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Can small firms gain relational advantage? Exploringstrategic choice and trustworthiness signals in supplychain relationshipsStephen L. Jonesa, Stanley E. Fawcettb, Cynthia Wallinc, Amydee M. Fawcettb & Barry L.Brewerd

a Carlson School of Management, University of Minnesota, Minneapolis, MN, USAb Goddard School of Business, Weber State University, Ogden, UT, USAc Marriott School of Management, Brigham Young University, Provo, UT, USAd College of Business, University of Wyoming, Laramie, WY, USAPublished online: 09 May 2014.

To cite this article: Stephen L. Jones, Stanley E. Fawcett, Cynthia Wallin, Amydee M. Fawcett & Barry L. Brewer (2014): Cansmall firms gain relational advantage? Exploring strategic choice and trustworthiness signals in supply chain relationships,International Journal of Production Research, DOI: 10.1080/00207543.2014.915068

To link to this article: http://dx.doi.org/10.1080/00207543.2014.915068

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Can small firms gain relational advantage? Exploring strategic choice and trustworthinesssignals in supply chain relationships

Stephen L. Jonesa, Stanley E. Fawcettb, Cynthia Wallinc, Amydee M. Fawcettb and Barry L. Brewerd*

aCarlson School of Management, University of Minnesota, Minneapolis, MN, USA; bGoddard School of Business, Weber StateUniversity, Ogden, UT, USA; cMarriott School of Management, Brigham Young University, Provo, UT, USA; dCollege of Business,

University of Wyoming, Laramie, WY, USA

(Received 7 December 2012; accepted 30 March 2014)

Organisational theory explicates that partners who overcome the challenges to developing trust-based interorganisationalrelationships can gain a vital source of competitive advantage. However, the extant relational research focuses on large,resource-rich entities. We, by contrast and extension, investigate whether small and medium-sized firms can leveragesupply chain relationships for competitive advantage. Specifically, power imbalances and resource constraints are addi-tional challenges common to small firms that may diminish their desire and ability to pursue relational advantage. How-ever, we posit that effective, trust-based governance can enable small and medium-sized firms to overcome their uniquechallenges to enter more collaborative relationships and thereby improve operational and firm performance. Our findingsfrom a survey of manufacturing firms provide evidence that small and medium-sized firms can gain performance benefitswhen they (1) make the conscious choice to pursue trust-based collaboration and (2) strategically demonstratetrustworthiness.

Keywords: relational rent; trust; collaboration; supply chain management; performance

1. Introduction

Collaboration between strategic supply chain partners can be a vital source of competitive advantage (Dyer and Singh1998). Collaborative supply chain partners attain relational rents by establishing novel knowledge-sharing routines thatpromote opportunity recognition, facilitate rapid resource reconfiguration and achieve high levels of agility andresponsiveness (Barreto 2010; Cao et al. 2009; Fawcett, Magnan, and Ogden 2007). Strategic collaboration, however,requires effective governance (Dyer and Singh 1998). Among governance mechanisms, trust is often necessary forsuccessful relational strategies (Barney and Hansen 1994). Trust diminishes the threat of opportunistic actions amongresource-dependent partners (Larson 1992; Sako 1998; Uzzi 1997). Further, trust lowers governance costs as it reducesconflict (Dyer 1997; Dyer and Chu 2003; Zaheer, McEvily, and Perrone 1998) and improves inter-firm learning andresponsiveness (Cai et al. 2012; Dodgson 1993; Handfield and Bechtel 2002). By creating safety within relationships,trust promotes greater experimentation and other creative actions that can help firms thrive in a rapidly changing andchaotic environment (Dyer, Gregerson, and Christensen 2011; Lee et al. 2008). Yet, trust frequently fails to emergebecause firms perceive threats of exploitation even by well-intentioned partners. As contracting cannot legislate the samebehaviours and benefits, trust makes relational advantage possible (Fawcett, Jones, and Fawcett 2012).

Unfortunately, the study of relational strategies as well as trust’s role as a governance mechanism has focused onlarge, multinational organisations (e.g. Dyer and Chu 2003; Sako 1991) or has not considered firm size (e.g. Doney andCannon 1997; Handfield and Bechtel 2002). Small firms are essential to the wealth and prosperity of the US economy.For instance, small firms

(1) account for 99.7% of employer firms,(2) create more jobs (64% of new private-sector jobs and 52% of the private sector workforce),(3) are more innovative on a per employee basis than larger firms,(4) and enjoy faster growth rates (Small Business Administration 2013; Small Business & Entrepreneurship

Council 2013).

*Corresponding author. Email: bbrewer4@uwyo.edu

© 2014 Taylor & Francis

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Thus, it is time to take a closer look to see if small-firm buyers can proactively build the trust needed to take advan-tage of relational strategies with larger suppliers.

Firms of all sizes struggle to build trust as an effective governance mechanism. Managers may misunderstand thetrust-building process, may fear exploitation or partner complacency, and may be susceptible to myopia and lost oppor-tunities (Das and Teng 2001; Fawcett, Magnan, and Williams 2004; Gulati, Khanna, and Nohria 1994). Yet, small firmsface additional challenges to building trust that makes them distinct from their larger counterparts. Specifically, there aretwo severe constraints small firms face that larger firms are less likely to encounter: (1) limited power (Porter 1980) and(2) constrained resources (Nooteboom 1994; Tan and Peng 2003; Walker and Petty 1978). Limited power and resourceconstraints can make the decision for small-firm managers to invest in trust development more daunting and the trust-building process more difficult.

Specifically, a lack of power eliminates a conspicuous option for initiating collaboration. Larger, more-powerful buy-ing firms can incentivise supplier participation in cooperative, trust-based strategies, spurring investment in capacity andtechnology as well as participation in ideation processes (Fawcett, Jones, and Fawcett 2012; Huston and Sakkab 2006).This power is often tied to their large scale (i.e. sales volumes). Small-firm buyers who lack scale, however, have diffi-culty getting larger suppliers to recognise their need for resource access and constant improvement in product and ser-vice offerings. Small firms have no visible enticement for larger suppliers to pursue unique value co-creationrelationships. Instead, they are often faced with unattractive contract terms because of their lack of power. In our preli-minary interviews,1 one manager who was evaluating a larger supply partner lamented, ‘There was a day when small[firms] carried [Company X]. Has [Company X] forgotten this?’ Another manager put it tersely, ‘The “little-guy” treat-ment … is very frustrating’. Small firms may have little evidence that trust-based, collaborative relationships are viableand they may foster concerns that more powerful suppliers would exploit them if they attempted to build trust.

