The impact of psychological contract breaches within east-west buyer-supplier relationships

The expanding role of Asian firms in global supply chains has meant that their Western counterparts need to be capable of transcending the East-West divide in their relational building efforts if they wish to successfully participate in these networks. This paper draws upon social exchange (SE) theo...

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Bibliographic Details
Published in:Industrial marketing management 2020-08, Vol.89, p.220-231
Main Authors: Kingshott, Russel P.J., Sharma, Piyush, Sima, Herbert, Wong, David
Format: Article
Language:English
Subjects:
B2B relationships
Commitment
EVLN typology
PSYCON breaches
Trust
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Summary:The expanding role of Asian firms in global supply chains has meant that their Western counterparts need to be capable of transcending the East-West divide in their relational building efforts if they wish to successfully participate in these networks. This paper draws upon social exchange (SE) theory to integrate the exit, voice, loyalty, neglect (EVLN) typology with the psychological contract (PSYCON) literature, to examine how Australian buyer firms build and nurture relationships with their Chinese suppliers. Data from 327 Australian managers collected using an online self-administered questionnaire reveals the negative effects of PSYCON breaches towards their suppliers on neglect, voice and loyalty in the relationship. In addition, contrasting effects of neglect and voice behaviours on trust and commitment, suggest that these behaviours can help erode and build East-West B2B relationships, respectively. These findings extend research on B2B relationships and offer useful managerial insights for decision makers operating in global supply chains involving relationships between firms from Eastern and Western backgrounds. •Rise of Asian firms requires Western firms to build stronger East-West relationships.•Psychological contracts are critical for successful social exchange relationships.•This study highlights the role of psychological contracts in East-West relationships.•Psychological contract breaches drive voice and neglect actions in B2B relationships.•Voice and neglect actions impact trust, commitment and loyalty in B2B relationships.
ISSN:0019-8501
1873-2062
DOI:10.1016/j.indmarman.2020.03.008