The nature and effectiveness of collaboration between firms, their customers and suppliers: a supply chain perspective

TLDR

Collaborative relationships between firms and trading partners are a key theme in supply‑chain literature, yet practical guidelines for developing such capability remain unclear. This study investigates a collaboration model predicated on strong working relationships with suppliers and customers. Using data from 418 Australian manufacturing plants, the authors construct customer‑relationship and supplier‑involvement variables and regress them against firm performance to test predictive validity. Structural equation modeling indicates that both collaboration constructs positively influence performance, supporting the model and offering insights into building collaboration capability.

Abstract

Abstract Purpose – The purpose of this paper is to investigate a model of collaboration based on the notion of firms having strong working relationships with their suppliers and customers. Whilst issues associated with collaborative relationships between firms and their trading partners are a key theme currently being addressed in the supply chain management literature, there appears to be a lack of clear guidelines as to how such capability can be developed in a practical sense. Design/methodology/approach – Data from 418 Australian manufacturing plants are used to test the model. Two key constructs, customer relationship and supplier involvement, are developed. For predictive validity purposes, these constructs are regressed against firm performance construct. Findings – Results of structural equation modeling analysis show, inter alia, that there is some support for this collaboration model, with both collaboration‐based constructs influencing performance. Originality/value – The results provide an insight into how firms can develop a level of collaboration capability.