There is strong evidence that U.S. organizations are increasingly implementing supplier development programs to help their suppliers improve quality, enhance delivery performance, reduce costs, and in turn improve their own supply chain performance. However, many of these supplier development programs are not successful. This study argues that an understanding of the knowledge transfer process should play a central role in understanding improvements in buyer-supplier performance resulting from supplier development activities.
Building on the extant supplier development literature and relevant knowledge transfer literature, this study investigates key antecedents and performance outcomes of knowledge transfer in a supplier development context. Specifically, the study tests the impact of the extent of supplier development involvement, trust (competence and benevolence), shared vision and supplier’s learning intent on the effectiveness (comprehension and usefulness) and efficiency (speed and economy) of knowledge transfer and the influence of knowledge transfer on buyer-supplier performance.
For this research, 167 U.S. manufacturing firms were used to test the hypotheses. The results show that suppliers’ learning intent and benevolence trust positively impact both the effectiveness and efficiency of knowledge transfer. Supplier development involvement was found to have a positive effect on knowledge transfer effectiveness while shared vision and competence trust had positive effect on knowledge transfer efficiency. The findings also show that both effectiveness and efficiency of knowledge transfer have impact on supplier delivery performance but have no direct effect on supplier cost performance. This research makes an important contribution to the literature on the antecedents of successful knowledge transfer in supplier development. First, the research highlights that supplier’s learning intent leads to better comprehension, better application and quicker absorption of the new knowledge that is transferred to the supplier. Second, suppliers who have trusting relationship with their buyers are more likely to be successful at understanding, applying and rapidly gaining the new knowledge. Moreover, Suppliers who are involved in supplier development with their buyers are more likely to use the knowledge gained on multiple projects and to improve their capabilities. Finally, commonalty in goals, values, culture and strategies between the buyer and the supplier promotes an environment that is conducive for easier flow of knowledge.