Collaboration strategies in buyer-supplier relational (BSR) networks and sustainable firm performance: a trade-off story

Abstract

Collaboration in buyer-supplier relational (BSR) networks can be variously achieved: A buyer firm can focus on supplier-to-supplier interconnectivity (i.e., network density) or enable supplier clustering in its BSR network. While the extant literature has considered the effects of these two strategies on firm financial performance, it has not shown whether a focal firm's buyer-supply network collaboration strategy affects its sustainable firm performance (SFP), specifically its environmental and economic performance. This paper investigates three key questions: (a) How do collaboration strategies influence SFP? (b) Is there an optimal mix of these two network strategies for fostering collaboration in a firm's BSR network? (c) Can a manager win on both environmental and economic frontiers by pursuing either strategy? Leveraging extant research on BSR networks, network theory, and ambidexterity, we propose a model linking collaboration strategies to SFP. We construct 330 multi-tier BSR networks and find strong support for the non-linear effects of both collaboration strategies on SFP. A response function analysis identifies the combination of strategies yielding the best outcome for SFP. We also find strong evidence for trade-offs between the performance variables. The results show that managers should focus on density as a lever while developing a minimal level of supply base clustering. We present academic and managerial implications for managing buyer-supplier relationships and consequent performance.