Moreover, limited resources – such as liquidity (Walker and Petty 1978) and managerial slack (Tan and Peng 2003)– may further constrain small-firms’ ability to employ relational strategies. Research has shown that trust can be costlyand time consuming to develop (Doney and Cannon 1997; Zaheer and Harris 2006). For example, Larson (1992) foundthat small firms required 6 to 18 months of resource-consuming trust-building activities before strong, trust-based rela-tionships emerge. To build high relational trust, firms must carve out precious managerial time and talent – a resourcethat many small firms often lack (Richey et al. 2010). This is a difficult proposition for smaller, resource-constrainedfirms that do not have the slack time and money to invest in efforts that are resource intensive, are hard to implementand have uncertain outcomes. Thus, even if small-firm managers believe that they could benefit from enhanced collabo-ration, they must ask, ‘Lacking power and resources, can we realistically expect to be able to develop and benefit fromtrust-enabled relationships?’ These two-stage ‘should’ and ‘can’ challenges reiterate the need to assess small firms’ abil-ity to gain the same trust-based relational advantages as large firms.

Our purpose is to examine the under-researched role of trust as a valued and viable governance mechanism for smallfirms. We posit that despite conspicuous constraints, small firms can engage in value-co-creation relationships. Smallfirms may have unique advantages that can offset power and resource disadvantages. With less bureaucracy, small firmsmay be more agile and responsive to partners and may be free to form important interpersonal ties. However, given the‘should’ and ‘can’ challenges described above, small-firm managers must explicitly consider such tradeoffs and makethe strategic choice whether or not to use trust as a competitive lever. If the decision is yes, managers must subsequentlyinvest in trustworthiness signals. We evaluate this by surveying 138 small and medium-sized manufacturing buyer firms.We find that meaningful performance advantages can be obtained by firms that (1) make the strategic choice to pursuetrust strategies and (2) effectively employ trustworthiness signals. Our study makes two contributions. First, we foundevidence that it is possible for small firms to strategically develop trust to entice partners to engage in value-creationactivities that can achieve relational advantage. Second, we highlight the strategic nature of building trust for smallfirms. Instead of a reactionary view of trust, we explicate that small firms can benefit from having a proactive approachtowards building trust. Such an approach can help identify trustworthy partners and ensure that small firms’ are strategi-cally signalling their trustworthiness to others.

2. Theory and hypotheses

Confusion can easily arise about notions of interorganisational trust and trustworthiness, so we begin by making ourconceptualisation explicit. We follow the conceptualisation of interorganisational trust suggested by Zaheer, McEvilyand Perrone (1998) and Dyer and Chu (2003). That is, interorganisational trust is the collective trust orientation thatmanagers and key organisational members hold towards a partner firm. This trust orientation captures managers’ confi-dence that the partner firm will not exploit their firm’s vulnerabilities. Through their role as decision-makers for the firm,managers actuate the firm’s decision to rely on another firm under a condition of risk. Thus, interorganisational trust is

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expressed through the decisions of the firm (Currall and Inkpen 2002). While we view interorganisational trust as theorientation of managers operating in their roles as decision-makers for the firm, we view trustworthiness as the rulesand routines built into the firm that signal – provide information to partners – that the firm can be trusted (Barney andHansen 1994; Nelson and Winter 1982).

Our main focus is on trustworthiness because it is by signalling trustworthiness that small firms have the potential tocreate relational advantages. By signalling trustworthiness, small firms engender partner trust, establishing the foundationto become a customer of choice. The important link between trust and trustworthiness is that a small firm’s decisions totrust or distrust others can influence routines within the small firm that signal more or less trustworthiness to partners.As interorganisational trust is highly influenced by investments in organisational routines, small-firm managers mustmake strategic choices whether to strive for trust-based relational advantages.

We begin by highlighting why the promise of effective governance structures, as explicated by the relational view(Dyer and Singh 1998), draw small firms towards trust-based relationships. We then explain why some small firms makethe strategic choice to signal their trustworthiness and others do not. Finally, we describe why small firms that attemptto build trust-based relationships will likely have improved operational and financial performance.

2.1 The draw of relational advantage

Firms, large and small, are motivated to develop trust with strategic partners because of the collaborative benefits thatcan ensue, which is explicated by the relational view of competitive advantage (Dyer and Singh 1998; Michaelideset al. 2013). In this view, collaborative supply chain relationships are the key to value creation, and trust is an essentialcomponent of such relationships. Trust lowers the cost of combining partners’ complementary resources (Dyer and Chu2003) and it improves learning, agility and responsiveness (Cai et al. 2012; Dodgson 1993; Handfield and Bechtel2002).

The relational view can be particularly appealing to small firms because of their resource constraints (Bretherton andChaston 2005). Specifically, effective execution of the relational view means that if small firms can do one thing extre-mely well – i.e. develop a truly valued capability – larger suppliers have a reason to want to partner with them. Thisreality emerged in the preliminary interviews. Two Fortune 500 consumer packaged goods companies described whythey are willing to tailor their service offerings and work collaboratively with a small, regional retailer. They noted thatthe retailer did not provide volume, but it was a leader in innovation. In effect, both suppliers said, ‘They are on thecutting edge, always experimenting. We learn when we work with them’. By offering a valued capability, this small firmgains access to complementary resources of its much larger suppliers. Trust is the requisite governing mechanism totransform partner complementarities into relational advantage. The benefit of trust-based relational advantage is wellknown among practitioners and it is often discussed as an important element in effective supply chain relationships(Fawcett, Magnan, and Williams 2004).

2.2 The role of trust strategies

In practice, however, trust is touted more than it is manifest (Fawcett, Magnan, and Williams 2004). Managers of smallfirms often find themselves stuck at low levels of trust with key partners. Although they can envision the benefits oftrust-based relationships, they are unwilling or unable to build trust. They lack the understanding and capacity to dem-onstrate their trustworthiness to their partners (Day et al. 2013; Fawcett, Jones, and Fawcett 2012). Because of the diffi-culties that small firms experience, we posit that developing trust requires a deliberate trust strategy. Managers arepressed with a conscious decision of whether to invest in trust as part of their firms’ relational strategy (Child andMöllering 2003; Fawcett, Magnan, and Ogden 2007; Tierney 2005). Their willingness to adopt trust strategies and theirability to implement the strategies in firm routines will determine the firm’s capacity to engage partners through trust-worthiness signalling (Barney and Hansen 1994).

