The Impact of the Relationships between Buyers and Suppliers Based on Their Financial, Social and Structural Bonds

This study examined a sample of Taiwanese companies and investigated the impacts of the relationships between buyers and suppliers with regard to financial, social, and structural bonds. The results show that firms share the knowledge with regard to supplier selection and supplier management based on guanxi (relationships), and that this can reduce transaction costs and increase investment, trust, and performance. Firms carry out the supplier selection and management based on guanxi, which can reduce transaction costs, while increasing investment, trust, and performance. Taiwanese firms use guanxi from their relatives, friends, and neighbors to their business. The key point is that buyer’s and supplier’s guanxi comes from both sides and is very important for Taiwanese firms, especially in their buyer and supplier collaboration