The Role of Structural Bonds in the Development of Strategic Buyer-Supplier Relationships

Abstract: Background: The need to cut costs, save money, become profitable, be innovative, improve product quality and be responsive to customers’ demands is encouraging some organizations to form strategic relationships with suppliers. In achieving this, certain joint investments, called structural bonds, are developed within the relationship life-cycle. Although the bonds tend to tie down the partners and also create impediments for the termination of the relationship, they inevitably contribute to the achievement of mutual goals and sustaining competitive advantage. Past researches failed to relate the structural bonds’ development to any of the stages of the relationship life-cycle, which this study investigated. Purpose: The purpose of this research is to investigate why and in which stages of a strategic buyer-supplier relationship are structural bonds initiated. Method: A multiple case study approach, involving four companies, was undertaken to achieve the purpose of this study. The method used in collecting the empirical data is in-depth interviews with purchasing employees of these companies: Lagermetall AB, Atlas Copco AB, SAAB Tech AB and Husqvarna AB. Results: Most of the structural bonds, based on this study, were introduced at the beginning of the relationships. Some of the reasons for introducing these bonds are: improved product quality, joint product development, knowledge transfer, innovation and communication. Though the bonds may be introduced by the more powerful organization in the relationship, there is interdependency in the relationship. The bonds influenced the following in the relationship: trust, commitment and cooperation, information sharing, and performance but also generated lock-in effects.