplier relationship typology. However, this expanded typology should be refined both theoretically and empirically.

The "deep" relationship type and its outcome tradeoffs resonate with some recent work regarding the "dark side" of long-term, close buyer-supplier relationships. Our study demonstrates that relational stability and supplier rigidity correlate with each other and exist side by side. In a similar vein, Grayson and Ambler (1999) also suggest this dual aspect of long-term relationships between service providers and clients in a marketing services context; the study empirically demonstrates how long-term relationships tend to have a dark side as the trust effect becomes dampened over time. A similar claim is put forth by Anderson and Jap (2005) in joint ventures and alliances. Seemingly close, stable business relationships can, in fact, be vulnerable to decline or destruction. The very same factors that strengthen the relationship can also open the door to negative relational issues. For example, in the buyer-supplier context, Villena, Revilla and Choi (2011) consider the potential risks of social capital. They offer empirical evidence that some forms of social capital characterizing cooperative relationships can impede value creation. There is clearly a research trend that considers both the upside and downsides of close business relationships. Future studies might delve more deeply into the dynamics of such relational tension and how to relieve it.

Our study shows how ostensibly closely tied buyer-supplier relationships can lead to supplier opportunism. We raise awareness of the dysfunctional effects of the "sticky" relationship type. Characterized by asymmetrically vested assets and commitment between parties, such a relationship involves diverging goals and courses of action. Cannon and Perreault (1999), in developing a taxonomy of buyer-supplier relationships, empirically identified what they call a "bare bones" cluster. That category, characterized by high operational linkages but low cooperation between parties, arises when there are few relational alternatives available. Future studies can add precision to the relational mechanisms underlying the dysfunctional effect of the long-term relations and supplier opportunism. Perceiving high risks of appropriation and exploitation by the buyer, the supplier may take covert opportunism as the only viable option to retaliate and recoup any loss incurred in the relation. Our results challenge the conventional wisdom that closely tied business relations make it harder for the parties to exercise opportunism (Heide & John, 1990). Additional studies should investigate how closely tied exchange relations can in fact induce more elusive forms of opportunism. With a tacit understanding of the partner's business needs and operations, either party is well equipped to deviate from the partner's expectations without getting caught and penalized.

Future studies can develop the meaning of relational ambiguity. In general, the literature has downplayed the value of short-term, arms-length ties, given their inherently high relational ambiguity and its presumed negative effects on performance. However, our study brings to the fore a potentially beneficial aspect of such relationships. With no direct, substantive risks posed by their interactions, parties in such a relationship can be more straightforward in their dealings and less sensitive about moving explicit information in their possession to the other. Regardless of the level of interfirm trust, casual interaction itself may increase the chances to access new ideas and perspectives for both parties given they are cognitively and strategically independent of each other.

We see ample opportunities for future studies to consider how the buyer's lack of control relates to the supplier's innovadve potential. It may happen because the condition gives the supplier the strategic freedom to engage in external exploration. When two parties hold each other in high regard (i.e., "gracious" type), the chances are higher that they choose to convey accurate information to each other. Some previous research has identified a similar type of interfirm relationship. Most notably, Cannon and Perreault (1999) introduce a buyer-supplier relational type, labeled "basic buying and selling." It features a relatively simple exchange based on short-term matching needs with a low annual business volume but generally positive feelings between parties. Their study, however, stopped short of making any predictions about potential relational consequences of such a "gracious" relationship.

Some studies have validated the importance of gratitude in building relationships between business partners. Palmatier, Jarvis, Bechkoff and Kardes (2009), for instance, find that positive feelings mediate the relationship between relational investments and performance. The authors demonstrate that without the mediating mechanism of favorable feelings between partners, relation-specific investments may not necessarily lead to better performance. Our study adds to the prior research by proposing that as long as the relational parties stay on good terms and appreciate each other's capabilities, both parties are likely to engage in reciprocating behaviors. These behaviors can open and increase chances for either party to tap into potentially useful knowledge or other resources from otherwise loosely connected business domains. As our field becomes more aware of the network implications of how individual business relationships are structured, we believe that this area of research offers a fruitful avenue for future studies.

