Effects of Suppliers' Reputation on the Future of Buyer-Supplier Relationships: The Mediating Roles of Outcome Fairness and Trust

Abstract

This study is motivated by the interest in looking beyond the must‐have tangible performance factors of buyer–supplier relationships to understand the role of intangible factors that affect buyer–supplier relationship continuity and future collaboration. The article uses three sequential structural equation models that integrate relationship theory, signaling theory and social exchange theory to empirically evaluate the effects of suppliers' reputation on the future of buyer–supplier relationships. This multitheoretical approach shows that reputation at the start of a project has a direct effect on a buyer's future collaboration intentions with suppliers. However, when outcome fairness (an economic factor) is added to the model the effect of reputation is partially mediated. Conversely, when trust during the project collaboration (a social factor) is added to the model the effects of reputation and outcome fairness are completely mediated. These results support that trust during the project collaboration has a stronger influence on the future of buyer–supplier relationships than fair economic rewards or reputation.

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