Critical incidents and supplier satisfaction - investigating tipping points in a seller’s market

Abstract

Purpose

The main purpose of this research is exploring the tipping points for a radical shift in supplier (dis)satisfaction. This study identifies triggers and links them to consequences for the buyer–supplier relationship.

Design/methodology/approach

The Critical Incident Technique (CIT) was used to interview Dutch supplier representatives in the infrastructure sector, resulting in rich descriptions of 29 critical incidents, extracting first-hand information.

Findings

Safety issues, technical disputes and recruitment of supplier’s technical staff have been identified as tipping points for suppliers to become dissatisfied. Implementing performance-based contracting is another critical incident that caused irritation and disappointment. On a more operational level, dissatisfaction was provoked by tender errors and price discussions with the buyer. This study also identified tipping points by which dissatisfied suppliers abruptly turned into satisfied suppliers. The effect of a solution-oriented buyer intervention appears to be most powerful if this behaviour transcends prior expectations.

Practical implications

Consequences of misunderstandings and discussion between supplier and buyer may be manageable or repairable, depending on the causes and triggers that influenced a supplier’s dissatisfaction. An early warning system could prove its worth, so that buyers are not faced with unpleasant surprises.

Originality/value

Despite the growing number of studies, processes of how antecedents lead to supplier (dis)satisfaction are not well understood. Antecedents are predominantly investigated by cross-sectional survey data, giving little insights into micro-processes and actual interaction between buyers and suppliers. Although CIT has been applied in many disciplines, the technique is hardly used within the context of purchasing and supply management research.

Citation

Janssens, K., Gelderman, C.J. and Petersen, J. (2023), "Critical incidents and supplier satisfaction - investigating tipping points in a seller’s market", Journal of Business & Industrial Marketing, Vol. 38 No. 13, pp. 154-165. https://doi.org/10.1108/JBIM-07-2022-0296

1. Introduction

Over the past two decades, supplier satisfaction has gained more attention in practice as well in the academic world. A growing stream of research has covered various aspects of supplier satisfaction, although there is still a significant backlog compared to the vast amount of customer satisfaction studies in industrial markets (cf. Piechota et al., 2021). However, we can now conclude that a substantial number of studies has focused on supplier satisfaction (Weller et al., 2021). This development is not surprising, given the importance of supplier satisfaction and dissatisfaction for the success of buying firms. Supplier satisfaction is said to be an important predictor of supplier performance (Weller et al., 2021; Pulles et al., 2016; Hüttinger et al., 2012).

Research results have shown that supplier satisfaction as well as supplier dissatisfaction contribute significantly to the possibilities for buyers to acquire important (tangible and intangible) resources (Pulles et al., 2016) and thereby gain competitive advantages for the organization (Esper and Crook, 2014). Companies have recognized the need for supplier satisfaction, especially when dealing with powerful, indispensable suppliers who are a source of innovation and differentiation (Pulles et al., 2016; Piechota et al., 2021). Buying firms need to acquire access to specific resources, for which they have to compete with other companies (Dyer and Hatch, 2006). Supplier satisfaction is therefore especially important for buying organizations dealing with (powerful) suppliers in seller’s markets.

Previous research has paid substantial attention to the antecedents of supplier satisfaction (Weller et al., 2021). In their literature review, Piechota et al. (2021) found a broad range of determinants of supplier satisfaction. Vos et al. (2016) made a distinction between economic and relational factors as antecedents of supplier satisfaction. This classification is similar to the framework of Maunu (2003), dividing antecedents into business-related dimensions (fact-based values) and communication-related dimensions (softer, human-based values). Literature is dominated by research providing long lists of variables contributing to supplier satisfaction (Hald, 2012), neglecting the processes and dynamics within buyer–supplier relationships. Episode theory provides a dynamic perspective on business relationships focussing on (patterns of) interaction (Schurr, 2007). Also, most previous studies lack information on supplier dissatisfaction (Pascual-Nebrada et al., 2021; Pascual-Nebrada et al., 2022) and how buyer–supplier interactions may turn from satisfaction into dissatisfaction and vice versa (Glavee-Geo, 2019).

Previous studies emphasized the importance of relationship development and introduced the interaction episode construct (Håkansson, 1982; Ford, 1980). In line with this, relationships are considered to develop by going through different stages. Within interaction episodes “decisions are made to change resource ties and activity links that represent structural components of a business relationship” (Schurr et al., 2008, p. 877). Some episodes are critical, causing significant changes in buyer–supplier relationships (Schurr, 2007). This episodic perspective on relationships is an insightful view on relationship development (cf. Anderson, 1995).

That is, the transition from one relationship state to another will always be triggered by a critical event/incident. These triggers are rarely the subject of research, with a notable exception of Hald (2012) who studied change activities in three relationships causing misalignment and reduction in supplier satisfaction. Current studies most commonly do not include the role of triggers. The lack of focus on triggers in past research is problematic, as we actually do not know why and how suppliers (suddenly) change their attitude from satisfied into dissatisfied and conversely, from dissatisfied to satisfied (Glavee-Geo, 2019).

Understanding triggers, that initiate the course of events, can shed light on the tipping points of supplier (dis)satisfaction. What are those straws that effectually broke the camel’s back? A trigger, within the context of this research, is anything that constitutes a turning point in the satisfaction of suppliers. The leading research questions in our study are the following:

RQ1.