2.2.1 Social dilemmas and the nature of supply chain relationships

The resource pooling required for value co-creation places decision-makers within a social dilemma. That is, supplychain relationships can be viewed as social dilemmas because they exhibit tension between what is rational for an indi-vidual firm and what is rational for an alliance as a whole (Fawcett, Magnan, and McCarter 2008; Kollock 1998; Parkhe1993). Specifically, fear of individual short-term opportunism undermines trust, leading firms to forego relationshipinvestments, which hinders the buyer/supplier relationship’s ability to uniquely co-create value.

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Importantly, power imbalances increase a small firm’s fear of exploitation. Both the probability of exploitation andexploitation’s deleterious effects are magnified. Small firms have limited ability to spread risk, face diseconomies ofscale and narrow scope and are acutely aware of their vulnerabilities (Nooteboom 1994). Given similar exchange scenar-ios, the magnitude of potential harm to small firms is significantly greater than to larger counterparts. Comparatively, asmall firm with a smaller product portfolio will find that its cash flow and financial performance are more severelyimpaired by a supply chain disruption (Hendricks and Singhal 2003). Additionally, resource-constrained small firmsmust expend a comparably larger ratio of resources to signal trustworthiness than their larger counterparts, whichincreases vulnerability. This reality may lead small-firm managers to opt out of resource-intensive initiatives required todevelop trust, leaving potential relational rents unrealised for them and their partners.

However, not all social dilemmas are alike (Parkhe 1993). Our interviews revealed that managers at small firms per-ceive social dilemmas quite differently. Some described prisoner dilemmas; others depicted assurance scenarios. In pris-oner’s dilemma scenarios, the highest payoff occurs through exploiting a relationship, so the dominant strategy leads toopportunistic behaviour and low trust (Komorita and Parks 1996). Interviewed managers expressed this sentiment asfollows:

� When they say they want to squeeze the costs out of the process, what they really mean is they are going tosqueeze the margins out of us.

� [They] are very good at sharing risks and rewards. They keep all of the rewards and pass all of the risks on tous.

They perceived that their partners would exploit any cooperative actions they might take. This focus on vulnerabilitydiscouraged managers from investing in trust.

Assurance scenarios, by contrast, have the highest payoff when both parties in the relationship cooperate, but itrequires signals from both parties of their good intentions (Cai et al. 2012; McCarter and Northcraft 2007). Signallingtrustworthiness is a key determinant of the optimal outcome in such scenarios (Kollock 1998). For instance, amonginterviewed managers of buyers and suppliers, an important phrase was, ‘They listen and are receptive to our ideas’.One manager defined the goal, ‘We discuss how to grow our joint business. It is as if we are partners in doing the busi-ness’. Assurance scenarios better model supply chain alliances with unique value co-creation potential (Gulati, Khanna,and Nohria 1994; Kollock 1998). Firms that view their alliances as assurance scenarios are more likely to see the needand believe in their capacity to convey their trustworthiness.

To summarise, managers recognised that not all relationships are created equal. Some relationships offer greatervalue co-creation potential. Some partners are more trustworthy. These factors define the appropriate level of resourcesharing with each partner. How managers perceive the risks and rewards inherent in resource-pooling relationships influ-ence their propensity to strategically invest in trust (Wicks, Berman, and Jones 1999). Developing supply chain trust isviewed as a mechanism for goal achievement; that is, to encourage the resource pooling that leads to unique value co-creation and subsequent relational rents. This view contrasts to indifferent or sceptical attitudes that limit trust develop-ment. Small firms can cultivate trusting relationships by influencing perceptions and, in a way, bring about self-fulfillingprophesies. Such strategy taken to an extreme could be damaging if it leads to excessive vulnerability (McCarter andNorthcraft 2007). However, if tempered by prudence (Wicks, Berman, and Jones 1999), trust strategies can concomi-tantly guard against opportunism.

2.2.2 Implementing trust strategies in trustworthiness routines

The decision to use trust strategies does not by itself lead to the development of trust. Such strategies must becomeconcretely embodied in the routines of a firm so that they signal the firm’s trustworthiness (Barney and Hansen 1994;Nelson and Winter 1982). Developing trustworthiness routines requires an ability to transform strategic plans into rea-lised rules for action (Mintzberg and Waters 1984). This includes developing routines to deliver on promises, to evaluatethe effect of decisions on supplier well-being, to guide the sharing of sensitive information and to integrate personnelacross company lines. It also includes inculcating organisational values of respect, open information sharing and fairnessin relationships, such as paying suppliers on time and sharing risks and rewards (Fawcett, Magnan, and Ogden 2007).Further, implementing trust strategies includes monitoring the signals that are sent to partners and ensuring the intendedmessage is conveyed (Doney and Cannon 1997).

Moreover, setting a trust strategy includes knowing which partners to employ it with. Firms may choose to interactdifferently with diverse members of their supply base. Not all relationships are, or should be, managed with the sameintensity of effort and resource dedication. This is true even among a firm’s most important strategic partners. That is,value co-creation opportunities must be evaluated and cultivated based on the nature of complementary resources

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available for pooling as well as differences in reciprocal trustworthiness signals from partners. For instance, one inter-viewed manager developed processes to monitor and score suppliers trustworthiness as part of a robust supplier-qualifi-cation system.

In sum, the vulnerability induced by power imbalances and the sense that signalling trustworthiness is difficult andresource intensive means that many small-firm managers are not inclined towards trust strategies. Yet, despite these hin-drances, some small-firm managers seek to trust and strive to pursue value co-creation opportunities. We therefore positthat the willingness to adopt a strategy towards trust and the subsequent ability to implement it is a crucial factor indeveloping that signalling capacity. Thus, small-firm managers who favour trust will more likely develop the trustwor-thiness routines necessary to develop supply chain trust. This leads to the hypothesis (see Figure 1):

H1: Small firms with more pronounced trust strategies are more likely to possess trustworthiness routines than their small-firmcounterparts that lack trust strategies.

