Heliyon 6 (2020) e03434

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Heliyon
journal homepage: www.cell.com/heliyon

Research article

Interorganizational cooperation and supplier performance in

high-technology supply chains
Neale O’ Connor a, Paul Benjamin Lowry b, *, Horst Treiblmaier c
a
Department of Accounting and Finance, School of Business, Monash University, 47500, Bandar Sunway, Selangor, Malaysia
b
Department of Business Information Technology, Pamplin College of Business, Virginia Tech, Pamplin Hall, Suite 1007, 880 West Campus Drive, Blacksburg, VA 24061,
USA
c
Modul University Vienna, Department of International Management, Am Kahlenberg 1, 1190 Vienna, Austria

A R T I C L E I N F O A B S T R A C T

Keywords: Never in history have global supply-chain relationships in high-tech electronics firms been more sophisticated,
Supply chain performance complicated, and almost always tied in some major aspect to China. This research examines how interorgani-
Buyer-supplier relationships zational (IO) cooperation impacts performance and what role relationship learning and information technology
Relationship marketing theory
(IT) integration play in the value-creation process for Chinese suppliers in business-to-business (B2B) supply
Social exchange theory
Collaboration
chains. We examine this issue using data collected from face-to-face interviews with supply chain managers and
Electronics industry executives from 1,004 Chinese high-tech electronic component suppliers. The results strongly support the hy-
Global supply chain pothesis that IO cooperation improves a supplier's performance regarding both its major customer and overall
Business marketplace. Relationship learning and IT integration are important mediating variables that drive performance.
Globalization The strongest effect in our study was the influence of IO cooperation on relationship learning. A unique aspect of
Operations management this study is that it focuses on a large sample of a specific supplier type—high-tech Chinese suppliers. This,
Technology adoption combined with the fact that the sampled companies were involved in manufacturing 13 different product groups,
Technology management
greatly increases the generalizability of the results.

1. Introduction 2012; Tarafdar and Qrunfleh, 2017). Although these studies predict how
performance can be improved by optimizing various factors, a compre-
In practice, multinational corporations (MNCs) are intensifying their hensive understanding of how supplier involvement, monitoring, and
engagement through more extensive monitoring and collaborative collaborative commitment—which we term interorganizational (IO)
practices to increase the value added by the supply chain and speeding up cooperation—works in these settings is still limited due to the absence of
time to market. For example, MNCs such as Giorgio Armani, S. Oliver, empirical work. This nascent state of the literature has in part led to a call
H&M, and IKEA are sending their international design teams to their by Fisher (2007) to strengthen the empirical base of operations man-
suppliers' factories for extended periods of time to speed up the design-to- agement. In their literature overview of a related concept—SC integra-
market process (Hultman et al., 2012; Kang et al., 2018). The strategy of tion—Van der Vaart and van Donk (2008) find that most surveys report a
increasing collaboration with suppliers strengthens innovativeness, positive relationship between SC integration and performance, but the
responsiveness, and profitability—all of which are critical for the authors question whether the nature of this relationship is well under-
long-term sustainability of the MNCs' global supply chains (Grekova stood. To date, the vast majority of studies analyze data from Western
et al., 2016; Fossas-Olalla et al., 2015; Strebinger and Treiblmaier, 2004). companies and apply a Western perspective (Treiblmaier et al., 2020).
Prior research has focused on optimizing supply chain (SC) perfor- Given that China is now involved in the high-tech electronics compo-
mance by contracting for the sharing of information, such as collabora- nents supply chain more than any other country in the world there is a
tive forecasting; coordination of multiple suppliers via monitoring need for research that investigates the nature of SC relationships from an
routines; encouraging downstream buyer cooperation; and optimizing Asian perspective. Additionally, the concerns for how MNCs engage in IO
various cost factors of location, inventory management, and distribution cooperation with emerging-market suppliers are explicitly evaluated in
(Aviv, 2001; Inderfurth et al., 2013; Jayaram et al., 2011; Kurtulus et al., our study.

* Corresponding author.
E-mail address: [email protected] (P.B. Lowry).

https://doi.org/10.1016/j.heliyon.2020.e03434
Received 18 August 2019; Received in revised form 6 November 2019; Accepted 14 February 2020
2405-8440/© 2020 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-
nc-nd/4.0/).
N.O. Connor et al. Heliyon 6 (2020) e03434

Ongoing relationship learning and information technology (IT) inte- 1.2. Structure of the manuscript
gration between suppliers and buyers have been identified as crucial
determinants of successful collaboration and sustainable performance. Going forward, this paper is structured as follows: In Section 2, we
Researchers have identified a range of factors that impact successful briefly elaborate on the theoretical background, namely relationship
relationship learning, such as the frequency of meetings and interactions marketing theory (RMT) and social exchange theory (SET) and introduce
and the effectiveness of IO communication, long-term commitment, top- IO cooperation as a formative construct. In Section 3, we develop our
management support, a buyer's trust in its supplier, formal and social hypotheses and introduce a comprehensive model. In Section 4, we
control structures, the level of cooperation, initiatives to increase logis- discuss the methodology, namely, our sample, the measurement model
tics responsiveness and knowledge exchange, and the use of common and the process of data collection. We present the results in Section 5,
resources (Bhatti, 2019; Humphreys et al., 2004; Iyer et al., 2014; Jean which are followed by a discussion including theoretical and managerial
et al., 2010; Osborn and Nault, 2012). In addition, researchers have implications (Section 6), as well as important conclusions and limitations
recognized IT integration as an important driver of performance (Boyer (Section 7).
et al., 2005; Ralston et al., 2015; Lai et al., 2016; Ward and Zhou, 2006).
The interdependent nature of SC management necessitates the use of IT 2. Theoretical background
integration to facilitate the sharing of information so that organizations
can minimize the costs associated with capacity coordination and pro- High-tech industries have complex and dynamic international SCs
duction planning (Aydinliyim and Vairaktarakis, 2010). However, in one (Akkermans and Van Wassenhove, 2018; Gao et al., 2008; Isaksson et al.
of the few studies have examined both the interplay of relationship (2016); Gaimon and Morton, 2005); this industry is distinguished from
learning and IT integration Tan et al. (2010) argue that SC relational the low-tech environment in that high-tech alliances are formed to
alignment—which they measured by asking about the suppliers' volume manage the complexity and multidimensionality of shared information,
flexibility and ability to improve customer satisfaction—influences a whereas the primary purpose of a low-tech alliance is to enhance effi-
company's performance more strongly than, for example, information ciency. For example, in a study of 167 high-tech manufacturing com-
alignment. panies, Patel (2011) describes the high-tech setting as a dynamic
Given these aspects of successful customer-supplier relationships, the environment that creates early organizational imprints of the flexibility
purpose of our research is to investigate how IO cooperation—measured necessary for responding to this unique environment. Ellram (1992)
by the level of supplier involvement, customer monitoring, and collab- studies the roles of trust and collaboration in the SCs of high-tech in-
orative commitment with their largest customer—impacts supplier per- dustries, such as pharmaceuticals, chemicals, energy, computers, semi-
formance. Our specific research question for our context is as follows: conductors, and telecommunications, concluding that high-tech
industries have the highest tendency to establish buyer-supplier alliances
RQ. How does IO cooperation influence supplier performance in the
because of the complexity and multidimensionality of the information
context of China's high-tech hardware components industry?
shared. Furthermore, Ellram (1992) study shows that mutual commit-
Furthermore, we empirically assess whether the influence of IO ment contributed more to the success of SC collaboration and carried
cooperation on supplier performance is mediated by relationship more weight than formal agreements.
learning and IT integration. Specifically, we focus on China's high-tech Several prominent studies argue that the task interdependence asso-
industry, which provides an ideal setting because of its global impor- ciated with the complexity of high-tech alliances is associated with
tance and the unique way business relationships are fostered in China partnership control practices such as contractual contingency planning,
(Kang et al., 2018). Namely, we test our model by using a sample of 1,004 performance target setting, operational reviews, information sharing,
Chinese electronic component suppliers. supplier support, and joint problem solving (Dekker et al., 2013).
Relatedly, Dekker et al. (2014) find that greater task interdependency is
associated with an increase in boundary-spanner interactions and greater
1.1. Research contribution and impact information sharing about partnership activities and performance. Given
this collective evidence, we thus propose that suppliers involved in
Our empirical results show that in China's high-tech industry, a high-tech partnerships that exchange technologically complex compo-
company's level of IO cooperation is a major determinant of its nents will likely have a greater need for IO cooperation to navigate such
performance with its major buyer and the market in general. One interdependencies.
especially interesting finding is that the strong positive effect of IO
cooperation on (a) supplier performance for customer and (b) sup- 2.1. Relationship marketing theory and social exchange theory
plier market performance is partly mediated by relationship learning
and IT integration. We thus infer that synergies arise for an orga- Our investigation into the effects of IO cooperation on performance
nization from simultaneously implementing an adequate infrastruc- and its various antecedents and consequences touches upon several so-
ture and building a business network. The strongest effect in our cioeconomic theories concerning the underlying mechanisms and struc-
study was the influence of IO cooperation on relationship learning, tures of the complex relationship between buyers and suppliers.
which confirms preexisting literature that highlights the strong Regarding the relationships between human actors—which, in our case is
connection of cooperation and the subsequent emergence of personal the interaction between suppliers and buyers—the RMT provides a
networks. conceptual underpinning (Lewin and Johnston, 1997). Rooted in various
Our model further indicates that researchers must not only include disciplines and research streams, such as business marketing, services
IO cooperation as an important antecedent in any study that strives to marketing, and marketing channels, as well as database marketing and
explain and predict performance; instead, researchers must measure direct marketing (Berry, 1983; Hunt et al., 2006; M€ oller and Halinen,
cooperation in three dimensions to take into account how supplier 2000; Rather and Sharma, 2019), the RMT represents a major stream in
involvement, customer monitoring, and collaborative commitment current marketing research and is mainly focused on attracting, main-
together constitute cooperation. Namely, IO cooperation is determined taining, and enhancing customer relationships (Berry, 1983). Among
by these three dimensions, and we used a formative measurement to other phenomena, RMT research strives to explain why companies and
account for this conceptualization. We discuss these and other impor- consumers enter into relationships with other companies and consumers
tant implications for research, practice, and theory in the discussion and why some efforts at relationship building turn out to be more suc-
section. cessful than others (Hunt et al., 2006). The RMT is composed of two types