CONCLUSION

Our goal for this study is to revisit the conventional wisdom that close, collaborative relationships are purely good, while arms-length, adversarial relationships are entirely bad. Buyer-supplier relationships involve conflicting interests and require careful strategic consideration. Suppliers have to navigate through different and often conflicting needs of their diverse customers. Buying companies have to find balance between building deep relationships with their suppliers and being mindful of the competitive landscape among the suppliers.

There is no single, ideal way to manage a buyer-supplier relationship. Building a deep relationship may work in some cases but not in others. One strategic approach (e.g., "deep" relationship) can lead to seemingly conflicting outcomes (e.g., stability and rigidity). Each of the four buyer-supplier relationship archetypes, as theorized in this study, has its own pros and cons when it comes to relational outcomes. Therefore, as a buyer, gaining a proper understanding of the potential advantages and disadvantages for each relationship type is important, particularly when seeking a balanced portfolio. Using our expanded buyer-supplier relationship typology, buying companies can re-classify the range of their supplier relationships, identify their potential merits and risks, and strategize appropriately for the most desirable outcomes.

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Yusoon Kim (Ph D., Arizona State University) is an Assistant Professor of Operations & Supply Chain Management at Oregon State University's College of Business. His current research interests focus on applying systems-level theoretical or analytical approaches to supply network research, which include social network analysis, embeddedness perspectives, complex systems theories, graph theories, and agent-based behavioral theories. His current projects address such emerging supply chain/network management issues as supply network complexity and structural contingencies, multi-dimensional buyer-supplier relationships, value creation in supply networks, and supply network disruption and resilience.

Thomas Y. Choi (Ph.D., University of Michigan) is the Harold E. Fearon Chair of Purchasing Management at the W. P. Carey School of Business at Arizona State University. Professor Choi's research focuses on the upstream side of supply chains where a buying company interfaces with many suppliers organized in various forms of networks. He has co-authored two trade books on purchasing and supply management, both for the Institute for Supply Management. He is executive director of CAPS Research, a joint venture between Arizona State University and the Institute for Supply Management. He also directs the Center for Supply Networks (CaSN), an academic research group focused on complex adaptive supply networks.

Acknowledgments: We want to thank the editor-in-chief, and the anonymous reviewers for their constructive criticisms and suggestions to improve the manuscript. We also thank CAPS Research for providing the funding for this research.

(1) This is the large Japanese automaker chosen and studied for the current research. To ensure anonymity, we use a fictitious name "LJA" to refer to this automaker in the remainder of this article.

YUSOON KIM

Oregon State University

THOMAS Y. CHOI

Arizona State University

TABLE 1
Supplier Demographics

Demographics                      Frequency   Percentage

Total annual revenue ($US)
  <50 million                        46          28.2
  50-100 million                     22          13.5
  101-250 million                    28          17.2
  251-500 million                    23          14.1
  Over 500 million                   42          25.8
  Not reported                        2           1.2
  Total                             163         100

Number of employees
  <200                               35          21.5
  200-500                            40          24.5
  501-1,000                          27          16.6
  1,001-2,500                        18          11.0
  2,501-5,000                         8           4.9
  5,001-10,000                        9           5.5
  Over 10,000                        24          14.7
  Not reported                        2           1.2
  Total                             163         100

Length of relationship (years)
  <5                                 17          10.4
  5-10                               39          23.9
  11-15                              40          24.5
  16-20                              32          19.6
  21-30                              28          17.2
  Over 30                             2           1.2
  Not reported                        5           3.1
  Total                             163         100

Reliance on LJA business (%)
  <5                                 28          17.2
  5-10                               29          17.8
  11-20                              29          17.8
  21-40                              27          16.6
  41-60                              23          14.1
  61-100                             25          15.3
  Not reported                        2           1.2
  Total                             163         100

