Capturing The Longitudinal Dynamics Of Customer-supplier Relationships: An Empirical Examination Of The Roles Of IT, Transaction Economics And Social Exchange

Abstract

The forms of cooperative business hold the promise of reduced costs, increased efficiencies, rapid market and environmental responses, expanded market opportunities, new resources, faster product developments, and the most coveted of all benefits--competitive advantage. These cooperative business forms are a rich matrix for the exploration and testing of a wide range of theories, such as Transaction Cost Economics, Social Exchange Theory, Resource Dependence Theory, and Relational Exchange Theory. This thesis presents a process view of how IT and trust affect transaction costs in a transaction dyad consisting of a small supplier and a large customer. It goes beyond functional relationships between variables to examine empirical connections between sequences of events and outcomes. The thesis presents a dual perspective of affective elements; the IT buildup represents the technological aspects of changes in transaction costs and the Trust buildup represents the human aspects. The base model emphasized the impact on transaction costs by IT and trust buildups over time. Trust buildup was shown to be the strongest determinant of the reduction in transaction costs; IT buildup demonstrated that it too could reduce transaction costs, but with less influence than trust buildup. The mediating effects of trust buildup are significant on the relationship between IT and changes in transaction costs. However, IT does have a direct impact on transaction costs and is an important consideration in decisions regarding transaction costs between trading partners of unequal size.