Journal of Operations Management 28 (2010) 101114

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Journal of Operations Management

journal homepage: www.elsevier.com/locate/jom

Examining supply chain relationships: Do buyer and supplier perspectives on

collaborative relationships differ?
Gilbert N. Nyaga a,*, Judith M. Whipple b,1, Daniel F. Lynch c,2
a
Information, Operations, & Analysis Group, College of Business Administration, 214 Hayden Hall, Northeastern University, Boston, MA 02115, United States
b
Department of Supply Chain Management, Michigan State University, The Eli Broad College of Business, N 370 North Business Complex, East Lansing, MI 48824, United States
c
Centre for International Trade & Transportation, Dalhousie University, 6100 University Avenue, Suite 2060, Halifax, Nova Scotia B3H 3J5, Canada

A R T I C L E I N F O A B S T R A C T

Article history: Firms are building collaborative relationships with their supply chain partners in order to achieve
Received 3 November 2008 efciencies, exibility, and sustainable competitive advantage. However, it is unclear if collaborative
Received in revised form 25 July 2009 relationships provide benets that compensate for the additional expense associated with such
Accepted 28 July 2009
relationships. Further, it is unclear what factors promote successful collaborations. This research
Available online 5 August 2009
examines collaborative relationships in two separate studies using structural equation modeling: one
study examines buyers perceptions and the second study examines suppliers perceptions. The two
Keywords:
studies are then compared using invariance testing in order to determine economic and relational factors
Collaborative relationships
that drive satisfaction and performance from each partys perspective. Results show that collaborative
Commitment
Trust activities, such as information sharing, joint relationship effort, and dedicated investments lead to trust
Satisfaction and commitment. Trust and commitment, in turn, lead to improved satisfaction and performance.
Supply chain alliances Results from the two independent studies exhibit similarities and differences; while the conceptual
Invariance testing model is highly similar, certain paths vary in their signicance and/or their importance across buyer and
supplier rms such that buyers focus more on relationship outcomes while suppliers look to safeguard
their transaction specic investments through information sharing and joint relationship effort.
Managerial and theoretical implications of the ndings are discussed.
2009 Elsevier B.V. All rights reserved.

1. Introduction manufacturers seek long-term relationships with fewer suppliers

Increasingly, rms are building collaborative relationships with
their supply chain partners in order to achieve efciencies,
exibility, and a competitive advantage. Collaborative relation-
ships adopt a long-term approach with joint efforts by each partner
to create unique value that neither partner can create indepen-
dently (Corsten and Kumar, 2005). Many studies suggest that
collaborative relationships are associated with improved perfor-
mance (Dwyer et al., 1987; Heide and John, 1990; Ganesan, 1994;
Kalwani and Narayandas, 1995; Doney and Cannon, 1997;
Monczka et al., 1998; Cannon and Perreault, 1999; Rokkan et al.,
2003). Ganesan (1994) suggests that rms in long-term relation-
ships rely on relational exchanges to maximize prots over a series
of transactions. Kalwani and Narayandas (1995) note that
* Corresponding author. Tel.: +1 617 373 2116.
E-mail addresses: g.nyaga@neu.edu (G.N. Nyaga), whipple@bus.msu.edu
(J.M. Whipple), Daniel.Lynch@Dal.Ca (D.F. Lynch).
1
Tel.: +1 517 353 6381.
2
Tel.: +1 902 494 6428; fax: +1 902 494 1483.
to secure valued resources and technologies, harness supplier skills
and strengths, and gain from quality and process improvements.
Rokkan et al. (2003) argue that a relationships extendedness or
future time horizon may mitigate risks that specic investments
produce. Daugherty et al. (2006) found that rms engaged in
collaborative relationships achieved improved visibility, higher
service levels, increased exibility, greater end-customer satisfac-
tion, and reduced cycle times.
However, in spite of the demonstrable benets, many rms are
struggling to achieve the desired level of collaboration and/or the
expected benet of such collaborations. This is because critical
details, such as selecting the right partner, matching inter-
organizational needs and capabilities, and clearly dening
standards and goals, are often overlooked (Daugherty et al.,
2006). As such, many collaborative initiatives have not lived up to
expectations (Frankel et al., 2002).
At the same time, there are questions concerning whether both
buyers and suppliers benet from collaboration. In a study of
collaborative relationships between suppliers and large retailers,
Corsten and Kumar (2005) found that even though both parties
beneted from the collaboration, there was greater feeling of