2.3 The complexion of trustworthiness routines

A firm’s trustworthiness routines constitute the primary inputs partners use to develop trustworthiness perceptions, whichin turn fosters the partners’ trust in the firm. As small firms interact with partners, they send signals to their partnersregarding their trustworthiness (Barney and Hansen 1994). Partner firms interpret the broadcasted signals to determinethe level of trust they place in the focal firms (Doney and Cannon 1997). Simply stated, firms that want to be trustedby partners can signal their trustworthiness through specific actions, inviting partners to trust them. If partners recipro-cate with trustworthy signals, interorganisational trust emerges (Ireland and Webb 2007). Both firms are then willing tobe vulnerable in their quest to work together for distinctive value co-creation.

Based on the interorganisational trust literature (Seppänen, Blomqvist, and Sundqvist 2007) as well as on prelimin-ary interviews conducted by the researchers, we posit that trustworthiness routines can be broken into two dimensionsbased on the intent of the trustworthiness signal that is broadcasted. We define these dimensions as performance capabil-ity and relationship commitment. In practice, a specific trustworthiness routine may signal elements of both categories,but we see these categories as theoretically distinct and expect routines to primarily fall into one of the two dimensions.

2.3.1 Performance capability

Performance capability routines signal a firm’s motivation and ability to keep promises, fulfil obligations and act hon-estly (Cheng, Yeh, and Tu 2008; Claro, de Oliveira Claro, and Hagelaar 2006; Kwon and Suh 2005). Agents of partnerfirms who receive and interpret these signals are likely to attribute the signalling firm’s actions to the firm’s willingnessand capacity to perform to promise. One manager noted this succinctly: ‘Trust is doing what you say you are going todo … Trust is both attitude and capability’. Another reiterated, ‘It is being able to work together with a high level ofconfidence that people are going to do what they say they are going to do. It involves both intent and capability to fulfilto what is said’. Performance capability signals are the expressions of motivation and capacity that partners use to gaugefirm character.

Performance capability routines are important for both strategic and non-strategic relationships, are found in bothshort and long-term relationships (Fawcett, Jones, and Fawcett 2012), and are vital for trust development. Theyinfluence partners’ competence-based trust (Sako 1998). If small buyer firms, for instance, consistently keep promisesthey make to suppliers, they not only signal to suppliers their intent to be honest, but more importantly their capabilityto be reliable partners.

Trust Strategy Trustworthiness Routines

Operational Performance

Firm Performance

Performance Capability

Relationship Commitment

Figure 1. Buyer firm mediated path from trust strategy to firm performance.

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2.3.2 Relationship commitment capability

Relationship commitment routines signal a willingness and ability to maintain key relationships until mutual benefits arerealised (Sako 1998). Actions that invite reciprocity and interdependency and that indicate longer term investment fallinto this dimension (Ireland and Webb 2007). One interview manager described this as follows: ‘It’s pretty much anunderstanding or idea that each other is looking out for each other’s interests. You’ve got each other’s back and interestsin mind as you strive to build the business’. For instance, partner-specific investments, such as providing process engi-neering to enhance supplier capabilities invite reciprocity (Nelson, Mayo, and Moody 1998). Buyers that involve part-ners in target costing processes, which expose firm costs to partners, also signal interdependency (Ellram 1999; Laseter1998). Valued actions may be less-resource intensive, focusing on creativity, flexibility, empathy and speed – strengthsof small, entrepreneurial firms (Fawcett et al. 2009; Rosas and Camarinha-Matos 2009). Further, firms may seek feed-back from their partners, which signals intent to improve and become a better partner in the future. These routines sig-nal a firm’s capacity to develop and maintain a value co-creation relationship over a longer period of time withoutexploiting its partner (Sako 1998).

Relationship commitment routines suggest that the firm sees unique value co-creation potential in a long-term rela-tionship. In essence, a partner will interpret a firm’s other-regarding actions as an indication that the firm values long-term commitments and has a longer time horizon for trust (Li et al. 2012; Zaheer and Harris 2006). Knowing that abuyer values longer term relationships reduces a supplier’s concern of exploitation. In a collaborative effort, there isoften lag between initial investments and benefits from those investments. Relationship commitment routines providesignals to help reduce concerns over early defection before benefits are realised. There is some concern that over longperiods, relational commitments could lead partners to myopically miss new opportunities (Zahra, Yavuz, and Ucbasaran2006) or could cause relationships to stagnate and lose importance (Grayson and Ambler 1999). Yet, relational commit-ments are important when developing new relationships as they provide assurance that one will not leave the relation-ship until both partners have realised the benefits.

2.3.3 Trustworthiness routines and relational advantage

The strategic use of performance capability and relationship commitment routines give the confidence necessary toengage in cooperative relationships and improve performance. Specifically, the most common managerial refrain is thattrust, ‘helps us improve the business together’. One manager elaborated, ‘The collaborative spirit makes it easier to dobusiness’. Trustworthiness routines invite greater reciprocation and enable entrepreneurial inter-firm initiatives, includingcollaborative innovation and improvement (Ireland and Webb 2007; Li et al. 2012). For example, one manager sharedthe following,

For example, about a year ago, production costs were up. We were going to deliver a price advance. We started a ‘What if’discussion with [Company Y]. The outcome was good for everyone. It was a triple win – good for us, for [Company Y], andfor the end consumer.

As trust strengthens, firms share more and better information and can take advantage of opportunities to uniquelyconfigure inter-firm resources. For instance, managers related that trust-enabled information sharing helps them (1)‘improve production efficiencies’, (2) ‘understand what is going on in the marketplace’ and (3) ‘manage the businessbetter’. Further, trust leads to better problem-solving. One manager explained, ‘ABC uses very proactive methods tosolve problems. They are easy to work with and seek equitable solutions. We don’t have to be afraid to call or to meetface to face when a problem arises. There will be no shouting or ranting and raving’. Another reiterated, ‘They listen tome and let me bring new ideas to the table’. Trust-enabled collaboration allows small firms to leverage their ownconstrained resources to obtain vital operational benefits, including reduced operational costs, reduced governance costs,better responsiveness and better quality (Dyer and Chu 2003; Handfield and Bechtel 2002; Zaheer, McEvily, andPerrone 1998).

Trust helps firms improve performance and costs. One supply manager emphasised that trustworthiness routineshelped his small firm ‘get favorable pricing usually available only to larger firms’. Further, his company sought aftercollaborative opportunities to pilot new technologies with trusted large suppliers to gain the benefits of new efficiencies.Another small firm related how it had employed its trust strategy with a large supplier for many years to gain favourablepositioning for access to technologies and services. These trust-enabled operational improvements can result in improvedfirm performance. We thus expect to see a mediated relationship between buyer trustworthiness and firm performance(see Figure 1). We posit:

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H2: The implementation of trustworthiness routines by small firms is associated with greater firm performance, fully mediatedby operational performance.