What triggers suppliers from satisfaction to dissatisfaction?

RQ2.

What triggers suppliers from dissatisfaction to satisfaction?

This study is aimed at contributing to the existing literature in a number of ways. Firstly, we investigate supplier (dis)satisfaction, focusing on triggers and consequences. Secondly, the antecedents of supplier satisfaction are predominantly investigated through (quantitative) survey studies (Vos et al., 2021; Ahmed et al., 2020; Caniëls et al., 2018; Pulles et al., 2016; Hüttinger et al., 2014; Ghijsen et al., 2010; Essig and Amann, 2009; Maunu, 2003; Wong, 2002). A limitation of these survey studies is the measurement at a specific moment in time (cross-sectional data), giving little insights into the processes and circumstances that affect supplier (dis)satisfaction in specific situations (Weller et al., 2021). Therefore, we applied the Critical Incident Technique (CIT) in our study, collecting and analysing rich narratives through interviews with sales professionals in the Dutch infrastructure sector, a typical seller’s market. We interviewed knowledgeable representatives of supplying companies, producing thick descriptions of 29 critical incidents that triggered radical changes in supplier (dis)satisfaction. The main findings and contributions of this study concern the identification of triggers in combination with their consequences for the buyer–supplier relationships. Thirdly, although CIT has been applied in many disciplines, the technique is hardly used within the context of purchasing and supply management research (cf. Gelderman et al., 2020).

2. Literature review

2.1 Satisfaction and dissatisfaction

Satisfaction can be defined in various ways, although consensus exists that satisfaction refers to “the overall approval of and positive affect towards another party” (Scheer and Stern, 1992, p. 133). The “satisfaction” concept has its roots in the social exchange theory (SET) which applies cost-benefit logic to a variety of exchange relationships (Emerson, 1976). SET predicts relationship termination whenever the costs of a relationship are higher than the rewards. Social exchange is believed to be contingent on the rewarding actions of both parties (Blau, 1964). Social actors are inclined to compare the outcomes of any relationship to prior expectations. An individual’s expectations are essential in this regard.

Actors in an exchange relationship will use absolute as well as relative criteria to evaluate relationship outcomes (Thibaut and Kelley, 1959). In line with this principle, Oliver (1977) has developed the Expectancy–Disconfirmation Theory, also known as the confirmation–disconfirmation paradigm (C/D paradigm) (see Figure 1). This theory is regarded as one of the most important pillars of marketing. The C/D paradigm is widely recognized and used in customer satisfaction research. Customer satisfaction is most commonly operationalized as the difference between expected and delivered performance. When a product outperforms the expectations, the disconfirmation is positive, increasing satisfaction. The implications are straightforward: to foster satisfaction, parties can reduce expectations and/or improve performance. When a product underperforms, the disconfirmation will be negative, which decreases satisfaction (i.e. increases dissatisfaction). As defined by Pascual-Nebrada et al. (2022, p. 2), dissatisfaction refers to “the disconfirmation process between pre-purchase expectations and subsequent results.” A negative disconfirmation results in dissatisfaction (cf. Oliver, 1977).

This conceptualization of satisfaction is not without problems. Expectations in the real world are not independent variables, as suggested by the model. Expectations are inclined to change, in accordance with new performance experiences, among many other factors. In addition, the implications of “dissatisfaction” are not that clear-cut, as implied by SET. Dissatisfaction does not automatically result in relationship termination, for instance, switching cost and the availability of alternatives are of critical importance. What is the best available alternative (Piechota et al., 2021)? Satisfaction does not always result in relationship continuity. Other alternatives might be more attractive or an actor merely feels that certain minimum expectations are met (LaBarbera and Mazursky, 1983). Matzler et al. (2003) identified basic factors which refer to the minimum requirements, which will only lead to dissatisfaction if not met, but which will not lead to (more) satisfaction if met. Basic factors will therefore not lead to satisfaction in case of a relatively high performance, as the importance of that factor is relatively low.

It is also important to acknowledge that factors that contribute to satisfaction might differ from factors that result in dissatisfaction. In practice, a supplier will become dissatisfied when a buyer acts wrongly or opportunistically (cf. Essig and Amann, 2009). A simple act or decision might therefore be a complete game changer regarding supplier (dis)satisfaction. Literature largely ignores to identify and describe such specific actions and concrete circumstances. Also, literature is not very specific on “whether expectation-realization discrepancies always result in lower satisfaction” (Weller et al., 2021, p. 2). A phenomenon known as “social bonding” could make relationships robust against such discrepancies (Krishnan et al., 2021).

2.2 Drivers of supplier satisfaction

Supplier satisfaction is defined in various ways (Ghijsen et al., 2010), most commonly as meeting or exceeding a supplier’s expectation (cf. Schiele et al., 2012). The vast majority of studies operationalize supplier satisfaction as an unidimensional construct (cf. Piechota et al., 2021). In our study, we conceptualize supplier satisfaction as an overall evaluation of the relationship with a particular buyer (Vos et al., 2021; Selnes and Gønhaug, 2000). More specific, this evaluation can be either positive (“satisfied supplier”) or negative (“dissatisfied supplier”). Our study focusses on the tipping points that trigger suppliers to radically change their evaluation of their relationship with buyers.

