International Journal of Operations & Production Management

Purpose – The purpose of this paper is to investigate the climate for co-operation, from both the supplier and buyer perspectives, for its impact on co-operative activities. Climate encompasses the constructs of cross functional barriers, participation by the respondent in strategic customer/supply decisions and expectation of the continuity of the relationship, competitive pressure and institutionalized beliefs about co-operation in the firm's industry.

Design/methodology/approach – The design of the study is based on a cross-sectional mail-based survey of 89 buyer and supplier dyads, involving 178 manufacturing companies. First, the psychometric properties of the proposed constructs were assessed. Then the relationships among the proposed constructs were tested by structural equation modeling for the supplier and then the buyer samples.

Findings – Both parties' co-operative behaviors were strongly influenced by the expected continuity of the relationship. Suppliers differed from buyers in that they were influenced by institutional beliefs about co-operation. Involvement in decision making positively affected shared planning activities for the suppliers whereas it affected relationship flexibility for the buyers. Lastly, buyers in contrast to suppliers were influenced by competitive pressure.

Research limitations/implications – As a cross-sectional study about complex inter-firm relationships, the research does not directly capture relationship effects over time. The paper also does not address how climate affects the formulation and implementation of dysfunctional buyer-supplier relationships.

Practical implications – Buyers and suppliers should be aware that there are significant similarities and differences in how their partners respond to the context in which they operate. This knowledge is important in understanding what drives the other party's behavior in the formal and informal negotiations and problem solving that characterize an ongoing relationship.

Originality/value – The research uses dyadic data to understand both sides of the buyer supplier relationship. It introduces constructs such as institutional belief and cross-functional barriers and functional involvement in strategic planning as components of a new concept called co-operative climate. This concept is found to be relevant to both buyer and supplier perspectives.