Supplier Development Activities and Buying Firm’s Performance: An Empirical Investigation of Iranian SMEs

Document Type : Research Paper


1 Faculty of Management, Velayat University, Iranshar, Sistan & Baluchistan, Iran

2 Faculty of Management, Multimedia University, Jalan Multimedia, 63100 Cyberjaya, Selangor, Malaysia


This study attempts to investigate the major antecedent factors that influence manufacturing SMEs intentions toward the implementation of supplier development activities in Iranian SMEs. In order to achieve this objective, the research constructs were developed. The conceptual framework underlying this study was based on the theories of supplier development activities and social capital.  These theories were merged and developed by adding some main variables after analyzing various key antecedents that were thought to be the influential factors that determined the intention of the manufacturing firms to adopt supplier development activities. A cross sectional method was used to gather data collected from 280 Iranian manufacturing SMEs. The measures and hypotheses were analyzed with the help of the Structural Equation Modeling (SEM). The research supported the idea that information sharing within firms, communication methods, top management support and trust between trading partners have positive influence on information sharing between firms. Furthermore, the research showed the positive effects of information sharing between firms on inventory management and product quality on buying firms.


Main Subjects

Article Title [فارسی]

فعالیت های توسعه تامین کننده و عملکرد بنگاههای خریدار: یک مطالعه تجربی در بنگاههای کوچک و متوسط ایرانی

Authors [فارسی]

  • عبدالناصر درخشان 1
  • اچ وی بون اونگ 2
  • گویندان مارتهاندان 2
1 دانشکده مدیریت، دانشگاه ولایت، ایرانشهر، سیستان و بلوچستان، ایران
2 دانشکده مدیریت، دانشگاه مولتی مدیا، سلنگور، مالزی
Abstract [فارسی]

دراین تحقیق سعی شده است تا عوامل اصلی پیش بینی کننده تاثیر گذار بر بنگاههای کوچک و متوسط ایرانی نسبت به اجرای فعالیت های توسعه تامین کننده بررسی شود. برای دستیابی به این اهداف، ساختارهای تحقیق توسعه توسعه یافته و چارچوب مفهومی این تحقیق بر مبنای نظریه فعالیت های توسعه تامین کننده و سرمایه اجتماعی شکل گرفته است. این نظریه با افزودن برخی متغیرهای اصلی پس از تجزیه و تحلیل پیشبین های مختلف کلیدی اثرگذار بر قصد شرکت های تولیدی جهت اتخاذ فعالیت های توسعه تامین کننده ادغام شده و توسعه یافتند. برای جمع آوری داده ها از 280 بنگاه کوچک ومتوسط ایرانی ازروش مقطعی استفاده شده است. مقیاس ها و فرضیه ها با کمک مدل سازی معادلات ساختاری مورد تجزیه و تحلیل قرار گرفته اند. این مطالعه نشان داد که تبادل اطلاعات درون سازمانی بنگاه ها، روشهای ارتباطی، پشتیبانی مدیریت عالی و اعتماد بین شرکای تجاری تاثیر مثبتی بر تبادل اطلاعات بین سازمانی دارد. علاوه براین، این تحقیق اثرات مثبت تبادل اطلاعات بین شرکت ها را درمدیریت موجودی کالا وکیفیت محصولات نشان می دهد.

Keywords [فارسی]

