The relational outcomes of performance management in buyer-supplier relationships

Highlights

• The outcomes of performance measurement are investigated in an inter-organizational setting. .

• CB_SEM is applied in the analysis of survey data on buyer-supplier relationships.

• The relationship between performance information and relational governance is investigated.

• Differences between strategic and non-strategic suppliers are analyzed.

• Relational benefits of performance measurement are demonstrated.

Abstract

This study analyzes how relational governance facilitates the relationship benefits of performance information provided by both a supplier and a buyer. It also examines the effect of strategic supplier status on value creation supported by performance information in a buyer-supplier relationship. The empirical data was collected with a survey addressed to suppliers of large-scale industrial companies operating in both manufacturing and service sector. Confirmatory factor analysis and structural equation modeling (CB-SEM) were utilized in the analysis of data. The results demonstrate the positive impact of operative performance information provided by a supplier on buyer-supplier relationship value. Mature supplier performance evaluation relates to relationship value only through the mediation of relational governance, i.e. collaborative performance management activities. Relational governance is important in relationships with both strategic and non-strategic suppliers, but for different reasons. In strategic supplier relationships, relational governance is even more important than the availability of performance information. The results of this study add to the limited body of research analyzing the outcomes of performance measurement and management in supply chains. They also extend the literature of information sharing in supply chains by presenting the varying roles played by relational governance in the use of two different forms of performance information.