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N.O. Connor et al. Heliyon 6 (2020) e03434

of relationship theories: (1) market based (i.e., consumer-oriented) and the customer and strengthen relational norms and beliefs about the
(2) network-based (i.e., interorganizationally oriented) (M€ oller and future of the relationship (Mesquita and Brush, 2008).
Halinen, 2000). In the context of the present study, the latter type is Based on the premise that using a combination of formal and informal
relevant. The implication of applying the RMT to a high-tech SC context control mechanisms in managing the interorganizational relationship is
is that network-based RMT involves more managerial levels and likely to be more effective, researchers have sought to understand
complexity in the interactions between SC partners. whether such mechanisms act as complementary or substitutive forces
A second theory that focuses on the rational behavior of human actors (Poppo and Zenger, 2002; Wuyts and Geyskens, 2005) that influence
is SET (Chan et al., 2008; Reimann and Ketchen, 2017). SET explains partner behavior, such as in curtailing opportunism and focusing their
human actors' motivations—beyond the obvious economic benefits—to efforts to achieve efficient coordination outcomes (Gundlach and Can-
share and exchange information. SET also explains social behavior in non, 2010). Another set of scholars has sought to reconcile these diver-
economic undertakings, stating that such behavior is contingent upon gent views by arguing that the effectiveness of control depends on the
receiving rewarding reactions from others (Blau, 1964). SET is used to mechanisms involved, their joint use and contextual factors in their
analyze exchange mechanisms in relationships within social contexts; the deployment (Jayaraman et al., 2013; Liu et al., 2009; Zhou and Xu,
proponents of SET consider interaction processes between parties to be at 2012). Echoing this view, we model these control mechanisms as a
the core of social exchange relationships, in which each participant's formative multidimensional construct (IO Cooperation) with three di-
behavior is influential and evokes responses from the other. Analogously, mensions: (1) supplier involvement, (2) monitoring, and (3) collabora-
the outcome of each exchange-relationship participant's behavior is tive commitment. Supplier involvement captures the personal aspects of
influenced by the responsive behaviors of others (Anderson and Narus, doing business, such as the extent to which the customer involves the
1984). In an SC context, Wu et al. (2014) find that SET “guides interac- supplier in collaborative activities (Jean et al., 2014). The second
tional behaviors for the expectation of a reward from partners” (p. 122), dimension of IO cooperation—monitoring—captures formalized commu-
and the authors name trust, reciprocity, and power as the antecedents to nication and supervision activities that are often institutionalized (Ittner
collaboration. Similarly, Tanskanen (2015) highlights the importance of et al., 1999). Monitoring is recognized as an important part of main-
“playing the relationship game” smartly in buyer-supplier relationships. taining effective buyer-supplier links, especially with the increasing need
SET has been previously applied to illustrate ways of avoiding lock-in for transparency in the sustainable supply chain (Short et al., 2016;
situations in buyer-supplier relationships (Narasimhan et al., 2009). Talluri and Sarkis, 2002). Cousins et al. (2008) stress that monitoring
We combine the RMT and SET to investigate how IO cooperation does not correspond with the close supervision of supplier performance,
enhances performance via (1) relationship learning and (2) IT integra- but rather, it is the process of the buyer and supplier's socializing that is
tion. Given this background, we summarize the proposed theoretical critical to success.
model as follows: Relationship learning, which is defined as a cooperative Finally, to capture the activities related to proactive communication
“process of improving future behavior in a relationship” through joint and the sharing of important information, both of which require a certain
teams and communication (Selnes and Sallis, 2003, p. 80), is affected by level of trust and relationship commitment, we include collaborative
IO cooperation and impacts a supplier's performance regarding its major commitment as the third dimension of IO cooperation. Collaborative
buyers and the overall market. Similarly, IT integration acts as a mediating commitment captures the extent of supplier integration in terms of both
variable between IO cooperation and customer and market performance. the supplier and major customer's commitment to the exchange of in-
Relationship learning is operationalized as an outcome of IO cooperation formation on operations and sales, respectively (Flynn et al., 2010). This
and is a driver of performance, whereas IT integration functions as an is, in part, a function of the purpose in the relationship (Ramanathan and
enabling technology. Our SC performance model allows us to test Gunasekaran, 2014); a narrow scope of purpose might encompass such
simultaneously for direct and mediating relationships and to detect things as simply providing feedback on reliable deliveries, whereas a
spurious relationships. The remainder of this section proposes the hy- broad scope might include more advanced feedback such as improving
potheses for the model. key processes, developing new products, and developing new markets. It
follows that the more ambitious the collaborative commitment is in a
relationship, the more reason there is to exchange information and learn
2.2. IO cooperation as a formative multidimensional construct
how relationship performance can be improved. Overall, IO cooperation is
a similar construct to SC integration, which is defined as the degree to
Researchers have examined two main types of control mechanisms in
which a supplier can partner with key customers to structure its IO
the interorganizational context. First, supplier performance measure-
practices, procedures, and behavior into collaborative, synchronized, and
ment and monitoring are important formal control mechanisms in B2B
manageable processes that fulfill customer requirements (Stank et al.,
relationships, which customers use to guide supplier evaluations and give
2001).
feedback as well as to make purchase order allocation and ongoing
contract renewal decisions (Chaddad and Rodriguez-Alcala, 2010;
3. Hypothesis development
Jayaraman et al., 2013). Second, customers use informal control mech-
anisms—such as supplier involvement in decision making, informational
3.1. The mediating role of relationship learning
sharing, and joint problem-solving—to enhance supplier confidence in
the customer's honesty and benevolence (Zhou et al., 2008). Informal
Companies engage in relationship learning activities to better un-
controls are processes that attempt to improve the understanding, in-
derstand each other's needs and respond accordingly (Kim and Chai,
teractions, and involvement between the parties. They include collabo-
2017). Such activities have naturally increased in importance with global
rative practices that transmit common values, beliefs, and philosophy
SC sustainability efforts (Gosling et al., 2016; Oelze et al., 2016). This is
within the clan and help to minimize information asymmetry and to
congruous with the basic propositions of SET, which postulates that re-
absorb misunderstandings among the parties, which diminishes oppor-
lationships form because business partners provide reciprocal benefits to
tunistic tendencies and enhances coordination efforts (Krause et al.,
each other over time (Gouldner, 1960). As has long been recognized by
2007).1 In so doing, informal control mechanisms help to build trust in
marketing managers, relationship learning between organizations is key
to successful performance (Vieira et al., 2014), and this concept has
1
Authors have also referred to the informal control construct as informal so- received much attention in supply chain research (Blome et al., 2014;
cialization (Lawson et al., 2009; Cousins et al., 2006), socialization mechanisms Brito et al., 2014; Cao and Zhang, 2011; Wadhwa et al., 2010a). By
(Cousins and Menguc, 2006) and supplier (direct) involvement (Lau, 2014; Kosmol sharing information about products, systems, competencies, and needs,
et al., 2018; Krause et al., 2007).