  • فعالیت توسعه تامین کننده
  • مدیریت موجودی
  • بهبود کیفیت محصول
  • عملکرد مالی
Abu Bakar, A. H. (2002). Vendor development program: A Malaysian case study. First Proceedings of Asia Pacific Economics and Business Conference,  115– 122.
Ahire, S. L. & Dreyfus, P. (2000). The impact of design management and management on quality: An empirical examination. Journal of Operations Management. 18(5), 549-575.
Ahmadi, F., & Alizadeh, S. (2018). Study of Strategic Thinking of Managers based on their Mental Pattern. Journal of Humanities Insights, 2(2), 206-215
Alfred, B. S. L., Felix, T.S.C., & Pu, X. (2018). Impact of supplier development on supplier’s performance. Industrial Management & Data Systems. 118(6), 1192-1208.
Anand, K., & Mendelson, H. (1997). Information and organization for horizontal multimarket coordination. Management Science, 43(12), 1609– 1627.
Arumugam.V.C, Boon.O.H, & Derakhshan. A (2011), Implementation of supplier development activities in manufacturing organization: A review of literature. European journal of Economics, Finance and administration, 43(1),1-12.
Astrid, V. (2007). Information exchange in vendor managed inventory. International Journal of Physical Distribution & Logistics Management, 37(2), 131-147.
Bagchi, P.K., Ha, B., Skjøtt-Larsen, T. & Lars, B.S. (2005). Supply chain integration: A European survey. International Journal of Logistics Management, 16(2), 275-294.
Bai, C. & Sarkis, J. (2011). Evaluating Supplier Development Programs with a Grey-Based Rough Set Methodology. Expert Systems with Applications, 38(11), 13505-13517.
Blome, C., Hollos, D. & Paulraj, A. (2014). Green Procurement and Green Supplier Development: Antecedents and Effects on Supplier Performance. International Journal of Production Research, 52(1), 32-49.
Carr, A. S., & Kaynak, H. (2007). Communication methods, information sharing supplier development and performance: An empirical study of their relationships. International Journal of Operations and Production Management, 27(4), 346–370.
Carr, A. S., & Smeltzer, L. R. (2002). The relationship between information technology use and buyer – supplier relationships: An exploratory analysis of the buying firm’s perspective. IEEE Transactions on Engineering Management, 49(3), 293-304.
Chavhan, R., Mahajan, S.K. & Sarang, J. (2012). Supplier development: Theories and practices. Journal of Mechanical and Civil Engineering, 3(3), pp. 37-51.
Claycomb, C., Germain, R., & Droge, C. (1999). Total system JIT outcomes: Inventory, organization and financial effects. International Journal of Physical Distribution & Logistics, 29(10), 612-630.
Closs, D. J., Roath, A. S., Goldsby, T. J., Eckert, J. A. & Swartz, S. M. (1998). A comparison of anticipatory and response-based supply chain strategies. International Journal of Logistics Management, 9(2), 21-34.
Corbey, M., & Jansen, R. (1993). The economic lot size and relevant costs. International Journal of Production Economics 30(31), 519–530.
Crocitto, M., & Youssef, M. (2003). The human side of organizational agility. Industrial Management & Data Systems, 103(6), 388-397.
Dalvi, M. V., & Kant, R. (2015). Benefits, Criteria and Activities of Supplier Development: A Categorical Literature Review. Journal of Marketing and Logistics, 27(4), 653-675.
Dalvi, M. V., & Kant, R. (2018). Effect of supplier development activities on performance outcomes: An empirical study. Benchmarking: An International Journal, 25(2), 489-516.
Dewett, T., & Jones, G. R. (2001). The role of information technology in the organization: A review, model, and assessment. Journal of Management, 27(3), 313-346.
Dimitrios P. K., & Rio, G. (2008). The effect of inventory management on firm performance Industrial Management and Information Systems Laboratory. International Journal of Productivity and Performance Management, 57(5), 355-369.
Dudley, L. & Lasserre, P. (1989). Information as a substitute for inventories. European Economic Review, 33(1), 67-88.
Dyer & Nobeoka (2000). Creating and managing a high-performance knowledge-sharing network: The Toyota case. Strategic Management Journal, 21(3), 345-367.
Dyer, J. H. (1997). Effective inter-firm collaboration: How firms minimize transaction costs and maximize transaction value. Strategic Management Journal, 18(7), 535-556.
