Justice served: Mitigating damaged trust stemming from supply chain disruptions

Abstract

a b s t r a c tThis research examines the mitigation of damaged trust stemming from supplier-induced disruptions. We used the critical incident technique on 302 buying firms in China to capture two (one successful, one unsuccessful) supplier-induced disruptions (yielding a total of 604 incidents) to test our theorizing grounded in justice theory. We find evidence that different aspects of trust damage (ability, benevolence, and integrity) can be mitigated through the supplier's selective use of appropriate justice approaches (procedural, interactional, or distributive justice), which, in turn, foster relationship continuity intentions. Within this realm, we make a number of contributions. First, we find that procedural justice is the most effective mechanism (followed by distributive justice and interactional justice) to recoup the damage to buyers' trust in the suppliers' ability, benevolence, and integrity. Second, we find that mitigating damaged ability is the most powerful precursor (followed by recuperating damaged integrity) for locking in future business. Conversely, the mitigation of damaged benevolence is not found to affect future business intentions. Third, our post hoc results suggest that disruptions and consequent mitigation efforts pose relational threats as well as opportunities-yet the "double-edged" nature is affected by the "base" level of trust (i.e., the trust level prior to the disruption). Broadly, our study suggests that suppliers can overcome the negative relational repercussions of disruptions (that they caused) by employing well-developed, but nuanced, mitigation efforts and, in doing so, repair, solidify or even enhance the relationships.

Unintended Consequences: How Suppliers Compensate for Price Concessions and the Role of Organizational Justice in Buyer‐Supplier Relations

“…Understanding the role of organizational justice can reduce opportunistic behavior (Ireland and Webb ) and help recover trust after supply chain disruptions occur (Wang et al. ). In a critical study, Narasimhan et al.…”

Execution quality: An analysis of fulfillment errors at a retail distribution center

“…Related issues involving execution quality in retailing include misplaced inventory (Camdereli and Swaminathan, 2010), inventory record inaccuracy (Heese, 2007;DeHoratius et al, 2008), and backroom inventory (Gaukler et al, 2007;Eroglu et al, 2012). In addition, our research is related to studies of the impact of execution quality on the relationships between firms and their suppliers (Wang et al, 2014).…”

“…First, since fulfillment errors make the inventory supply process less efficient by imposing unnecessary costs on retailers and suppliers alike, managers can work with suppliers toward the elimination of fulfillment errors (Wang et al, 2014). Kulp et al (2007) describe the various methods retailers use to collaborate with suppliers to reduce fulfillment errors.…”

Developing country sub‐supplier responses to social sustainability requirements of intermediaries: Exploring the influence of framing on fairness perceptions and reciprocity

“…Few studies in the operations and production management literature have emphasized the importance of the perceptions of fairness for improving the performance of supply chain relationships (e.g., Griffith et al, 2006; Wang et al, 2014). For example, based on a study of 290 supply chain relationships, Griffith et al (2006) showed that the distributors’ positive procedural and distributive perceptions of fairness of supplier policies enhanced the relationship with their suppliers, decreased conflicts of interests, and increased satisfaction and performance.…”