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N.O. Connor et al. Heliyon 6 (2020) e03434

both suppliers and buyers can improve their competitive positions and These findings are corroborated by Lambert and Enz (2012), who mea-
increase their mutual attractiveness (Tanskanen and Aminoff, 2015). sure the financial outcomes of two companies that implemented
To foster the development of RMT, Hunt et al. (2006) ask the question cross-functional teams to enhance their business-to-business (B2B) re-
of why firms and consumers enter into relationships with each other. We lationships. They conclude that cross-functional involvement was a key
expect that increased IO cooperation necessitates relationship learning driver of financial performance for the two participating companies.
activities. Companies gain a better understanding of the value their Finally, a cross-national SC study shows that relationship learning indeed
partners seek; for example, both the buyer and supplier will develop enhances the value and performance of both suppliers and buyers
inter-functional organizational solutions (e.g., joint teams) to coordinate (Cheung et al., 2010). Given the increased promise of synergistic out-
their exchanges, thereby strengthening their relationship. Ou et al. comes from relationship learning, we propose the following:
(2010) identified process management as an important mediator be-
H2. Relationship learning improves suppliers' performance for their
tween supplier management and supplier performance. They argued that
main customer.
effective supplier management improved operational performance not
only through reductions in inventory, waste, and safety stocks, but also H3. Relationship learning improves suppliers' overall market
showed that effective supplier management enhances cooperation be- performance.
tween buyers and suppliers by allowing supplier involvement and
participation in both the design and production processes. Similarly,
involvement and participation in joint meetings enhance relationship 3.2. The mediating role of IT integration
learning, or the acquisition of knowledge that can be used in future
innovation (Ding et al., 2014; Ge et al., 2014; Arthanari et al., 2015; Yan IO coordination, such as coordinated production schedules, necessi-
and Nair, 2016). tates information-sharing capabilities. Implementing IT systems to in-
For the supplier, relationship learning provides a chance to promote crease these capabilities has become a pressing priority for many
its capabilities and responsiveness to gain business over the long term. vertically integrated companies (Aydinliyim and Vairaktarakis, 2010).
For example, a supplier has the chance not only to learn from its partner Therefore, efficient data exchange and communication within and be-
(the buyer) but also to respond proactively to design issues during tween organizations needs a coordinated IT infrastructure (de Mattos and
product development and production and to supply issues through Barbin Laurindo, 2015). From a SET perspective, integrated IT systems
corrective action requests. In this way, relationship learning allows a provide the infrastructure necessary for social exchange, which we argue
supplier to build trust with its buyer and to communicate and show its enables the benefits of IO cooperation to be realized (Gefen and Ridings,
commitment to that partner, which helps increase the buyer and sup- 2002). With recent advances in information and communication tech-
plier's overall relational capital (Jean et al., 2010). Thus, we hypothesize nologies, organizations over time can efficiently integrate business pro-
the following: cesses with their SC partners, establishing ongoing relationships. SC
management technologies (e.g., electronic data interchange, electronic
H1. IO cooperation improves relationship learning.
data access, barcodes, RFID, artificial intelligence, Internet of Things,
One of the key elements of the RMT is that beneficial business out- real-time supply-chain agents, real-time big-data analytics, Distributed
comes are a result of the close links between suppliers and buyers, which Ledger Technology (DLT), Blockchain) support the integration and co-
has been empirically confirmed (Cheung et al., 2010). Johnson (1999), ordination of SC information and enable manufacturers to engage in
for example, finds that the strategic integration of a supplier's relation- timely information sharing and collaboration with their upstream sup-
ship enhances a company's financial performance. Johnson emphasizes pliers and downstream buyers (Chae et al., 2014; Devaraj et al., 2007;
that intercompany relationships “do reach a point where the intercom- Huo et al., 2014; Li and Gao, 2008; Treiblmaier, 2018; Zhao et al., 2011).
pany partnership becomes a strategic asset to the participant companies” Several studies support this assertion. Bayraktar et al. (2009) stress
(p. 13). Similarly, Luo (1997) reveals that relationship-based business that these technologies, which they call “enablers,” are essential for
variables have significant, positive influences on foreign-invested en- improving the link between SC management practices and operational
terprises' financial and market performances. Thus, companies must performance. Suppliers' relationship-specific investments have been
constantly strive to build relationships with their partners, and they do so found to encourage the sharing of their product and process innovation
by continuously learning about their partners' reciprocal expectations ideas with their customers (Wagner and Bode, 2014), and this supports
and needs. the view that technology enables business relationships (Gibson and
We can expect a supplier's relationship learning to enhance its per- Edwards, 2005). The myriad of opportunities that IT presents occasion-
formance, with its learning acting as a timely feedback mechanism. For ally lead to over-optimistic expectations about what benefits integrated
example, through relationship learning activities, suppliers gain greater IT can provide a company. Research has shown that “IT-savvy” com-
insights from their respective customers (i.e., buyers) into the critical panies need to develop IT infrastructures that are carefully aligned with
performance areas they must achieve (Knight, 2002). This improved their operating models (Weill and Ross, 2009), strategies, and structures
understanding and awareness of critical performance areas will likely (Strebinger and Treiblmaier, 2004). When this alignment is properly
translate into more proactive and targeted behaviors on the part of the implemented, companies can expect numerous benefits. Sinkovics et al.
supplier to meet its customer's needs, improving the supplier's overall (2011) demonstrate how IT integration using B2B IT infrastructures
performance in the following ways: First, suppliers can use what they helps multinational enterprises enhance local suppliers' responsiveness.
learn to set up performance feedback mechanisms that provide them with Of course, the integration impediments caused by technological differ-
timely feedback about production quality problems before their cus- ences between businesses' IT applications remain major problems that
tomers receive and complain about poor-quality deliveries; second, often lead to fundamental challenges in joint planning and collaborative
relationship learning allows a supplier to focus its resources on areas its transportation, despite the use of state-of-the-art IT (Buijs and Wort-
customer deems critical, thus increasing overall efficiency by eliminating mann, 2014). In the present context, Zhao et al. (2011) show that in
the possibility that the supplier would spend resources in other ways. China, strong internal IT integration is a necessary condition to realize
According to SET, in a business environment, relationships are not the benefits of external IT integration—a critical component of IO
“ends” in themselves, but rather, they serve to improve the performance cooperation. Finally, Lai et al. (2016) also show in a China context that
of the participating companies (Sungu et al., 2019). Drawing on SET, this IT integration must reflect a deep assimilation throughout an orga-
Relationship stability, a buyer's trust in its supplier, relational capital, nization and its supply chain—as opposed to mere “adoption”—in order
and commitment all have a significant influence on the market perfor- to reap the potential benefits. Thus, we posit that the following
mance of companies in SC alliances (Christopher, 2017; Yang, 2009). hypothesis:

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N.O. Connor et al. Heliyon 6 (2020) e03434