0272-6963/$ see front matter 2009 Elsevier B.V. All rights reserved.
doi:10.1016/j.jom.2009.07.005
102 G.N. Nyaga et al. / Journal of Operations Management 28 (2010) 101114
inequity in the relationship on the part of suppliers. In other words,
suppliers may believe that they receive less than they deserve. This
suggests the existence of suspicion among suppliers with regard to
relationship parity. However, there is no denitive conclusion on
this issue. Addressing this issue is crucial for the future success of
such relationships. As buyers work with fewer suppliers and
suppliers seek longer-term relationships with customers, the
demands for successful collaborative approaches increase and
become more critical for achieving competitive advantage. More
research that focuses on the practices, mutual efforts, and derived
value within the relationships between buyers and their strategic
suppliers is critical (Terpend et al., 2008).
There are two main objectives for this research. First, we
examine the antecedents of performance and satisfaction with
collaborative relationships using key mediating variables (trust
and commitment) from two perspectives: buyers and suppliers.
Second, we investigate the similarities and differences in these two
perceptions with respect to the antecedents and outcomes of
collaborative relationships in order to determine common and
different measurement paths and measurement strengths. The
contributions to the literature include increased understanding of
factors that inuence the perceived success of collaborative
relationships from both a buying and a supplying rm perspective,
as well as a comparison of buying and supplying rm perspectives.
While previous studies have often examined factors of success in
collaborative relationships, these studies have generally examined
only buyers perspectives or only suppliers perspectives; this
research expands on such previous research by comparing both
sides of the equation. This type of comparison is critical because
the underlying assumption in supply chain management research
is that buyers and suppliers are willing and able to cultivate
mutually benecial relationships leading to satisfaction (Benton
and Maloni, 2005, p. 2). This underlying assumption has not been
readily tested.
In the following section, we briey review the literature in
transaction cost analysis and social exchange theory to provide a
theoretical foundation and rationale for our proposed model of
collaboration. Research hypotheses are developed and a con-
ceptual model is proposed. Next, the research methodology is
described followed by research results. Finally, discussion of
research implications is provided as well as limitations and
suggestions for future research.
2. Theoretical background and research hypotheses
Transaction cost analysis (TCA) theory is a well-established
framework for examining supply chain governance options. TCA
has traditionally been used to evaluate make versus buy decisions
using two governance options: vertical integration and market
exchange. Between these two ends of the governance continuum
exists an intermediate form of governance called hybrid govern-
ance. The governance problems that are often operationalized in
research include asset specicity and uncertainty (behavioral and
environmental) (Rindeisch and Heide, 1997). For example, asset
specicity creates a contractual hazard, which requires more
elaborate governance (Bensaou and Anderson, 1999) and, thus,
would traditionally encourage vertical integration. However,
hybrid governance has emerged as a mechanism to effectively
reduce transaction costs associated with market exchange while
also reducing the ownership requirements of with vertical
integration (Rindeisch and Heide, 1997). A hybrid governance
option is an attractive option that allows for governance through
contractual means (Williamson, 1985) or governance through
relational means (Heidi and John, 1992; Whipple et al., 1999).
As discussed by Rindeisch and Heide (1997), these hybrid
governance mechanisms can be referred to as unilateral (e.g.,
contractual authority serves as the governance mechanism) or
bilateral (e.g., the relationship serves as the governance mechan-
ism), respectively.
The drawback to unilateral or contractual mechanisms is that
contracts can become increasingly complex and specic, and all
moral hazards cannot be foreseen in advance; this shortcoming
encourages the development of relational governance mechanisms
(Bensaou and Anderson, 1999). When incomplete contracts exist,
credible commitments can be established in order to administer
the relationship such that both parties can adapt to new,
unforeseen circumstances (Williamson, 1993). Williamson
(1983) discussed the use of asset specicity as a form of credible
commitment because transaction specic assets provide an
incentive to remain in the relationship.
Credible commitments can also develop when both parties
voluntarily engage in activities that enhance mutual interest as
these activities often have little value outside the specic
relationship (Srinivasan and Brush, 2006). Mutual interest assists
with the problem of incomplete contracts and deters opportunism
that, in turn, promotes self-enforcement (Srinivasan and Brush,
2006). Self-enforcement arises from credible commitments (Heide,
1994). Through credible commitments, self-enforcement develops
because both parties lose if the relationship ends; thus, implicit
and explicit understandings will not be violated (Bensaou and
Anderson, 1999, p. 462). As such, relational governance exists
when each party becomes reliant on the other, and, in this manner,
the relationship itself is the binding contract to govern the
relationship (Whipple et al., 1999). Relational ties are the
connecting links between exchange partners that inuence or
restrain a partners actions (Palmatier, 2008, p. 77). These ties
hold the relationship together as long as each party believes
himself to be better off by continuing the agreement than he would
be by ending it (Telser, 1980, p. 27).
Hybrid governed structures using these forms of bilateral,
relational governance mechanisms have been referred to as
partnerships, alliances, and, more recently, as collaborative
relationships. Using this theoretical discussion as a foundation,
we present a model that examines economic-driven and relational
mechanisms and their resulting impact on satisfaction and
performance. This is important since few studies have investigated
the effects of various safeguards on relationship outcomes (Jap
and Ganesan, 2000, p. 228). Additionally, research that examines
performance outcomes resulting from relational exchanges is
needed (Morris and Carter, 2005).
This model expands upon existing TCA theory and previous
relational exchange research in that it combines the foundations of
TCA with social exchange theory. Social exchange theory focuses
on the norms of reciprocating benets such that people cooperate
under the expectation that they will give and receive from the
relationship (Blau, 1964). Williamson (1993) addresses this to a
point with the concept of credible commitment whereby credible
commitment means that a party should give and receive
commitment once the hazards of opportunism arises (p. 459).
Assumptions regarding opportunism may lead to the use of only
rational or coercive control mechanisms (Ghoshal and Moran,
1996), which leaves out opportunities for social relations to affect
economic performance (Uzzi, 1997). As Powell (1990) indicated
certain forms of exchange are more social-that is, more
dependent on relationships (p. 300). Social exchange theory
(from a dyadic as opposed to network perspective) suggests that
social attributes, such as trust and commitment, are key drivers of
performance in exchange relationships (Palmatier, 2008).
Relational ties become critical when studying collaborative
approaches. For example, Morgan and Hunt (1994) posit that trust
and commitment are key predictors of success in collaborative
relationships; yet, these constructs are social, not coercive, control
 G.N. Nyaga et al. / Journal of Operations Management 28 (2010) 101114
mechanisms. If parties are using bilateral mechanisms, these
mechanisms must focus on incentives for mutual exchange in
order to be self-enforcing; the mechanisms should not focus on
opportunism as it has the chance to become a self-fullling
prophecy (Ghoshal and Moran, 1996).
2.1. Theoretical model of collaborative governance
Collaboration is dened as occurring when two or more
independent companies work jointly to plan and execute supply
chain operations with greater success than when acting in
isolation (Simatupang and Sridharan, 2002, p. 19). Collaboration
among supply chain partners may result in greater economic
benets in comparison to traditional (market exchange) relation-
ships (Paulraj et al., 2008). However, collaborative results often are
not achieved without greater investments (e.g., human resources,
technology) than required in transactional exchange relationships
(Lambert and Knemeyer, 2004; Whipple and Russell, 2007). These
greater investments place each party in the exchange at risk (e.g.,
uncertainty, opportunism) making the governance decision more
important as it signicantly affects relationship performance and
success. As such, our interest is in examining how bilateral
governance mechanisms affect collaborative performance and
satisfaction. Specically, our model differs from previous models in
that it contains economic-oriented constructs traditionally asso-
ciated with TCA, such as transaction specic investments, while
being mediated by relational mechanisms, such as trust, that are
associated with social network theory. Fig. 1 illustrates the
conceptual model to be discussed below.
2.2. Collaborative activities
Credible commitments may develop when incomplete con-
tracting exists because neither party can rely on contractual
mechanisms completely to manage the relationship. Instead, rms
can participate in collaborative activities, which serve as non-
contractual mechanisms for working out problems that may
arise over time. As such, collaborative activities represent each
partys willingness to give and take in the relationship and this
allows the relationship to adapt over time and creates an avenue
for on-going administration of the exchange (Williamson, 1993).
These activities deter opportunism, encourage cooperative beha-
vior, and increase the potential value of the exchange relationship
(Srinivasan and Brush, 2006). This research examines three types
of collaborative activities: dedicated investments, information
sharing, and joint relationship effort.
Williamson (1993) advised that rms should give and receive
credible commitments if potential opportunism existed. William-
son (1979) discussed how one party may encourage the other to
invest in dedicated assets as a way to minimize the risk of that
other party acting opportunistically. Anderson and Weitz (1992)
also described dedicated investments as representing pledges that
can lead to commitment.
When a party makes dedicated investments, the chance for the
other party to act opportunistically is more likely and so other
Fig. 1. Conceptual model.
103
actions may be taken to safeguard the dedicated investments. This
is often referred to as creating plural forms of governance (Bradach
and Eccles, 1989; Jap and Ganesan, 2000). One way for a rm to
safeguard its investments is to create relational norms (Heidi and
John, 1992). Heidi and John (1992) indicate that specic assets
create an incentive to exercise control while norms provide the
ability to acquire control (p. 36) in the sense that norms can
discourage a rm from taking advantage of its partner. For
example, norms are safeguards against a suppliers opportunistic
behavior when a customer has made dedicated investments (Jap
and Ganesan, 2000). As such, norms indicate that each party is
willing to give and take in an effort to administer the relationship
over time.
Ivens (2006) found support for the notion that norms can help
to create value in the relationship or can be used to control or limit
