The Impact of Supplier Development on Financial Performance in the Restaurant Industry

Abstract

Many firms have come to recognize the crucial role that cooperative relationships with suppliers play in determining high financial performance. Of main concern in many firms are supplier development activities and behaviors (SDABs) of buying firms, which are an attempt to meet current and future business needs such as high financial performance by improving supplier performance. The purpose of this study is to evaluate how buying firms' SDABs affect supplier performance (in delivery as well as product and service quality) and its impact on financial performance of the buying firms. The authors critically revisit extant knowledge on the subject, develop a conceptual framework integrating buyer and supplier relationship marketing/management practices, and test the framework in the independent restaurant industry context. Using structural equation modeling and data collected from 236 restaurant owners and/or presidents in the United States, the results of this research support the usefulness of the framework, showing that buying firms' SDABs directly affect supplier performance, which leads to high financial performance of the buying firms.

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