H4. IO cooperation positively influences IT integration. and customer focus as crucial antecedents. Using data from the financial
services industry, Field and Meile (2008) show that better supplier
Following the tenets of SET, we argue that IT integration acts as a
involvement correlates with greater buyer satisfaction with the suppliers'
mediator between IO cooperation and performance. Namely, coopera-
overall performance. Interestingly, their research shows that partnering
tion leads to better IT integration, which, in turn, fosters performance.
components (e.g., cooperation) are more important to buyers than
We focus explicitly on the enabling role of IT, whose effect on company
operational components (e.g., feedback). Related studies have found that
performance is controversial (Mitra, 2005). The results showing the
collaborative planning has an important influence on SC performance
relationship between IT implementation (in the broadest sense) and its
and indirectly on a company's financial performance (Petersen et al.,
hypothesized benefits to performance have long been mixed (Bardhan
2005). To account for the complexity of buyer-supplier relationships,
et al., 2007a, 2007b) and are often fraught with caveats. Boone and
Paulraj and Chen (2005) examine three essential B2B activities: supply
Ganeshan (2001) show that IT can contribute to significant productivity
base reduction, communication, and long-term relationship building, and
gains when integrated into the production process but not when used
conclude that IO communication has a significant influence on quality
solely to collect information. In a study of 518 manufacturing plant
performance, while long-term relationships do not.
managers, Maiga et al. (2014) find that IT integration and cost-control
Regarding SC integration, a similar construct to IO cooperation, Flynn
systems do not exert substantial independent effects on financial perfor-
et al. (2010) confirms that SC integration is related to both operational
mance, but the interaction of such systems turns out to be beneficial.
and business performance. In a study of 120 manufacturing companies,
Swafford et al. (2008) report that the IT integration and competitive
Devaraj et al. (2007) find that the relationship between e-business
business performance relationship is mediated by SC flexibility and
technologies and company performance is mediated by buyer and sup-
agility. Bardhan et al. (2007b) examine how specific types of IT are better
plier integration. Supplier integration is shown to enhance the cost,
aligned with certain types of project characteristics, showing that the fit
quality, flexibility, and delivery performance. Similarly, Lee et al. (2007)
between IT use and the environment is directly associated with project
posit that SC integration is the best strategy available to suppliers for
performance and indirectly with project competence. A study by He et al.
achieving reliable SC performance. Given these findings and the impor-
(2014) indicates that a SC that integrates the supplier has a positive,
tance placed on cooperation in China (Gu et al., 2008), we propose the
direct effect on product performance.
following:
Finally, Wu and Katok (2006) demonstrate that enhanced SC per-
formance through relationship learning requires communication be- H7. IO cooperation improves supplier performance regarding its major
tween partners. Currently, this communication is incomplete without IT buyer.
integration. Broadly speaking, the positive effects of IT integration can be
To improve the study's clarity and conciseness, we first explicitly
subsumed into two major categories: (1) timely feedback and (2)
asked our study's interviewees about their relationships with their major
improved resource efficiency. Both have been shown to strengthen the
buyers. In line with the literature on the RMT, we hypothesize that a
relationships between organizations, in turn, fostering IO exchange in
better performance with a company's major buyer has a positive effect on
general (Katsamakas, 2007; Medlin, 2006). Given the above juxtaposed
a company's overall market performance. This hypothesis can be directly
to the fact that the high-tech industry is more likely to benefit from IT
derived from the fundamental premises of B2B relationship marketing,
integration (Saksena, 2009), we propose the following:
which assumes that improving the service level of a company's (business)
H5. IT integration improves a supplier's performance regarding its customers leads to better overall market performance (Ellis, 2010; Luu
major buyer. et al. (2018); Palmatier et al., 2006; Rajput et al., 2018; Streukens et al.,
2011). Thus, we hypothesize the following:
H6. IT integration improves a supplier's market performance.
H8. A supplier's performance regarding its major buyer improves that
supplier's market performance.
3.3. IO cooperation and performance
Figure 1 summarizes all eight hypotheses and shows our final model;
Finding the antecedents to a company's successful performance re- it combines crucial elements from the RMT and SET. The importance of
mains one of the most pressing, yet vexing, tasks for researchers. Among the relationships can be found in H1, H2, and H3, which hypothesize that
others, prior research has focused on optimizing performance by con- IO cooperation is an important antecedent of relationship learning, IT
tracting for the sharing of information such as in collaborative fore- integration, and performance. This is in line with Hunt et al. (2006), who
casting, variability amplification, quality flexibility contracts, SC identify several relational factors and indicators for marketing success.
integration, the coordination of multiple suppliers or multiple units The application of SET can be found in the reciprocal relations in the
within the buyer, supply networks, and downstream buyer cooperation combinations of H1/H2, H1/H3, H4/H5, and H4/H6. In all four cases,
(Ataseven and Nair, 2017; Aviv, 2001; Balakrishnan et al., 2004; Chen we hypothesize that increased IO cooperation triggers an increase in
and Paulraj, 2004; Jayaram et al., 2011; Li and Atkins, 2002; Wadhwa performance that is mediated by relationship learning or IT integration.
et al., 2010b). Namely, each increase in cooperation triggers a positive response that
Highlighting the important role boundary spanners play within cross- can be either a more sophisticated infrastructure for communication or
cultural international cooperative ventures, Luo (2001) concludes that better relationships. This has a positive reciprocal effect on the perfor-
personal attachment influences return on investment (ROI) and process mance of the company that made the first move to improve cooperation.
performance; the author differentiates between three different levels of
attachment—individual, organizational, and environmental—all of 4. Methodology
which turn out to have significant effects on company performance.
Cousins and Menguc (2006) focus on the relationship between SC inte- 4.1. Data and samples
gration and performance, finding that the former has a marked impact on
suppliers' communication performances but not on their operational Our study involved an interview survey of supplier B2B customer
performances, improvements of which consist of cost, time to market, relationship managers. Thus, our sample comprises 1,004 electronic
lead-time reductions, and quality improvements. Chang et al. (2016) component suppliers, ranging in size from nine to 60,000 employees. The
identify a positive effect of SC integration on firms' financial perfor- distribution, according to 13 different component types, is shown in
mance, whereas earlier, Yeung et al. (2005) find that the impact of Table 1.
quality management on performance is context dependent. In their study In response to criticisms in the literature (Van der Stede et al., 2005)
of the Chinese electronics industry, they identify process management regarding “who” completed the mail survey or who was interviewed, the

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Figure 1. Supply chain performance model.

among the short-listed potential interviewees, there was over a 70%

Table 1. Sample product group distribution and interviewee position categories.
take-up rate for the request to be interviewed by the first author.
Crucially, this study was approved by the Human Research Ethics Com-
Industry Group Name No. of Companies % of Sample mittee for Non-Clinical Faculties at The University of Hong Kong, refer-
Connector 150 14.94% ence number EA190109 on January 21, 2009, in support of the
Passive components 146 14.54% associated peer-reviewed research grant: Hong Kong GRF Fund
Generic components 107 10.66% (No.12503515).
Materials 85 8.47%
Printed circuit boards (PCBs) 81 8.07%
Light-emitting diodes (LEDs) 76 7.57% 4.2. Variable measures and scale development
Transformers 69 6.87%
Optronics 68 6.77% Table 2 details the measurement items used in our survey. Given the
Battery and power 60 5.98%
extensive commitment of the interview process, the survey had a large
range of measures, enabling the exploration of different research ques-
Integrated circuits (ICs) 53 5.28%
tions that focused on specific outcomes such as the following: (i) What
Touch panels 50 4.98%
are the determinants of supplier performance measurement alignment?
Switches 44 4.38%
(ii) What is the influence of geographical distance on customer gover-
Speakers 15 1.49%
nance behavior? These questions are explored in other working papers
1,004 100%
that aim to contribute to the accounting and international business
Position Category No. % of Sample
literature. The specific variable measures taken from the interview sur-
Sales manager/director/engineer 291 28.99%
vey all related to the collaborative and communicative activities of the
Business department manager 197 19.62% suppliers' largest customers, the focus of our study. Validated scales were
General manager and vice general manager 142 14.14% taken from the literature and modified for our context following the
Salesman/representative/supervisor 133 13.25% procedures recommended in the literature, as needed. All items were
Account/asset/purchasing/project director 78 7.77% carefully pretested and checked for content validity ex-ante. The modi-
Foreign/overseas sales 75 7.47% fications were informed by a pilot study of the purchasing managers of six
Market department manager 70 6.97% large brand-name manufacturers and the sales managers of 11 of their
CEO/President 18 1.79% suppliers (Wieland et al., 2017).
1004 100.00% The survey items measuring relationship learning were taken from Jean
et al. (2010); this construct is intended to measure communication and
information exchange between individuals but can capture personal ex-
interviewee vetting process was carried out personally by the first author.
changes as well as the quality of relationships. By contrast, the survey's IT
Because we focused on the supplier's relationship with its major down-
integration measurement assesses technological dimensions—that is, the
stream customer, the target interviewee was the customer relationship
virtual connections between suppliers and their major buyers. It not only
manager. We used an intensely personal approach to ensure that the key
covers general aspects of connectivity (i.e., the use of network technol-
customer relationship manager in each supplier selected for the interview
ogies such as e-mails, virtual-network connections, file sharing) but also
was knowledgeable about the collaborative practices of their largest
focuses on the level of computerization and sharing of information via
manufacturing customer. To execute this ideal, the first author attended
quick ordering systems. These survey items were adapted from Nar-
29 B2B trade shows and went on factory visits over a two-year period to
asimhan and Kim (2002) and Kim (2009), who investigate company
personally meet with and approve each interviewee before beginning an
integration in SCs and the impact of SC integration on firm performance,
interview. A total of 988 interviews were conducted in Chinese and 16
respectively.
were conducted in English (see Table 1 for the sample interviewees).
The most complex construct in our study, IO cooperation, examines
Each interview lasted for one hour on average. We followed the steps
three different dimensions: supplier involvement, customer monitoring,
pioneered by Bloom and Van Reenen (2007) in their large-scale inter-
and collaborative commitment. The supplier involvement dimension
view study of over 3,000 managers. The sample population consisted of
measures the importance of the role that the supplier plays in various
all the component companies invited to interview in each expo, and
areas of the buyer's value chain (Song et al., 2011; Song and Di

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Table 2. Measurement details for survey.