value-claiming behavior. Given that this research is focused on
collaborative relationships and bilateral, as opposed to unilateral,
governance mechanism, the norms examined in this research will
be norms that can be used to add value to the relationship. This
research will focus on two activities that represent value-adding
relational norms: information sharing and joint relationship effort.
Each of these activities will be dened below.
2.2.1. Dedicated investments
Dedicated investments refer to investments made by a buyer or
supplier that are dedicated to a relationship with a specic supplier
or buyer, respectively (Heide and John, 1990). Dyer and Singh
(1998) argue that relationship partners can develop critical
resources that span rm boundaries and that may be embedded
in interrm routines and processes. These resources (i.e., relational
specic assets) enable the relationship to appropriate higher
returns and sustainable competitive advantage. Generally, such
investments are associated with relationship success (Anderson
and Weitz, 1992; Ganesan, 1994; Dyer and Singh, 1998; Rokkan
et al., 2003). According to Ganesan (1994), dedicated investments
offer tangible evidence that a partner can be believed, cares for the
relationship, and is willing to make sacrices through such
investments. Dedicated investments lead to trust (Palay, 1984).
Jap and Ganesan (2000) found that retailers protected their
dedicated investments by cultivating strong commitment in the
relationship, and Anderson and Weitz (1992) found that dedicated
investments were associated with greater relationship commit-
ment. In this research, we examine the respondent rms level of
dedicated investment, and therefore, we hypothesize that:
H1a: Dedicated investments will have a positive impact on
commitment.
H1b: Dedicated investments will have a positive impact on
trust.
2.2.2. Information sharing
Information sharing refers to the extent that critical informa-
tion is conveyed to a partys relationship partners (Mohr and
Spekman, 1994). This may include involving other parties in early
stages of product design, opening the books and sharing cost
information, discussing future product development plans, or
jointly providing supply and demand forecasts (Cannon and
Perreault, 1999). Inter-rm communication was found to be an
important part of a buying rms supplier development effort
(Krause, 1999). Moreover, information sharing is a critical factor if
partners are to realize benets of collaboration (Min et al., 2005).
Kwon and Suh (2004) argue that information sharing is essential in
the trust-building process since sharing of critical information
enables rms to develop an understanding of each others routines
and develop mechanisms of conict resolution, which signals that
the partner can be trusted. Doney and Cannon (1997) argue that
104 G.N. Nyaga et al. / Journal of Operations Management 28 (2010) 101114
sharing condential information provides a signal that the party
sharing the information can be trusted, and that the partners
motives and intentions are benevolent. Anderson and Weitz (1992)
found that information sharing encouraged parties to commit to
the relationship. Past studies suggest that greater sharing of
information reduces uncertainty thereby improving the level of
trust and commitment in a relationship (Anderson and Weitz,
1992; Doney and Cannon, 1997; Monczka et al., 1998; Kwon and
Suh, 2004). Thus, we hypothesize that:
H2a: Information sharing will have a positive impact on
commitment.
H2b: Information sharing will have a positive impact on trust.
2.2.3. Joint relationship effort
For collaborative relationships to succeed, it is important that
partners work together to plan and coordinate activities, as well as
resolve problems. Min et al. (2005) found that joint effort, such as
planning, goal setting, performance measurement, and problem
solving, is essential for successful collaborative relationships, and
is closely related to information sharing. Several studies suggest
that joint effort enables partners to co-align their operations and
processes, which enhances the relationship by building trust.
When rms work together, they are more likely to commit to the
relationship (Jap and Ganesan, 2000). The opportunity for joint
decision making provides an incentive for suppliers to commit
(Subramani and Venkatraman, 2003). Joint effort is expected to
enhance the level of trust and commitment in the relationship.
Hence, the following hypotheses are developed:
H3a: Joint relationship effort will have a positive impact on
commitment.
H3b: Joint relationship effort will have a positive impact on
trust.
2.3. Key mediating variables
Bilateral governance regulates or reduces opportunism through
the promise of a long term, future relationship (Josi and Campbell,
2003) as those agreements serve as incentives for mutual exchange
(Wathne and Heide, 2000). Longevity is an implicit safeguard
especially if parties in the exchange are not bound contractually
(Srinivasan and Brush, 2006). Even in the presence of contracts,
however, the inability to completely anticipate all contingencies is
impossible and so parties must agree to work together to adapt in a
mutually protable manner (Ganesan, 1994). Self-enforcement
provides a collective incentive to maintain the relationship
because the potential gains exceed the potential opportunism
(Telser, 1980). When rms make dedicated investments, they
become more vulnerable (Wathne and Heide, 2000); thus, the
creation of trust and commitment becomes more important.
One of the earlier studies in relational exchange introduced
the concept of the key mediating variables (KMV) where trust
and commitment mediated between antecedent constructs and
outcome variables (Morgan and Hunt, 1994). While not referred
to in the Morgan and Hunt (1994) study as self-enforcement, this
research posits that trust and commitment create a collective
incentive to maintain the relationship. Morgan and Hunt (1994,
p. 22) posit that commitment and trust, not power, allow a rm
to condition others; which we posit creates a self-enforcing
opportunity. Trust and commitment are core bilateral govern-
ance mechanisms since they form implicit contracts that rely on
mutual adjustment processes rather than enforceable, legal
contracts (Srinivasan and Brush, 2006). In other words, to go
beyond the boundaries of legal contracts, rms look to keep their
risks in check and when trust exists, for example, these risks
are reduced or mitigated (McCutcheon and Stuart, 2000). Trust
also reduces transactional uncertainty when contracts are
difcult to enforce (Uzzi, 1996), and makes long term dedicated
investments less risky (Ganesan, 1994). Additionally, successful
performance in a supply chain has been shown to be based on
trust and commitment among supply chain partners (Kwon and
Suh, 2004).
In their original research, Morgan and Hunt (1994) examined
the KMV model on a limited industry sample (tire retailers in the
automotive industry) and, thus, calls for examining the impact of
KMV across a wider range of industries are certainly appropriate.
Additionally, Morgan and Hunts (1994) model did not specically
examine relationship outcomes (Morris and Carter, 2005). This
research explores the mediating effect of trust and commitment
while specically using performance and two dimensions of
satisfaction (satisfaction with results economic-oriented satis-
faction; and satisfaction with the relationship non-economic
satisfaction) as the outcomes of interest.
2.3.1. Commitment
Commitment refers to an exchange partners belief that an
ongoing relationship with another rm is so important as to
warrant maximum efforts at maintaining it; that is, the committed
party believes the relationship is worth working on to ensure it
endures indenitely (Morgan and Hunt, 1994). Commitment
results in mutual gain for both suppliers and buyers in a supply
chain relationship (Anderson and Weitz, 1992). Performance
improvements are often made possible when rms commit to
long-term partnerships (Krause et al., 2007). Prahinski and Benton
(2004) found that commitment had a direct and positive impact on
performance, while Jap and Ganesan (2000) found that retailers
perceptions of their suppliers commitment inuenced the
retailers evaluation of supplier performance and their satisfaction.
Therefore, we hypothesize that:
H4a: Commitment will have a positive impact on satisfaction
with relationship.
H4b: Commitment will have a positive impact on satisfaction
with results.
H4c: Commitment will have a positive impact on performance.
2.3.2. Trust
Trust refers to the extent to which relationship partners
perceive each other as credible and benevolent (Ganesan, 1994).
Credibility reects the extent to which a rm in a relationship
believes that the other party has the required expertise to perform
the expected task effectively, while benevolence occurs when one
relationship partner believes that the other party has intentions
and motives that will benet the relationship (Ganesan, 1994). As
indicated by Uzzi (1996), trust is a unique governance mechanism
in that it promotes voluntary, nonobligating exchanges (p. 678).
Past studies found a strong association between trust and
relationship success (Doney and Cannon, 1997; Geyskens et al.,
1999; Monczka et al., 1998; Whipple and Frankel, 2000), and trust
and satisfaction with protability (Mohr and Spekman, 1994).
Corsten and Kumar (2005) posit that trust results in greater
openness between suppliers and retailers and thus greater
knowledge and appreciation of each others contribution to the
relationship.
At the same time, Ganesan (1994) suggests that long-term
orientation in retailervendor relationships depends on the
extent to which a retailer or vendor trusts the channel partner.
Therefore, it is expected that buyers and suppliers who trust each
other will be more satised with the relationship and will put
more effort toward ensuring its continuity. Additionally, it is
expected that trusting partners will commit resources to a
 G.N. Nyaga et al. / Journal of Operations Management 28 (2010) 101114
relationship if the relationship is viewed as a long term
investment. In that sense, it is expected that trust will inuence
commitment because commitment entails vulnerability and
there must then be some trust to encourage partners to put
themselves in a vulnerable position (Morgan and Hunt, 1994, p.
24). Therefore, we hypothesize that:
H5a: Trust will have a positive impact on satisfaction with
relationship.
H5b: Trust will have a positive impact on satisfaction with
results.
H5c: Trust will have a positive impact on performance.
H5d: Trust will have a positive impact on commitment.
2.4. Relationship outcomes
Cannon and Homburg (2001) indicate that collaborative
relationships must generate demonstrable value to its participants.
Field and Meile (2008) found that stronger supplier relationships
were associated with greater satisfaction and performance.
Understanding the antecedents of satisfaction is critical as there
is a void in supply chain satisfaction research (Benton and
Maloni, 2005). In this study, three outcome measures are
examined: satisfaction with the relationship, satisfaction with
results, and performance.
Satisfaction is dened as an overall positive measure or
evaluation of the aspects of a rms working relationship with
another rm (Dwyer et al., 1987). Kalwani and Narayandas (1995)
found that supplier rms in long-term relationships achieved
higher sales growth and protability than those in transactional
relationships. Satisfaction with a relationship may be dened in
both economic terms (i.e., economic rewards arising from the
relationship such as increased sales volume and prots) and non-
economic terms (i.e., positive affective response to psychosocial
aspects such as good interaction, respect, and willingness to
exchange ideas) (Geyskens et al., 1999). The idea that satisfaction
can be measured in economic and non-economic terms was
posited by Geyskens et al. (1999) through a meta-analysis;
however, these authors did not examine this multi-dimensional