Literature provides a vast amount of drivers and antecedents of supplier satisfaction (Vos et al., 2016). The literature review of Piechota et al. (2021) resulted in about 150 “determinants” of supplier satisfaction. Although variations exist, there appears to be consensus about the classification into economic antecedents and relational antecedents (Weller et al., 2021; Piechota et al., 2021; Vos et al., 2016; Essig and Amann, 2009; Maunu, 2003).

Economic antecedents refer to concrete, fact-based values (Maunu, 2003). The growth opportunities from a customer relationship is an example of an important, economic driver of supplier satisfaction (Hüttinger et al., 2014). Other economic antecedents are profitability (Vos et al., 2016), a continuous income flow (Pulles et al., 2016) and expectations of relationship continuation (Glavee-Geo, 2019). On the strategic level, factors like early supplier involvement (Maunu, 2003) and intensity of cooperation (Essig and Amann, 2009) could be important, whereas on the operational level performance indicators regarding service, ordering, billing and time management (Ahmed et al., 2020; Essig and Amann, 2009) could also contribute to supplier satisfaction. In the process from order to payment, suppliers often experience long lead times. A reliable order process with short payment terms is therefore suggested to contribute to supplier satisfaction (Essig and Amann, 2009).

Relational antecedents refer to softer, human-based values like openness, feedback and company values (Maunu, 2003). Communication and conflict management have been identified as accompanying factors (Essig and Amann, 2009). The chemistry and trust between actors are other examples of relational antecedents of supplier satisfaction (Pulles et al., 2016). Negative associations with supplier satisfaction are the use of influence strategies (Ghijsen et al., 2010) and buyer power (Schiele et al., 2012). The relational antecedents seem to coincide with the buyer’s operational and relational behaviour towards a supplier (Vos et al., 2016).

2.3 Drivers of supplier dissatisfaction

Dissatisfaction is not by definition the result of the lack of factors that lead to satisfaction, but the lack of the correct pattern of expectations for these factors (Anderson, 1973). In line with the C/D paradigm, supplier dissatisfaction is said to arise from not meeting the supplier’s expectations (Schiele et al., 2012). Meeting minimum conditions does not directly involve satisfaction, but rather a level of acceptance, a so-called zero point (LaBarbera and Mazursky, 1983). The stated minimum expectations consist of several aspects. A supplier is likely to become dissatisfied with a customer relationship when there is a discrepancy between a supplier’s expectations and the buyer’s realization of value (Weller et al., 2021). A supplier’s dissatisfaction might be caused by a buyer, acting opportunistically or using coercive power (Vos et al., 2021). The consequence of supplier dissatisfaction may be that the supplier lowers commitment and output quality, or that the supplier tries to improve the situation or even terminates the relationship (Essig and Amann, 2009). Supplier dissatisfaction usually implies that the relationship is under pressure and unstable. Task and relational conflicts may easily trigger supplier dissatisfaction (Vos et al., 2021).

Expectations may stem from contractual agreements, but also form implicit norms or unfounded ideas. Obviously, suppliers will become dissatisfied with a buyer who fails to comply with the contractual agreements (LaBarbera and Mazursky, 1983). Still, different buyer behaviours may irritate suppliers, triggering supplier dissatisfaction. Maunu (2003) recognizes the systematic failure to meet agreed and expected payment as a factor that can easily cause irritation, although suppliers hold only minimum expectations. When orders are booked late, paid (too) late, suppliers may easily become dissatisfied. The unagreed reopening of negotiations or the failure to index prices are other antecedents of supplier dissatisfaction (Glas, 2018). These are merely examples, as the literature is not very clear or specific on whether expectation discrepancies always result in a decrease in satisfaction or even supplier dissatisfaction (Weller et al., 2021). Moderating factors, like social bonding (Krishnan et al., 2021) or buyer status (Vos et al., 2016), may reduce the impact of expectation discrepancies on supplier dissatisfaction.

The consequences of dissatisfied suppliers can be significant for customers. Dissatisfied organizations can choose from three options in the event of dissatisfaction (cf. Day and Bodur, 1978). Firstly, parties can choose to boycott the customer/supplier with whom the negative experience occurred. They can terminate the collaboration, terminate any contracts and decide not to deliver anymore. This can have major consequences for customers in a seller’s market. Secondly, a supplier can opt for reporting, writing negative reviews and warn others against this customer (negative advertising). Thirdly, a supplier can choose not to do the above and try to improve the relationship or not disclose the problems. This could be a conceivable option if the market is very competitive and the supplier does not want to lose the customer (Day and Bodur, 1978). These three options are not exhaustive. In addition, the preference for a response option will also depend on the degree and type of dissatisfaction.

2.4 Critical incidents and supplier (dis)satisfaction

All in all, various factors have been identified to impact supplier satisfaction or dissatisfaction. The level of satisfaction can be considered the result of the impact of all of these factors. However, such a survey approach could be too general, where the (positive and negative) impacts would benefit from a critical incident perspective. A change in satisfaction level is often said to take place gradually. After all, most studies assume that supplier satisfaction develops over time in a sequence of repetitive interactions (Piechota et al., 2021; Weller et al., 2021). However, in practice, it seems to happen regularly that satisfaction has to quickly make way for dissatisfaction due to certain specific events (triggers). Conversely, it is generally assumed, as shown by research in marketing, that a negative association seems to turn less quickly into a positive association (Henderson et al., 2004). The proverb “trust comes on foot and goes on horseback” seems to fit this perfectly. Some scholars emphasize an on evolution-based instead of episodic perspective on relationship development (Ellegaard, 2012).