3. Methodology

3.1 Survey data collection

Because issues involving the role, influence and measurement of trust in supply chain alliances are complex, dynamicand not well understood, we conducted interviews with managers at 49 firms involved in collaborative initiatives. Inter-views were semi-structured, lasted from two to four hours, and focused on critical antecedents to alliance success. Thenotes from the interviews were collated and analysed for common themes (Corbin and Strauss 1990; Eisenhardt 1989;Eisenhardt and Graebner 2007; Ellram 1996). Importantly, trust emerged as the most commonly cited antecedent to suc-cessful value co-creation among supply chain partners. Further, a number of strategies and routines for developing trustwere identified. These preliminary interviews established the context to design the survey instrument.

We used Dillman’s widely accepted Total Design Method to manage the survey process (Dillman 1978). First, wemailed a cover letter, instruction sheet and survey to 1700 senior purchasing managers randomly selected from the Dunand Bradstreet database. We carefully reviewed sample respondents to ensure each one represented a unique firm, thusensuring the autonomy of responses. The sample frame provided broad geographic and manufacturing industry coveragewithin the US. We sent second and third mailings to potential informants at two-week intervals. We offered informantsentry into a drawing for one of ten free iPod Nanos to increase response rate. We collected 189 usable surveys (11%response). Of those 189 responses, 113 were from firms with 250 or fewer employees and 138 were from firms consist-ing of 500 or fewer employees. Both 250 and 500 employees are common cut-offs for small and medium-sized enter-prises (Ayyagari, Beck, and Demirguc-Kunt 2007). We use a 500-employee cut-off because it is the standard within theUS and it allows us to work with a larger sample. Finally, the instructions asked informants to specifically consider theirstrategic, collaborative supply relationships.

Because non-response bias could be an issue, we tested for its presence by comparing early responses to lateresponses (Armstrong and Overton 1977). We found no evidence of bias. Further, we collected via phone the demo-graphic profiles of 100 non-respondents, selected at random and compared their profiles to those of respondents. Again,no significant differences were found.

3.2 Constructs

Constructs were developed based on extant interorganisational trust literature and preliminary interviews. We followedthe scale-development procedures suggested by Churchill (1979). Table 1 lists the construct items and their factorloadings.

The trust strategy construct was developed from the preliminary interviews. It measures firms’ favourable expecta-tions towards trust (Wicks, Berman, and Jones 1999) or, in other words, their beliefs that trust can lead to or enablecompetitive success. A three-item measure (see Table 1) asked informants about their company strategy (7-point scale:1 = strongly disagree, 7 = strongly agree).

The two trustworthiness constructs were developed from the preliminary interviews and the trust literature (comparewith appendix A in Seppänen, Blomqvist, and Sundqvist 2007). Interorganisational trust has been measured in manydifferent ways, but few papers discuss trustworthiness routines from the point of view of the trustee. Still, some trustitems could easily be adapted for trustee informants instead of trustor informants. Our theoretical constructs are intendedto be general at the interorganisational level, but some measurement items we developed are more specific to a supplychain manufacturing context (Seppänen, Blomqvist, and Sundqvist 2007). Informants were asked about their suppliermanagement practices. We used four items to measure performance capability – routines intended to signal promisekeeping and integrity – on a 7-point scale (1 = strongly disagree, 7 = strongly agree). We also used four items to measurerelationship commitment capability – routines intended to signal long-term commitment – on a 7-point scale (seeTable 1). Performance capability and relationship commitment capability are related constructs because they are bothused to signal trustworthiness. We model them as dimensions of trustworthiness routines by forming a second-orderconstruct.

Operational performance and firm performance constructs were adapted from Bowersox et al. (1995) and Dess andRobinson (1984), respectively. Informants were asked to indicate the extent to which their supplier managementapproach improved operational performance and their firms’ competitive performance compared to leading rivals in theirprimary industry (1 = not improved, 7 = greatly improved). Three items were used for each construct to measure level ofagreement with key operational and performance outcomes (see Table 1). We also added a control for relationship length

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because it may also impact trust signalling. We asked informants how many years they had worked with a chosen strate-gic supplier they knew well.

4. Analysis and results

4.1 Construct evaluation

Following practices widely adopted in published literature, our data analysis implemented the two-step modelling pro-cess described by Anderson and Gerbing (1988) of using confirmatory factor analysis (CFA) to establish convergent anddiscriminant validity followed by structural modelling (SEM) to examine the hypothesised relationships amongvariables.

Construct acceptability was evaluated based on demonstrating unidimensionality, convergent validity, discriminatevalidity, reliability and model fit (Koufteros 1999). Unidimensionality was assessed by the examination of standardised

Table 1. Statistical characteristics of latent constructs and summated indices.

Factorloading

Standarderror t-value

Chronbach’sα

Trust strategy 0.781Trust-based supplier relationships lead to improved competitiveperformance

0.724 0.085 8.91

Trust-based supplier relationships lead to higher levels of collaboration 0.725 0.083 8.93We trust our suppliers to do what is right for the health of our long-termrelationship

0.778 0.103 9.78

Trustworthiness routinesPerformance capability 0.758We always deliver on promises made to suppliers (e.g. on-time payment,order quantities)a

0.594 0.090 6.87

In negotiations, we only make promises we are prepared and intend tokeep

0.724 0.079 8.75

We are always perfectly honest and truthful with suppliersb 0.670 0.093 7.95Fairness and integrity accurately characterise all our dealings with oursuppliers

0.682 0.106 8.13

Relationship Commitment 0.632Our buyer training emphasises treating suppliers fairly (provides themtools to do so)

0.579 0.122 6.49

We proactively share our future technology and market entry plans 0.512 0.138 5.64When making decisions, we explicitly evaluate the impact on supplierwell-beingc

0.636 0.131 7.20

We integrate supplier personnel into new product and other value-addedteams

0.462 0.159 5.04

Performance factorsOperational performanced 0.812Cost of purchased items 0.791 0.090 10.29On-time delivery/Due-date performance 0.784 0.094 10.17Productivity 0.742 0.076 9.44

Firm performancee 0.886Market share growth in the last three years 0.779 0.088 10.50Overall competitive strength 0.891 0.076 12.65Growth in Return on Assets (ROA) in the last three years 0.887 0.074 12.75

N = 138χ2 (df) = 115.742, p = 0.311 (109)CFI = 0.995, GFI = 0.910, NNFI = 0.993, RSMEA (90% CI) = 0.0212 (0.0–0.0496)All loadings significant at p < 0.001

Note: Survey items were adapted from the studies: aDoney and Cannon (1997); bYilmaz, Sezen, and Ozdemir (2005); cKwon andSuh (2005); dBowersox et al. (1995); eDess and Robinson (1984).

