Role of buyer-supplier relationship on organisational performance of small medium and micro enterprise retailers in Durban

Abstract

Buyer-supplier relationship plays a huge role in the running of an almost flawless supply chain, being responsible for the efficient supply of goods, services, and information across the entire supply chain. Organisations are faced with pressure to improve their competitive advantage and market share. In that regard, to improve organisational performance, the question arises whether to have a transactional relationship with many suppliers or have a collaborative relationship with a smaller number of suppliers. The research study aimed to examine the role that buyer-supplier relationship plays on organisational performance in the SMME retail industry in Durban. The study objectives were to ascertain the type of a relationship SMME retailers have with their suppliers, establish the influence of inter-organisational factors: trust, satisfaction, information sharing, commitment, and loyalty on the existing buyer-supplier relationships, and determine the implications of the existing buyer-supplier relationships on the organisational performance of SMME retailers. The study tested the following hypotheses: • H1: There is a significant relationship between supplier information sharing and supplier organisational performance. • H2: There is a significant relationship between buyer satisfaction and supplier information sharing. • H3: There is a significant relationship between buyer satisfaction and buyer loyalty. • H4: There is a significant relationship between buyer loyalty and supplier information sharing. • H5: Buyer trust moderates the relationship between supplier information sharing and supplier organisational performance. • H6: Supplier commitment moderates the relationship between supplier information sharing and supplier organisational performance. The study adopted a conceptual framework grounded on two major theoretical standpoints: transaction cost economics and social exchange theory. Within a survey research design, a crosssectional time horizon was employed to obtain the overall picture of the relationship between buyer-supplier relationship and organisational performance. The study targeted 1320 Durban based SMME retailers as per yellow pages of 2019. The sample were 591 SMME retailers that are selected at a 95% level of confidence with a plus or minus 3 margin of error and analysed using structural equation modelling which offers a universal and appropriate framework for statistical analysis including several multivariate procedures that are traditional, a confirmatory factor analysis will be used as the study has several independent variables which are correlated and an intervening variable. The study found that three out of the six hypotheses articulated to be able to accomplish the studies aim were analytically supported and accepted. A conclusion can therefore be made that information sharing between SMME retailers and their suppliers has a role of enhancing the harmonious collaboration as well as trust, loyalty, commitment, and satisfaction that exists amongst these partnerships. Buyer-supplier relationship between SMME retailers and their suppliers will in turn have a huge role in improving supplier organisational performance for these suppliers. The study recommended that SMME retailers should make use of fewer suppliers with collaborative relationships in order to improve organisational performance.