The Role of Trust in the Relationship Between Trade Companies and their Suppliers

Market globalization, increasing competition and the development of the information technology, along with unstable economic conditions and searching for areas of cost reduction, have lead to increasing importance of business logistics in last few decades. As the definition of logistics (Ben Sassi, 2008) suggests that „it is the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services and related information from point of origin to point of consumption for the purpose of confirming to consumer requirement“, the large number of business entities which are involved in the area of business logistics could be expected. Also, we may suppose possible number of business relationships, and costs that are results of inefficient and inadequate development of relationships between logistics members. The main purpose oft his paper is to explain the importance of trust between trade companies and their suppliers. Namely, literature review (Morgan & Hunt, 1994; Papakiriakopoulos & Pramatri, 2010) suggests that the trust and commitment between business subjects are the most salient factor in the effectiveness of complex organization structures (as we fin din the area of logistics today). In accordance with the main purpose of the paper, the structure of the paper was made. In such a way, the first part of the paper is dedicated to theoretical aspects of business logistics, and the special attention is devoted to trade companies and their suppliers. Moreover, the concept of trust between companies, its benefits and problems are presented. Second part of the paper consists of the research on the commitment and trust level between Croatian trade companies and their suppliers. There, some implications of the trust on the business performance of the sample of 50 companies are given. The findings suggest high level of trust between trade companies and their suppliers on the Croatian market. Statistically significant relationship between trust and commitment among companies and their performance indicators are found. Conclusively, Croatian companies are well aware of the logistics aspect of business with information flow and partnerships are prerequisite of the market competitiveness.