Industry qroupinqs
  (based on NAICS)
  Textile (or leather)                4           2.5
  product
  manufacturing
  Chemical (plastics                 37          22.7
  and rubber
  products
  manufacturing
  Primary metal                       9           5.5
  manufacturing
  Transportation                     94          57.7
  equipment
  manufacturing
  Merchant                            8           4.9
  wholesalers,
  durable goods
  Motor vehicle                       8           4.9
  and parts
  dealers
  Transit and ground                  1            .6
  passenger
  transportation
  Automotive repair                   2           1.2
  and maintenance
  Total                             163         100

TABLE 2

Profile of Survey Respondents

Respondent Title   Frequency   Percentage

President/CEO         35          21.5
Vice president        38          23.3
Director              20          12.3
General manager       22          13.5
Manager               48          29.4
Total                 163         100

TABLE 3

Operational Definition and References for
Individual Measures

Variable            Measure            Definition         References

Relational     Commitment          Each party's       Ganesan
  Posture                            intention to       (1994), Morgan
                                     maintain the       and Hunt
                                     relation even      (1994)
                                     at the cost of
                                     short-term
                                     sacrifices

               Trust               The level of       Ganesan
                                     expectancy         (1994),
                                     held by the        Johnson,
                                     parties of the     Cullen, Sakano
                                     partner's          and Takenouchi
                                     reliability        (1996),
                                     and                Zaheer,
                                     faithfulness       McEvily and
                                                        Perrone
                                                        (1998b)

               Information         The extent to      Heide and
                 sharing             which parties      Miner (1992),
                                     disclose           Lusch and
                                     information        Brown (1996)
                                     that may be
                                     beneficial for
                                     the other

               Relational norms    A party's          Siguaw et al.
                 (a)                 perception of      (1998),
                                     whether its        Spekman and
                                     partner shares     Davis (2004)
                                     the
                                     understanding
                                     regarding
                                     mutually
                                     accepted
                                     behaviors

               Conflict            The extent to      Deutsch
                 resolution (a)      which              (1969), Morgan
                                     interfirm          and Hunt
                                     conflicts are      (1994)
                                     managed
                                     amicably and
                                     developmentally

Relational     Interaction         Frequency in       Hansen (1999),
  Intensity      frequency           various            Heide and
                                     domains of         Miner (1992)
                                     buyer-supplier
                                     interactions

               Asset specificity   The extent of      Heide and John
                                     relation-          (1990),
                                     specific           Nooteboom,
                                     investments        Berger and
                                     made by each       Noorderhaven
                                     party              (1997)

               Operational         Economic value     Astley and
                 interdependency     of the             Zajac (1991),
                 (a)                 exchange tie       Brusoni,
                                     (in volume and     Prencipe and
                                     product) and       Pavitt (2001),
                                     lack of            Pfeffer and
                                     substitutes        Salancik
                                                        (1978)

               Multiplexity (a)    The extent to      Marsden and
                                     which two          Campbell
                                     firms engage       (1984)
                                     in joint
                                     activities
                                     above and
                                     beyond their
                                     regular
                                     exchange

Relational     Relational          The extent of      Leana and
  Outcomes       stability (a)       the compliance     Barry (2000),
                                     with the           Leblebici and
                                     agreed-upon        Salancik
                                     protocols and      (1982)
                                     alignment of
                                     goals and
                                     values even
                                     under adverse
                                     conditions

               Supplier rigidity   The extent to      Nelson and
                 (a)                 which the          Winter (1982),
                                     supplier           Tracey (2005)
                                     adheres to the
                                     prescribed
                                     operating
                                     procedures and
                                     existing
                                     contract
                                     terms, with no
                                     behavioral
                                     adjustments to
                                     different
                                     problem
                                     contexts

               Lack of synergy     The extent to      Chatterjee
                 (a)                 which two          (1992), St.
                                     parties have       John and
                                     mutually           Harrison
                                     realized           (1999)
                                     surplus in
                                     returns and
                                     capabilities
                                     when compared
                                     with the sum
                                     of those of
                                     individuals

               Supplier            The extent to      Lewis (2002),
                 opportunism         which the          Pfeffer and
                                     supplier           Salancik
                                     exercises          (1978), Provan
                                     opportunism in     and Skinner
                                     covert ways        (1989)