Most commonly, studies do not show which triggers constitute a sufficient condition for a radical shift in supplier (dis)satisfaction (Glavee-Geo, 2019). Our study intends to shed light on these triggers, critical incidents that turn satisfaction into dissatisfaction, and vice versa. Quite some research has been done on antecedents of supplier satisfaction, while ignoring the role of triggers. The specific term “trigger” should not be confused with the more generic term “antecedent” (cf. Maitlis and Lawrence, 2007). A trigger, within the context of our study, leads to a tipping point for a supplier regarding the state of (dis)satisfaction towards a buyer. A trigger initiates the course of events, whereas a whereas an antecedent indicates the reason(s) for that something to happen (cf. the trigger is the finger-operated lever used to fire a weapon, whereas the cause the antecedent refers to the reason for firing that weapon) (Gelderman et al., 2020).

The existence of critical incidents in business relationships is reported in many empirical studies, supporting an episodic perspective on relationship development (Anderson, 1995; Brennan and Turnbull, 1999; Schurr, 2007; Hald, 2012). The idea of critical incidents in buyer–supplier relationships is founded in the empirical and theoretical work (Ford, 1980; Cunningham and Homse, 1982; Cambell and Cunningham, 1983), providing guidelines on how to shift to a following development stage (Fiocca, 1982). The trigger perspective on relationships can be positioned within the wider stream of research based on an episodic perspective on buyer–supplier relationships.

3. Research method

3.1 Critical incident technique

The CIT is a comprehensive method for explorative, qualitative research. Flanagan (1954, p. 327) defined an incident as “any observable human activity that is sufficiently complete in itself to permit interference and predictions to be made about the person performing the act”. Flanagan (1954) developed CIT for studies on work behaviours. Now the technique has been used in many areas of application, particularly in marketing and service encounters (Bitner et al., 1990) and organizational psychology (Butterfield et al., 2005). However, CIT is hardly used within the context of purchasing and supply management research (cf. Gelderman et al., 2020).

We applied CIT to investigate specific triggers that resulted in turning points for suppliers with respect to their (dis)satisfaction with buying organisations. We also studied the impact on the buyer–supplier relationship and how these consequences were managed (cf. Chell, 2011). A critical incident in our study is considered an event or incident that has triggered suppliers to abruptly alter their feelings of satisfaction towards a buyer. Respondents were asked to describe and explain situations in which they experienced such sudden changes. A question that is generally an issue in the critical incident approach is whether the incident itself could not be something very personal. It is important to note that the critical incidents relate to the organizational level, not to the individual level. In addition, the (boundary spanning) respondents report on what they have experienced and interpreted themselves, providing first-hand information and insights in the investigated phenomena.

3.2 Data collection

The empirical part of this study consists of in-depth interviews with representatives of large Dutch manufacturing companies within the infrastructure sector. Company size was determined by number of employees, with large size companies holding > 250 employees, according to the Netherlands Chamber of Commerce (KVK, 2023). The infrastructure sector has increasingly become a seller’s market, facing several major challenges, such as the shortage in the housing market and achieving the energy transitions and the associated ambitions. In addition, the infrastructure sector has to cope with various problems such as a shortage of technically trained personnel, the perfluoroalkyl and polyfluoroalkyl substances (PFAS) and nitrogen crises (KVK, 2023).

Flanagan (1954) proposes to conduct interviews with respondents with substantive knowledge of the subject. In our study, we have selected respondents with substantial experience in buyer–supplier relationships who were responsible in deciding whether or not to deliver to a particular customer. Respondents must be authorized to negotiate and reach agreements with customers. Because of their authority, the satisfaction of these managers is therefore decisive for whether or not to accept organizations as customer. The job titles vary from account manager over manager to director (see Table 1). A total number of 29 critical events were described, documented and analysed. These events relate to situations where satisfaction suddenly changes from satisfied to dissatisfied and vice versa. Of the 29 critical incidents, 17 relate to a change from satisfaction to dissatisfaction and 12 incidents concern events in which dissatisfaction turns into satisfaction. The incidents reported belong to different events in different relationships. The interviews took place in Spring 2021, from March to May.

The explorative interviews were aimed at discovering critical incidents in which supplier satisfaction suddenly reverses and triggers multiple consequences. This applies separately to triggers where satisfaction turns into dissatisfaction, and to triggers where dissatisfaction turns into satisfaction. Respondents were invited to describe and reflect on their first-hand experience with customer relationships in which their satisfaction drastically changed. All interviews were guided by an interview protocol. The interviewer gave the interviewee ample time to respond and reflect, not setting a time limit. All interviews ended up taking about 1.5 h. Respondents were asked and challenged to reason back from the present along critical events in the past five years. The interviewer asked to describe at least four critical events, two events in which satisfaction turned into dissatisfaction and two events in which dissatisfaction turned into satisfaction. It is important that the interviewer understands these critical incidents well and understands all the details. To understand this properly, the following types of questions were asked (cf. Chell, 2011):

Q1.

