A relational approach of the supply function: an extension to the new ventures phenomenon in the small and medium enterprise (SME) context

Abstract

The interest in correctly managing the relationships that companies establish with their suppliers increases and represents the first step toward ensuring that the product will comply with the desired standardsThis research proposes a model that explains the long-term orientation of firmsuppliers relationships, specifically focused on the small and medium enterprise (SME) context. This is because SMEs present different profiles to bigger firms and therefore they require special attention.We consider that the evolution of firms and their experience are also factors that affect the planning and managing processes of companies and their supply function, in particular. To analyze the effect of experience, we take the new ventures concept as a reference. The global sample is divided into two subsamples: 'new ventures' and 'established forms'. The implications that derive from our research, its limitations and proposals for future research are also discussed.

The impact of effectuation on small firm buying decisions

“…This study considered the impact of effectuation logic on the buying decisions of small firm owner-managers (Sarasvathy, 2001b). It proposes a new conceptual model in which the effects of effectuation logic were considered in relation to the predilection of small firm owner-managers to select trusted suppliers that offer sufficient available support resources to reduce potential losses to an affordable level, to use personal and business networks, and to engage with them on flexible terms (Cambra-Fierro & Polo-Redondo, 2009;Dew et al, 2009;Morrissey & Pittaway, 2004Sarasvathy, 2001b).…”

“…Secondly, suppliers need to be adaptable to the needs of small firm owner-managers. While they value service over price, they also require flexible trading terms and due to poor planning and a lack of resources, they rely on their suppliers to deliver high levels of customer service and technical backup (Cambra-Fierro & Polo-Redondo, 2009;Ellegaard, 2009Ellegaard, , 2012Thakkar et al, 2008b). Furthermore, when a supplier has proven itself, small firm ownermanagers appear to wish to become loyal customers and remain in long-term trading relationships (Cambra-Fierro & Polo-Redondo, 2008;Ellegaard, 2009;Kavak et al, 2015;Seung-Kuk et al, 2009;Wynarczyk & Watson, 2005).…”

“…The impact of effectuation on small firm buying decisions __________________________________________________________________________________ __________________________________________________________________________________ Page 9 been experienced, it takes the form of the ability to trust that a supplier will keep its promises (Cambra-Fierro & Polo-Redondo, 2009;Morrissey & Pittaway, 2004. Small firm ownermanagers consider trust to have been broken when deliveries are missed, goods or services fail to live up to quality expectations, or there is a breach of any other promises made by the supplier.…”

The dark side of effectuation in a key account management relationship

“…For KAM relationships to be successful, both sides of the buyer-supplier dyad need to commit resources (Davies & Ryals, 2014). Therefore, it is imperative that appropriate resources, which may include those beyond original contractual terms (Meehan & Wright, 2011), are available and applied as required (Cambra-Fierro & Polo-Redondo, 2009;Morrissey & Pittaway, 2004. However, differing priorities (Meehan & Wright, 2011) and lack of flexibility (Fang et al, 2011) may lead to such resources being unavailable.…”

“…Continued use of effectuation may, however, reduce small supplier ability to successfully manage a KAM relationship long term, particularly where it leads to failure to meet KAM partner expectations, breach of trust, and relationship breakdown (Cambra-Fierro & Polo-Redondo, 2009;Dasanayaka et al, 2020;Morrissey & Pittaway, 2004Mungra & Yadav Prabhat, 2019). The literature of sales and new product development links customer needs and products/services that should be developed to meet them (Cooper, 2018;Ortega et al, 2017;Sarasvathy, 2009).…”