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Introduction
Competitive forces are putting firms under pressure to improve quality, delivery performance, and responsiveness while simultaneously reducing costs. In response, firms are increasingly exploring ways to leverage their supply chains, and in particular, to systematically evaluating the role of suppliers in their activities. One result has been the increased outsourcing of activities not considered to represent core competencies ([48] Prahalad and Hamel, 1990). This enables firms to better utilize their resources, increasing the value added attributable to them. It also allows them to be more flexible and responsive to changing needs. Moreover, outsourcing allows firms to exploit the capabilities, expertise, technologies, and efficiencies of their suppliers. Increased outsourcing, however, implies greater reliance on suppliers and a commensurate need to manage the supplier base. This has for some companies meant reducing and streamlining the supplier base, and/or developing closer relationships with suppliers ([50] Scannell et al. , 2000).
At an operational level, the benefit to a buyer of developing close relationships with key suppliers comes in the form of improved quality or delivery service, reduced cost, or some combination thereof. At a strategic level, it should lead to sustainable improvements in product quality and innovation, enhanced competitiveness, and increased market share. These should in turn be reflected by improvements in financial performance. A number of authors have examined the role of relationships in business in general, and more specifically, in the buyer-supplier context. The research stream can be traced back to early work in industrial marketing ([67] Hakansson, 1982), though theoretical frameworks such as transaction cost economics ([66] Williamson, 1985) and the resource based view of the firm ([63] Wernefelt, 1984) have also been used to explain why firms are motivated to outsource, and the impact this has on relationship development. In recent years there has been considerable interest in empirical studies of buyer-supplier relationships (SBSR). In particular, identification of when these relationships are appropriate, the dimensions of effective relationships, and how relationships can be a source of competitive advantage have received considerable attention in the literature ([16] Ellram, 1995; [7] Carr and Pearson, 1999; [46] O'Toole and Donaldson, 2000; [10] Corsten and Felde, 2004). While the literature is extensive, questions remain. For example, little evidence exists of the impact of supplier selection (SS), a...