What happened next?

Q2.

Why did that happen?

Q3.

How did that happen?

Q4.

Who did that happen to?

Q5.

What did those involved feel then?

Q6.

What were the consequences of that (short and long term)?

3.3 Data analysis

As the data consisted of in-depth interviews, an open and axial coding was preferred (see e.g. Pascual-Nebrada et al., 2022). The processing of the interviews starts with transcribing and coding the interviews (Miles and Huberman, 1994). The encoding process includes triggers, antecedents and their consequences for supplier (dis)satisfaction. Data analysis can be based either on a conceptual framework (deductive logic) or on a grounded approach (inductive logic) (cf. Stauss, 1993). Considering the explorative nature of our study, we opted for an inductive approach, in which the coding is controlled by the data (cf. Gelderman et al., 2020). The inductive logic is aimed at discovering relevant concepts and categories within the data (Chell, 2011). We did not use a priority list of incidents (Bott and Tourish, 2016), as we intended to capture critical incidents as experienced by knowledgeable respondents. We intentionally chose to code manually, as to get a feel for the data.

4. Results

We agree with Bott and Tourish (2016) that CIT seems appropriate for gathering “thick descriptions.” In our result section, we have included a number of these “thick descriptions.” As expected, respondents appeared to be very well able to recall and describe situations in which their satisfaction with a buyer changed radically. The high degree of recall is not only caused by the high impact that critical incidents have on the further development of buyer–supplier relationships. Another aspect is related to the fact that critical incidents were perceived as an unexpected phenomenon. Respondents were neither prepared nor able to anticipate these incidents. These factors appear to be a major contribution to the respondents' ability to recall the incidents.

In addition, we found that power dynamics played an important role in each narrative. Suppliers are not wilful victims in seller’s markets, although it is always the buying party who makes decisions about whether or not to buy products. We found that suppliers do not resign themselves to decisions made by buyers, but decide themselves, for example, to terminate the relationship. As respondent #1 put it: “power always plays a role, but the real breaking point can be found in the way how you treat each other”. A buyer’s attitude “we are in charge, if you don’t comply, you are replaceable” is not productive in a seller’s market.

4.1 From supplier satisfaction to supplier dissatisfaction

A total of 17 events were described and analysed, in which the satisfaction of suppliers with their customers turned into dissatisfaction.

4.1.1 Technical staff issues

One of the striking results is the importance that organizations attach to their personnel. There is a shortage of technical personnel within the infrastructure sector. Supplier staff often work almost full working weeks for a particular client. The satisfaction of staff therefore partly determines whether staff will continue to work for the supplier in question, or whether they are open to new challenges. As a result, respondents indicate that the satisfaction of the staff largely determines the satisfaction of the organization with a customer. In a number of incidents, the satisfaction of staff appears to be the decisive factor in the escalation. In addition, there are also events where the capacity of personnel is decisive. “Discussions about stationary shifts or not being able to scale up due to scarcity quickly heat up.” This is what one of the respondents indicated. The trigger, the drop that makes the bucket overflow, often turns out to be the dismissal of personnel or discussions about the (degree of efficient) deployment of technicians:

We had deployed a newly trained person for a large framework agreement. In order to increase the technical capacity and to guarantee manufacturability in the energy transition, the training of personnel was part of this contract. In the summer of 2018, ten mechanics completed their training and were being deployed on the contract. After three months, all ten technicians were asked by the customer to work for them. Nine out of ten mechanics actually left our company which made it very difficult for us to fulfil the framework agreement. And we lost our investment in staff training. The active recruitment of staff by the customer was the trigger for us to not renew the contract and to exclude the customer from new tenders. (Respondent 3, incident 16, trigger: customer recruits our technical staff)

One event concerns an accident at work, where a customer has not complied with technical safety standards. This has been a turning point and trigger in the satisfaction with this customer, because the consequences of the accident were significant. In the infrastructure sector, safety is an important condition, holding high requirements. After all, accidents can be fatal. Failure to meet safety standards can lead to both parties losing certificates, damaging their reputation and putting personnel at risk. This makes further cooperation impossible.

4.1.2 Customers enforce performance-based contracting

Another recurring trigger for dissatisfaction concerns certain strategic choices made by customers. Situations were described in which the risk profile in the contract or the collaboration changes due to a change of strategy. It also happened that organizations were no longer able to participate in contracts at all. Within the sector a trend is visible where more integrated contracts are being concluded. Consequently, the supplier then has to operate more in the chain and is considered end-to-end responsible. Various respondents stated several times that this is difficult to achieve and accept. The trigger for this type of event varies from bad experiences with new contracts and therefore cancellation to not being able to accept or accept this type of contract, as a result of which the cooperation ends by operation of law:

We have been supplying this customer for 35 years, so that we derive a (large) part of our raison d’être from this customer. At some point, the client selected new ways of contract management. The purchasing strategy included more outsourcing with fewer contractors, combined with a system of performance based contracting. This strategic change came as a surprise and hit us very hard. This was the trigger for us, which turned satisfaction into dissatisfaction. By now, we no longer supply the customer at all, because we cannot meet their demands. In addition, there is also a lack of will to reorganize ourselves according to the wishes of the customer. We thought we were a strategic partner, but it turned out to be not the case. (Respondent 5, incident 20, trigger: introduction of performance-based contracting)