view of satisfaction using primary data as will be conducted in this
study.
In addition to relationship satisfaction, performance in
collaborative relationships can be viewed in terms of opera-
tional measures that improve for each partner as a result of
involvement in the relationship. Performance improvements
that result from a buyersupplier relationship directly inuence
a buying rm and, thus, become a critical consideration for a
buyer rm and its supplier development program (Prahinski and
Benton, 2004). Extant literature suggests that collaborative
relationships create opportunities for a rm to see improved
operational performance, such as cost reductions, and reduced
inventory, as well as improved logistics performance measures,
such as ll rate, cycle time, lead-time (Whipple and Frankel,
2000; Daugherty et al., 2006). Conversely, there must be
performance advantages in order for rms to engage in
potentially risky and time-intensive collaboration (Johnston
et al., 2004, p. 25).
2.5. Comparing buyer and supplier perspectives
While research in collaborative relationships assumes buyers
and suppliers enter into such agreements for mutual gain, it is not
clear whether each party in the relationship benets equivalently.
In fact, some research indicates that win-win is possible but that
each party wins something different (Whipple and Frankel,
2000). Adams (1965) is credited for creating the notion of equity
105
theory, which posits that when one party perceives its benets
from the relationship are not proportional to its inputs into the
relationship in comparison to the corresponding ratio of some
other party, an inequity exists. Corsten and Kumar (2005) found
that while retail buyers and their suppliers both beneted from
collaboration, suppliers felt greater inequity associated with such
benets. Scheer et al. (2003) examined dealersupplier relation-
ships and found that when negative inequity (i.e., a rms
outcome-to-input ratio is less than its partners) existed, trust
and relationship continuity decreased. This is important given that
Benton and Maloni (2005) posit that supplier satisfaction is
impacted more by the nature of buyersupplier relationship,
rather than the resulting performance. As such, if perceptual equity
does not exist and/or if the win is different, it is logical that the
perceived outcomes of the relationship may differ as well as the
way each partner approaches the relationship. In other words, if
perceptual inequity exists, it may cause distrust (or reduce trust)
thereby impacting the relationship outcomes due to the mediating
role of trust. When outcomes are reduced, a partner may, in turn,
invest less in the relationship and/or may discontinue the
relationship.
Previous research has shown that buyers and suppliers may
view the constructs examined in our conceptual model differ-
ently. John and Reve (1982) found that buyers and suppliers
perceptions were highly similar when focused on structural issues
in comparison to more subjective relational issues. Dispropor-
tionate or mismatched commitment (i.e., one partner is more
committed than the other) can result in dissatisfaction, conict,
opportunistic tendencies, and eventual decline of the relationship
(Anderson and Weitz, 1992; Gundlach et al., 1995). Additionally,
Whipple and Frankel (2000) found that trust was ranked as the
most important factor in alliance success by buyers, while their
dyadic supplier counterparts ranked trust as the second most
important factor for success after senior management support.
McCutcheon and Stuart (2000) found more examples of buyer
rms initiating trust-building actions when compared to the
actions taken by supplier rms.
Information sharing may differ across partners as well.
Whipple et al. (2002) found that suppliers were more interested
in timely information because suppliers rely on information from
customers in order to start internal planning processes, while
buyers were more interested in accurate information because if a
problem arises buyers need accurate information to adjust plans
properly. Sharing proprietary information might expose a
partner to opportunistic behavior by the other party (e.g., using
the information to gain leverage in negotiation or with the
partners competitors). Finally, involvement in joint effort may
vary between buyers and suppliers. This is especially likely
where one party feels that it is investing more than the partner
not only in terms of physical resources, but also in terms of
personnel and time.
Given the lack of understanding of both buyer and supplier
perspectives, this research also explores buyer and supplier
similarities and differences. The hypothesized relationships of
the conceptual model will be tested separately using two
independent samples. The rst study sample examines the
collaboration model from buyers perspectives. The second study
sample examines the collaboration model from suppliers per-
spectives. This is an important step that is needed before
comparisons across the buyer and supplier model can be made.
Comparisons across the two independent study samples will then
focus on comparing (1) if the models paths are the same for buyers
and suppliers; and (2) if the hypotheses are supported. Addition-
ally, the separate models will then be compared using invariance
testing to determine if differences exist between the buyer study
sample and the supplier study sample.
106 G.N. Nyaga et al. / Journal of Operations Management 28 (2010) 101114
Table 1
Respondents title and business category.
Respondent Title Buyers Suppliers
CEO/President 1.6% 9.8%
Vice-president 3.0% 27.8%
Director 16.5% 25.5%
Manager/Supervisor 41.1% 16.9%
Buyer/Sales representative 31.6% 12.5%
Other 6.2% 6.7%
3. Research methodology
3.1. Sampling and data collection
Data for this research was obtained from surveys distributed
across two independent samples: the rst sample targeted buying
rms and the second sample targeted supplier rms. The survey
instrument was initially pre-tested by industry representatives
and academics familiar with collaborative relationships. The pre-
test was used to ensure the questionnaire was clear and concise, as
well as to ensure the items were parsimonious and provided face
validity for the constructs examined. Based on the pre-test, minor
changes were made to the questionnaire and the instrument was
then transformed into an on-line survey. For the purposes of the
survey, a collaborative relationship was dened as a long-term
relationship where participants generally cooperate, share infor-
mation, and work together to plan and even modify their business
practices to improve joint performance.
In order to ensure that a wide range of industries were included
in the respondent base, we purchased databases from trade
associations mailing lists. The respondent base consisted of
executives from diverse manufacturing and service industries in
the U.S. A variation of Dillmans (2000) total design method was
used with respect to distributing the survey. An initial email
message inviting potential respondents to participate in the survey
was sent, and the email message provided a link to the on-line
survey. A second email reminder was sent approximately 10 days
after the initial email and a third email reminder was sent one
month later.
3.1.1. Survey 1: buyers perspectives
The survey was sent to 2891 potential buyer respondents from
one mailing list. Respondents from the buyer rm mailing list were
asked to indicate whether their companies had a collaborative
relationship with a supplier. If answered in the afrmative,
participants were instructed to complete the survey with regard to
a specic collaborative relationship with a supplier. The buyer
survey yielded 397 responses (14% response rate). After removing
responses with missing data, the nal sample consisted of 370
buyer responses. The response rate was likely impacted by the fact
that the study focused on collaborative relationships.
3.1.2. Survey 2: suppliers perspectives
The survey was sent to 3869 potential supplier respondents
from three different mailing lists. Three supplier lists were used in
an effort to increase the size of the supplier sample. Respondents
from the supplier rm mailing list were asked to indicate whether
their companies had a collaborative relationship with a buyer. If
answered in the afrmative, participants were instructed to
complete the survey with regard to a specic collaborative
relationship with a buyer. The rst supplier survey was sent to
2467 potential respondents, the second survey was sent to 1302
potential respondents, and the third survey was sent to 100
potential respondents. These surveys yielded 158 responses, 70
responses, and 62 responses, respectively. The combined supplier
Business Category Buyers Suppliers
Manufacturer 71.9% 47.5%
Distributor/Wholesaler 10.5% 8.2%
Retailer 2.2% 1.6%
Third-party provider 3.2% 21.6%
Transportation 3.0% 9.0%
Other 9.2% 12.2%
sample had 290 responses (7.5% response rate). After removing
responses with missing data, the samples used in the analysis
consisted of 255 supplier responses. The response rate was likely
impacted by the fact that the study focused on collaborative
relationships.
3.1.3. Initial sample analysis
We evaluated nonresponse bias in accordance with suggestions
by Armstrong and Overton (1977). We compared early versus late
response waves across items and key demographic variables for
each survey sample. T-test and ANOVA results revealed that no
signicant differences existed between early versus late responses
in both buyer and supplier surveys. Therefore, non-response bias is
not a major concern for the research. We also compared responses
in the three supplier surveys to ensure the samples were not
statistically different. The tests also showed that there were no
statistical differences across the three supplier samples. Thus, the
samples were combined in the analysis.
Table 1 shows the distribution of respondents titles and
business category in which their companies operate. The majority
of respondents (94% for buyers and 93% for suppliers) hold
executive level, manager/supervisor, or buyer/sales representative
positions. Fifty-three percent of respondents in the buyer survey
and forty-nine percent of respondents in the supplier survey had
ve or more years in their current position. Eighty-three percent of
respondents in the buyer survey and eighty-nine percent in the
supplier survey had ve or more years of experience in their
industry. This suggests that respondents had the requisite
knowledge and experience to participate in the survey. The
majority of respondents work in manufacturing companies,
accounting for 72% and 47% of respondents in the buyer survey
and supplier survey, respectively. Other respondents worked for
distributors/wholesalers, retailers, third-party providers, and
transportation carriers.
3.2. Measurement
We adopted survey measurement items from past studies based
on relevant literature and where appropriate, we adapted the items
to specic contexts. The survey contained forty survey items
representing eight constructs. The constructs were information
sharing (Monczka et al., 1998); joint relationship effort (Ellinger
et al., 2000); dedicated investments (Rinehart et al., 2004);
commitment (Moberg and Speh, 2003); trust (Doney and Cannon,
1997); satisfaction with relationship and with results (Kauser and
Shaw, 2004); and performance (Knemeyer et al., 2003; Dahlstrom
et al., 1996). The resulting model utilized twenty-eight survey items
whereby each construct had between three and ve items after some
items were dropped in initial factor analysis due to low factor
loadings. The retained measures had high factor loadings and strong
reliability (Appendix A). All measures used a seven point Likert scale
(where 1 = strongly disagree and 7 = strongly agree). Note that
dedicated investments examine the dedicated investment that the
respondent rm makes and performance examines the respondent
rms resulting performance.
 G.N. Nyaga et al. / Journal of Operations Management 28 (2010) 101114 107

