The role of social capital in achieving preferred customer status with manufacturing and service suppliers

Abstract

PurposeThis study uses social capital theory to analyze how social capital and supplier development support achieving supplier satisfaction and preferred customer status. The resulting model is compared between manufacturing and service suppliers.Design/methodology/approachA survey receiving 482 supplier responses from manufacturing and service suppliers was utilized and analyzed using partial least squares (PLS) path modeling and multi-group comparison tests.FindingsThe paper adds new explanations for preferred customer status through empirical evidence of relationships between supplier development, social capital, supplier satisfaction, and preferred customer status. Cognitive and relational capital directly support achieving preferred customer status. The role of supplier satisfaction in achieving preferred customer status is lower for manufacturing suppliers.Research limitations/implicationsBoth service and manufacturing suppliers could also be studied in their specific industry settings. A more in-depth investigation of other business relationship dynamics, such as power, is needed in a future study.Practical implicationsService and manufacturing suppliers need different strategies to obtain the benefits from supplier development and social capital building. For service suppliers, more intangible factors are relevant in comparison to manufacturing suppliers.Originality/valueThis study advances the literature in two main ways. First, it elaborates the role of supplier development and social capital in the path toward supplier satisfaction and preferred customer status as perceived by suppliers. Second, this study answers the calls for a better understanding of the contextual characteristics underlying potential differences in how preferred customer status is formed.