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A study of supply chain partnerships based on the commitment-trust theory


Mei-Ying Wu, Yung-Chien Weng and I-Chiao Huang
Department of Information Management, Chung-Hua University, Hsinchu, Taiwan, Republic of China
Abstract
Purpose The purpose of this paper is to use high-tech companies in Taiwan as research subjects to verify the t of the commitment-trust theory and explore the supply chain relationships among research variables. Design/methodology/approach The key mediating variables model (KMV) proposed by Morgan and Hunt is applied to construct the research structure, hypotheses, and questionnaire. The research hypotheses are validated through structural equation modelling and conrmatory factor analysis. Findings Research results show that for two parties of an exchange relationship, higher levels of trust can lead to better interactions and trust is an important factor affecting their supply chain partnerships. It helps increase interests of both parties, facilitate constant co-operation and communication, and reduce uncertainties. Higher levels of commitment can also help increase value benets, reduce a partners propensity to leave, and enhance supply chain co-operation efciency. Originality/value Empirical results indicate that relationship marketing is a strategy that promotes trust and commitment of partners in high-tech industries. While information sharing and communication can increase partners intention of long-term co-operation, functional conicts can facilitate positive interactions and reduce uncertainties. Through relationship marketing, high-tech companies can create win-win strategic alliances to develop their competitive advantages in the market. Keywords Taiwan, Supply chain management, Partnership, Relationship marketing, High-tech companies, Commitment-trust theory, Supply chain relationships, Key mediating variables model Paper type Research paper

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Introduction In almost all nations, high-tech companies not only create competitive advantages of the nation but also act as the main locomotive of innovation and productivity improvement of all industries. High-tech companies in Taiwan have also promoted economic growth of the nation. They have become the backbone of Taiwans industries. According to Chu (2010), high-tech companies have the following characteristics: using high-precision and highly sensitive facilities, high capital intensity, complicated production processes, short product life cycle, high ratios of investment in research and development, and high knowledge intensity. In this study, we dene high-tech companies as:
[. . .] capital and technology intensive rms that place a strong emphasis on professional knowledge, research and development, and employee training and operate in an environment with short product life cycles and intense market competitions.

Asia Pacic Journal of Marketing and Logistics Vol. 24 No. 4, 2012 pp. 690-707 q Emerald Group Publishing Limited 1355-5855 DOI 10.1108/13555851211259098

Based on the classication of Hsinchu Science Park Administration Bureau (2007), we further divide high-tech companies into six categories, including semiconductor manufacturing, computer and peripheral, optoelectronic, electronics-related,

precision machinery, and bio-tech. In high-tech industries, every product is made of numerous components offered by numerous partners. Therefore, trust and commitment of partners is extremely important. How to develop trust and commitment of partners has become a focus of high-tech companies in business management. In high-tech industries, all supply chain partners will make every effort to form closer relationships to reduce costs and increase prots. How to maintain long-term co-operative relationships is an important issue for them. Since Morgan and Hunt (1994) proposed the commitment-trust model, many researchers have probed into various trust and commitment related issues. High-tech industries are the most competitive industries at present. They are characterised by intense competition, high professional techniques, and extensive research and development of know-hows. For companies in this industry, building win-win situations to maintain co-operative relationships is a challenge. McCutcheon and Stuart (2000) propose that goal relevance, corporate value, cultural compliance, rm scale, and power asymmetry should be considered rst in the choice of corporate partners. This implies that when competitions are intense and the business environment is volatile, rms will attempt to work with their partners to form core values of their business. OKeeffe (1998) mentions that value creation is the basis for maintaining a closer exchange relationship. That is to say, more competitive suppliers are usually more reliant on their customers, and they are more like strategic partners. According to Lee and Kim (1999), partnership is a co-operative relationship between organisations that pursue a common goal and share risks and benets. Organisational integration and relationship recognition between partners usually involve high relationship closeness, high commitment-trust, and a tendency to help each other (Harvey and Speier, 2000). Mohr and Spekman (1994) have identied three characteristics of partnership success: partnership attributes, communication behaviour, and conict resolution techniques. Over reliance on good interpersonal relations and underestimation of turbulence surrounding partnering may ultimately cause collapse of a good partnership and withdrawal of commitments originally made for the exchange (Boddy et al., 1998). In the past 20 years, there has been a breakthrough in the development of relationship marketing. Relationship marketing has been frequently applied to business-to-business and business-to-customer product marketing and maintenance of a mutualistic relationship. In fact, relationship marketing is to base marketing activities on relationships, and such marketing activities involve products, services, consumers, and the market. Issues pertaining to channels, B2B, B2C, service marketing, marketing studies, international marketing, and marketing communication are all within the scope of relationship marketing. Using relationship commitment and trust as main variables, Morgan and Hunt (1994) developed a commitment-trust theory. They used relationship commitment and trust as mediating variables in the commitment-trust model, which consists of ve important antecedent variables (relationship termination costs, relationship benets, shared values, communication, and opportunistic behaviour), two mediating variables (relationship commitment and trust), and ve outcome variables (acquiescence, propensity to leave, co-operation, functional conict, and uncertainty). This paper focuses on the supply chain partnerships in high-tech industries. On the basis of Morgan and Hunts (1994) relationship commitment and trust theory, a survey study of Taiwans high-tech industries will be conducted to understand co-operation