               Relational          The degree of      Solomon and
                 ambiguity (a)       determinacy in     Knobloch
                                     the link           (2001),
                                     between the        Carson, Madhok
                                     courses of         and Wu (2006)
                                     action taken
                                     by the partner
                                     and the
                                     subsequent
                                     effects

               Supplier            The extent to      Young-Ybarrra
                 flexibility (a)     which the          and Wiersema
                                     supplier has       (1999),
                                     autonomy and       Shimizu and
                                     no                 Hitt (2004),
                                     reservations       Gosain,
                                     in business        Malhotra and
                                     decisions and      Sawy (2004)
                                     strategic
                                     actions

               Lack of control     The extent to      Leifer and
                 (a)                 which the          Mills (1996),
                                     buyer              Geringer and
                                     regulates the      Hebert (1989),
                                     business           Das and Teng
                                     processes and      (1998)
                                     outputs of the
                                     supplier

               Supplier            The extent to      Benner and
                 innovation (a)      which the          Tushman
                                     supplier           (2003),
                                     departs from       McGrath
                                     existing           (2001), Phelps
                                     knowledge,         (2010)
                                     skills,
                                     products,
                                     methods, and
                                     markets

(a) Measures largely based on new scale.

TABLE 4

Orthogonality Testing

                                                         [chi square]
CFA Model         CFI    RMSEA      AIC         BIC          (df)

Two 2nd-order     .924   .047    12422.903   12865.309   1028.70 (939)
  factor model
Single            .746   .070    19478.502   19920.909   1684.29 (937)
  2nd-order
  factor model

TABLE 5

Descriptive Statistics, Correlations, Variances,
and Scale Reliabilities (a)

Variables          Mean       S.D.     [alpha] (b)      1

1. Relationship    13.9       7.19        n.a.        51.7
  duration c
2. Firm size       2.92        .93        n.a.          .22 **
3. Business        9.1       26.69        n.a.          .05
  reliance (%)
4. Overall         5.64        .69        n.a.         -.15
  performance
5. Innovation      4.49        .66         .75         -.05
  focus
6. Long-range      4.37        .83         .71          .06
  view
7. No. of car      8.13       3.72        n.a.          .11
  models
8. Industry        3.37       4.81        n.a.          .08
9. Market          3.09        .66         .81         -.01
  uncertainty
10. Relational     3.74        .49         .83          .27 **
  Intensity
11. Relational     3.64        .61         .88         -.05
  posture
12. Relational     4.89        .66         .74          .06
  stability
13. Supplier       4.19        .54         .66         -.08
  rigidity
14. Lack of        4.78        .82         .77          .05
  synergy
15. Supplier       2.85        .79         .73         -.02
  opportunism
16. Relational     3.03        .80         .78          .19 *
  ambiguity
17. Supplier       3.44        .73         .67         -.08
  flexibility
18. Lack of        3.51        .87         .64         -.04
  control
19. Supplier       4.09        .72         .69          .15
  Innovation

Variables           2          3          4          5          6

1. Relationship
  duration c
2. Firm size        .87
3. Business        -.45 **     2.9
  reliance (%)
4. Overall         -.19 *       .08        .47
  performance
5. Innovation       .04         .01        .51 **     .43
  focus
6. Long-range      -.08         .09        .26 **     .37 **     .69
  view
7. No. of car       .19 *      -.29 **    -.11       -.12       -.11
  models
8. Industry         .33 **     -.27 **    -.01        .05       -.06
9. Market           .07        -.06       -.09       -.10       -.18 *
  uncertainty
10. Relational     -.05         .31 **     .12        .24 **     .23 **
  Intensity
11. Relational     -.15         .24 **     .27 **     .22 **     .22 **
  posture
12. Relational     -.15         .26 **     .28 **     .26 **     .23 **
  stability
13. Supplier        .01        -.07        .23 **     .09        .09
  rigidity
14. Lack of        -.01         .15        .27 **     .30 **     .28 **
  synergy
15. Supplier       -.01         .19 *     -.24 **    -.19 *     -.25 **
  opportunism
16. Relational      .20 **     -.23 **    -.18 *     -.21 **    -.22 **
  ambiguity
17. Supplier        .23 **     -.35 **     .12        .15       -.02
  flexibility
18. Lack of         .06         .19 *     -.08        .07        .07
  control
19. Supplier        .06        -.09        .32 **     .54 **     .19 *
  Innovation

