Contribution to Industrial Buyer Behavior Model: An Empirical Research

Abstract

Today’s businesses experience many uncertainties in their internal operations and environments. Manufacturing flexibility is an excellent response to these uncertainties. Volume, modification, mix, and expansion flexibilities are the manufacturing flexibilities that businesses look for when they select their suppliers. In parallel, these flexibilities are often used as a supplier selection criterion in the literature. The supplier selection decision is a strategic issue for today’s businesses as a typical company is highly dependent on its suppliers to procure raw materials and parts. Sound supplier selection decision leads to competitive advantage because it is related to a positive relationship between buyer and supplier and reciprocal improvement of performance and trust between both parties. However, a literature review for this study showed a need for more empirical work on the relationship among types of flexibilities, supplier selection, performance improvement, long-term relationships, and trust. In order to fill the gap in this area, data was collected from 148 automotive companies operating in Turkey. For the data collection, the automotive industry was chosen as it is subjected to more uncertainties due to its connections to many other industries. The data were then analyzed using the structural equation model. The results showed a significant positive relationship between types of manufacturing flexibility and supplier selection. Also, positive relationships were found among supplier selection, performance, long-term relationships, and trust. Mediation and indirect effect analysis were also conducted. Long-term relationships and performance fully mediated the relationship between supplier selection and trust. An indirect relationship between supplier selection and trust was also found. The study results are expected to contribute to Sheth’s buyer-behavior model by introducing manufacturing flexibility, long-term relationship, performance, and trust to the model. Also, the study’s findings assist executives in making more informed decisions concerning supplier selection, depending on the level and types of flexibility they demand from their suppliers, performance, long-term relationships, and trust.