The effect of relational investments on supply chain quality integration: protection or constraint of legal bonds?

Abstract

PurposeThis study examines the effect of relational investments (e.g. supplier involvement and commitment, customer involvement and commitment) on supply chain quality integration (e.g. supplier and customer quality integration), which leads to financial performance. Moreover, the authors explore the moderating effects of legal bonds on the relationship between relational investments and supply chain quality integration.Design/methodology/approachA survey study of manufacturing firms is presented to illustrate the conceptual model. The authors use the data from 213 manufacturing firms to test the hypotheses by structural equation modeling.FindingsThe results show that supplier and customer quality integration are positively related to financial performance. Supplier involvement and commitment are positively related to supplier quality integration. Customer involvement is positively related to customer quality integration, but customer commitment is not significantly related to customer quality integration. Additionally, on the supplier side, legal bonds negatively moderate the relationship between supplier involvement and supplier quality integration but positively moderate the relationship between supplier commitment and supplier quality integration. On the customer side, legal bonds do not moderate the relationship between customer involvement and customer quality integration, but negatively moderate the relationship between customer commitment and customer quality integration.Originality/valueThis study provides novel insights into supply chain quality management from relational perspectives, as well as the contingent role of legal bonds between them.