Social capital as a facilitator of successful buyer-supplier performance management

Abstract

Performance management in supply chains is an increasingly important, rapidly developing but challenging area. It may benefit from sufficient levels of social capital, such as frequent interactions between buyers and suppliers. However, social capital has not yet been studied as a facilitator of performance management. To bridge this knowledge gap, we examine buyer-supplier performance management and social relationship characteristics as perceived by suppliers. We analyze empirical data gathered through a survey of 482 suppliers by employing PLS-SEM and PLS-MGA. The findings elaborate on the role of cognitive, relational, and structural capital in performance management activities within a buyer-supplier relationship. Moreover, the results demonstrate how a supplier's positive perception, in the form of preferred customer status, can be facilitated through performance management activities. The findings reveal that there is a difference in the role of cognitive and relational capital between key and non-key supplier groups in performance management activities. We conclude that successful performance management in buyer-supplier relationships requires more than simply a system for sharing information. The mature use of performance measurement is also essential, with cognitive capital being especially beneficial in this endeavor.