Supply chain relationships: exploring the effects of both relational and structural embeddedness on operational performance

Abstract

Few studies approach supply chain relationships from the perspective of integration with customers and suppliers at the same time. In this paper the effects of both relational and structural embeddedness with suppliers and buyers on operational performance were evaluated in terms of productivity and quality. Hypotheses were tested by hierarchical linear regression models (OLS models) with a sample of Brazilian furniture firms. The results showed that relational embeddedness alone has positive effect only on quality, and paradoxically, higher levels of relational embeddedness lead to a reduction of the effect of structural embeddedness. One implication of the results involves the recognition that higher levels of trust and cooperation do not always lead to more benefits or greater levels of operational performance. If isolated from other governance mechanisms, these can even lead to the loss of one of the parties, reinforcing the idea that relational and structural embeddedness are complementary governance mechanisms.