An empirical study on the link between buying performance criteria and the termination of business relationship

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An empirical study on the link between buying performance criteria and the termination of business relationship


Author: Lam, Chun-cheung Otto
Title: An empirical study on the link between buying performance criteria and the termination of business relationship
Year: 1999
Subject: Industrial procurement
Negotiation in business
Hong Kong Polytechnic University -- Dissertations
Department: Multi-disciplinary Studies
Dept. of Management
Pages: ix, 100, [9] leaves : ill. ; 30 cm
Language: English
Abstract: The purpose of this study is to investigate the relationship between the buying performance criteria and the termination of the business relationship with current suppliers. Previous research has indicated that the most important criteria for buying performance are price, product quality and delivery. None of the previous studies have looked into the relationship between buying performance and business termination. This research is attempted to find out their relationships and to analyse factors affecting such relationships. In view of different perspectives of buying practitioners in the decision making unit, the evaluation of buying performance criteria of each perceived role is also studied and analysed. A theoretical framework linking the business termination and buying performance critieria; perceived quality, perceived price, delivery performance, and close business relationship is developed. This objective is achieved by collecting data from local garment buying firms. Respondents are carefully selected to represent different perceived roles of the buying firms. Strong relationship is found among the three performance criteria with the business termination. It supports the previous research that termination decision-making is affected by the logical analysis of suppliers' performance in terms of perceived quality, perceived price and on time delivery. Although close business relationship is strongly related to business termination, it has no effect to intervene among the three performance criteria towards the business termination with current suppliers. The ranking of importance of each criterion is found in line with previous studies. However, terminated suppliers have a common problem of poor delivery performance and poor product quality. The actual performance of each criterion is proved to be important to the termination decision making. Several implications for both purchasing management and suppliers are noted. In particular, the results of this study can be used as a benchmark for the evaluation on the supplier performance and provide a good direction to the suppliers as the guideline for improving their business relationship with buying firms.

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