Variables           7          8          9          10         11

1. Relationship
  duration c
2. Firm size
3. Business
  reliance (%)
4. Overall
  performance
5. Innovation
  focus
6. Long-range
  view
7. No. of car      7.68
  models
8. Industry         .33 **     23.2
9. Market           .17 *        .12        .44
  uncertainty
10. Relational     -.10         -.04       -.14       .25
  Intensity
11. Relational     -.19 *       -.28 **    -.11       .12 **     .37
  posture
12. Relational     -.15         -.10       -.22 **    .49 **     .68 **
  stability
13. Supplier       -.10         -.03       -.21 **    .07        .15
  rigidity
14. Lack of        -.19 *       -.16 *     -.05       .36 **     .64 **
  synergy
15. Supplier        .01         -.04        .08      -.03       -.18 *
  opportunism
16. Relational      .13          .11        .10      -.33 **   -.60 ***
  ambiguity
17. Supplier        .12          .12        .01      -.23 **    -.03
  flexibility
18. Lack of        -.18 *       -.10 *     -.01       .16 *      .20 **
  control
19. Supplier        .05          .19 *     -.05       .25 **     .17 *
  Innovation

Variables           12         13         14         15

1. Relationship
  duration c
2. Firm size
3. Business
  reliance (%)
4. Overall
  performance
5. Innovation
  focus
6. Long-range
  view
7. No. of car
  models
8. Industry
9. Market
  uncertainty
10. Relational
  Intensity
11. Relational
  posture
12. Relational     .44
  stability
13. Supplier       .24 **      .29
  rigidity
14. Lack of        .52 **      .10        .68
  synergy
15. Supplier       .16 *      -.16 *     -.20 *      .62
  opportunism
16. Relational     .50 **     -.18 *     -.43 **     .15
  ambiguity
17. Supplier       .11        -.01        .06       -.10
  flexibility
18. Lack of        .06         .16 *      .20 *      .03
  control
19. Supplier       .22 **      .09        .25 **    -.14
  Innovation

Variables           16           17           18          19

1. Relationship
  duration c
2. Firm size
3. Business
  reliance (%)
4. Overall
  performance
5. Innovation
  focus
6. Long-range
  view
7. No. of car
  models
8. Industry
9. Market
  uncertainty
10. Relational
  Intensity
11. Relational
  posture
12. Relational
  stability
13. Supplier
  rigidity
14. Lack of
  synergy
15. Supplier
  opportunism
16. Relational     .64
  ambiguity
17. Supplier       .11          .53
  flexibility
18. Lack of        .21 **      -.22 **        .76
  control
19. Supplier       .08          .09          -.02        .51
  Innovation

(a) n = 163, correlation (lower half triangle) and variance
(diagonal).

(b) Cronbach's alpha.

(c)CAII the values of this row are based on the logarithm of
the actual number of years of relationship, except for the
Mean and S.D. (which are based on the raw data)

* p < .05 (one-tailed); ** p < .01 (one-tailed).

TABLE 6

Results of Multinomial Logistic Regression Analysis

Quadrant                IV = 55    IV = 33     IV = 46
Outcome Variable          Deep      Sticky    Transient

Relational stability
  RRR                   48.81 **     1.77     1 (base)
  SE                     3.37         .08

Supplier rigidity
  RRR                    2.32 *      1.74     1 (base)
  SE                      .10         .07

Relational synergy
  RRR                   29.48 **   1 (base)     1.09
  SE                     1.76                    .04

Supplier opportunism
  RRR                   1 (base)     3.22 **    2.18 *
  SE                                  .12        .08

Relational ambiguity
  RRR                   1 (base)     6.04 **    8.57 **
  SE                                  .26        .38