Fawcett, S. E., Osterhaus, P., Magnan, G. M., Brau, J. G. & McCarter, M.W. (2007). Information sharing and supply chain performance: The role of connectivity and willingness. Supply Chain Management: An International Journal, 12(5), 358-68.
Forza, C., & Flippini, R. (1998). TQM impact on quality conformance and customer satisfaction:  A causal model.  International Journal of Production Economics, 55(1), 1-20.
Ghijsen, P. W. T., Semeijn, J. & Ernstson, S. (2010). Supplier satisfaction and commitment: The role of influence strategies and supplier development. Journal of Purchasing and Supply Management, 16(1) 17-26.
Hair, J.F., Anderson, R.E., Tatham, R.L., Black, B.C. (2010). Multivariate data analysis. Prentice-Hall, Upper Saddle River, New Jersey, USA.
Handfield, R., Ghosh, S., & Fawcett, S. (1998). Quality-driven change and its effects on financial performance. Quality Management Journal, 5(3), 13-30.
Hosseini, Z., Farzadnia, E., & Riahi, A. (2017). Improvement of Company Financial Performance through Supply Chain and Review of Human Resource Effects on it. Journal of Humanities Insights, 1(1), 1-6.
Humphreys, P. K., Li, W. L., & Chan, L. Y. (2004). The impact of supplier development on buyer-supplier performance. The International Journal of Management Science, 32(2), 131-43.
Iran Statistical Yearbook (2015). Tehran: Centre of Statistics of Islamic Republic of Iran, 295-328.
Joshi S., P., Rakesh, R., Sachin, K., & Manoj,K., (2017). To examine the relationships between supplier development practices and supplier-buyer relationship practices from the supplier's perspective. Benchmarking: An International Journal, 24(5), 1309-1336.
Joshi, S. P, Bhasin, H. V., Rakesh, V., & Kharat, M., (2016). Critical success factors for supplier development and buyer supplier relationship: Exploratory factor analysis. International Journal of Strategic Decision Sciences, 7(1), 19-39.
Kaynak, H. (2002). The relationship between just-in-time purchasing techniques and firm performance. IEEE Transactions on Engineering Management, 49(3), 205-217.
Keramati, A., Nazari-Shirkouhi, S., Moshki, H., Afshari-Mofrad, M., & Maleki-Berneti, E. (2013). A novel methodology for evaluating the risk of CRM projects in fuzzy environment. Neural Computing and Applications, 23(1), 29-53.
Kleinschmidt, E. J., Brentani, U., & Salomo, S.  (2007). Performance of global new product development programs: A resource-based view. Journal of Product Innovation Management, 24(5), 419-441.
Krause, D. R. (1997). Supplier development: Current practices and outcomes. International Journal of Purchasing & Materials Management, 33(2), 12-19.
Krause, D. R., Handfield, R. B., & Scannell, T. V. (1998). An empirical investigation of supplier development: Reactive and strategic processes.  Journal of Operations Management, 17 (1), 39-58.
Krause, D. R., Handfield, R. B., & Tyler, B. B. (2007). The relationship   between supplier development, commitment, social capital accumulation and performance improvement. Journal of Operations Management, 25(2), 528-544.
Krause, D. R., Scannell, T. V., & Calantone, R. J. (2000). A structural analysis of the effectiveness of buying firms’ strategies to improve supplier performance. Decision Sciences, 31(1), 33-55.
Lee, H., Padmanabhan, V., & Whang, S. (1997). Information distortion in a supply chain:  The Bullwhip Effect. Management Science, 43(4), 546-558.
Li, W., Humphreys, P., Yeung, A. C. L., & Cheng, T. C. E. (2007). The impact of specific supplier development efforts on buyer competitive advantage: An empirical model. International Journal of Production Economics, 106(1), 230-247.
Li, W., Humphreys, P., Yeung, C. & Cheng, T. (2012). The impact of supplier development on buyer competitive advantage: A path analytic model. International Journal of Production Economics, 135(1), 353-366.
Lieberman, M. B., & Demeester, L. (1999). Inventory reduction and productivity growth: Linkages in the Japanese automotive industry.  Management Science, 45 (4), 466–485.
Maani, K. E., Putterill, M. S., & Sluti, D. G. (1994). Empirical analysis of quality improvement in manufacturing. The International Journal of Quality & Reliability Management, 11(7), 19-37.
