Examining buyer firm usage of supplier support services

Abstract

Prior relationship marketing research has primarily focused on the importance of building strong relationships between suppliers and buyer firms and the positive financial outcomes associated with high quality buyer firm-supplier relationships.However, buyer firms with strong relationships often exhibit declining purchasing and extant literature offers little guidance for how suppliers should respond when a buyer firm exhibits declining purchasing, even though the relationship between the supplier and that buyer firm is strong. In such cases, I propose that suppliers can encourage buyer firms to utilize additional direct and indirect support services to increase buyer firm purchasing which, in turn, leads to increases in end user purchasing from the buyer firm and/or buyer firm concentration of purchasing with the supplier. Using buyer firm survey responses matched with archival data from a large industrial supplier, I find that, on average, buyer firm indirect and direct support service usage leads to increases in sales growth for the supplier. Prior support service literature indicates that the use of support services leads to positive financial outcomes, but this research suggests that the positive effect may be enhanced or diminished contingent on the buyer firm’s capabilities and characteristics. This research contributes to support service literature by revealing that a buyer firm’s utilization of supplier support services can lead to different financial outcomes for the supplier.