Supplier flexibility
  RRR                    1.11     1 (base)      2.14 *
  SE                      .04                    .09

Relational control
  RRR                    1.85 *      2.60 *    1 (base)
  SE                      .06         .09

Supplier innovation
  RRR                    1.72 *    1 (base)     1.47
  SE                      .06                    .05

Quadrant                IV = 29      LR [chi          P >
Outcome Variable        Gracious   square] (df)   [chi square]

Relational stability
  RRR                   15.37 **   109.29 (42)        .000
  SE                      .99

Supplier rigidity
  RRR                    2.09      43.65 (18)        .001
  SE                      .09

Relational synergy
  RRR                    9.45 **    121.64 (42)        .000
  SE                      .51

Supplier opportunism
  RRR                    1.69      70.36 (42)        .004
  SE                      .06

Relational ambiguity
  RRR                    1.78      92.58 (42)        .000
  SE                      .08

Supplier flexibility
  RRR                    2.11 *     66.05 (42)        .010
  SE                      .10

Relational control
  RRR                    1.67      75.02 (56)        .046
  SE                      .02

Supplier innovation
  RRR                    2.35 *     65.33 (42)        .012
  SE                      .10

RRR, relative risk ratios; SE, standard error; Base,
base category for comparison.

** Significant at .01 level (asymptotic z tests).

* Significant at .05 level (asymptotic z tests).

FIGURE 3

Comparisons of LJA's Four Supplier Relationship Types on
Relational Outcomes

A Relational Stability

Deep          48.81
Sticky         1.77
Transient      1
Gracious      15.37

B Supplier Rigidity

Deep           2.32
Sticky         1.74
Transient      1
Gracious       2.09

C  Relational Synergy

Deep          29.48
Sticky         1
Transient      1.09
Gracious       9.45

D Supplier Opportunism

Deep          29.48
Sticky         1
Transient      1.09
Gracious       9.45

E  Relational Ambiguity

Deep           1
Sticky         6.04
Transient      8.57
Gracious       1.78

F Supplier Flexibility

Deep           1.11
Sticky         1
Transient      2.14
Gracious       2.11

G Relational Control

Deep           1.85
Sticky         2.6
Transient      1
Gracious       1.67

H Supplier Innovation

Deep           1.72
Sticky         1
Transient      1.47
Gracious

Note: Table made from bar graph.

APPENDIX A
Measurement Scale Items (a)

                                                             Factor
Label            Construct: (Reliability) Scale Items        Loading

Interaction frequency (b): (.78)

  fc1     Frequency of face-to-face communication: How         .64
            often does your firm interact with [name of
            the focal buyer, labeled "B"] as compared with
            other customers?

  fc2     Frequency of telephone communication: How            .93
            often does your firm interact with B as
            compared with other customers?

  fc3     Frequency of written communication: How often        .65
            does your firm interact with B as compared
            with other customers?

  fc4     Frequency of delivery: How often does your           .42
            firm deliver your products or components to B
            as compared with other customers? (c)

  fc5     All in all, how often does your firm interact        .67
            with B (on average over the past 3-5 years)?

Operational interdependency: (.83)

  op1     Any change in our firm's production will have        .92
            a significant impact on B's day-to-day
            operations.

  op2     It will be easy for B to substitute another          .86
            supplier for the component(s) our company
            provides. (d)

  op3     B is highly dependent on the products we             .78
            supply.

  op4     Our operational goals assume a continued             .94
            relationship with B.

Asset specificity: (.82)

  as1     Our company has extensively invested in              .86
            production equipment to do work for B.

  as2     Our firm has committed significant time and          .88
            resources to train and develop our personnel
            for B.

  as3     Our production system is designed to                 .66
            accommodate the specific products we make for
            B.

  as4     Our firm has made significant adjustments to         .52
            comply with B's technological norms/standards.

Multiplexity (e): (.76)

  mp1     How extensively has your company been engaged        .86
            in joint activities with B?

  mp2     Please check all of the following B's models         .75
            that your products/components support (in a
            table provided that lists all the product
            lines B currently assembles: six sedans, two
            crossovers, five SUVs, one van, and two pickup
            trucks).