Madlberger, M. (2009). What drives firms to engage in inter organizational information sharing in supply chain management? International Journal of e-Collaboration, 5(2), 18-42.
Mahapatra, S., Das, A. & Narasimhan, R. (2012). A Contingent theory of supplier management initiatives: Effects of competitive intensity and product life cycle. Journal of Operations Management, 30(5), 406-422.
Milgram, P., & Roberts, J. (1988). Communication and inventories substitutes in organizing production.  Scandinavian Journal Economics, 90(3), 275-289.
Moberg, C. R., Cutler, B. D., Gross, A., & Speh, T.  W. (2002). Identifying antecedents of information exchange within supply chains. International Journal of Physical Distribution and Logistics Management, 32(9/10), 755-770.
Muhammad, K. (2018). The effects of electronic human resource management on financial institutes. Journal of Humanities Insights, 2(1), 116-120.
Nagati, H. & Rebolledo, C. (2013). Supplier development efforts: The suppliers’ point of view. Industrial Marketing Management, 42(2), 180-188.  
Narasimhan, R., & Kim, S.W. (2001). Information system utilization strategy for supply chain integration. Journal of Business Logistics, 22(2), 51-75.
Nazari-Shirkouhi, S., & Keramati, A. (2017). Modeling customer satisfaction with new product design using a flexible fuzzy regression-data envelopment analysis algorithm. Applied Mathematical Modelling, 50(1), 755-771.
Nazari-Shirkouhi, S., Keramati, A., & Rezaie, K. (2015). Investigating the effects of customer relationship management and supplier relationship management on new product development. Tehnički vjesnik, 22(1), 191-200.
Noruzy, A., Dalfard, V. M., Azhdari, B., Nazari-Shirkouhi, S., & Rezazadeh, A. (2013). Relations between transformational leadership, organizational learning, knowledge management, organizational innovation, and organizational performance: An empirical investigation of manufacturing firms. The International Journal of Advanced Manufacturing Technology, 64(5-8), 1073-1085.
Rao, S. S. (2000). Enterprise resource planning: Business needs and technologies. Industrial Management & Data Systems, 100(2), 81-88.
Rogers, K. W., Purdy, L., Safayeni, F., Duimering, P. R. (2007). A supplier development program rational process or institutional image construction? Journal of Operations Management, 25(2) 556–572.
Routroy, S. & Pradhan, S. K. (2014). Analyzing the performance of supplier development: A case study. International Journal of Productivity and Performance Management, 63(2), 209-233.
Shetty, Y. K. (1988). Managing product quality for profitability.  SAM Advanced Management Journal, 53(4), 33-38
Shin, H., Collier, D. A., & Wilson, D. D. (2000). Supply management orientation supplier/buyer performance. Journal of Operations Management, 18(3), 317-333.
Sillanp¨a¨a I., Shahzad K., & Sillanp¨a¨a E. (2015). Supplier development and buyer–supplier relationship strategies – a literature review. International Journal of Procurement Management, 8(1), 227–250.
Singhal, V. (2005). Excess inventory and long-term stock price performance.  Working Paper, Georgia Institute of Technology.
Sriram, V., & Stump, R. (2004). Information technology investments in purchasing: Empirical investigation of communications, relationship and performance outcomes. The International Journal of Management Science, 32 (1), 41-55.
Tan, K. C. (2001). A structural equation model of new product design development. Decision Sciences, 32(2), 195-226.
Waller, M. A., Johnson, M. E., & Davis, T. (1999). Vendor-managed inventory in the retail supply chain. Journal of Business Logistics, 20(1), 183-203.
Watts, C. A., & Hahn, C. K. (1993). Supplier development programs:  An empirical analysis. International Journal of Purchasing and Materials Management, 29(2), 11–17.
Wognum, P. M., Fisscher, O. A. M., & Weenink, S. A. J. (2002). Balanced relationships management of client-supplier relationships in product development. Technovation, 22 (6), 341-351.
Yu, Z., Yan, H., & Cheng, T. C. E. (2001). Benefits of information sharing with supply chain partnerships. Industrial Management & Data Systems, 101(3)114-119.
Yu, Z., Yan, H., & Cheng, T. C. E. (2002). Modeling the benefits of information sharing-based partnerships in a two-level supply chain. The Journal of the Operational Research Society, 53(4), 436-446.