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between partners. The research results can be a reference for rms in high-tech industries developing supply chain partnerships. In Table I, we present a list of papers using the commitment-trust model to investigate the relationship between commitment and trust in different industries. The theoretic model and hypotheses As shown in Figure 1, the framework of this research is built on the basis of Morgan and Hunts (1994) commitment-trust model.
Researcher(s) Morgan and Hunt (1994) Applications Independent automobile resellers Results This paper was focused on behaviours involved in the exchange between buyers and sellers. Results showed relationship commitment is negatively correlated with propensity to leave and relational commitment and trust are negatively correlated with uncertainty Relational commitment and trust have signicant inuence on relationship termination costs and relationship benets, shared value, and communication have signicant inuence on both parties of an exchange Communication and conict will signicantly inuence commitment. Trust has no indirect effect on communication, conict, and commitment The importance of satisfaction with the adoption of technology-mediated communication for future intentions will directly and positively inuence future intentions Communication directly inuences benets and indirectly inuences trust. Shared value directly inuences commitment and indirectly inuences benets through trust Communication, information exchange, and opportunistic behaviour have direct effects on trust and indirect effects on relationship commitment through trust The elements of service level agreements (SLA) have direct effects on the co-operative relationships between the service recipient and the service provider. Relational attributes developed on the basis of SLA, such as trust and commitment, can practically lead to the success of IT outsourcing Customer satisfaction is in fact more affected by indirect channels than by direct ones. Essentially, the business partner relationship and the indirect relationship are the same relative to customer satisfaction levels Results suggest that coercive strategies are counterproductive in encouraging co-operation and compliance either directly or through relational intermediaries, while non-coercive inuence produces positive outcomes and effects on intermediaries This paper showed how the user enterprise can initiate and establish trust and relationship commitment between temporary workers and a user enterprise through relationship marketing activities

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Friman et al. (2002) Coote et al. (2003) MacDonald and Smith (2004) MacMillan et al. (2005)

Five companies in the service industry Transnational Chinese rms 226 industrial companies High-ranking executives in 120 nanced organisations

Lancastre and B2B electronic market Lages (2006) Goo and Nam IT outsourcing (2007)

Byrnes and Mujtaba (2008)

Multinational IT sales

Hausman and Hospital material Johnston managers (2010) Table I. Literature associated with the commitment-trust model Chou et al. (2011) Taiwans temporary workers

