The moderating role of trust in manufacturer‐supplier relationships

Purpose – The purpose of this paper is to verify the moderating role of trust in the relationships between environmental uncertainty and a manufacturer's propensity for vertical control over its supplier, and between environmental uncertainty and the manufacturer's satisfaction with the supplier performance. It also confirms a threshold effect of trust, i.e. the moderating role of trust is present up until a threshold value of trust is reached.Design/methodology/approach – Survey research was conducted to collect data from manufacturers; structural equation modeling was used to purify measurement scales, and multiple regression was conducted to test the hypotheses.Findings – This study confirmed that a manufacturer's perception of a supplier's trustworthy behavior weakens the justification for a higher degree of vertical control over its supplier's key decisions. Trust also reduces the manufacturer's discontent with its supplier's performance.Research limitations/implications – Traditional transaction cos...

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