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residuals and modification indices. These two parameters were small, indicating good fit. Convergent validity is demon-strated in Table 1, which shows that all indicator coefficients are significant (Anderson and Gerbing 1988). Discriminantvalidity was evaluated by pair-wise chi-square difference tests and a complete model test that compared estimated factorcorrelation models to those where the correlation was constrained to one (Anderson and Gerbing 1988). In all cases, thetests proved significant at a p-value of 0.0003 or smaller. Additionally, Chronbach’s alphas were calculated to assessconstruct reliability. Four of the five reliability scores exceeded the recommended threshold of 0.70 (Churchill 1979;Nunnally 1978). The reliability for the relationship commitment scale was 0.632, which is acceptable for new, explor-atory scales (Dunn, Seaker, and Waller 1994; Churchill 1979).

The overall CFA model statistics (CFI = 0.99, TLI or NNFI = 0.99, GFI = 0.91 [threshold of 0.90 or greater] andRSMEA = 0.021 [threshold of 0.08 or less]) (Kelloway 1998) suggest that the construct structure fits the data well.These indices were selected based on their relative independence of sample size (Garver and Mentzer 1999). Finally, thechi-square absolute fit test is not significant or greater than 0.05 (p = 0.311) indicating there is no significant differencebetween the population covariance matrix and that implied by the model (Kelloway 1998). Based on these statistics themodel fits the data well. Thus, the constructs are theoretically unique and possess adequate reliability as well as goodconvergent and discriminant validity. We can be reasonably confident that the measured items reflect the theoretical con-structs they are designed to measure.

A concern for single surveys with a single respondent is common methods bias. To minimise the chance of this biasoccurring, we implemented a careful research design. The survey included positive and negatively coded items to ensuremental resets that would cause the respondent to recalibrate their response periodically (Podsakoff, MacKenzie, andPodsakoff 2012). In an effort to prevent a priming effect, items were ordered in the survey in a manner that scrambled con-cepts and that gave temporal, psychological and proximal separation of predictor and criterion survey items (Podsakoff,MacKenzie, and Podsakoff 2012). Additionally, the analysis shows the factors to be distinct and unique, allowing us toconclude that common methods bias does not unduly affect the interpretability of the findings (Podsakoff, MacKenzie, andLee 2003). We also applied a Harman one-factor test by loading the 17 variables into an exploratory factor analysis fromwhich emerged four factors with eigenvalues greater than one. The first factor explained 33% of the variance in the data.Because the items did not load on a single factor and there was no dominant factor with the majority of the variance, therewas no indication of the presence of common method bias (Harman 1967). Further, we tested for common methods vari-ance by including a single unmeasured latent method factor that loads all items as factor indicators. Comparing this com-mon factor model to the original CFA demonstrates that factors other than common methods bias are the probable sourceof the variance in the data. This conclusion is based on the low amount of variance explained by common factor (less than7% of model variance (Carlson and Perrewe 1999; Facteau et al. 1995; Podsakoff, MacKenzie, and Lee 2003).We conclude that the survey results are not unduly affected by common methods bias.

4.2 Model fit and estimates

To test the hypothesised relationships, a Structural Equation Model (SEM) was estimated using Lisrel. The descriptivestatistics and correlation matrix for items used in the model are presented in Table 2. Results of the analysis are reportedgraphically in Figure 2. The model fits the data well as demonstrated by comparative and absolute fit measures (CFI =0.99 and TLI or NNFI = 0.99 [threshold 0.90 or greater], RMSEA = 0.035 [threshold 0.08 or less], χ2 p = 0.0964 [thresh-old greater than 0.05]) (Kelloway 1998). The structural model demonstrated good fit.

For robustness, we also tested the model with a cut-off of 250 employees (n = 113) and with the complete data-set(n = 170) with firm size as a control variable. List wise deletions eliminated 19 respondents in the full data-set. In allcases, the sign and significance of the estimated paths remained the same (see Figure 2) and all models exhibited goodfit with a RMSEA of 0.039 or less (90% confidence interval of 0.0–0.0628 or less), a NNFI of 0.98 or greater, and aCFI of 0.98 or greater. The firm size control variable was not significant in the complete data-set model. The strength ofthese results holding across all sizes of companies indicates that firms have successfully pursued trust strategies regard-less of size.

Hypothesis 1 posited that more pronounced trust strategies will lead to greater use of trustworthiness signals. Figure 2shows that the standardised coefficient estimate was positive and significant (β = 0.80, p < 0.05), which supports Hypoth-esis 1. Note also that performance capability and relationship commitment are both important trustworthiness routinesthat buyers employ. This is shown by the significant paths in Figure 2 for these trustworthiness dimensions.

Hypothesis 2 posited that greater use of trustworthiness routines, manifest through both performance capability andrelationship commitment signals, is associated with higher firm performance. It was posited that this relationship wouldbe fully mediated by operational performance. The standardised coefficient estimates from trustworthiness routines tooperational performance (β = 0.82, p < 0.05) and from operational performance to firm performance (β = 0.37, p < 0.05)

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Table2.

Descriptiv

estatisticsandzero-order

constructs.