Antecedent Variables Relationship termination costs


H1 +

Mediator Variables

Outcome variables Acquiescence


H8 +

Supply chain partnerships

Relationship benefits

H2 + H3 +

Relationship commitment H7 +

H9 H10 +

Propensity to leave

693

Shared values

Co-operation
H4 + H11 +

Trust
H5 + H12 + H13

Communication
H6

Functional conflict

Opportunistic behavior

Uncertainty

Figure 1. Research framework

Operational denitions of research variables The research variables in this paper include relationship termination costs, relationship benets, shared values, communication, opportunistic behaviour, relationship commitment, trust, acquiescence, propensity to leave, co-operation, functional conict, and uncertainty. Taking advantage of LISRELs capability, we have divided the above variables into exogenous variables and endogenous variables. According to Morgan and Hunts (1994) relationship commitment and trust theory, we dene the exogenous variables and endogenous variables in Table II. Research hypotheses With the above-mentioned antecedents, mediating variables, and outcome variables, we propose the following hypotheses. Antecedent variables. Heide and John (1988) point out that relationship termination cost is an expected loss of terminating a relationship, and this cost will affect continuance of the co-operative relationship. A rm has to bear certain switching costs if it terminates an existing partnership. The cost can be seen as an expected loss of ending an already settled relationship. The loss also includes non-economic costs, such as customer satisfaction (Cote and Latham, 2003). Friman et al. (2002) mention that relationship termination cost has a positive inuence on relationship commitment. It can be inferred that partners will increase their relationship commitment if the cost of terminating their relationship is high. Hence, we propose the following hypothesis: H1. There is a signicant positive relationship between relationship termination costs and relationship commitment. If an enterprise can provide special treatment benets (such as economic savings or customised services), it can increase its partners commitment (Fornell, 1992). Morgan and Hunt (1994) propose that relationship benets and relationship commitment are

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Variable

Denition

References Hsieh (2003)

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Exogenous variables Relationship The switching cost incurred termination when a rm terminates an existing costs exchange relationship and seeks new partners Relationship The rm can obtain more advantageous benets benets from the current partners than from other partners Shared values The extent to which partners have beliefs in common about what behaviours, goals, and policies are important or unimportant, appropriate or inappropriate, and right or wrong Communication Formal and informational sharing of meaningful and timely information between rms Opportunistic Deceptive or concealing behaviour behaviour conducted by midor high-ranking executives of a rm to facilitate achievement of an exchange Endogenous variables Relationship A rm perceives maintaining a long-term commitment relationship with a partner as very important and makes all possible efforts to maintain it Trust The partner believes that the rms mid- and high-ranking executives are reliable and honest Acquiescence

Morgan and Hunt, 1994), Egan (2001), Hsieh (2003) Morgan and Hunt (1994), Holdford and White (1997)

Etgar (1979), Morgan and Hunt (1994)

Morgan and Hunt (1994), Hsieh (2003), Hausman and Johnston (2010), Chen et al. (2011)

Propensity to leave Co-operation Functional conict

Uncertainty Table II. Denition of variables

Morgan and Hunt (1994), Doney and Cannon (1997), Hsieh (2003), Cai et al. (2010), Hausman and Johnston (2010), Chen et al. (2011) Morgan and Hunt (1994), Hsieh (2003), The extent to which a partner accepts and adheres to the requests or policies of Tsai and Shieh (2005) the rms mid- and high-ranking executives The possibility that a partner terminates an existing co-operative relationship in the future The mid- and high-ranking executives of both parties work together to reach mutual goals Through negotiation and handling, Morgan and Hunt (1994), Kale et al. disagreements between mid- and high- (2000) ranking executives of partners can be resolved to produce a constructive result Morgan and Hunt (1994), Hsieh (2003), The extent to which a partner is condent that the rms mid- and high- Vijayasarathy (2010) ranking executives have sufcient information and abilities to help it make decisions

positively correlated. For both parties of a partnership, continuance of partnership is the greatest most important benet for their values. Therefore, partner values can also be affected by partner satisfaction, loyalty, and co-operation. The evidence in Bansal et al. (2004) suggests that the more that customers trust a service provider, the higher commitment they make to the service provider. On the basis of the above literature, we propose the following hypothesis: H2. There is a signicant positive relationship between relationship benets and relationship commitment. Exchange parties with shared values are more committed to their partnership (Morgan and Hunt, 1994). Zineldin and Jonsson (2000) also mention that shared values are the most important factors affecting the relationship commitment of partners. For partners with goals or policies in common, sharing resources and abilities can lead to greater mutual commitment and closer bonds. According to Mukherjee and Nath (2003), shared values symbolise the common beliefs between a company and its customers, such as morality, security, and privacy. Dwyer et al. (1987) point out that shared values promote development of commitment and trust. The empirical evidence in Morgan and Hunt (1994) also suggests that shared values inuence commitment and trust at the same time. Cai et al. (2010) point out that a rms trust in its supplier is positively related to information sharing between them. Therefore, we propose the following hypotheses: H3. There is a signicant positive relationship between shared values and relationship commitment. H4. There is a signicant positive relationship between shared values and trust. From the viewpoint of manufacturers and distributors, there is a positive relationship between past communication and trust (Anderson and Narus, 1990). MacMillan et al. (2005) found in an empirical study of non-prot organisations that communication behaviour has positive inuence on trust. Based on the above literature, we propose the following hypothesis: H5. There is a signicant positive relationship between communication and trust. Parker et al. (1996) mention that speculation and scepticism between partners may undermine mutual trust. If any party conducts a deceptive behaviour or seeks only self-interest, the distrust caused may increase the supervision cost and obstruction in negotiation. According to Zineldin and Jonsson (2000), opportunistic behaviour is one of the important factors that undermine trust. Lancastre and Lages (2006) have empirically conrmed that opportunistic behaviour has a negative and direct impact on trust. Therefore, we propose the following hypothesis: H6. There is a signicant negative relationship between opportunistic behaviour and trust. Mediating variables: relationship commitment and trust. Trust signicantly inuences commitment (Moorman et al., 1992). So far, many studies on B2B relationship marketing have either directly or indirectly supported the relationship between trust and relationship commitment (Andaleeb, 1996; Goodman and Dion, 2001; Morgan and Hunt, 1994; Moore,