Trust: (.87)

  tr1     Our company trusts B to keep its promises.           .81

  tr2     B puts confidence in what our company says.          .77

  tr3     B has always been fair in its negotiations           .72
            with our firm.

  tr4     B trusts that our firm would not take                .74
            advantage of our relationship and try to
            profit at their expense.

  tr5     B is a trustworthy company.                          .79

Commitment: (.75)

  cm1     Our company on occasion makes sacrifices to          .82
            help B.

  cm2     Our firm's relationship with B goes beyond the       .57
            letters of the contract.

  cm3     Both our company and B often go out of our way       .78
            to help each other.

  cm4     Our company is just another supplier with            .54
            which B does business. (d)

  cm5     B expects its relationship with our firm to          .73
            strengthen over time.

Relational norms: (.86)

  rn1     If either our firm or B experiences a problem        .68
            in our relationship, we can count on each
            other to find a solution.

  rn2     B always reciprocates the favors we do for           .80
            them.

  rn3     Our firm receives a fair compensation from B         .82
            for what we put into our relationship.

  rn4     B favors options that benefit both of our            .76
            firms rather than ones that just benefit them.

  rn5     Even in adverse situations, both our firm and        .63
            B will stay together.

Information sharing: (.74)

  is1     Both my company and B share information that         .59
            might benefit the other party.

  is2     Our firm regularly shares its proprietary            .66
            information with B.

  is3     In our firm's relationship with B, information       .61
            exchange occurs informally and often outside
            prespecified formal channels.

  is4     B regularly shares its proprietary information       .75
            with our company.

Conflict resolution: (.78)

  cr1     When there are disagreements, my firm and B          .70
            tend to blame each other. (d)

  cr2     There are lingering feelings of resentment and       .68
            frustration about unresolved issues with B.
            (d)

  cr3     When there is a problem, all facts are               .60
            assessed to try to reach a mutually
            satisfactory solution.

  cr4     When there are particularly difficult                .51
            problems, B sometimes notifies our company
            that they can take their business elsewhere.
            (d)

Relational stability

  sb1     Our company understands B's business goals,          .78
            and B understands our company's business
            goals.

  sb2     Our company anticipates that both parties are        .85
            always cooperative in working through any
            impending business problems.

  sb3     Our firm trusts that both parties espouse            .76
            mutual relational values and operational
            protocols.

  sb4     If necessary, both our firm and B would be           .46
            willing to revisit the terms of our existing
            contract. (c)

  sb5     Even when other suppliers fail, B can always         .67
            count on our company to come through.

Supplier rigidity

  rg1     Our company follows stringent operating              .68
            procedures when working with B.

  rg2     In our relationship with B, our firm generally       .71
            adheres to and enforces the terms of the
            existing contract.

  rg3     When working with B, our company often makes         .84
            adjustments based on the nature of the
            problem. (d)

  rg4     B generally believes there is one best way to        .39
            do things in its relationship with our
            company. (c)

Lack of synergy

  sy1     Our company and B can accomplish a lot more by       .59
            working together as opposed to by working
            independently. (d) Differing views between our     .73
  sy2       firm and B have often led to discovering
            better ways to solving problems. (d)

  sy3     Our company and B complement each other well         .78
            in terms of capabilities. (d)

  sy4     Working with B has allowed our firm to               .73
            overcome some problems we could not solve
            alone. (d)

Supplier opportunism

  le1     Sometimes our company slightly alters the            .85
            facts presented to B to get what we need.

  le2     Our company always provides B with a                 .43
            completely honest picture of our business
            activities. (d,c)

  le3     In working with B, our firm often selectively        .68
            withholds information.

  le4     Sometimes our company presents facts to B in a       .72
            way that makes us look good.

  le5     Our firm acts very quickly to take advantage        -.24
            of any new business opportunities with B. (c)