Latent Construct/Scaling Items Label

Relationship learning; adapted from Chen et al. (2009); Jean et al. (2010); rel_learn_1 It is common to establish joint teams to solve operational problems in the
Selnes and Sallis (2003) relationship.
7-point scale: strongly disagree/agree rel_learn_2 It is common to establish joint teams to analyze and discuss strategic issues.
rel_learn_3 The problem-solving atmosphere in the relationship is cooperative.
rel_learn_4 We have a lot of face-to-face communication in this relationship.
IT integration IT_int_1 How linked is your company with the major customer through information
IT_int_1 adapted from Narasimhan and Kim (2002) networks (e-mails, virtual-network connections, file sharing)?
IT_int_2 and IT_int_3 were from Kim (2009) IT_int_2 How computerized is the ordering process for your major customer (e.g., do you
7-point scale: to a very little/large extent have an online ordering system)?
IT_int_3 To what extent has your company established a quick ordering system with your
major customer?
Interorganizational cooperation: Supplier involvement; adapted from Ittner io_co_rel_1 How important are you to the customer in its acquisition of product technology,
et al. (1999) (i.e., technology incorporated into the design of the product or services delivered
Items 1–4 to the customer)?
5-point scale: not at all/primary; io_co_rel_2 How important are you to the customer's acquisition of manufacturing-process
Item 5 technology (i.e., technology incorporated into the design of the process through
5-point scale: never vs. always/almost always; which your products and services are produced)?
Item 6
io_co_involv_3 How important are you in the speeding up your customer's new-product
5-point scale: no role/central role;
development?
Item 7
5-point scale: not at all/fully io_co_involv_4 How important are your suggestions to your customer's development of new
products/services?
io_co_involv_5 How often do you play a prominent role in identifying your customer's new
product/service opportunities?
io_co_involv_6 What is your company's role in developing your customer's strategic plans, either
formally or informally?
io_co_involv_7 How well does your company understand your customer's strategic plans?
Interorganizational cooperation: Monitoring io_co_mon_1 How frequently does your major customer supervise or monitor your company?
Adapted from Ittner et al. (1999) io_co_mon_2 How frequently are supplier employees trained?
7-point scale: never/daily
io_co_mon_3 How often do your company's and your major customer's senior executives
typically meet per year?
io_co_mon_4 At the lower levels (for example, in R&D at one company and manufacturing at
another), how frequently does communication take place (by any means)?
Interorganizational cooperation: io_co_cc_1 How often does your company's major customer provide it with production-
Collaborative commitment; adapted from Flynn et al. (2010); planning forecasts (including updates)?
Item 1 io_co_cc_2 Your major customer believes it is important for your company to communicate
5-point scale: never/daily; problems before it detects them.
Items 2 and 3
io_co_cc_3 Your major customer feels it is important that your company proactively
5-point scale: very low/high importance;
communicates schedule changes and changes to product or process specifications.
Item 4
5-point scale (if YES) daily/annually (reverse coding) io_co_cc_4 Does your major customer explicitly share its performance data with you?
Supplier performance with major buyer; from (Humphreys et al., 2004) su_cust_perf_1 Percentage of orders meeting design specifications.
7-point scale: no/significant improvement su_cust_perf_2 Percentage of orders meeting quality requirements.
su_cust_perf_3 Percentage of on-time deliveries.
su_cust_perf_4 Cost management of purchased parts.
su_cust_perf_5 Average investment in purchased-parts inventory.
su_cust_perf_6 Lead time for special/rush orders.
su_cust_perf_7 Time required for supplier to take a new item from development into production.
Supplier market performance; adapted from (Flynn et al., 2010; Kim, 2009) su_mark_perf_1 Sales growth over past three years.
7-point scale: no/significant improvement su_mark_perf_2 Increased market share.
su_mark_perf_3 Increased profitability (i.e., profit ratio).
su_mark_perf_4 Creation of new products/product enhancements (past three years).

Benedetto, 2008). We used the seven-item instrument developed by Itt- The items measuring supplier performance regarding major buyers
ner et al. (1999). The second dimension (customer monitoring) measures were taken from Humphreys et al. (2004), who surveyed companies in
the frequency of on-site customer monitoring practices, such as training Hong Kong to examine the role of supplier development. Finally, the four
and supervision. We used the four monitoring items reported by Ittner measurement items for supplier market performance were based on two
et al. (1999). Both supplier involvement and customer monitoring scales studies in the literature that carefully researched market performance: that
were adapted from the study by Ittner et al. (1999). After pretesting, of Kim (2009) and Flynn et al. (2010). They were also based on pretests
these dimensions were modified to match the specific goals of our study. and expert opinions gained through the pilot study.
The third dimension, collaborative commitment, was based on the sup-
plier- and customer-integration measurement items from Flynn et al. 4.3. Data quality assurance and collection
(2010). We used four items that were adapted and best suited for the
present study's cooperation domain based on pretests and expert opinions Several steps were taken to ensure high-quality data were collected.
gained through the pilot study. All interviews were screened by the first author in person at the expo or

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factory site, thus allowing for cross-checking with other company ma- leveraged additional guidelines for applying PLS to management
terials (e.g., brochures, product displays, buyer brand logos). All in- research, as established and demonstrated by Gefen and Straub (2005),
terviewers received special training and were required to carefully audit Cenfetelli and Bassellier (2009), and Lowry and Gaskin (2014). We
and review at least five interviews with another experienced interviewer conducted an extensive pre-analysis and data validation according to the
before conducting their own interviews. Each interview was supervised latest standards for the following four reasons: (1) to establish the
by one researcher to ensure the interview team followed the correct factorial validity of our measures through convergent and discriminant
protocol, such as following the correct order of questions and double- validity; (2) to establish that multicollinearity was not a problem with
checking with interviewees for all responses that exhibited potential any of our measures; (3) to check for common method bias using the
common response bias (e.g., three or more responses on the same level of marker-variable approach; and (4) to establish strong reliability.
the Likert-type scale).
Before testing our model, several analyses were run with the inter- 5.1. Details on factorial validity
viewer as a fixed effect. These analyses were designed to test for incon-
sistent interpretations of categorical responses and standardizations of Factorial validity is formed by establishing both convergent validity
the scoring system, and they did not yield any significant effects. and discriminant validity, two highly interrelated concepts that must
Therefore, we concluded that our survey and interview protocols suffered coexist. To establish the factorial validity of our latent constructs, we
no significant distortions because of our interviewers. used two widely accepted techniques to determine convergent validity
Our target group consisted of sales managers, who can offer the and two widely accepted techniques to determine discriminant validity.
greatest insight into suppliers' relationships and interactions with their First, we examined our outer-model loadings, summarized in Table 3.
largest buyers. Before each interview, the potential candidate was Convergent validity can be established when the outer-model loadings' t-
screened for knowledge of the company's relationship with its largest values are significant; all items in the present study's outer-model load-
buyer. The survey's topic and goal were explained, and it was made clear ings were highly significant. To double-check our results, we correlated
that most of the questions focused on the suppliers' interactions with our latent-variable scores against their indicators as a form of factor
their largest buyers. During each interview, the interviewers closely loading, then examined the indicator loadings and cross-loadings to
adhered to a checklist to ensure consistency during follow-ups on establish convergent validity, as proposed by Gefen and Straub (2005)
particular response patterns. Additionally, detailed information on the and demonstrated in Lowry and Gaskin (2014). This analysis is sum-
interview process (e.g., date and expo or factory location) and type of marized in Table 4. Although this approach is typically used to establish
manager (e.g., gender, seniority, and confidence level) were collected discriminant validity, convergent validity, and discriminant validity are
and used to reduce residual variation. Four to six weeks after completing interdependent and help establish each other (Straub et al., 2004). Thus,
each interview, a follow-up call was made, during which a research team convergent validity is also established when each loading for a latent
member rechecked select questions in each section of the interview to variable is substantially higher than those for other latent variables—and
assess response consistency and reliability. this was true for the present study's data in every case.
Given that our topic is subject to social desirability bias and that most Similarly, we also used two approaches to establish discriminant
of our data are based on self-reported survey answers, we incorporated validity, as described in Gefen and Straub (2005) and demonstrated more
several design choices to lessen the chance of common method bias recently in Lowry and Gaskin (2014). First, as with convergent validity,
(CMB) and to increase the likelihood of data quality (Bagozzi, 2011; we examined our study's factor loadings, but this time, we did so to
Lowry et al., 2016; MacKenzie and Podsakoff, 2012; Podsakoff et al., ensure no significant overlap existed between our constructs. Again, see
2003). To do so, all company representatives were interviewed by a team Table 4, which illustrates the strong discriminant validity our method
of interviewers who filled out the responses on behalf of their respective showed.
interviewees. Open-ended questions, control variables, and single-item Second, we compared the square roots of the average variance-
measures were also interspersed with measures of more complex con- extracted (AVE) scores with the latent variables' correlations. The stan-
structs based on multiple items. We also used measures with different dard here is that the AVE scores' square roots for any given construct
scaling and anchors. Finally, our survey also included several control (latent variable) should be higher than any of the correlations involving
questions that were theoretically unrelated to our topic to serve as that construct (Fornell and Larcker, 1981; Staples et al., 1999). The
marker variables to demonstrate that common method bias did not numbers are shown in the diagonal for constructs (bolded and under-
threaten our data. In the case of inconsistent responses, the interviewees lined) in the measurement model of Table 5. Strong discriminant validity
were asked to double-check their answers and discuss them on the spot. was shown for all sub-constructs. Importantly, interorganizational
These controls were used within and between different sections of the cooperation is a second-order factor composed of three first-order,
survey. Consequently, these efforts dramatically decreased the possibility reflective constructs that we validated separately: (1) shared measures,
of CMB occurring and greatly increased data quality. This is further (2) operational monitoring, and (3) relationship strength.
empirically confirmed in multiple ways the next section.
5.2. Establishing lack of mono-method bias
5. Results
Moreover, our research was designed a priori so that common method
Except where noted, all model analyses were conducted with partial bias (aka mono-method bias) would not likely result from our study—as
least square (PLS) regression using SmartPLS version 2.0 (Ringle et al., per the leading literature on the subject (Bagozzi, 2011; MacKenzie and
2005) because PLS is more appropriate than covariance-based SEM for Podsakoff, 2012; Podsakoff et al., 2003). However, we still tested for
preliminary model building, is more robust for the analyses of common method bias to establish that it was unlikely to be a negative
less-normalized industry data, and better handles complex data (e.g., factor in our analysis' remaining data.
large datasets, datasets with second-order factors, datasets with forma- The most important point concerning common method bias is that, if
tive measurement)—which best describes the present study's data (Chin it exists, the constructs of a model will be highly correlated with each
et al., 2003; Fornell and Larcker, 1981; Peng and Lai, 2012). By contrast, other. Thus, we simply examined a correlation matrix of our study's
CB-SEM is more appropriate than PLS when testing highly developed, constructs and determined whether any of the correlations were above
known models with highly normalized data (Chin et al., 2003; Peng and 0.90; if they had been, it would have been sufficient evidence that
Lai, 2012). common method bias might have existed (Pavlou et al., 2007). These
Our work was in accordance with that of Peng and Lai (2012), who correlations are presented in the measurement-model statistics in
explains how to apply PLS to operations management research. We also Table 5, and as shown, all are significantly below the 0.90 threshold.