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1998). Ruyter et al. (2001) found a signicant and positive relationship between trust and commitment among rms in high-tech industries. In the study on the supply chain relationship, Kwon and Suh (2004) found that trust level and commitment degree are positively related. Chu and Fang (2006) investigate the factors affecting the relationship between trust and commitment in supply chain management of the manufacturing industry. Their results show that there is a positive relationship between trust and commitment of partners. Other scholars including Hausman and Johnston (2010), Sheng et al. (2010), and Chen et al. (2011) have all conrmed the positive relationship between trust and commitment. Therefore, we propose the following hypothesis: H7. There is a signicant positive relationship between trust and relationship commitment. Outcome variables. Acquiescence is the extent to which a partner accepts or adheres to another partners requests or policies (Morgan and Hunt, 1994). Customers are not likely to terminate an existing relationship if they cannot nd an alternative partner (Bendapudi and Berry, 1997). Therefore, we propose the following hypothesis: H8. There is a signicant positive relationship between relationship commitment and acquiescence. Commitment inuences propensity to leave (Morgan and Hunt, 1994). Many studies of organisational behaviours have revealed a strong negative relationship between organisational commitment and propensity to leave (Coben, 2000). Therefore, we propose the following hypothesis: H9. There is a signicant negative relationship between relationship commitment and propensity to leave. According to Deutsch (1960), trust is essential during the early stage of co-operation, and a good co-operative relationship is built upon mutual trust and commitment between partners. Trust is a core element of information sharing among enterprises. Partners will be more willing to dedicate more resources to the co-operative relationship if there is a high level of trust between them (Daniel, 2001). According to Frankema (2001), relationship commitment inuences co-operation through trust, but the co-operation level declines if both parties have a reduced intention to maintain a longer relationship. Hausman and Johnston (2010) have conrmed that commitment and trust have positive effects on co-operation. Shen and Chen (2007) show that team trust has an indirect effect on co-operation satisfaction. Thus, we propose the following hypotheses: H10. There is a signicant positive relationship between relationship commitment and co-operation. H11. There is a signicant positive relationship between trust and co-operation. According to Panteli and Sockalingam (2005), conicts resulting from doing a certain work are good for accomplishment of the work because they can motivate members involved in this work to propose various opinions, clarify their concepts, and nally reach a consensus. Therefore, we propose the following hypothesis: H12. There is a signicant positive relationship between trust and functional conict.