Table 2
Construct level correlation matrixa.

Buyer sample constructs Supplier sample constructs

1 2 3 4 5 6 7 8
Mean 5.88b 5.38 5.62 6.26 4.97 5.37 5.11 4.79
Mean Std Dev 0.92 1.32 1.26 1.02 1.41 1.09 1.30 1.18
Construct

1 Information Sharing 6.13 0.84 1 0.59 0.42 0.70 0.50 0.57 0.41 0.43
2 Joint Relationship Effort 5.32 1.42 0.49 1 0.54 0.60 0.58 0.65 0.52 0.49
3 Dedicated Investments 4.64 1.47 0.34 0.50 1 0.50 0.37 0.44 0.32 0.36
4 Commitment 6.02 0.90 0.53 0.44 0.43 1 0.55 0.66 0.53 0.32
5 Trust 5.73 0.99 0.54 0.45 0.30 0.62 1 0.70 0.62 0.43
6 Satisfaction with Relationship 5.57 1.00 0.57 0.50 0.32 0.62 0.76 1 0.75 0.55
7 Satisfaction with Results 5.28 1.05 0.41 0.30 0.32 0.45 0.53 0.58 1 0.44
8 Performance 5.16 1.16 0.35 0.30 0.33 0.42 0.51 0.51 0.49 1
a
All correlations are signicant at p < .01 level.

Although some studies assess satisfaction as a single construct,
we assessed it as two constructs to mirror economic and non-
economic satisfaction proposed by Geyskens et al. (1999).
Satisfaction with the relationship focuses on relationship-oriented
activities such as participation in decision-making, commitment,
information sharing, and coordination and management of
activities. Satisfaction with results focuses on overall performance
issues such as protability, market share, and sales growth.
Since we asked respondents to answer questions on both the
dependent and independent variables, common method bias may be
a concern. We performed Harmans single-factor test (Podsakoff and
Organ, 1986; Podsakoff et al., 2003), which holds that common
method variance is present when either (a) a single factor emerges
from the factor analysis or (b) one general factor will account for the
majority of the covariance among the measures. We loaded all
variables to a principle component factor analysis to see whether a
single factor would emerge and/or if one general factor would
account for most of the covariance in the variables (Hult et al., 2007).
The unrotated solution is used to test for common method bias. The
factor analysis revealed that the rst factor accounted for 41.7% of
the total 70% variance in the buyer sample and 47.2% of the total
71.8% variance in the supplier sample. Using Varimax rotation, the
variance explained ranged from 8.7% to 20.7% in the buyer sample
and from 10.4% to 19.2% in the supplier sample. This suggests that
common method bias was not a major problem in our data.
To assess reliability, we computed coefcient alpha values for
each construct. The a-values ranged from .800 to .931 across buyer
and supplier data. Since these values exceed the recommended .70
value (Nunnally, 1994), reliability is established. All factor loadings
are signicant at p < .001, demonstrating convergent validity. To
assess discriminant validity, we compared the average variance
extracted by each construct with its shared variance with other
constructs (square of correlations between the constructs) (Fornell
and Larcker, 1981). The average variance extracted (buyer
sample = 5376% and supplier sample = 6078%) is greater than
the squared intercorrelations for each construct in both samples.
Therefore, discriminant validity is established. The measurement
items, reliability, and factor loading results are shown in Appendix A.
Table 2 provides the construct level correlation matrix.
4. Model t and results
We used structural equation modeling (SEM) with an EQS
program to test the hypothesized causal relationships between
constructs. Figs. 2 and 3 show the structural models and
standardized path coefcients for the buyer and supplier data,
respectively. The t indices for both buyer and supplier samples
indicate that the model provides good t for the data. For the buyer
model, the goodness of t indices were x2(336) = 750 (p < .001);
NNFI = 0.915; CFI = 0.924; IFI = 0.925; and RMSEA = 0.064. For the
supplier model, the goodness of t indices were x2(334) = 718
(p < .001); NNFI = 0.912; CFI = 0.922; IFI = 0.923; and RMSEA =
0.073. The t indices exceed the recommended threshold values
(Bollen, 1989; Byrne, 2006) hence the models are acceptable.
4.1. Assessing measurement invariance
We performed two-group invariance tests across the two
independent survey samples to establish whether relationship
perceptions vary between buyers and suppliers. Past studies
suggest that in a multi-group approach, the set of items and
number of underlying constructs is assumed to be the same across
groups (Bollen, 1989; Baumgartner and Steenkamp, 1998). This
assumption is met in our research since the constructs, number of
items in each construct, and construct measures are the same in
both buyer and supplier samples. However, the sample sizes are
different. Examination of extant literature shows that the issue of
different sample sizes in multi-group models is not adequately

Fig. 2. Buyer survey model.

