Supplier satisfaction, buyer power, and supply chain performance : an investigation of apparel suppliers in China

Globalization and international trade have greatly impacted interactions and transactions between buyers and suppliers in the business to business (B2B) relationship exchange. Studies in the supply chain management (SCM) field have increasingly emphasized that buying and supplying firms in a dyadic buyer-supplier relationship (BSR) need to attain competitive advantage by achieving high levels of supply chain performance (SCP). Recent research indicates that several relationship factors could potentially affect SCP. Among these factors, studies have shown that buyer structural power, buyer behavioral power, and supplier affective and cognitive satisfaction are highly significant factors impacting overall SCP. Given the importance of these factors, the purpose of this dissertation was twofold: (1) to investigate supplier satisfaction with the BSR in relation to buyer power, and (2) to examine how supplier satisfaction with the BSR impacts supply chain performance. Social Exchange Theory (SET) was applied as the theoretical lens for the dissertation. A survey-based research method was used to test the hypothesized relationships among latent constructs of buyer structural power, buyer reward-mediated power, buyer coercive-mediated power, buyer non-mediated power, supplier cognitive satisfaction, supplier affective satisfaction, and supply chain performance in the model. A total of 38 items were adopted from the literature using a seven-point Likert-type scale. An electronic version of the survey was generated using Qualtrics and distributed via WeChat. A purposive sampling approach was applied. Participants were apparel industry professionals in China and were contacted through the member directories of various local apparel business associations. The Qualtrics survey link was distributed to 1313 potential respondents. A total of 419 responses were recorded in Qualtrics, yielding a gross response rate of 31.91%. After removing incomplete and duplicate responses, the sample consisted of 218 useable surveys for statistical analysis. Statistical analysis was performed using structural equation modelling (SEM) in Mplus version 8.0. Testing of the proposed hypotheses (H1- H7) was performed on the relationships depicted in the structural model. The results of the hypothesis testing supported H1c, H4a, H4b, H5, H6, H7a, and H7b. The remaining H1a, H1b, H2a, H2b, H3a, and H3b were rejected. The findings demonstrated the importance of buyer structural power for supplier cognitive and affective satisfaction, and the effects of supplier affective and cognitive satisfaction on supply chain performance. In the highly competitive and fragmented Chinese apparel industry, based on the results of this study, it is reasonable to conclude that excellence in managing buyer power and supplier satisfaction in supply chain management is clearly a prerequisite for gaining competitive advantage. This dissertation makes several significant contributions to the study of power and satisfaction within the apparel BSR. First, the study is among the first to examine both structural and behavioral power in relation to cognitive and affective satisfaction in the BSR. Second, the study investigated satisfaction with the BSR from the supplier’s perspective, which is rare in the extant literature. Third, to date, few studies have collected survey data specifically from suppliers in the Chinese apparel industry to assess BSRs. Last, the study revealed that supply chain performance can be improved through increased supplier satisfaction. Managing a high performing BSR has become increasingly important in the global apparel industry, as competition is intensifying at the corporate, regional, national, and international levels. This dissertation sought to bridge theory and practice to investigate how supply chain performance is linked to satisfaction with the BSR. The findings from this empirical study therefore have implications for both academics and industry practitioners. The study also provided a power–satisfaction–performance model that can serve as a guide for future academic studies and apparel industry supply chain strategy development. The study presented a holistic view of how actively managing the BSR power structure, engaging buyer power behaviors, and increasing the level of supplier satisfaction can greatly improve supply chain performance, which is of utmost importance for all apparel firms seeking competitive advantage in the global industry