Uncertainty decreases when exchange partners have trust in each other (Parkhe, 1993). The evidence in Birgelen et al. (2000) suggests that decision makers have more dependence on information that they perceive as complete. Gao (2005) points out that a buyers trust for the supplier has a negative inuence on the uncertainty of decision making. Chen et al. (2011) suggest that there is a negative relationship between the level of behavioural uncertainty and the level of trust. Thus, we propose the following hypothesis: H13. There is a signicant negative relationship between trust and uncertainty. We will develop a questionnaire rst based on variables included in Morgan and Hunt (1994) and then modify it according to expert opinion and pre-test results. Data analysis Basic sample analysis The sample comprised of employees in Taiwans high-tech industries, including the semiconductor manufacturing industry, computer and peripheral industry, optoelectronic industry, electronics-related industry, precision machinery industry, and biotech industry. These employees were mainly involved in purchase, information, R&D, marketing, manufacturing, outsourcing, and quality control in their company. The questionnaire was administered to employees selected using purposive sampling. 207 valid responses were obtained, and the valid response rate was 21.05 per cent. Table III presents a basic analysis of the sample. The reliability of the questionnaire was measured by Cronbachs a, and the result was 0.8034, meaning this questionnaire was developed with reliable internal consistency. As this questionnaire was developed on the basis of related literature and modied according to opinions of senior managers in the high-tech industries. Therefore, its content validity was assured. Structural equation modelling analysis The research model was constructed through structural equation modelling. It consisted of 12 dimensions, including ve independent variables (relationship termination costs, relationship benets, shared values, communication, and opportunistic behaviour) and seven dependent variables (relationship commitment, trust, acquiescence, propensity to leave, co-operation, functional conict, and uncertainty). A conrmatory factor analysis of this model was performed. All factor loadings were between 0.55 and 0.91, and all error variances were non-negative and reached a signicance level. With regard to the t of the internal structure of the model, the composite reliability (CR) of each construct was computed. According to Bagozzi and Yi (1988), CR should be greater than 0.6. In this study, all the CR values were between 0.77 and 0.89, indicating good reliability. The average variance extracted (AVE) of the latent variables shows the average explanatory power of all variables for a particular latent variable. A higher AVE value (AVE . 0.5) indicates higher reliability and convergence validity of the latent variable. In this study, the AVEs of latent variables were between 0.54 and 0.73. It can be inferred that these variables have good reliability and convergence validity. The model was also tested for preliminary t criteria, overall model t, and t of internal structure of model. The result is presented in Table IV. As shown in Table IV, all the results of this model met the suggested standards.

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Item Industry

Category Semiconductor manufacturing Computer and peripherals Optoelectronics Electronics related Precision machinery Biotech Others One to ve years Six to ten years 11-20 years More than 20 years No more than 100 employees 101-500 employees 501-1,000 employees More than 1,000 employees Below $500 million $600 million-$1 billion More than $1.1 billion Below three years Four to seven years Eight to 11 years Above 12 years Supplier Manufacturer Both

Samplesize Percentage 66 54 24 40 12 7 4 24 68 58 57 61 32 34 80 76 29 102 33 84 45 45 39 75 93 31.9 26.1 11.6 19.3 5.8 3.4 1.9 11.6 32.9 28.0 27.5 29.5 15.5 16.4 38.6 36.7 14.0 49.3 15.9 40.6 21.7 21.7 18.8 36.2 44.9

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Firm age

Firm size (number of employees)

Capital

How many years have main partnerships existed

Business type Table III. Basic sample analysis

Preliminary t criteria

Measurement items Factor loading Error variance

Criteria 0.5-0.95 Non-negative ,3 . 0.9 . 0.9 . 0.9 . 0.8 . 0.8 , 0.05

Results Compliant Compliant

Table IV. Comparison between t indexes and results of the model

Overall model t x 2/df Normed t index (NFI) Non-normed t index (NNFI) Comparative-t index (CFI) Goodness of t index (GFI) Adjusted goodness of t index (AGFI) Root mean square error of approximation (RMSEA) Fit of internal Individual item reliability structure of Composite reliability (CR) model Average variance extracted (AVE) Parameter estimates

Compliant(x 2/df 1.259) Compliant (NFI 0.93) Compliant (NNFI 0.98) Compliant (CFI 0.98) Compliant (GFI 0.85) Compliant (AGFI 0.81) Compliant (RMSEA 0.036) . 0.5 Partially compliant . 0.6 Compliant . 0.5 Compliant t-value . 1.96 Compliant

The 13 proposed hypotheses were tested through LISREL. The path coefcients and t-values of these hypotheses are shown in Figure 2. Research results Regarding the 13 hypotheses proposed based on the relationship commitment and trust theory, we obtained the following research results. The inuence of antecedent variables on the trust and relationship commitment between enterprises and their main exchange partners H1. There is a signicant positive relationship between relationship termination cost and relationship commitment. According to the analysis results, this hypothesis is supported. It can be inferred that mid- or high-ranking executives in the high-tech industries will not easily terminate an existing relationship with its main exchange partner if the switching cost is high for their company. H2. There is a signicant positive relationship between relationship benets and relationship commitment. The analysis results support this hypothesis. In other words, if mid- or high-ranking executives of a high-tech company believe that they can get much more benets from the current exchange partner than from others, they will make maximum efforts to maintain their current partnership in pursuit of the long-term interest of the company. H3. There is a signicant positive relationship between shared values and relationship commitment. Our analysis results do not support this hypothesis. The path coefcient shows that there is a positive relationship but the direct effect is insignicant. As pointed out by Tsai and Shieh (2005), if two rms only view each other as business partners and do not have shared goals or policies, they are not likely
Relationship termination costs
H1 0.24(3.32***) H8 0.49(5.70***)