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(<5.0) (Cenfetelli and Bassellier, 2009; Peng and Lai, 2012). We thus
Table 3. Outer model weights to establish convergent validity. concluded that our model does not suffer from multicollinearity.
Latent Construct Items Outer weight t-values
Relationship learning rel_learn_1 0.652 12.66*** 5.5. Final analysis results
rel_learn_2 0.770 26.30***
rel_learn_3 0.576 9.99***
Our final path modeling results are summarized in Figure 2 and
rel_learn_4 0.707 19.44***
detailed in Table 8. Most of our hypothesized relationships were sup-
ported, which we address in the final part of this section.
IT integration IT_int_1 0.623 10.73***
Effect sizes of the results. Following Peng and Lai (2012) guidelines
IT_int_2 0.789 21.58***
for operations management researchers using PLS, we provide a post hoc
IT_int_3 0.777 21.10***
analysis to assess our model's effect sizes, statistical power, and
Interorganizational cooperation: io_co_involv_1 0.643 18.94***
Supplier involvement
Stone-Geisser blindfold. The effect sizes cannot be estimated from SEM
io_co_involv_2 0.630 20.74***
beta coefficients; instead, a conservative approach is used to use Pear-
io_co_involv_3 0.723 36.24***
son's r among the supported paths. Table 9 summarizes this analysis and
io_co_involv_4 0.730 34.51*** indicates that all the supported relationships have medium-to-large effect
io_co_involv_5 0.719 37.12*** sizes.
io_co_involv_6 0.669 25.17*** Statistical power: Regarding statistical power, our large sample size
io_co_involv_7 0.611 21.38*** of 1,000 companies far exceeds the minimum guidelines for PLS—a
Interorganizational cooperation: io_co_mon_1 0.691 15.91*** minimum sample size of at least ten times the most complex relationship
Monitoring io_co_mon_2 0.550 9.10*** in a given model (Peng and Lai, 2012). A more conservative approach is
io_co_mon_3 0.728 18.02*** to follow CB-SEM guidelines, which require a minimum of 10 samples
io_co_mon_4 0.509 7.73*** per item (Westland, 2010). Our model, including the control variables,
Interorganizational cooperation: io_co_cc_1 0.503 6.411*** has 38 indicators and hence would require a minimum sample size of
Collaborative commitment io_co_cc_2 0.628 9.50*** 380, making our actual sample size more than twice the size of the
io_co_cc_3 0.739 15.10*** required minimum. Finally, we used a more conservative approach in
io_co_cc_4 0.751 7.73*** calculating the sample size for SEM by following Westland (2010), who
Supplier performance with major buyer su_cust_perf_1 0.694 26.36*** considers the number of latent variables (10), the number of indicators
su_cust_perf_2 0.705 27.76*** (38), the minimum effect for observation, and an alpha significance of
su_cust_perf_3 0.726 28.12***
.05 and a power of .80. This calculation indicates that the minimum
sample size for our ratio of indicators to latent variables is 112, yet to
su_cust_perf_4 0.623 22.14***
produce a minimum 0.15 level of Cohen's f, a sample size of 797 would be
su_cust_perf_5 0.689 28.67***
required.
su_cust_perf_6 0.696 28.89***
Predictive relevance of our model: Regarding the Stone-Geisser
su_cust_perf_7 0.631 21.55***
blindfold, we calculated the Stone-Geisser (Q2) test of predictive rele-
Supplier market performance su_mark_perf_1 0.767 34.63***
vance, which tests whether a model can predict data points that are
su_mark_perf_2 0.795 34.46***
explicitly excluded: “If Q2 > 0, then the model is viewed as having pre-
su_mark_perf_3 0.749 26.85***
dictive relevance” (Peng and Lai, 2012, p. 473). In every case for the
su_mark_perf_4 0.527 4.49*** present study, Q2 was greater than 0.
*p < 0.05, **p < 0.01, ***p < 0.001, n/s ¼ not significant.
6. Discussion

However, as an additional check, we also used various control variables

In this paper, we present the findings from a study focusing on China's
as marker variables to see whether any of these were highly correlated
technology industry using a sample consisting of 1,004 high-tech com-
with our DVs, and again, this was not the case. Consequently, we have no
panies. Our research goal was to examine how IO cooperation, directly
reason to believe common method bias is a factor in our study.
and indirectly, impacts performance and what role IT integration and
relationship learning play in the value-creation process for suppliers in
5.3. Reliabilities B2B supply chains. We hypothesized a positive effect of IO cooperation
on relationship learning and IT integration, both of which were corrob-
All of our reflective sub-constructs exhibited high levels of reliability. orated. Furthermore, we identified IO cooperation and IT integration as
Reliability refers to the degree to which a scale yields consistent and stable important antecedents for supplier performance for the customer, while
measures through time (Straub, 1989). To establish reliability, PLS relationship learning turned out to have no such effect. Finally, Rela-
computes a composite reliability score as part of its integrated model tionship learning, supplier performance for customer and IT integration
analysis. This score is a more accurate measurement of reliability than all showed significant positive effects on supplier market performance.
Cronbach's alpha because it does not assume loadings or error terms must
exist for the items to be equal. The computed composite-reliability values 6.1. Theoretical implications
are summarized in Table 6 and indicate strong reliability.
In our study, we show that in China's high-tech industry, a company's
level of IO cooperation is a major determinant of its performance with its
5.4. Checking for multicollinearity major buyer and the market in general. We were able to reduce the in-
fluence of confounding variables, such as country of origin and type of
Another major concern with SEM, especially with PLS path modeling, business. Our sample selection method and our sample's size greatly
is its potential for multicollinearity. To check for this, we adhered to the increased the generalizability of our results.
latest validation standards with all our construct items, regressing each One especially interesting finding of the present study is that the
item against an arbitrary DV of the first cooperation dimension: inte- strong positive effect of IO cooperation on (a) supplier performance for
gration. These results are depicted in Table 7. The highest VIF score was customer and (b) supplier market performance is partly mediated by
2.699, which is far below the current standards for reflective constructs relationship learning and IT integration. Therefore, it can be inferred that

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Table 4. Correlations of latent variable scores against indicators.

