The Dependency of Buyer to Forge Trust with Supplier for Further Collaboration: The role of relational governance
Abstract
Both contractual and relational governance are equally important tools for governing interfirm relationships. Yet how the dependency of the buyer can build trust to govern collaboration with suppliers to overcome economic challenges has not been fully explored. In response to the shortfall, this study uses a survey of 175 alliances between construction firms and material suppliers in Nepal. The findings indicate that despite the presence of a proper legal system in Nepal yet the parties in inter-firm exchange prefer relational trust to efficiently manage their relationship and pursue further collaboration. The findings also suggest that relational trust serves as a mediating variable between perceived dependency and the exchange of information that would result long long-term collaboration between buyer and supplier.
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