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Acquiescence

Relationship benefits

H2 0.14(2.00*) H3 0.06(0.73)

Relationship commitment
H7 0.49(6.11***)

H9 0.25(3.14**) H10 0.23(2.34*) H11 0.42(4.15***) H12 0.47(5.97***) H13 0.48(6.22***)

Propensity to leave

Shared values

H4 0.34(4.14***) H5 0.36(4.25***) H6 0.05(0.68)

Co-operation

Trust

Communication

Functional conflict

Opportunistic behavior

Uncertainty

Notes: *t-value greater than 1.96, p < 0.05; **t-value greater than 2.58, p < 0.01; ***t-value greater than 3.29, p < 0.001; the numerical figure is path coefficient, and the parenthesized value is the t-value

Figure 2. Path coefcients and relationship of the variables

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to make every effort to maintain the partnership. According to some vice general managers of the surveyed the high-tech companies, the high-tech market is very volatile. Even if there are shared goals between partners, the exchange relationship is still vulnerable to any sudden product price hike. In high-tech industries, the powerful can always remain powerful. If a company intentionally gives its suppliers or downstream rms a hard time or another company pressurises its suppliers to sacrice their self-interest for long-term operation, its partners will have lower intention to maintain the exchange partnership. H4. There is a signicant positive relationship between shared values and trust. According to the analysis results, this hypothesis is supported. It can be inferred that if partners have a high degree of consensus over service or quality goals, their mid- and high-ranking executives will have little doubt of the honesty and reliability of each other. H5. There is a signicant positive relationship between communication and trust. According to the analysis results, this hypothesis is supported. This reveals that if mid- and high-ranking executives of a high-tech rm have trust for their partners, they are willing to establish smooth communication channels to share resources and obtain latest information. H6. There is a signicant negative relationship between opportunistic behaviour and trust. This hypothesis is unsupported, meaning that mid- and high-ranking executives in high-tech companies do not completely consider the relationship between trust and opportunistic behaviour as negative. As mentioned by some vice general managers, a managers integrity does inuence the level to which partners will co-operate with his rm. In practice, if mid- or high-ranking executives of a rm breach a promise made to their partners, their co-operative relationship will be denitely affected. However, decision makers have the right to direct problem-solving actions. If a rms partners resist co-operation with it, its decision makers will make all possible efforts to overcome the resistance and rectify their corporate image. As a result, there may be a positive relationship between opportunistic behaviour and trust. The inuence of trust and relationship commitment between exchange partners on outcome variables H7. There is a signicant positive relationship between trust and relationship commitment. Our analysis results offer support for this hypothesis. We can infer that if two partners have a high level of trust for each other, they will have a strong intention to maintain their exchange relationship. In other words, when a rms midand high-ranking executives have a belief in their partner integrity, they have higher intention to continue co-operation with this partner. H8. There is a signicant positive relationship between relationship commitment and acquiescence. This hypothesis is supported, indicating that if mid- and high-ranking executives have a strong desire to maintain the relationship with an exchange partner, they will not only satisfy the requests of this partner but also continue to work with it. H9. There is a signicant negative relationship between relationship commitment and propensity to leave. According to the analysis results, this hypothesis is supported. We can infer that if any party of a partnership nds it impossible to co-operate with the other party on certain policies or deals, it will reduce its commitment to the partnership and become more likely to terminate the relationship.