Relational ambiguity

  am1     The reasoning behind a request from B is             .73
            always clear to us. (d)

  am2     B is usually very clear and explicit about the       .79
            current state of its relationship with our
            firm. (d)

  am3     When a relational problem occurs, B knows            .82
            exactly how to deal with it. (d)

  am4     We are very clear about how B will react to          .72
            our actions. (d)

  am5     B tells us in no uncertain terms how we need         .26
            to solve our problems. (d,c)

Supplier flexibility

  fl1     In our relationship with B, our firm maintains       .80
            autonomy in developing other business
            relations.

  fl2     There are technologies we have invested for B        .35
            that cannot be used for other customers. (d,c)

  fl3     Our firm has a great deal of freedom to choose       .87
            a course of action when working with B.

  fl4     If necessary, my firm can readily commit our         .73
            resources to new courses of action regardless
            of the relationship with B.

  fl5     If we should lose our contract with B, we            .64
            would be forced to make significant internal
            changes. (d)

Lack of control

  col     B is heavily involved in the implementation of       .87
            quality assurance procedures in our company.
            (d)

  co2     B determines in detail the methods and               .57
            standards for the control of its purchase
            items. (d)

  co3     B gets heavily involved in our firm's                .66
            decisions such as our broad policies or daily
            operations. (d)

  co4     There are negative consequences for not              .25
            following B's operational rules or procedures.
            (d,c)

  co5     B frequently tells us which second-tier              .37
            suppliers we should work with. (d,c)

Supplier innovation

  in1     Our firm is always on the lookout for new            .66
            production methods.

  in2     Our company often develops new materials or          .76
            technologies to help our work for B.

  in3     Our company gets many new ideas from                 .58
            non-B-related sources.

  in4     Our company has provided B with many novel           .62
            cost-cutting ideas.

  in5     Our company has frequently introduced new            .32
            business contacts to B. (c)

  in6     Our firm's new ideas have often led to new           .54
            business opportunities for B.

Corporate innovation focus: (.75)

  cs1     Our company frequently experiments with              .76
            important new ideas or ways of doing things.

  cs2     Employees of our firm frequently come up with        .81
            creative ideas that challenge conventional
            ideas.

  cs3     Compared to the competition, in our company, a       .48
            higher percentage of sales come from new
            products. (c)

  cs4     At our firm, a strong emphasis is placed on          .54
            improving efficiency.

  cs5     Our company is very strong in refining               .49
            existing technologies. (c)

  cs6     Our firm always adjusts procedures, rules, and       .42
            policies to make things work better. (c)

Long-range relational view: (.71)

  cs7     In general, our company cares more about             .69
            long-term rather than short-term performances.

  cs8     Our company believes that focusing on the            .84
            distant future will lead to better overall
            performance than worrying about short-term
            goals.

  cs9     Our firm believes that organizations that            .57
            pursue quarterly cost targets may be
            sacrificing long-term performance.

Market uncertainty: (.81)

  mu1     There is stable availability of the component.       .74
            (d)

  mu2     It is easy to monitor technological trends.          .53
            (d)

  mu3     The total demand at the industry level is            .68
            stable. (d)

  mu4     There is high uncertainty in production or           .37
            distribution of the component. (c)

  mu5     Prices for the component are volatile.               .65

  mu6     Accurate sales forecasts are typically               .85
            available. (d)

(a) Items appearing on the supplier-side survey
questionnaire; items on the buyer-side survey are similar
yet adapted.

(b) A Likert-type scale used for these items ranges from 1 =
"Rarely" to 6 = "Very often," except for the last item (1 =
"once per year or less," 2 = "2-4 times per year," 3 = "5-10
times per year," 4 = "1-3 times per month," 5 = "1-4 times
per week," and 6 = "once per day or more.").

(c) Excluded from the measurement models and regression
analyses.

(d) Reverse-coded.

(e) A scale ranges from 1 = "Very limited" to 6 = "Very
extensive."
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Article Details
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Author:Kim, Yusoon; Choi, Thomas Y.
Publication:Journal of Supply Chain Management
Article Type:Statistical table
Date:Jul 1, 2015
Words:15554
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