Creating supply chain relational capital: The impact of formal and informal socialization processes.Journal of Operations Management Cousins, P.D.; Handfield, R.B.; Lawson, B.; Petersen, K.J. (authors contributed equally and are listed in alphabetical order)
2006
Authors from the College of Business:
Kenneth J. Petersen, Associate Professor of Management; First Community Bank Faculty Fellow; Visiting Senior Fellow, Manchester Business School
Over the years, firms have become increasingly specialized, focusing on a smaller set of core competencies. As a result of this specialization, supply chains have become more complicated, with greater numbers of firms participating in the development, production and delivery of goods and services to consumers. We also know that firms tend to make better decisions when they have access to better information and that careful management of these relationships is necessary in order to make information flow. Interestingly, firms have a wide variety of relationship management tools at their disposal, but they often choose the wrong tool for the job. For instance, a buyer in a more powerful position (with respect to its supplier) may choose to use this power to manage the supplier relationship by forcing its supplier to meet the buyer’s supply chain goals. Does this method of managing the relationship make information flow? The research team thought not, so we sought to understand other ways in which a buyer could manage a relationship with a supplier. Specifically, we sought to understand how the use of formal and informal socialization might help to create an improved supplier relationship and how this improved relationship might lead to better product/process designs and improved sales. Using formal and informal socialization to manage a relationship is more subtle and takes the approach of developing the relationship with a supplier as a partner by working with them both formally and informally in a variety of ways. The research found that, in fact, the use of informal socialization with a supplier is highly associated with an improved buyer-supplier relationship. This is an interesting finding for managers as it provides an alternative to other traditional, but perhaps less well-performing ways to manage a buyer-supplier relationship. It is also interesting in that, with an eye towards avoiding the appearance of impropriety, buying firms will often create internal purchasing policies that make the use of informal socialization with suppliers difficult.