H10. There is a signicant positive relationship between relationship commitment and co-operation. The analysis results support this hypothesis. We can infer that in high-tech industries, partners who are more dedicated to their relationship are more willing to invest more resources in the co-operation. In other words, relationship commitment has a positive effect on intention of co-operation. H11. There is a signicant positive relationship between trust and co-operation. According to the analysis results, this hypothesis is supported. When a rm has trust and dependence for its partner, it will make efforts to satisfy the request from or share information with the executives of this partner and maintain their co-operative relationship. H12. There is a signicant positive relationship between trust and functional conict. According to the analysis results, this hypothesis is supported. If any conict of opinions or interest occurs between partners, partners who have trust in the others will be more willing to resolve the conict through communication and use a constructive thinking model to facilitate co-operation. They will use sincerity and communication rather than argument to enhance the supply chain efciency. H13. There is a signicant negative relationship between trust and uncertainty. This hypothesis is supported, meaning that trust can reduce uncertainties and increase condence in ones decisions. Findings and discussion This study investigated supply chain partnerships in high-tech industries. As shown in Table III, the sample comprised of companies mainly in the semiconductor manufacturing, computer and peripherals, electronics related, optoelectronics, precision machinery, and biotech industries. Most of these companies have a rm age between six and ten years, more than 1,000 employees, and a capital over NT$1.1 billion. Besides, most of them have worked with their partners for four to seven years both as a supplier and a manufacturer. The above data show that the sample composition ts the research interest. Analysis results indicate that in a partnership between high-tech companies, trust and relationship commitment are mainly affected by factors including relationship termination costs, shared values, communication, acquiescence, co-operation, functional conicts, and uncertainty. We will discuss the results in three subsections, including the effects of antecedents variables, the effects of mediating variables, and the effects on outcome variables (as shown in Figures 1 and 2). First of all, our results conrm that relationship commitment is signicantly affected by relationship termination costs and relationship benets. Previous studies such as Friman et al. (2002) and Cote and Latham (2003) have found that relationship termination costs have a positive effect on relationship commitment. Compared with companies in traditional industries, high-tech companies, particularly those in the semiconductor industry, need to pay a higher cost for switching. The cost becomes even higher after a value chain has been established. Therefore, partners will tend to maintain their current co-operation with partners. It can be inferred that partners have higher relationship commitment when their relationship termination costs are high. Liu (2010) mentions that the higher the supply chain relationship benets, the higher the inter-organisational relationship commitment. In high-tech industries, supply chain partners ally mainly for their own value benets. Our results have conrmed that relationship benets are the basis of relationship commitment. Besides, both shared values and commutation have

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a signicant effect on trust. High-tech industries are characterised by short product life cycles and high market volatility. To reduce business risks, most companies will form strategic alliances based on technical co-operation to create competitive benets. This strategy requires them to share their techniques, resources, and knowledge. They have to rely on shared values and communication to win trust of their partners. Our analysis results about mediating variables show that trust has a positive effect on relationship commitment. Trust and commitment are key element of co-cooperation in any industry. Especially in high-tech industries, higher trust can lead to higher relationship commitment. This nding also supports the theory proposed by Morgan and Hunt (1994). Finally, results also suggest that relationship commitment has a signicant effect on all outcome variables, including acquiescence, propensity to leave, and co-operation. According to Morgan and Hunt (1994), relationship commitment is a partners belief that an ongoing relationship with another is so important as to warrant maximum efforts at maintaining it. In high-tech industries, there is a tendency that large rms have more persistent dominance of the market, so many rms have developed toward within-industry integration and cross-industry alliance. Our ndings indicate that in this kind of co-operation, weaker partners tend to give tacit assent (acquiescence) to requests of stronger ones, in hope of maintaining a long-term relationship with them. However, if both parties of a relationship have very low relationship commitment, their propensity to leave (i.e. to terminate the relationship) will become higher. Hence, relationship commitment is negatively related to propensity to leave. Besides, results also manifest that relationship commitment has a positive effect on intention of co-operation. As to the effects of trust, empirical results suggest that trust is signicantly related to co-operation, functional conict, and uncertainty. The intense market competitions and shortening of product life cycle in high-tech industries have compelled all rms to pay more attention to their partnerships. Trust is most essential in the early stage of co-operation. Trust will positively affect partners intention of co-operation. Functional conict is also called positive conict. In the context of high partner trust, functional conicts can results in positive outcomes for both parties. Our empirical results indicate that trust has a positive effect on functional conicts. Finally, trust is negatively related to uncertainty. Companies in high-tech industries have to cope with fast development of technologies, volatile market demands, complex product structures, and short product life cycles. Their business environment is subject to high uncertainties. Therefore, all partners should increase their trust in each other to increase their involvement in others information so that they can effectively avoid poor decisions made under information asymmetry. Conclusions In this paper, we focused on supply chain partnerships in Taiwans high-tech industries to investigate the factors affecting partnership based on Morgan and Hunts (1994) relationship commitment and trust theory. According to the research results, we proposed the following conclusions and suggestions. In Taiwans high-tech industries, both relationship termination cost and relationship benets have a positive inuence on relationship commitment; share values and communications have a positive inuence on trust. Besides, there is a signicant positive relationship between trust and relationship commitment; relationship commitment positively inuences acquiescence and co-operation and negatively

