Inter‐firm network capability: how it affects buyer‐supplier performance

Abstract

Purpose The purpose of this paper is to offer a view that a firm's critical resources and capabilities span firm boundaries, and are embedded in inter‐firm resources and routines. Design/methodology/approach Building on a capability view the paper argues that firms can engender sustainable competitive advantage by enabling firms to build and leverage inter‐organizational relationships to generate relational rents by: fostering close working relationships with a limited number of suppliers; building effective network structures, and developing a long term orientation. Using PLS path modelling, the paper empirically tests a number of hypothesized relationships based on a sample of 176 Dutch firms. Findings The results demonstrate that inter‐firm network capability significantly and substantially affects supplier performance as well as buyer performance, thereby providing evidence of the predictive validity of the inter‐firm network capability construct. Originality/value The study contributes to a more complete understanding of a firm's collaborative capabilities in developing and leveraging inter‐organizational relationships and enhances the knowledge of the drivers of rent generating capabilities that contribute to the firm's performance.