Latent Construct (1) (2) (3) (4) (5) (6) (7)

Items
rel_learn_1 0.652 0.072 0.193 0.052 0.100 0.094 0.060
rel_learn_2 0.770 0.036 0.392 0.180 0.040 0.114 0.164
rel_learn_3 0.576 0.099 0.131 -0.023 0.073 0.069 0.057
rel_learn_4 0.707 0.099 0.272 0.272 0.091 0.122 0.112
IT_int_1 0.061 0.623 0.056 -0.009 0.154 0.200 0.093
IT_int_2 0.033 0.789 0.155 0.056 0.101 0.166 0.147
IT_int_3 0.123 0.777 0.114 0.082 0.061 0.183 0.183
io_co_involv_1 0.189 0.105 0.643 0.159 0.139 0.178 0.192
io_co_involv_2 0.156 0.108 0.630 0.198 0.152 0.180 0.153
io_co_involv_3 0.230 0.085 0.723 0.188 0.188 0.220 0.186
io_co_involv_4 0.312 0.093 0.730 0.182 0.162 0.212 0.216
io_co_involv_5 0.313 0.122 0.719 0.140 0.164 0.227 0.208
io_co_involv_6 0.347 0.083 0.669 0.199 0.107 0.202 0.181
io_co_involv_7 0.355 0.125 0.611 0.173 0.144 0.195 0.258
io_co_mon_1 0.141 0.021 0.167 0.691 0.026 0.051 0.051
io_co_mon_2 0.104 0.065 0.154 0.550 0.009 0.094 0.099
io_co_mon_3 0.175 0.050 0.212 0.728 0.115 0.098 0.110
io_co_mon_4 0.128 0.023 0.101 0.509 0.149 0.020 -0.010
io_co_cc_1 0.043 0.058 0.099 0.026 0.503 0.077 0.068
io_co_cc_2 0.074 0.105 0.175 0.075 0.628 0.142 0.117
io_co_cc_3 0.057 0.078 0.141 0.084 0.739 0.170 0.115
io_co_cc_4 0.090 0.115 0.166 0.110 0.751 0.200 0.128
su_cust_perf_1 0.119 0.128 0.182 0.088 0.135 0.694 0.332
su_cust_perf_2 0.084 0.163 0.119 0.004 0.119 0.705 0.317
su_cust_perf_3 0.073 0.204 0.160 0.062 0.196 0.726 0.256
su_cust_perf_4 0.056 0.169 0.239 0.098 0.182 0.623 0.275
su_cust_perf_5 0.098 0.142 0.258 0.103 0.148 0.689 0.327
su_cust_perf_6 0.112 0.175 0.192 0.077 0.207 0.696 0.312
su_cust_perf_7 0.172 0.194 0.254 0.077 0.113 0.631 0.290
su_mark_perf_1 0.141 0.111 0.214 0.072 0.086 0.323 0.767
su_mark_perf_2 0.114 0.144 0.200 0.086 0.159 0.345 0.795
su_mark_perf_3 0.077 0.179 0.195 0.082 0.148 0.358 0.749
su_mark_perf_4 0.148 0.126 0.252 0.068 0.068 0.233 0.527

(1) ¼ Relationship learning; (2) ¼ IT integration; (3) ¼ Interorganizational cooperation: Supplier involvement; (4) ¼ Interorganizational cooperation: Monitoring; (5) ¼
Interorganizational cooperation: Collaborative commitment; (6) ¼ Supplier performance with the major buyer; (7) ¼ Supplier market performance.
Items shaded in grey indicate loadings over 0.500 on the associated latent construct.

Table 5. Measurement model statistics and AVEs.

Latent Construct Mean SD (1) (2) (3) (4) (5) (6) (7)
Relationship learning (1) 5.30 0.91 0.680
IT integration (2) 4.66 1.54 0.105 0.734
IO cooperation: Relations (3) 3.35 0.67 0.382 0.156 0.677
IO cooperation: Monitoring (4) 2.53 0.88 0.201 0.062 0.252 0.626
IO cooperation: Integration (5) 3.91 0.65 0.103 0.131 0.222 0.124 0.663
Supplier performance regarding major buyer (6) 4.81 1.03 0.147 0.238 0.298 0.103 0.227 0.681
Supplier market performance (7) 4.16 1.26 0.162 0.198 0.305 0.096 0.160 0.439 0.717

Bolded and underlined entries down the diagonal indicate the square root of the AVEs.

synergies arise for an organization from simultaneously implementing an cooperation in three dimensions to take into account how supplier
adequate infrastructure and building a business network. The strongest involvement, customer monitoring, and collaborative commitment
effect in our study was the influence of IO cooperation on relationship together constitute cooperation. In other words, IO cooperation is
learning, which confirms preexisting literature that highlights the strong determined by these three dimensions, and we used a formative mea-
connection of cooperation and the subsequent emergence of personal surement to take this into account.
networks. When it comes to the theory behind practice, our findings are in
Our model further indicates that researchers must not only include IO line with the basic RMT guidelines. IO cooperation fosters relation-
cooperation as an important antecedent in any study that strives to ship learning and thus has a direct and indirect positive effect on
explain and predict performance; instead, researchers must measure supplier market performance. Interestingly, we found no such

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enhance the performance of the overall SC but rather has indirect