A major customer introduced performance-based contracting. The customer drew up functional specifications that we had to develop into technical specifications. But, then we had to get approval from that customer for anything and everything! And, as a contractor, we had to work with subcontractors in areas we know nothing about. As a contractor, all risks were borne by us, with the result that we were attacked on everything. Everything was our fault. In short, all very inefficient and expensive for us. A conversation about this escalated, leading to the end of the business relationship. (Respondent 4, incident 14, trigger: introduction of performance-based contracting)

4.1.3 Problematic communication

In many cases, supplier dissatisfaction resulted in relationship termination. In some incidents, respondents reported on problematic employees (often buyers) representing the buying organization. In one occasion, the supplier decided to ban certain employees of the customer. The supplier threatened to work for the customer if they had to communicate and collaborate with these employees. In these incidents, the customer was no longer regarded as a preferred customer or customer-of-choice. Suppliers were open to look for new customers or new markets. The sector will also play a role in this, as Respondent 1 also stated: “Due to the scarcity of personnel, we are in the position to collaborate only with customers who provide a suitable workplace for our technical staff. This ensures continuity in our workforce, which is very important to us.” Another recurring topic among respondents was the lack of trust. A fairly elusive concept, yet five events represent situations where respondents do not feel taken seriously by the customer in question. The tipping point in all these events is characterized by “the moment when we realize that we can no longer trust this customer.” The triggers can be mistakes or everyday problems. For example, respondents indicate as triggers: technical disputes, errors in tenders and price discussions:

We had a technical dispute with a customer about the technology to be applied. According to the contract, we were responsible for the technology. However, the customer did not agree with what we proposed. The customer also constantly questioned the choice for us as a supplier, also in other areas. Eventually it became a legal dispute, in which we no longer trusted each other. We cancelled the contract and excluded cooperation with this customer. The trouble initially started with that technical disagreement, escalating in a legal dispute and relationship termination. (Respondent 1, incident 1, trigger: technical disputes)

Finally, respondents have experienced unproductive, inflexible attitudes and behaviours of buyers. The relationship with a customer deteriorates significantly if, from the supplier’s perspective, serious deliberations have been avoided. For example, Respondent 3 told a narrative about a customer who refused to have a serious conversation about serious problems. Instead, the buyer preferred endless, fruitless discussions about prices and costs. Respondents #4 and #6 also recalled examples where a customer did not want to enter a discussion about the division of costs and responsibilities. In all these cases, the supplier decided to sit out the contract (with minimal effort), to learn from this situation, but also to negotiate much harder next time. In other words, relational governance is largely replaced by contractual governance, resulting in harder future negotiations.

In all events, respondents indicate that the minimum expectation had not been met. This is regularly reinforced by the fact that respondents indicate that agreements made has not been fulfilled. Figure 2 summarizes and shows the triggers and consequences that we derived from the interviews about the transition from satisfied to dissatisfied suppliers.

4.2 From supplier dissatisfaction to supplier satisfaction

A total of 12 events were described and analysed, in which the dissatisfaction of suppliers with their customers turned into satisfaction.

4.2.1 Willingness to renegotiate contracts

We found that in some cases, suppliers succeed in making a loss-making contract negotiable and changing it into break-even or even profitable contracts. In these situations, people were dissatisfied because loss was incurred. The turnaround to satisfaction can therefore be found in this spectrum. Transparency between parties appears to be crucial to provide each other with insight into the financial consequences of the contracts. A striking detail is that in some events the respondent formally terminated the contract before satisfaction was achieved. In both cases, the formal termination appeared to be a trigger to start a conversation between the parties. In other cases, a conversation is also held, often due to dissatisfaction from the customer:

We had a long-term (>15 years) relationship with this customer, on which we depended about 50% of our annual turnover. However, we had been losing money on this contract for years. We felt increasing pressure from shareholders. After a heated shareholders' meeting, we decided to terminate the contract. The customer was shocked which initiated discussions at board level. After we cancelled the contract, the customer realised how important and problematic the relationship was for us. The customer’s attitudes changed and suddenly adverse contractual agreements could be revised. A bridging contract sealed our new mutual trust, creating a feeling of satisfaction with this customer. (Respondent 6, incident 9, trigger: willingness to renegotiate)

We also identified triggers related to capacity problems or the wishes of technical personnel. This can then be resolved in consultation with the customer by deploying staff elsewhere or by adjusting schedules and thereby increasing continuity. It is crucial that parties are transparent to each other about availability. In these situations, the trigger can be found in the fact that the feasibility of the contract is at stake at some point because of the capacity problems. In that case, the parties must enter into open, constructive communication to reach a mutual agreeable solution:

We had been arguing for some time about various matters, such as payment terms and claims. This has led to the initiation of a lawsuit. Parallel to these business disputes, the work went on as usual. Our technicians worked almost entirely for this one customer. At some point, all our technical staff and myself were invited to their company party, which was an internal party for the customer’s employees. Suddenly it became clear to me that they valued us very much and that our staff was treated as the customer's own workers! I have to say, that was a tipping point for me. My attitude changed and I wanted to keep the customer. We dropped the lawsuit and went to resolve the issues at board level. (Respondent 1, incident 5, trigger: unexpected appreciation on a personnel level)

In many cases, the supplier’s dissatisfaction was related to the unprofitable or even loss-making relationship with a customer. If a customer is willing to renegotiate to a less strict contract, this can be a trigger so that feelings of dissatisfaction change to satisfaction with that customer. In other cases, frictions arise, because the supplier is unable to deliver on time or quality problems occur. Understanding from the customer’s side can be a tipping point, especially if it involves the customer stepping in or allowing more leeway in the arrangements. Innovations can also play an important role here.