108 G.N. Nyaga et al. / Journal of Operations Management 28 (2010) 101114
Fig. 3. Supplier survey model.
addressed. Baumgartner and Steenkamp (1998) perform simula-
tion tests of different sample sizes varying from 150 to 500 and
conclude that accurate estimates of differences in latent means can
be obtained with different sample sizes and only few common
items. However, they point out that a large sample size is needed
where common items are few. Since in our research the construct
items are the same across samples, and the sample sizes exceed the
recommended minimum sample size (N = 150) for performing
structural equation modeling (Byrne, 2006), the different buyer
(370) and supplier (255) sample sizes are not a major concern. The
analysis should yield accurate results.
Past studies suggest that invariance tests should proceed in
three steps (levels): congural invariance, measurement invar-
iance, and structural invariance (Bollen, 1989; Steenkamp and
Baumgartner, 1998; Cheung and Rensvold, 1999; Byrne, 2006).
Congural invariance tests whether the same number of factors
and factor-loading pattern holds across independent groups;
measurement invariance tests whether the measurement model is
equal across independent groups; and structural invariance tests
for similarity of measurement and structural models across
independent groups (Byrne, 2006).
To determine evidence of invariance, past studies suggest that
difference in x2 values (Dx2) between the restricted model and the
baseline congural model should be examined. If the difference is
statistically signicant, then the two models are not equivalent
across groups (Byrne, 2006). However, since Dx2 value is sensitive
to sample size and non-normality (much like x2 itself), it may not
be a practical and realistic measure of invariance (Cheung and
Rensvold, 2002; Byrne, 2006). Therefore, evidence of invariance
should be based on two alternative criteria: (a) the multigroup
model should demonstrate an adequate t to the data, and (b) the
change in CFI (DCFI) values between models should be negligible
(Cheung and Rensvold, 2002; Byrne, 2006). Byrne (2006) posits
that when invariance tests are performed using an EQS program,
the comparative approach (using Dx2) is not necessary because LM
Test allows for immediate identication of noninvariant equality
constraints across groups. In EQS, a cumulative multivariate LM
Test x2 and an incremental univariate x2 as well as their
probability values are presented for each constraint. Noninvariant
parameters have probability values of incremental univariate x2
that are <.05. However, where minimal differences exist between
two nested models (models being tested for invariance), it is
advisable to check DS  Bx2 (Byrne, 2006).
Table 3
Invariance test results.
x2 value d.f.
Congural invariance 1554 672
Metric invariance 1619 692
Scalar invariance 1853 714
Structural (path) structure 1639 700
First, we performed congural invariance test. We performed a
two-group model test consisting of the baseline models of buyer
and supplier samples without imposing any equality constraints.
As Table 3 shows, the model exhibits congural invariance since
the model ts the data well: x2(672) = 1554, p < .001; NNFI = 0.905;
CFI = 0.915; IFI = 0.916; and RMSEA = 0.071. Therefore, the struc-
ture of the model is optimally represented with the pattern of
paths and factor loadings specied.
Second, we performed the measurement invariance test. There
are three levels of measurement invariance; namely, metric, scalar,
and factorial invariance. Past studies suggest that factorial
invariance, which compares measurement error variances and
covariances is excessively restrictive and is of least importance
(Meredith, 1993; Byrne, 2006). Consequently, we only tested
metric and scalar invariance. Metric invariance tests the invariance
of factor loadings. It shows whether respondents in different
groups interpret and respond to measurement items in an
equivalent manner (Steenkamp and Baumgartner, 1998; Yoo,
2002). For metric invariance, we constrained all free factor
loadings to be equal across the two groups. The goodness-of-t
results reported in Table 3 show that the model exhibits good t to
the data: x2(692) = 1619, p < .001; NNFI = 0.903, CFI = 0.911,
IFI = 0.912, and RMSEA = 0.072. A review of the LM Test statistics
for the metric invariance test showed that only ve items were
noninvariant across the two groups. In effect, buyers and suppliers
generally interpret measurement items equivalently in most cases.
Scalar invariance tests the invariance of intercept terms to
determine consistency between differences in latent means and
observed means, which is necessary for comparative validity in
cross-group studies (Meredith, 1993; Steenkamp and Baumgart-
ner, 1998; Yoo, 2002). To test scalar invariance, we constrained all
invariant factor loadings and all observed variable intercepts
regardless of whether the factor loading for a variable is xed to 1.0
for model identication or freely estimated due to its noninvar-
iance across groups (Byrne, 2006). The goodness-of-t results of
this test indicate that the model tted data well: x2(714) = 1853,
p < .001; NNFI = 0.903, CFI = 0.913, IFI = 0.914 and RMSEA = 0.072.
The LM Test statistics show that 18 out of 27 intercepts were
noninvariant across groups.
Finally, we performed structural invariance testing. We
constrained the structural paths to be equal across groups and
also retained all equality constraints of factors except the
parameters found to be noninvariant in the metric invariance
NNFI CFI IFI RMSEA Dx2
0.905 0.915 0.916 0.071
0.903 0.911 0.912 0.072 65
0.901 0.913 0.914 0.072 299
0.903 0.910 0.910 0.072 85
 G.N. Nyaga et al. / Journal of Operations Management 28 (2010) 101114 109

Table 4 5. Discussion of results

Invariant structural paths.

Structural Path Buyer Supplier Signicance
coefcient coefcient
Information Sharing ! Commitment 0.262 0.563 .000
Joint Relationship Effort ! Trust 0.247 0.520 .001
Trust ! Commitment 0.477 0.147 .028
Trust ! Satisfaction with 0.682 0.564 .000
Relationship
Commitment ! Performance 0.180 0.100 .002
test. The goodness-of-t results of this more restricted model
(Table 3) indicate that it tted data well: x2(698) = 1639, p < .001;
NNFI = 0.903, CFI = 0.910, IFI = 0.910 and RMSEA = 0.072. LM Test
results show that ve structural paths are noninvariant across the
two groups. Table 4 reports the noninvariant paths. We also
compared x2 values and CFI values of the structural invariance
model and the congural model. Dx2 values = 85 and DCFI
values = 0.005 (Table 3). We computed DS  Bx2 value (Satorra
and Bentler, 2001; Byrne, 2006) and found it statistically
signicant. The DCFI value is substantial. These tests (LM Test,
Dx2 and DCFI) indicate that noninvariance is supported for these 5
paths, and conrm that there are differences in relationship
perceptions between the buyer and supplier samples.
4.2. Hypotheses support
As shown in Figs. 2 and 3, the majority of hypotheses are
supported. Dedicated investment was hypothesized to positively
impact commitment (H1a) and trust (H1b). While dedicated
investment was shown to have a positive and signicant impact on
commitment, the impact on trust was not signicant in either the
buyer or supplier model. Information sharing was hypothesized to
positively impact both commitment (H2a) and trust (H2b). Both of
these hypotheses were supported in the buyer and the supplier
model. Joint relationship effort was also hypothesized to positively
impact commitment (H3a) and trust (H3b). The relationship
between joint relationship effort and commitment, while positive,
was not signicant, and, thus, this hypothesis (H3a) was not
supported in either the buyer or supplier model.
Results indicate that commitment signicantly and positively
affects satisfaction with the relationship (H4a) and satisfaction with
results (H4b) in both buyer and supplier models. However, whereas
commitment signicantly affects performance for buyers (H4c), the
effect is not signicant for suppliers. Trust has a positive and
signicant impact on satisfaction with the relationship (H5a),
satisfaction with results (H5b), and performance (H5c) for both
buyers and suppliers. The hypothesis that posits that trust positively
impacts commitment (H5d) for both buyers and suppliers is also
supported. The hypotheses results are summarized in Table 5.
One of the immediate results of the research shows that the
proposed model offers the promise of generalizability in that the
model is supported using two independent samples where
participants come from different perspectives: a buying perspec-
tive and a supplying perspective. This result, in and of itself, is
interesting because it highlights that buyers and suppliers have
perspectives that are generally more similar than they are
different. In this sense, it offers the possibility that collaborative
relationships are more likely to be successful because buyer and
supplier models are not highly different.
While the majority of hypotheses were supported, there were
two hypotheses that were not supported in either the buyer or the
supplier model. Furthermore, there was one hypothesis that was
supported in the buyer model, but not the supplier model. Joint
relationship effort positively and signicantly affects trust (H3b)
but not commitment (H3a) for both buyers and suppliers. Joint
relationship effort is certainly important in collaborative relation-
ships, but the impact of such effort is directly and positively related
to trust and not directly related to commitment. As such, joint
relationship effort (e.g., working on joint teams, conducting joint
planning, making joint decisions) becomes a trust-building action
that rms can, and should, invest in. These activities serve as a
direct signal that the partner can be trustednot as a direct signal
that the partner will be more committed to the relationship. It is
through this joint effort that rms can demonstrate they are
keeping the other partners best interest in mind and considering
their welfare. This demonstration becomes important to building
trust (McCutcheon and Stuart, 2000). Perhaps because joint
relationship effort tends to be more operationally focused in
that it is used to avoid operational problems and to examine ways
to improve efciency (at least as operationalized in the items
included in this research), joint effort may not be seen as
strategic or long-term and, thus, does not directly inuence
a rms long-term commitment to a particular relationship.
However, it should be noted that there is an indirect effect of
joint relationship effort and commitment through trust such
that when rms engage in a joint relationship effort, it positively
impacts trust, which, in turn, positively impacts commitment.
Conversely, dedicated investments positively and signicantly
affect commitment (H1a) but not trust (H1b) for both the buyer
and supplier models. It is intuitive that dedicated investments
signal a long-term commitment to a relationship. If a rm has
made transaction-specic investments, as expected when invest-
ments are dedicated, the rm would also seek to extract other
commitments from the partner rm as a way to safeguard the
dedicated investment. As discussed by Zhao et al. (2008),
commitment can lead to integration and reduce transaction costs
and opportunism. Thus, the rm dedicating the investment

Table 5
Summary of hypotheses.

