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Cooperative strategies in customer-supplier relationships: The role of interfirm trust

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  • Laaksonen, Toni
  • Jarimo, Toni
  • Kulmala, Harri I.

Abstract

In this paper we model the real cost structures of three customer-supplier relationships through a game theory approach. The three cases demonstrate the benefits of mutual interfirm trust in financially measurable terms. Indeed, interfirm trust can decrease the transaction costs of the relationship, thus providing competitive advantage for the partners. Moreover, we present a pricing arrangement that partially compensates the possible lack of mutual trust. A practical implication is that managers should pay more attention to the role of interfirm trust in partner selection processes.

Suggested Citation

  • Laaksonen, Toni & Jarimo, Toni & Kulmala, Harri I., 2009. "Cooperative strategies in customer-supplier relationships: The role of interfirm trust," International Journal of Production Economics, Elsevier, vol. 120(1), pages 79-87, July.
    • Handle: RePEc:eee:proeco:v:120:y:2009:i:1:p:79-87
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    2. Lees, Nic J. & Nuthall, P.L. & Wilson, M.M.J., 2016. "The impact of relationship quality on supplier performance in New Zealand agri-food supply chains," 26th International Food and Agribusiness Management Association (IFAMA) World Forum, 2016, Aarhus, Denmark 273035, International Food and Agribusiness Management Association (IFAMA).
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    10. Lees, Nic & Nuthall, Peter & Wilson, Mark M.J., 2020. "Relationship quality and supplier performance in food supply chains," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 23(3), August.
    11. Shivam Gupta & Vinayak A. Drave & Surajit Bag & Zongwei Luo, 2019. "Leveraging Smart Supply Chain and Information System Agility for Supply Chain Flexibility," Information Systems Frontiers, Springer, vol. 21(3), pages 547-564, June.
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    13. González-Benito, Javier & Reis da Rocha, Duilio & Queiruga, Dolores, 2010. "The environment as a determining factor of purchasing and supply strategy: An empirical analysis of Brazilian firms," International Journal of Production Economics, Elsevier, vol. 124(1), pages 1-10, March.
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    15. Wang, Longwei & Yeung, Jeff Hoi Yan & Zhang, Min, 2011. "The impact of trust and contract on innovation performance: The moderating role of environmental uncertainty," International Journal of Production Economics, Elsevier, vol. 134(1), pages 114-122, November.
    16. Oznur OZKAN-TEKTAS, 2014. "The Effects of Opportunism and Trust on Buyer-Supplier Relationship: Do Commitment Types Matter?," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 4(9), pages 14-26, September.
    17. Araneda-Fuentes, Cristina & Lustosa, Leonardo Junqueira & Minner, Stefan, 2015. "A contract for coordinating capacity decisions in a business-to-business (B2B) supply chain," International Journal of Production Economics, Elsevier, vol. 165(C), pages 158-171.
    18. Edward C. S. Ku & Wu-Chung Wu & Yan Ju Chen, 2016. "The relationships among supply chain partnerships, customer orientation, and operational performance: the effect of flexibility," Information Systems and e-Business Management, Springer, vol. 14(2), pages 415-441, May.
    19. Schoenherr, Tobias & Wagner, Stephan M., 2016. "Supplier involvement in the fuzzy front end of new product development: An investigation of homophily, benevolence and market turbulence," International Journal of Production Economics, Elsevier, vol. 180(C), pages 101-113.
    20. Esther Calderon-Monge & Ivan Pastor-Sanz, 2017. "Effects of Contract and Trust on Franchisor Performance," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 11(4), December.
    21. Bhattacharya, Ananya & Singh, Prakash J. & Nand, Alka Ashwini, 2015. "Antecedents of buyer opportunistic behavior in outsourcing relationships," International Journal of Production Economics, Elsevier, vol. 166(C), pages 258-268.
    22. Oznur OZKAN-TEKTAS, 2014. "The Effects of Opportunism and Trust on Buyer-Supplier Relationship: Do Commitment Types Matter?," International Journal of Business and Social Research, LAR Center Press, vol. 4(9), pages 14-26, September.

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