4.2.2 Customers act (unexpectedly) as problem solvers

Also, in a number of events, problems were solved by initiative of the customer, sometimes very unexpected. In some occasions, customers improved the relationship with a supplier through some kind of innovation. For example, a customer had succeeded in working more efficiently, so that more capacity became available. There was also an event where security at a customer was improved, so that a supplier was again willing to deliver to a customer. Another turning point was the start-up of a pilot in which parties would work together exclusively:

We had to deal with major backlogs with a customer. We were both to blame for the delays. The contract was so strict that the customer could sue us for breach of contract. I was invited to the customer for a work meeting and I saw some stormy weather ahead. But it turned out to be more ‘a conciliatory dinner’, where we communicated openly, clarifying our positions and interests. The need to make up for delays was also discussed. The outcome was that the customer decided not to terminate the contract, but to help out with their own staff to make up for arrears. This enabled us to make a fresh, clean start, which boosted the performance. (Respondent 2, incident 12, trigger: customer gave a much needed helping hand)

Finally, open conversations, transparency and an eye for human factors turned out to be necessary in all cases. Trust must be regained, for which a relational approach is crucial at an interpersonal level. Figure 3 summarizes and shows the triggers and consequences concerning the transition from dissatisfied to satisfied suppliers.

5. Discussion

Literature has produced long lists of a variety of antecedents of supplier satisfaction (Piechota et al., 2021), which makes it more difficult to understand the (interplay of) factors that ultimately determine the state of (dis)satisfaction. In addition, studies most commonly analyse cross-sectional survey data, missing out how the interaction between buyers and suppliers contribute to supplier satisfaction. Our study contributes to the current body of knowledge in three ways. Firstly, although studies on supplier satisfaction increased substantially over the past years (Weller et al., 2021), antecedents leading to supplier satisfaction or dissatisfaction have been examined to a much more limited extent. We add to existing literature by exploring the tipping points that radically shift supplier satisfaction to dissatisfaction and vice versa. Secondly, these antecedents are mainly investigated by cross-sectional survey data, giving a limited understanding of micro-processes and actual interaction between buyers and suppliers. We therefore conducted in-depth interviews with sales professionals, using CIT to explore the triggers that result in tipping points regarding (dis)satisfaction in their relationship with buyers. Thirdly, we used CIT which is a promising but rarely used method in the field of purchasing and supply management (Gelderman et al., 2020).

5.1 What triggers suppliers into a state of dissatisfaction?

Fine examples of the interplay of economic and relational factors that result in dissatisfaction are the issues and management of inter-firm conflicts. Conflicts can be related to performance and the disturbed interaction between buyers and suppliers, not able to solve tensions in a productive way. Economic antecedents in our study were conflicts about technical and safety issues, tender and price issues. Our findings align with studies that found the negative impact of relational conflicts on supplier satisfaction (Pascual-Nebrada et al., 2022; Vos et al., 2016).

Another relational factor can be categorized as opportunistic buyer behaviour. Opportunism is most commonly conceptualized as self-seeking interest with guile, at the expense of the other party (cf. Williamson, 1975). In the infrastructure sector with scarcity of technical specialists, we found that a buying company behaved opportunistically by recruiting the (self-trained) technical staff of the supplier. Many studies have identified opportunism as one of the key factors that undermines and destroys relationships (Gelderman et al., 2020; Trada and Goyal, 2017; Samaha et al., 2011). Our results concur with these studies.

Many professional buyers have developed a preference for performance-based contracting (PBC). With PBC, at least a portion of supplier payment is tied to specific and measurable performance (Selviaridis and Wynstra, 2015; Liinamaa et al., 2016). PBC is considered an appropriate strategy for the effective and efficient procurement of goods and services (Datta and Roy, 2013). However, practitioners might be induced to ignore or underestimate the downside of PBC (cf. Gelderman et al., 2019). In our study, we identified a rather drastic “downside”: when a buying company switched to PBC, the supplier became so dissatisfied that the relationship was terminated.

5.2 What triggers suppliers into a state of satisfaction?

Obviously, it is not easy for a buying company to find a tipping point that turns a dissatisfied supplier into a state of satisfaction. We found that it is important to know what exactly made a supplier dissatisfied, but not to a level that the supplier already terminated the relationship. In our study, dissatisfied suppliers struggled with loss-making contracts and with performance issues. In all cases, the triggers relate to buyers who took the initiative to give a much needed helping hand. Such a flexible attitude, showing solution-oriented behaviour, appeared much appreciated by suppliers. Other studies reported similar results, for instance, Ghijsen et al. (2010) who concluded that supplier development and practical assistance have a significant impact on supplier satisfaction. The effect of such buyer intervention appears to be most powerful if this behaviour transcended suppliers’ expectations. The results are therefore very much in line with the principles of the expectation–disconfirmation theory.