Mean

SD

12

34

56

78

910

1112

1314

1516

1.Trustrelatio

nshipleads

tocompetitive

performance

5.95

1.04

2.Trustrelatio

nshipleads

tohigh

ercollabo

ratio

n5.93

1.02

0.52

3.Wetrustsupp

liers

todo

whatisrigh

t5.23

1.29

0.57

0.56

4.Wealwaysdeliv

eron

prom

ises

5.70

1.04

0.27

0.18

0.30

5.In

nego

tiatio

nswe

makeprom

ises

we

intend

tokeep

6.25

0.95

0.32

0.41

0.34

0.46

6.Wearealways

perfectly

honestwith

supp

liers

5.48

1.26

0.30

0.33

0.31

0.44

0.45

7.FairnessandIntegrity

characterise

our

dealings

5.91

1.10

0.33

0.22

0.36

0.35

0.50

0.48

8.Our

buyertraining

emph

asises

treatin

gfairly

5.41

1.37

0.29

0.29

0.33

0.21

0.30

0.28

0.25

9.Weproactivelyshare

future

techno

logy

4.25

1.52

0.32

0.27

0.36

0.15

0.22

0.27

0.29

0.26

10.Whenmaking

decision

s,weevaluate

impact

onsupp

liers

4.31

1.48

0.29

0.38

0.30

0.21

0.27

0.25

0.18

0.31

0.33

11.Weintegrate

supp

lierperson

nel

into

team

s

3.82

1.73

0.28

0.22

0.25

0.12

0.16

0.10

0.06

0.29

0.24

0.39

12.Costof

purchased

items

5.22

1.17

0.37

0.40

0.38

0.30

0.43

0.33

0.35

0.32

0.32

0.34

0.19

13.On-tim

edeliv

ery/Due

date

performance

5.38

1.22

0.32

0.36

0.35

0.23

0.30

0.36

0.32

0.39

0.28

0.31

0.18

0.66

14.Produ

ctivity

5.18

0.97

0.28

0.29

0.40

0.34

0.29

0.34

0.27

0.38

0.30

0.42

0.33

0.55

0.58

15.Marketsharegrow

thin

lastthreeyears

4.98

1.18

0.18

0.18

0.12

0.11

0.12

0.04

0.01

0.33

0.15

0.30

0.19

0.18

0.24

0.36

16.Overallcompetitive

streng

th5.12

1.08

0.26

0.21

0.29

0.32

0.23

0.17

0.16

0.33

0.24

0.36

0.16

0.41

0.37

0.45

0.69

17.Growth

return

onassets(ROA)in

last

threeyears

4.82

1.06

0.20

0.22

0.28

0.24

0.18

0.20

0.14

0.33

0.14

0.39

0.16

0.33

0.32

0.47

0.71

0.79

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were positive and significant. The coefficient for the direct path from buyer trustworthiness to firm performance was notsignificant. Together, these results support Hypothesis 2. Finally, the length of relationship control variable was posi-tively and significantly related to trustworthiness routines.

5. Discussion

Our primary question was whether small firms may reap the benefits of trust-enabled value co-creation relationships.Trust is difficult for any company to build, but there are particular challenges for small firms. Limited size often bringsa lack of ability to motivate partners to enter into collaborative relationships and often means resources are constrained.However, our results show that some small firms are overcoming these limitations and are able to employ trust-basedrelationships to enable improved operational and firm performance.

Support for Hypothesis 1 shows that some small firms are making strategic choices to proactively employ trust intheir key supplier relationships and that they are signalling their trustworthiness through their routines. The evidencesupports the notion that some small firms seek to tap into the potential for unique value creation with strategic supplychain partners. Value creation is possible when small firms and partners possess resources that can be combined in novelways to improve performance (Dyer and Singh 1998). Small firms can provide greater agility and flexibility (Power andReid 2005; Wolff and Pett 2006). Further, the preliminary interviews revealed that many small firms bring valuablesensing resources to an alliance. That is, given their unique market position and need to be responsive to environmentalfactors, small firms can often bring new, innovative ideas to relationships. These attributes are attractive for partnersdesiring to create collaborative relationships. However, developing mature, high levels of trust is requisite for realisingthe potential value co-creation benefits (Fawcett, Jones, and Fawcett 2012). Trust is needed because it is a more effec-tive governance mechanism for collaborative efforts for which it is hard to stipulate contract terms (Dyer and Singh1998). It allows the benefits of greater agility and responsiveness to be realised (Handfield and Bechtel 2002). Absenttrust, companies are less willing to invest in relationship specific assets, establish knowledge-sharing routines or inte-grate complementary capabilities – especially with small firms. The critical takeaway: small firms must look beyondsales volume and scale economies (enticements they cannot offer) to give larger suppliers a reason to work with them –a reason to make them a customer of choice. That reason can be flexibility, responsiveness or ideation. Regardless ofthe reason, to be a preferred candidate for resource pooling, the small firm must be trusted as a reliable partner.

Support for Hypothesis 2 shows that firms that are signalling their trustworthiness routines attain important perfor-mance benefits. This evidence suggests that small firms that are actively demonstrating the ability to perform to promiseand commit to productive, innovative relationships are capturing the value creation they are seeking. Demonstratingtrustworthiness increases trust and entices partners to collaborate. Trusted small firms are able to successfully secure theattention of their partners allowing them to create collaborative relationships. The interviews revealed that for supplypartners, trusted small firms become low-risk associates to engage with in experimentation. As customers of choice,small firms can provide an ideal setting for pilot projects of new collaborative processes. For instance, managers at aFortune 500 supplier noted that whenever they want to test a new process, they go back to the same small customer foran initial pilot test. This small customer has shown it is willing to experiment. Moreover, it has demonstrated an abilityto design and execute pilot projects so that they are not only successful but also provide insight into a proven path tosuccessful implementation. Small firms likewise benefit as partners provide complementary resources to bring ideas tofruition. Small firms are able to benefit from collaborative outcomes that trust-based relationships foster.

Trust Strategy Trustworthiness Routines

Operational Performance

Firm Performance

Performance Capability

Relationship Commitment

.80* .82* .37*

.88*.75* .21

Length of Relationship .17

Figure 2. SEM of buyer firm trustworthiness (standardised values).Note: *p < 0.05; n = 138, χ2 = 150.335 (129 df), p = 0.096, NNFI = 0.099, CFI = 0.99, RMSEA = 0.0347 (90% CI: 0.00 to 0.056).

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One question is whether the small firms benefitting from trust strategies are uniquely positioned or are uniquelyendowed with resources to capture the collaborative benefits. Although small firms that are not pursuing trust-enabled collaboration may be more resource constrained than their peers, our robustness checks showed no evidencethat size, as an indicator of resource constraints, impacted the findings. Comparisons of only the smallest firms (lessthan 250 employees) and the full data-set of small, medium and large firms showed consistent results. Rather, theinterviews suggest that cognitive barriers play an important factor in keeping small firms from developing trust-based relationships. Supply chain relationships present social dilemmas to small firms, but managers at small firmsview comparable dilemmas differently. Some view tightly coupled relationships fearfully – as prisoner’s dilemmasscenarios in which exploitation is highly probable. Others seek unique value co-creation, and are willing to seerelationships as assurance scenarios. They signal trustworthiness and seek reciprocity, which opens performanceimprovements for both parties. Managers’ mindsets prompt or impede pursuit of trust-based relationships even whenaccounting for resource constraints. Indeed, a pessimistic view towards trust development increases the perceptionof resource constraints. Such a view may lead managers to see investments in trustworthiness routines, such assharing product/process improvement ideas or resources like engineering talent, as excessively risky and too expen-sive. By contrast, managers who favour value co-creation strategies perceive trust as a vital enabling mechanism.They see a high opportunity cost if the investment is not made and are thus willing to commit to collaborativerelationships.

