Social capital, relational learning, and performance of suppliers

The relationship between buyers and suppliers over the years – social practices – facilitate the development of social capital (SC), and it contributes to the relationship performance (RP) for both parties. The purpose of this paper is to examine the mechanisms that transform SC into RP. By exercising the relationship learning (joint sense-making, information sharing, and knowledge integration), this paper proposes that SC will transform into RP.

Quantitative study was employed in this study. Questionnaires were distributed to first-tier supplier of Astra Group (Astra International) in Indonesia. In total, 211 questionnaires were used for data analysis in this study.

The results exhibit that cognitive and structural SC contribute to the development of relational SC. Further, relational SC was positively associated with joint sense-making, which then goes through information sharing, knowledge integration, and finally RP.

The cross-sectional data in a specific context (a firm) in Indonesia serve as a major limitation of this study. The development of SC and learning as a social process might not be captured well by using the current method – surveys. Furthermore, a major problem is caused by a one-sided survey that depends on the suppliers’ perceptions and judgments of relationship learning and performance.

The results suggest that managers and other relationship actors would benefit from the competency to develop practices and activities with suppliers regarding developing trust. The trust development is facilitated by having common understanding and interactions regularly, either by participating in formal and/or informal activities with suppliers. Building consensus – joint sense-making, between buyers and suppliers are crucial practices in relationship learning before knowledge sharing and knowledge integration practices are in place. And finally, managers should actively integrate this knowledge in order to increase their RP.

This study empirically tests the supply chain practice view as a new theoretical perspective in the supply chain management literature. It also extends the utilization of social practices – SC – since it is crucial in a buyer-supplier relationship. It also presents that relationship learning is a mechanism that could transform SC into RP, and thus bridge the SC and collaborative learning theory. Finally, this study indicates that inside relational learning, there are sequences of joint sense-making-information sharing-knowledge integration, before it moves on to RP.