inuences propensity to leave. Finally, trust has a positive inuence on co-operation and functional conicts and a negative inuence on uncertainty. However, our empirical ndings showed that the effect of shared values on relationship commitment is not signicant. This is mainly because if there is any imbalance of power between two partners, that is, one party thinks that the other takes a stronger stance against it, despite the fact that both have common beliefs in certain goals and interests, it is still hard for them to maintain a long-term partnership. Besides, there may be a positive relationship between opportunistic behaviour and trust. In practice, decision makers have the right to direct problem-solving actions. If a rms partners resist co-operation with it, its decision makers will make all possible efforts to iron out the resistance and rectify their corporate image. The main difference between high-tech industries and traditional industries lies in that high-tech industries have higher value-added from knowledge creation, shorter product life cycles, faster technology development, higher business risks, more intense market competitions, and more drastic changes in the external environment. For high-tech industries, their operations rely heavily on contribution of competent and competitive employees. How to build trust and commitment is of high importance. High-tech companies are faced with high uncertainties in the external environment. They need to build trust of partners with a fair, just, and open attitude. High risk is a characteristic of high-tech industries. In the presence of trust, members in high-tech industries have higher intention to take more business risk. Therefore, fostering trust and commitment is an imperative task for high-tech companies. Relationship marketing is a business strategy. Firms market their services or products based on relationships. By gaining trust and commitment of partners, businesses can create long-term and win-win relationships with partners. To be succinct, trust and commitment of partners should be built upon high relationship termination costs, more relationship benets, and better communication. Trust and commitment of partners can lead to lower propensity to leave, reduced uncertainties, and higher intention of co-operation. For high-tech rms, relationship marketing is an effective strategy for enhancing partner loyalty and satisfaction. Our empirical ndings suggest that high-tech rms adopt relationship marketing to build trust and commitment of their partners. Through relationship marketing, they can share information, have better communication with their partners, and increase their partners intention of long-term co-operation. Through functional conicts, they can have positive interactions with partners and reduce information uncertainties. Relationship marketing can help them form win-win strategic alliances with partners to strengthen their supply chain and acquire competitive advantages in the market. In this paper, we applied the relationship commitment and trust model to investigate the effects of various factors on supply chain partnership. We hoped that the results and conclusions could become an important reference for high-tech companies when developing supply chain partnerships.
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Further reading Chan, Y.L. (2003), A study of relationship marketing in the ocean freight forwarder industry, MA thesis, Department of Shipping and Transportation Management, National Taiwan Ocean University. Ganesan, S. (1994), Determinants of long-term orientation in buyer-seller relationships, Journal of Marketing, Vol. 58, pp. 1-19. Huang, C.H. (2000), The study of relationship for inter-organizational trust, dependence and willingness of keeping buyer-seller cooperation studying for PC hardware marketing channel, MA thesis, Graduate School of Management, Ming Chuan University. Smith, J.B. and Barclay, D.W. (1997), The effects of organizational differences and trust on the effectiveness of selling partner relationships, Journal of Marketing, Vol. 61, pp. 3-21. Williamson, O.E. (1975), Markets and Hierarchies, Analysis and Antitrust Implications, The Free Press, New York, NY. Wilson, D.T. (2000), An integrated model of buyer-seller relationships, in Sheth, J.N. and Parvatiyar, A. (Eds), Handbook of Relationship Marketing, Sage, Thousand Oaks, CA, pp. 245-70. Wulf, K.D., Odekeren-Schroder, G. and Lacobucci, D. (2001), Investments in consumer relationships: a cross-country and cross-industry exploration, Journal of Marketing, Vol. 65, pp. 33-50. Corresponding author Mei-Ying Wu can be contacted at: meiying@chu.edu.tw

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