Over time, underinvestment in trustworthiness routines may bring greater reality to perceived resource constraintsfor pessimistic firms. By contrast, firms that make the conscious choice to use trust as an enabling governance mech-anism gain skills and find efficiencies that decrease constraints to trust development. In presenting a cognitive barrierexplanation, we do not rule out resource constraints. There may be qualitative differences in resource endowmentsthat are not captured by firm size. Although the insignificance of firm size as control variable more strongly suggeststhe main trust impediments are cognitive barriers, we surmise that for small firms that do not pursue trust develop-ment, both resource constraints and cognitive barriers likely intertwine to hinder trust investments. Future researchcould help elucidate the relationship between resource constraints and managers’ views towards strategic uses oftrust.

Another question that arises, ‘What risks accompany trust strategies?’ When taken too far, such a strategy couldexpose a small firm to exploitation (Alvarez and Barney 2001; Kramer 2009). Importantly, our results showed perfor-mance benefits for small firms with trust strategies. It appears these firms, in developing their trust strategies, take awell-reasoned approach. As several managers noted, ‘We could not do this with everyone’. This manager’s commenthighlights the importance of small firms’ decisions regarding which partners to privilege. Both signalling to and inter-preting trust signals from potential strategic partners can play a critical role in the development of privileged relation-ships. Some level of exploitation is always a risk in resource-pooling and value co-creation scenarios, but firms that relyon trustworthiness signals are more likely to make prudent choices in the partner selection process that limit exposure toopportunism. That is, firms that seek trust development monitor their relationships closely and are guided towards anoptimal level of trust (Wicks, Berman, and Jones 1999). Our findings reveal that some willingness to engage in trustdevelopment can prove beneficial and points to a need for additional research to further elucidate this developmentalprocess for small firms.

6. Limitations and future research

Two limitations bind the scope of our findings. First, our survey includes buyer firms only. We did not survey their sup-plier counterparts. In the tradeoff between a higher response rate and a dyadic structure, we chose the higher responserate to maintain statistical power and retain generalisability. By so doing, we limited our knowledge of partner suppliers’size, their signals of trustworthiness and their attitudes towards trust. More dyadic research is needed. For instance, aneed exists to specifically examine the differences in supplier selection and relationship development practices betweenfirms with strong and firms with weak trust strategies. Such an examination would require a pre-screening of companiesto assure that sufficient numbers of each group were included in the study.

Second, there is a reciprocal nature to trust development (Ireland and Webb 2007; Jones et al. 2010). With ourcross-sectional study design, we are unable to test the cycles of trust development. Future research would benefit from alongitudinal survey that captured the development of trust at different stages. Such research would capture trust at differ-ent levels and see how it increased or decreased as trust development progressed. It could also help explain how differ-ent types of trustworthiness routines are employed as trust becomes more mature.

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7. Conclusion and implications

When unique value co-creation potential exists and can be tapped by closer, more collaborative relationships, small firmscan employ trustworthiness signals to engage partners. When trust emerges, small firms can mitigate vulnerability and moreeffectively engage in deeper collaborative exchanges that bring relational advantages and increased firm performance.

7.1 Theoretical implications

An important contribution of this research is that we highlight the role of trustworthiness signalling as a proactive meansof developing trust. This affirms and extends the work of others who recognise purposeful trust development (Child andMöllering 2003; Wicks, Berman, and Jones 1999). Both performance capability and relationship commitment signals areneeded to engender mature trust. By recognising these two dimensions of trustworthiness routines, it becomes clearerthat there is a breadth and intensity to trustworthiness. Performance capability routines are used to develop trust in vari-ous exchange relationships, strategic and non-strategic in nature. Relationship commitment routines indicate the presenceof unique value co-creation potential. They promote the relationship intensity that antecedes relational advantage. Ourfindings demonstrate that despite the constraints on them, small firms can initiate and benefit from trust-enabled collabo-rative relationships.

7.2 Managerial implications

Trust can be an enabler of relational advantage, but managers must consider it as a strategic choice. Whether and withwhom to build trust are vital strategic decisions. If implemented well, proactive efforts can lead small firms to benefitfrom trust-based relationships. Our survey was conducted with manufacturers, so our results are particularly applicableto goods producers.

� Managers must take into account the impact their actions will have on their partners. This requires managers toconsider the financial and operational consequences of their actions on their strategic partners.

� Managers must consider criteria regarding collaborative capability when selecting key suppliers. If managersgauge potential suppliers’ attitudes towards trust and collaboration, then they may make different supplier selec-tions that enable value co-creation via trust development.

� Managers should consider how to optimise trustworthiness signalling. They should be cognizant of how laxnessin performing to promise impedes trust development. And, instead of defaulting to risk-averse actions, manag-ers must engage in well-reasoned investments that invite reciprocal action and foster collaboration. Managerswho optimise on potential gain while staying within the confines of reasonable risk are more likely to buildtrust.

The relational view argues that the resources needed for competitive success often reside beyond the four walls ofthe firm. This is particularly true for small, resource-constrained firms. To bring valued resources together, cooperativestrategies are needed. However, effective governance antecedes success. Trust can provide the governance needed toenable companies to combine and configure resources innovatively. Our findings demonstrate that some small firms areproactively pursuing trust-enabled strategies and achieving higher levels of operational and firm performance. By devel-oping routines to signal trustworthiness, collaborative relationships can be built and managers can help their firmsachieve competitive advantage.

Note1. We conducted 49 preliminary interviews with companies to understand the nature of value co-creation. Trust was identified as the

most important enabler of value co-creation. More importantly to our context, key insight into the small-buyer-larger-supplierrelationship emerged. We use quotes and examples from our interviews with supply chain managers to assist with building ourtheoretical framework and hypotheses.

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