The role of trust and relationship structure in improving supply chain responsiveness

In order to reduce cycle times between supply chain entities, managers must work to create new relational forms that rely on trust to a greater extent. We present a model suggesting that to build relationships based on trust, suppliers must invest in site-specific and human assets, and buyers must judiciously apply contracts to control for relative levels of dependence within the relationship. Our model also suggests that buyer-dependence, supplier human asset investments, and trust are all positively associated with improved supply chain responsiveness, defined in this study as the supplier's ability to quickly respond to the buying party's needs. This model is tested with data gathered from a sample of purchasing managers in North American manufacturing firms. The results suggest that even in cases when buyers do not have a great deal of control over their suppliers, working to build trust within the relationship can improve supplier responsiveness. (C) 2002 Elsevier Science Inc. All rights reserved.