Table 6. Reliability of this Study's Latent Constructs. benefits.
Latent Construct Reliability Regarding the methodological contributions, we closely adhered to
IT integration 0.776 recommendations by Peng and Lai (2012) on how to use PLS in opera-
Relationship learning 0.773
tions management research. Additionally, we employed various tech-
IO cooperation: Relations 0.855
niques to avoid bias (e.g., common method bias) to check for
multicollinearity and ensure the validity of our results. The Peng and Lai
IO cooperation: Monitoring 0.716
paper offers some guidance to other operations management researchers
IO cooperation: Integration 0.754
who are seeking to apply PLS to cases for which it is the method of choice
Supplier market performance 0.806
(e.g., preliminary model building). Furthermore, we adapted existing
Supplier performance regarding major buyer 0.858
scales from the literature and modified them for our research study,
which will help other researchers who want to investigate related
phenomena.
Examining our hypotheses, we find that IO cooperation is strongly
Table 7. Collinearity statistics.
associated with relationship learning (H1), which in turn impacts sup-
Latent Construct Items Item Label Tolerance VIF plier market performance (H3). The H1 results highlight the important
Relationship learning 1 rel_learn_1 0.698 1.432 role of cooperation (Arthanari et al., 2015; Yan and Nair, 2016) and
Relationship learning 2 rel_learn_2 0.511 1.955 confirm the findings of Ou et al. (2010), who identified supplier man-
Relationship learning 3 rel_learn_3 0.635 1.574 agement as an important driver of process management, and Prajogo and
Relationship learning 4 rel_learn_4 0.480 2.082 Olhager (2012), who showed that long-term relationships lead to
IT integration 1 IT_int_1 0.664 1.507 improved communication between suppliers and their customers. Com-
IT integration 2 IT_int_2 0.649 1.541 parable to Bayraktar et al. (2009), who identified a positive relationship
IT integration 3 IT_int_3 0.623 1.606 between SCM practices and performance, we found that relationship
Supplier involvement 1 io_co_rel_1 0.685 1.460 learning improves suppliers' overall market performance (H3). However,
Supplier involvement 2 io_co_rel_2 0.460 2.174 the hypothesized impact of relationship learning on supplier perfor-
Supplier involvement 3 io_co_rel_3 0.486 2.056
mance for customer (H2) was not significant.
Examining the individual hypotheses for IT integration, we find that
Supplier involvement 4 io_co_rel_4 0.465 2.148
this construct is strongly impacted by IO cooperation (H4) and in turn,
Supplier involvement 5 io_co_rel_5 0.370 2.699
impacts supplier performance for customer (H5) and supplier market
Supplier involvement 6 io_co_rel_6 0.446 2.241
performance (H6). This is consistent with the findings of Prajogo and
Supplier involvement 7 io_co_rel_7 0.467 2.141
Olhager (2012), who concluded that information technology and lo-
Monitoring 1 io_co_mon_1 0.599 1.669
gistics integration had significant mediating effects on long-term sup-
Monitoring 2 io_co_mon_2 0.631 1.584
plier-buyer relations and the operational performances of buyers. Other
Monitoring 3 io_co_mon_3 0.695 1.438
studies have also reported similar findings. Our results for H5 and H6
Monitoring 4 io_co_mon_4 0.783 1.277 are comparable with the findings of Bayraktar et al. (2009) who found
Collaborative commitment 1 io_co_cc_1 0.773 1.294 a positive relationship between IS practices and operational
Collaborative commitment 2 io_co_cc_2 0.708 1.413 performance.
Collaborative commitment 3 io_co_cc_3 0.641 1.560 Examining our hypotheses for IO cooperation, we find that IO coop-
Collaborative commitment 4 io_co_cc_4 0.543 1.841 eration strongly impacts supplier performance for the customer (H7).
Supplier performance with major buyer 1 su_cust_perf_1 0.492 2.031 This is consistent with the findings of Chang et al. (2016), Sezen (2008),
Supplier performance with major buyer 2 su_cust_perf_2 0.520 1.921 Li et al. (2009), and Ou et al. (2010), as well as those of Cao and Zhang
Supplier performance with major buyer 3 su_cust_perf_3 0.578 1.731 (2011). Finally, we find that supplier performance for the customer is
Supplier performance with major buyer 4 su_cust_perf_4 0.677 1.476 significantly associated with supplier market performance (H8). This
Supplier performance with major buyer 5 su_cust_perf_5 0.562 1.780 builds on much of the above literature, which mainly focuses on buyer
Supplier performance with major buyer 6 su_cust_perf_6 0.568 1.761 and supplier operational performances. Indeed, our findings show that
Supplier performance with major buyer 7 su_cust_perf_7 0.582 1.717 when suppliers achieve a higher operational performance regarding their
Supplier market performance 1 su_mark_perf_1 0.518 1.929 major buyers, their financial performance consequently improves.
Supplier market performance 2 su_mark_perf_2 0.547 1.829
Our findings on performance are also consistent with the few studies
Supplier market performance 3 su_mark_perf_3 0.536 1.867
that have examined the performance implications of SC management
practices for the supplier (e.g., Li et al., 2009; Flynn et al., 2010;
Supplier market performance 4 su_mark_perf_4 0.499 2.003
Hernandez-Espallardo et al., 2010). As such, our study builds on previous
literature that examines supplying manufacturers and how they manage
their relationships with their primary customers.
mediated effect of IO cooperation on supplier performance for the
customer dimension.
6.2. Managerial implications
Moreover, our results also confirm and refine SET, which postulates
the reciprocity of exchange relations. Notably, IO cooperation has a
For managers, the results of our study indicate that IO cooperation
positive effect on IT integration (i.e., the integration of IT infrastructure
within a SC is essential for improving a supplier's performance regarding
and data exchange). Therefore, close collaboration necessitates the
its major customer and within the overall marketplace. Interestingly,
establishment of a solid technological infrastructure (Chae et al., 2014;
focusing on parts of the whole organizational system might not yield the
Huo et al., 2014; Treiblmaier and Strebinger, 2008). This infrastructure,
expected results, as shown by the nonsignificant relationship between
in turn, has a positive reciprocal effect on performance. Similarly, IO
relationship learning and supplier performance for the customer.
cooperation fosters relationship learning, which also has a positive
The results of the present study demonstrate clearly that companies
reciprocal effect on supplier market performance. Furthermore, these
should improve their IO cooperation, and in turn, this will strongly
effects confirm the findings by Li et al. (2009), who state that IT imple-
improve performance—both the supplier's performance with its major
mentation (which is closely related to IT integration) does not directly
customer and its overall market performance. To achieve this goal, strong

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N.O. Connor et al. Heliyon 6 (2020) e03434

Figure 2. Model testing results.

Table 8. Results of exploratory structural equation model testing.

Tested Path β t-value Sig.

Hypotheses
(H1) IO cooperation → Relationship learning 0.424 16.231*** Yes
(H2) Relationship learning → Supplier performance with major buyer 0.005 0.230 (n/s) No
(H3) Relationship learning → Supplier market performance 0.091 3.136** Yes
(H4) IO cooperation → IT integration 0.174 5.107*** Yes
(H5) IT integration → Supplier performance with major buyer 0.198 8.599*** Yes
(H6) IT integration → Supplier market performance 0.078 2.544** Yes
(H7) IO cooperation → Supplier performance with major buyer 0.298 6.315*** Yes
(H8) Supplier performance with major buyer → Supplier market performance 0.409 14.692*** Yes
Control Variables
Buyer concentration → Supplier performance with major buyer (-0.020) 1.359 (n/s) No
Size (no. employees) → Supplier performance with major buyer (-0.015) 0.572 (n/s) No
Chinese ownership? → Supplier performance with major buyer 0.007 0.651 (n/s) No
Buyer concentration → Supplier market performance 0.038 0.102 (n/s) No
Size (no. employees) → Supplier market performance 0.062 2.745** Yes
Chinese ownership? → Supplier market performance (-0.003) 0.230 (n/s) No

*p < 0.05, **p < 0.01, ***p < 0.001, n/s ¼ not significant.

Table 9. Effect sizes of significant model paths.

Tested Hypothesis Calculated Pearson's r Effect size interpretation*

(H1) IO cooperation → Relationship learning 0.456 Large
(H2) Relationship learning → Supplier market performance 0.007 Very small
(H4) IO cooperation → IT integration 0.098 Small
(H5) IT integration → Supplier performance with major buyer 0.159 Medium
(H6) IT integration → Supplier market performance 0.262 Medium–large
(H7) IO cooperation → Supplier performance with major buyer 0.080 Small
(H8) Supplier performance with major buyer → Supplier market performance 0.421 Large
*
Cohen (1988) indicates that in using Pearson's r for estimating effect size, the following magnitudes should be used: small (0.10), medium (>0.10 and <0.30), and
large (>0.30 and <0.50).

relationships are an essential prerequisite, but the importance of sharing enhancing IO communications, which largely depend on personal
a common IT infrastructure must not be neglected. Managers should relationships.
ensure that different types of information exchanges (ranging from e- In our research, we have identified three important constituents of
mails and file sharing to online ordering systems) over integrated net- cooperation (i.e., supplier involvement, customer monitoring, and
works are possible (i.e., that the necessary enabling technologies are in collaborative commitment), but several more may exist. Our operation-
place), but they must also make sure that this technology is actually alization for the cooperation construct provides interesting starting

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N.O. Connor et al. Heliyon 6 (2020) e03434

points for managers on how to improve IO exchanges. Suppliers can take Therefore, future research should focus on additional constructs and
proactive steps toward understanding their customers' strategic plans and longitudinal studies.
making suggestions for new product opportunities. Suppliers should also
proactively seek regular, formal evaluations from their buyers to Declarations
constructively improve their operations. These formal process systems
can offset the negative impacts of random feedback triggered by specific Author contribution statement
underperformance events (e.g., delayed delivery and poor product
quality), and which can lead to greater trust and reciprocity between Neale O’ Connor: Conceived and designed the experiments; Per-
partners over time. formed the experiments; Analyzed and interpreted the data; Contributed
reagents, materials, analysis tools or data; Wrote the paper.
7. Conclusions and limitations Paul Benjamin Lowry, Horst Treiblmaier: Analyzed and interpreted
the data; Contributed reagents, materials, analysis tools or data; Wrote
In our study, we have shown that IO cooperation is an important the paper.
antecedent of supplier performance for the customer and later within the
general marketplace. From 2010 to 2012, we investigated the direct and
Funding statement
mediating effects of relationship learning and IT integration. Our results
indicate that relationship learning, and IT integration mediate the impact
This work was supported by the Hong Kong GRF Fund
of IO cooperation on an organization's performance.
(No.12503515), as supported by the University of Hong Kong.
Additionally, we corroborate previous research indicating that
cooperation has a positive influence on performance, highlighting the
importance of correctly specifying the nature and direction of re- Competing interest statement
lationships between the drivers and enablers of cooperation and per-
formance. For example, several studies have provided evidence to The authors declare no conflict of interest.
support the role of cooperation regarding the performance of a
manufacturer in managing an upstream SC (e.g., Cao and Zhang, 2011; Additional information
Ou et al., 2010; Tan et al., 2010). Our study expands on this by
providing evidence to support the important role of cooperation No additional information is available for this paper.
regarding a manufacturer's performance in managing a downstream
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