Number Hypothesized relationship Buyer model Supplier model

H1a Dedicated Investment ! Commitment Supported Supported

H1b Dedicated Investment ! Trust Not Supported Not Supported
H2a Information Sharing ! Commitment Supported Supported
H2b Information Sharing ! Trust Supported Supported
H3a Joint Relationship Effort ! Commitment Not Supported Not Supported
H3b Joint Relationship Effort ! Trust Supported Supported
H4a Commitment ! Satisfaction with Relationship Supported Supported
H4b Commitment ! Satisfaction with Results Supported Supported
H4c Commitment ! Performance Supported Not Supported
H5a Trust ! Satisfaction with Relationship Supported Supported
H5b Trust ! Satisfaction with Results Supported Supported
H5c Trust ! Performance Supported Supported
H5d Trust ! Commitment Supported Supported
110 G.N. Nyaga et al. / Journal of Operations Management 28 (2010) 101114
becomes more committed to a future relationship with the
partnerin order to protect the usefulness of the investment.
However, such investments do not positively and directly
inuence trust. In fact, in the supplier model, dedicated invest-
ments (albeit not signicant) negatively impacted trust. This may
illustrate that when dedicated investments are a part of a
collaborative relationship, the supplier is more cautious about
trusting the buyer rm. Alternatively, when the buyer rm
requires dedicated investments to be a part of the relationship
it may send a negative signal to the supplier rm concerning trust-
building actions. In this sense, when a rm makes investments in
personnel, propriety expertise, and equipment/support systems
for a particular relationship, that investment does not signicantly
(negatively or positively) impact the ability for that rm to believe
the partner is trustworthy.
Finally, while commitment had a positive and signicant impact
on performance in the buyer model, the relationship was not
signicant in the supplier model. This is consistent with the
assertion by Benton and Maloni (2005) that supplier satisfaction is
driven more by the nature of the relationship than by the value of
performancealthough their conceptualization of their model and
subsequent testing was different from the approach taken in this
research. However, in a similar vein, this research shows that
commitment has a greater impact on suppliers satisfaction with the
relationship and satisfaction with the results of the relationship, and
a non-signicant impact on performance. With buying rms,
commitment serves as a direct and positive impact on satisfaction
(with the relationship and with the results) and performance.
It is possible that, for suppliers, their commitment to a
relationship with a buyer does not necessarily guarantee increased
business or improved performance. In other words, suppliers may
perceive that buyers do not necessarily reciprocate increased
levels of commitment with more business opportunities. For
example, buyers may periodically require contract renegotiation or
rebidding depending on changing market trends even when these
revisions are not favorable to a supplier and even when the
supplier has demonstrated commitment to the relationship. Since
commitment may not guarantee improved performance, trust may
be the main action that directly impacts performance from a
suppliers perspective. Alternatively, it may be that given the long-
term nature of commitment, suppliers may not directly attribute
todays performance to future commitment.
5.1. Comparison of buyer and supplier relationship perceptions
One of the main objectives of this research was to compare and
contrast independent samples illustrating buyers and suppliers
perceptions of collaborative relationships. On one hand, the
perceptions of buyers and suppliers are relatively consistent as
shown by the overall conceptual model being supported and tting
well for both the buyer and supplier independent samples. On the
other hand, there are important differences between the buyers and
suppliers perspectives from these two survey samples. Invariance
test results reported in Table 4 show the structural relationships that
are signicantly different across buyer and supplier samples. As
shown in this table, there are ve important differences.
First, the invariance test shows that the effect of information
sharing on commitment is stronger for suppliers than buyers.
Suppliers are likely to be committed to relationships with buyers
who share information since information sharing helps the
supplier to provide products or services more efciently and
effectively. A buyer sharing important information signals their
commitment to the supplier, and encourages the supplier to
commit to the relationship in return.
Second, invariance test results show that joint relationship
effort affects trust differently between buyers and suppliers; the
effect is greater for suppliers than for buyers. This is consistent
with the nding regarding the effect of information sharing on
commitment. It is expected that suppliers will be more trusting in a
relationship where buyers engage in joint planning, goal setting,
performance measurement, and problem solving. Suppliers are
likely to view such buyers as considerate of suppliers welfare and
in it together. Moreover, conducting joint activities provides an
avenue for suppliers to share their needs, concerns, and expecta-
tions in the relationship. Buyers involved in a joint effort are more
likely to address issues raised by suppliers, and this response may
further enhance suppliers trust.
Third, invariance test results show that the effect of trust on
commitment varies in buyer and supplier models. Trust has a
greater impact on commitment for buyers than suppliers. Buyers
are likely to be more committed to a supplier that they trust to
provide superior products, services, or contract terms. In addition,
buyers may be more committed to a supplier whose sales
personnel are friendly and trustworthy.
Although suppliers commit to a trustworthy buyer, suppliers
also realize that commitment does not necessary lead to improved
performance. Suppliers know that even when they have a trusting
relationship with a buyer, in the end, it is about business pay off
and buyers may look for alternative suppliers if expectations about
price, performance, or service are not met. Therefore, while trust
leads to greater commitment for both buyers and suppliers, the
impact is greater for buyers than for suppliers.
Finally, the invariance test results indicate that the effect of
trust on satisfaction with the relationship varies between buyers
and suppliers. Although the effect is strong in the buyer and
supplier samples as demonstrated by high path coefcients, the
impact is signicantly higher for buyers. This may reect a feeling
of inequity on the part of suppliers indicating they perceive that
buyers do not reciprocate supplier trust proportionately.
Invariance test results point to a dichotomy in the expectations
of buyers and suppliers. Suppliers place more importance on
safeguarding their transaction specic investments via developing
norms. Additionally, suppliers are concerned with inputs to the
relationship, such as information sharing, that enable them to
improve their performance as well as to provide the buyer with the
expected services.
Buyers, on the other hand, are more focused on trust and
commitment, and the resulting impact on outcomes. Given that
buyers are measured on performance outcomes, it is not surprising
that they are more concerned with paths that directly impact
performance. Further, trust and commitment reduce transaction
costs and thus, reduce the buyers need to monitor their suppliers.
Fig. 4 illustrates this dichotomy by highlighting the key differences
in buyer and supplier perceptions (Note: Fig. 4 only shows the
invariance testing results of the 5 signicant differences): buyers
focus on relationship outcomes versus suppliers focus on
collaborative activities. The results suggest that buyers need to
demonstrate an interest in collaborative activities (specically
norms) such as information sharing and joint effort to signal their
commitment to suppliers. This is important considering the value
that suppliers attach to the nature of relationship (Benton and
Maloni, 2005). On the other hand, suppliers should focus on
demonstrating trust and commitment as a way to improve
performance and buyer satisfaction since these are the outcomes
that buyers value.
6. Managerial and theoretical implications
6.1. Managerial implications
First, the research shows that buyers and suppliers are
generally satised with the collaborative relationships they have,
 G.N. Nyaga et al. / Journal of Operations Management 28 (2010) 101114
Fig. 4. Invariance test results paths of buyer supplier differences.
are satised with the results of such relationships, and gain
performance benets from investing in collaborative relationships.
One of the reasons cited for why collaborative relationships have
not been utilized effectively is concerns about whether such
investments actually pay off. This research lends support that
collaborative relationships offer worthwhile benets to both
buyers and suppliers.
Any actions buyers and suppliers take to improve trust and
commitment will result in greater benets from the relationship.
Information sharing impacts both buyers and suppliers commit-
ment and trust. Consequently, any investments made to improve
information sharing would result in increased commitment and
trust. However, our research results suggest that information
sharing has a much greater inuence on supplier commitment in
comparison to buyer commitment. This is consistent with previous
research that information sharing impacts buyers and suppliers
differently (Whipple et al., 2002).
While joint relationship effort inuences trust, the impact is
greater for suppliers than for buyers. This may be because joint
effort provides the supplier with greater access to the buyer rm
and demonstrates that the relationship is focused on joint
improvement. Additionally, joint effort enables suppliers to share
their concerns, seek relationship benets, and safeguard their
dedicated investments.
Interestingly, a rms dedicated investments to the relationship
impacts their level of commitment but not the level of trust they
have for the partner rm. Dedicated investments are a calculated
way for each partner to realize greater returns in a relationship or
secure critical future resources or services by increasing their
commitment to continuing the relationship. While trust is a more
important factor than commitment in terms of its impact on
satisfaction with the relationship, satisfaction with results, and
performance for both buyers and suppliers, perceptions of trust
vary between buyers and suppliers. Trust has a signicantly
greater impact on commitment and satisfaction with the relation-
ship for buyers than for suppliers. Antecedents of trust (e.g.,
information sharing) are most important to suppliers while the
outcomes of trust (e.g., satisfaction and performance) are most
important to buyers. Therefore, managers need to emphasize
activities that build trust. While trust building actions may be
more difcult for suppliers to demonstrate (McCutcheon and
Stuart, 2000), there is need for both buyers and suppliers to
continuously look for such opportunities.
Finally, whereas commitment impacts satisfaction and perfor-
mance in buyer rms, it only affects satisfaction in supplier rms.
This has broad implications for management considering that
performance is the ultimate barometer of success. Interestingly,
buyer commitment seems to be driven mainly by intangible
attributes (i.e., trust) while supplier commitment seems to be
driven more by tangible attributes (i.e., information sharing).
111
6.2. Theoretical implications
The results raise several issues that have implications on theory.
First, this research highlights the importance of a multi-dimensional
view of satisfaction. Satisfaction is often examined in research as an
overall indicator of relationship satisfaction. This paper uses two
satisfaction measures: one focused on satisfaction with the relation-
ship and one focused on satisfaction with results. This conceptualiza-
tion is consistent with the economic satisfaction and non-economic
satisfaction categorization purposed, but not tested empirically
(Geyskens et al., 1999), and so these research results provide a richer
understanding of how buyers and suppliers view satisfaction.
Second, this research supports the view that trust and
commitment mediate between collaborative activities and rela-
tionship outcomes. This highlights the importance and critical
nature of trust and commitment and their impact on relationship
success. While both commitment and trust are consistently
discussed in the social exchange literature as being crucial for
success in collaborative relationships, these constructs are
relatively ignored in transaction cost theory. This research
specically shows the mediating impact that trust and commit-
ment have on satisfaction and performance in collaborative
relationships by combining economic-oriented constructs used
in TCA (e.g., transaction specic investments) with relational
constructs (e.g., trust) used in social exchange theory.
Third, invariance testing is not often used in structural equation
modeling associated with collaboration research. In part, this is
because many research papers only view one side to the relationship
(e.g., buyers perspectives only) and, thus cannot use invariant
testing procedures. Invariance testing provides an opportunity to
compare performance and other factors across independent
samplesin this case, across two separate samples of buyers and
suppliers. Relationships are by nature multi-directional, which
raises the question of differences among partners. This study attests
to the robustness of invariance testing in supply chain relationships
studies. This research highlights key differences across independent
buyer and supplier samples, but also and perhaps, more importantly,
this research shows that buyer and supplier perspectives are more
similar than they are different. This is an important nding because
it means that when partners see eye-to-eye, it may be easier to
implement collaborative relationships and see resulting benets in
terms of satisfaction and performance.
7. Future research and limitations
Our study points to a number of areas where further research
would be valuable to academicians and managers. First, future
research could compare collaborative relationships to more
traditional market exchange relationships to determine if satisfac-
tion and performance are improved in collaborative relationships.
112 G.N. Nyaga et al. / Journal of Operations Management 28 (2010) 101114

