a b s t r a c tThe bottom-line financial impact of supply chain management has been of continuing interest. Building on the operations strategy literature, Fisher's (1997) conceptual framework, a survey of 259 U.S. and European manufacturing firms, and secondary financial data, we investigate the relationship between supply chain fit (i.e., strategic consistencies between the products' supply and demand uncertainty and the underlying supply chain design) and the financial performance of the firm. The findings indicate that the higher the supply chain fit, the higher the Return on Assets (ROA) of the firm, and that firms with a negative misfit show a lower performance than firms with a positive misfit.
Acknowledgements: We thank the editor for his guidance throughout the review process and the three anonymous reviewers for their constructive feedback on earlier versions of this article. We also acknowledge the partial financial support for this study by the Kühne Foundation.
Purpose
Industry practice shows that buyer-supplier partnerships are negatively influenced by zero-sum pie-sharing competition. Interfirm rivalry vis-à-vis a fair financial distribution of the mutually generated partnership pie is a growing source of concern for firms because fairness has a direct effect on the competitiveness of a partnership. This study aims to examine the consequences of fairness in pie-sharing within buyer-supplier new product development (NPD) partnerships on product-innovation, product-quality and product-cost, as well as the mediating role of opportunism.
Design/methodology/approach
The empirical analyses are grounded on data from 147 NPD partnerships between Tier-1 suppliers and automotive manufacturers, using structural equation modeling with SPSS AMOS.
Findings
Findings indicate that pie-sharing fairness significantly influences the partnership’s ability to increase NPD effectiveness and efficiency. Moreover, unfairness in sharing the mutual pie showed to promote harmful opportunism, which negatively mediates the relationship between pie-sharing fairness and NPD performance. To control partners’ fairness perception in the first place, the analysis revealed three factors that affect pie-sharing fairness significantly, i.e. relationship induced financial performance, behavioral tension and interfirm dependency.
Originality/value
Exchange relationships are built on economic and social components, both of which can be combined within the construct of pie-sharing fairness. Firms must take an interest in their exchange partner’s equitable share of the mutually generated partnership pie, as pie-sharing fairness can be used to promote determinants of effectiveness and efficiency of their mutual NPD project. In a two-sided mutually contingent exchange behavior, the firm’s own welfare must be regarded as an interorganizational overlap with the partner’s, which can be optimized only by mutual efforts.
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