Suppliers' Performance and Parts Transactions with Customers

Abstract

This paper investigates the relationship between suppliers' performance and their parts transactions with customers in Japanese automobile industry. We generate a hypothesis focusing on supplier's learning processes, and test it using Japanese auto parts transactions data set during the period 1993-99. Results show that suppliers who prove important to the main customer at the same time maintaining business relationship with numbers of other customers, tend to surpass other suppliers in their performance. In other words, we find how important it is for suppliers to build stable business tie with the main customer and broaden relationship with other various customers.