Given that collaborative relationships take greater investments in
terms of resources and time, additional research showing whether
the benets of collaboration signicantly outweigh the benets of
traditional, transactional relationships is important. Further since
collaborative relationships cannot be the focus of all buyer
supplier relationships, research that examines when collaboration
pays off is critical (Lambert and Knemeyer, 2004).
Second, collaborative relationships are long-term in nature.
Therefore, a longitudinal study of collaborative buyersupplier
relationships may yield some insights not captured in this study.
For example, since collaborative relationships require signicant
investments which might take time to develop, and benets may
not be immediately forthcoming, it is likely that buyer and supplier
perceptions of relationship pay offs will vary over time. This is
particularly important in terms of equity theory and other social
comparison theories. If at some point in the relationship, one party
feels the relationship is one-sided, they can work to reduce the
inequity, or they can exit the relationship. Future research could
take a longitudinal perspective to examine the mechanisms rms
may use to make relationships more equitable and/or the
conditions that cause a rm to believe the inequity is too great
and exit the relationship. This type of longitudinal analysis would
be best performed by studying specic matched dyads or
partners in a collaboration, and would likely require a different
methodological approach (e.g., qualitative analysis).
Finally, the model presented in this paper or components of it
could also be tested on matched dyads. This would enable
perceptions of equity to be tested as a contingency variable
impacting the conceptual model. While this research tested
differences in perspectives across two independent buyer and
supplier samples, replicating the research across paired or
matched dyads would be an important future contribution.
Acknowledgements
This research was partially supported by the Innovation and
Organizational Change (IOC) Program of the National Science
Foundation, Grant Number 0122173.

Appendix A. Construct measures with reliability, factor loading, and t-value for buyers and suppliers

Survey items Buyer Supplier

Information sharing (a = 0.802; 0.838)a

We inform this supplier/buyer in advance of changing needs. .720b .755b
In this relationship, it is expected that any information which might help the other party will be provided. .770 (11.8)c .794 (11.5)c
The parties are expected to keep each other informed about events or changes that may affect the other party. .824 (13.2) .847 (12.2)

Joint relationship effort (a = 0.846; 0.856)

My rm and this supplier:
have joint teams. .778 .768
conduct joint planning to anticipate and resolve operational problems. .845 (14.2) .933 (14.3)
make joint decisions about ways to improve overall cost efciency. .810 (13.8) .784 (12.1)

Dedicated investment (a = 0.800; 0.824)

We have invested substantially in personnel dedicated to this relationship. .684 .883
We have provided proprietary expertise and/or technology to this relationship. .737 (9.6) .638 (9.8)
We have dedicated signicant investments (e.g., equipment or support systems) to this relationship. .767 (9.6) .827 (13.1)

Commitment (a = 0.839; 0.923)

We expect this relationship to continue for a long time. .761 .872
We are committed to this supplier/buyer. .830 (14.2) .917 (19.8)
We expect this relationship to strengthen over time. .814 (13.9) .908 (19.4)
Considerable effort and investment has been undertaken in building this relationship. .567 (9.5) .844 (16.7)

Trust (a = 0.903; 0.915)

This supplier is genuinely concerned that we succeed. .828 .854
We trust this supplier keeps our best interests in mind. .893 (19.2) .910 (17.9)
This supplier/buyer considers our welfare as well as its own. .888 (19.0) .870 (16.7)

Satisfaction with relationship (a = 0.930; 0.931)

My rm is satised with this relationship in terms of:
coordination of activities. .808 .842
participation in decision making. .829 (16.7) .860 (16.2)
level of commitment. .888 (18.5) .886 (17.0)
level of information sharing. .868 (17.9) .829 (15.2)
management of activities. .849 (17.3) .850 (15.9)

Satisfaction with results (a = 0.890; 0.894)

My rm is satised with this relationship in terms of:
protability. .776 .755
market share. .915 (16.8) .920 (14.2)
sales growth. .877 (16.3) .915 (14.2)

Performance (a = 0.817; 0.856)

This relationship has:
reduced our order cycle times. .744 .670
improved our order processing accuracy. .771 (12.2) .865 (10.6)
improved our on-time delivery. .781 (12.3) .815 (10.2)
increased our forecast accuracy. .609 (9.7) .746 (9.5)
a
Buyer and supplier a values, respectively.
b
Free parameters (no t-test values).
c
t-Test values in bracket.
 G.N. Nyaga et al. / Journal of Operations Management 28 (2010) 101114
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