6. Conclusions and recommendations

6.1 Conclusions

Research on the antecedents of supplier satisfaction is typically set up in a cross-sectional survey study, giving limited insights into what is actually going on in the workplace between buyers and suppliers. This study is the first to use the CIT to identify and describe triggers that constitute tipping points for a radical shift in supplier (dis)satisfaction. Representatives of suppliers in a seller’s market were interviewed which resulted in thick descriptions of 29 critical incidents.

The infrastructure sector is characterized by the importance of technology, engineering and a shortage of technical staff. This context is reflected in the findings. Triggers that turned satisfied suppliers abruptly into dissatisfied suppliers were in many cases directly related to these characteristics. Safety issues, technical disputes and recruitment of supplier’s technical staff have been identified and described as critical incidents, constituting tipping points for the supplier. Another major point of irritation and disappointment were buyers who changed their purchasing strategy into a system of performance-based contracting. More on the operational level, dissatisfaction was provoked by tender errors and price discussions with the buyer. The consequences of these triggers were in all case quite drastic and negative for the buying company. Most commonly, the relationship was (eventually) terminated or the buyer lost the “preferred customer” status.

The study also included the investigation of tipping points that changed dissatisfaction into satisfaction of a supplier. In many cases, the original dissatisfaction was related to loss-making situations, and in some cases related to capacity and delay issues. Triggers for the radical change were most commonly induced by the willingness of customers to understand, accommodate and co-solve the supplier’s problems. Buyers also benefited from their interference which was reflected by improved and intensified collaboration.

6.2 Recommendations for future research

We do not claim to have identified all possible triggers that radically change the (dis)satisfaction of suppliers. The findings are the result of an explorative study, limiting the generalizability. The sector in which the research took place, is likely to have an impact on the findings. The scarcity of technical personnel is an example of a factor, significantly influencing the supplier relationships and the supplier satisfaction. Future research could try to shed more light on sector-specific triggers for (dis)satisfaction. Another interesting avenue is setting up a quantitative research and testing hypotheses.

A related limitation in this study is the power the supplier has because of this scarce market. The question that arises is whether this influences suppliers in how far they allow for dissatisfaction before they intervene. In other words, the question is whether the same triggers would continue to exist, or whether suppliers encounter different tipping points for standing up to their customers. A related venue for future research is a comparable study to buyer–supplier relationships in a buyer’s market. When buyers may find it not too difficult to find and contract alternative suppliers, a critical incident study is likely to identify other triggers for abrupt changes in suppliers’ (dis)satisfaction.

In our study, we focused on inter-firm relationships and inter-firm (dis)satisfaction. However, within buyer–supplier relationships, purchasing and sales professionals represent their firm and often act as decision-making agents. Different levels of analysis might produce different antecedents of and triggers for a drastic change in supplier satisfaction. Future research could incorporate or focus on the inter-individual level, addressing also the interactions between the individual and organizational level regarding (dis)satisfaction.

6.3 Recommendations for practitioners

If companies are convinced that the satisfaction of suppliers is important, it is also important to recognize and deal with (weak) signals that indicate changes in supplier satisfaction. Problems should not be ignored, even if they seem insignificant at first. Misunderstandings and discussions appear to escalate easily. The consequences may be manageable or repairable, depending on the causes and triggers that influenced a supplier’s dissatisfaction. One way of fostering satisfaction is to reduce expectations or improve performance (Pulles et al., 2016). Because, according to SET, when the costs of the relationship outweigh the benefits, dissatisfaction may manifest (Pascual-Nebrada et al., 2022).

An early warning system could prove its worth, so that buyers are not faced with unpleasant surprises. In addition, buyers will have to refrain from practices that seriously infringe the trust that suppliers had in the relationship. In our investigation, for example, we encountered incidents that immediately formed a point of no return for the supplier. Relationships were immediately terminated if, for example, the safety of one’s own staff was at stake. The introduction of stricter governance, for example, in terms of a performance base contract, can also result in the termination of the relationship.

We found in our study that dissatisfied suppliers were triggered and could be brought to satisfaction at a tipping point. From the supplier’s perspective, the customer often needs to make a (big) gesture. If a supplier is in trouble, for example, because of delays, contractual obligations or loss-making contracts, the supplier’s termination of the relationship is imminent.

To secure the relationship with the supplier, a buyer can show the willingness to renegotiate the contract.

Buying companies can hence save the day by offering a helping hand, unexpectedly or not.

Figures

Figure 1

Expectancy–disconfirmation theory

Figure 2

Supplier dissatisfaction: triggers and consequences

Figure 3

Supplier satisfaction: triggers and consequences

Table 1

Job titles and number of critical incidents

Resp.	Job title	No. of critical incidents: satisfaction → dissatisfaction
1	Managing director	3
2	Managing director	2
3	General manager	4
4	General manager	3
5	Commercial director	3
6	Account manager	2
Resp.		# of critical incidents: dissatisfaction → satisfaction
1	Managing director	2
2	Managing director	1
3	General manager	2
4	General manager	4
5	Commercial director	1
6	Account manager	2

Source:

Derived from the analysis of this study