Mending fences in a buyer–supplier relationship: The role of justice in relationship restoration

Abstract

While the extant literature has examined causes for buyer–supplier relationship dissolution, the restoration of severed buyer–supplier relationships has been overlooked. Drawing on organizational justice theory, our research develops and tests a model of relationship restoration. We examine how the supplier's restoration tactics—acknowledgment, compensation, and operational transparency, influence the interactional, distributive, and procedural fairness perception, respectively, of the buyer, resulting in relationship restoration. The results are based on a 2 (Acknowledgment – Yes/No) × 2 (Compensation – Yes/No) × 2 (Operational Transparency – Yes/No) vignette‐based study with 390 experienced practitioners. The analysis shows that compensating the buyer and providing transparent procedures for dealing with similar situations in the future, lead to higher distributive fairness and procedural fairness, respectively, resulting in restored relationships. Compensation makes up for past supplier malperformance, whereas operational transparency mitigates future concerns. We also find that restoration tactics based on interactional justice are less effective than those based on procedural and distributive justice. There is only marginal support for the indirect positive effect of acknowledgment on restoration intentions (p < 0.10). These results point to the importance of knowing how to approach a buyer to initiate relationship restoration. Managers must understand and evaluate the specific needs of each buyer when proposing a compensatory design that appeals to the buyer. Additionally, establishing procedures that are appealing to all buyers can be a challenge for a supplier, due to the differing benefits to the supplier provided by each buyer.

Theory and analysis of disruptive deception: SME responses to B2B supply chain opportunism

“…We found that small buyers express this effect more strongly. Mishra (2011) found that trust, cooperation and information sharing were key to building BSRs in SMEs, although the study was limited in time and scope. His literature review found no previous studies on BSR in SMEs.…”

Chrysalis of crisis: Covid-19 as a catalyst for awakening power and justice in a luxury fashion supply chain

“…Inequity theory focuses on organisational justice (Adams, 1963) and the role of fairness in organisational relationships. Justice, fairness and the resulting behaviour are closely linked as Mir et al . (2002, p. 27) state, “ Justice, in the form of rule adherence, is the antecedent to fairness perceptions, which eventually drives behaviour .” (Mir et al ., 2022, p. 27).…”

“…In addition, relatively weaker supply chain actors have been portrayed as passive power targets dominated by more powerful power sources, and have not been examined as key decision-makers (Tao et al ., 2022). The justice literature, so far, has also failed to investigate the perceptions of suppliers (Mir et al ., 2022) or how these are impacted by dependence and power use in supply chains.…”

“…For example, a relatively weak party is dependent on a more powerful partner to obtain resources (Tao et al ., 2022), which typically occurs as a consequence of inequity between buyers and suppliers (Carnovale et al ., 2019). In competitive contexts where buying firms have the ability to choose between multiple suppliers, low supplier-switching costs may result in inequity for suppliers (Mir et al ., 2022), ultimately damaging buyer–supplier relationships (Nyaga et al ., 2013).…”

“…Justice, fairness and the resulting behaviour are closely linked as Mir et al . (2002, p. 27) state, “ Justice, in the form of rule adherence, is the antecedent to fairness perceptions, which eventually drives behaviour .” (Mir et al ., 2022, p. 27). The role of justice in buyer–supplier relationships has so far received little attention with calls for studies linking dependence, power and justice (Carnovale et al ., 2019).…”