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Effects of Buyer-Supplier Relationships PDF
Effects of Buyer-Supplier Relationships PDF
Effects of Buyer-Supplier Relationships PDF
This research project is my original work and has not been submitted to any other institution or
examination body and no part of this research should be reproduced without my consent or that
Signature…………………….. Date…………………………
B011-003-0001/2014
This research proposal has been submitted for examination with my approval as the Dedan
Signature………………....... Date………………………..
Njoroge Zakary
DEDICATION
I dedicate this work to my loving parents MR. & Mrs. Cheruiyot and my brother Willy for their
support and encouragement throughout this academic journey. May God always shower you with
his blessings.
ACKNOWLEDGEMENT
First and foremost I would like to thank the God almighty for his guidance, strength and
My sincere gratitude is extended to my supervisor Zakary Njoroge for his tremendous guidance
and critique, which added substance to the work. Also, I extend my appreciation to Mr. Joshua
Finally, I thank all those who in one way or the other, have contributed to the successful
Government Tertiary Training Institutions and was carried out within Nairobi County, a case
study of Kenya Institute of Special Education, Kasarani. A lot of studies have been conducted on
cooperation). However, these studies did not look at the effect of these relationships on
procurement performance. The specific objectives were: to establish the effect of trust on
procurement performance in government tertiary training institution; to find out the effect of
procurement performance. The research questions were to find out how trust affects procurement
performance in government tertiary training institution? What are the effects of communication
procurement performance? and what are the effects of cooperation on procurement performance
in government tertiary training institution?. The study will benefit KISE by encouraging them to
adopt buyer-supplier relationships. Literature reviewed showed that that formal communication
of supplier evaluations positively influenced BSR. The descriptive design was employed in the
study. This study used purposive sampling and the data collection instrument used was a
Questionnaire. The data was analyzed using quantitative and qualitative techniques, and findings
presented in the form of frequency distribution tables and pie charts. The findings showed that all
variables on the study have positive effect on procurement performance. The study concluded
relationship. Finally the study recommended that this study be replicated in different business
LIST OF TABLES
Market Exchange: neither of the parties has developed specialized assets to work
with the other; they may work together using general purpose
Captive Buyer: the buyer is held hostage by a supplier free to switch to another
both the sides. Based on the trust both the parties can manage
The strategic alliance between buyers and suppliers therefore has become perhaps the most
important aspect in the procurement performance. As a result, maintaining credible suppliers has
become a priority for the buyer. The improvement of the relation and subsequent improved
procurement performance are critical in Kenya Institute of Special Education. At the
organization, it is crucial as it ensures efficient and timely delivery. The choice of Kenya
Institute of Special Education is important as it has invested huge capital in the provision of
special education; hence buyer supplier alliance is critical to achieving its mission. Various
studies in the field of procurement performance have been undertaken. These studies appreciate
the strategic roles played by suppliers in organizations, as indicated in Vonderembse (1999) and
Hsu (2006), who affirm that suppliers play a vital role in creating a competitive advantage and
Supplier-buyer relationships have today become the backbones of economic activities in the
performance and long-term business success (Veludo et al. 2006). According to Gadde and
Hakansson (2001), the competitiveness and profit-generating capacity of the individual firm is
highly dependent on its ability to handle the supply side. Similarly, Griffith and Myers (2005)
and shareholder value. This is particularly true due to the increased adoption of globalization and
outsourcing strategies (Tang and Musa, 2011) leveraged by company specialization and focus on
their core competencies in order to withstand today‘s competitive market pressures (Blome and
Schoenherr, 2011).
According to Burt et al. (2003), the three main buyer – supplier relationship are transactional,
collaborative and alliances. Transactional relationships are the most common and the most basic
relationship where neither party is concerned about the other parties well-being. There is very
little trust involved in this relationship and it could be a onetime transaction between the buyer
and supplier. There are rarely any big savings made in this kind of relationship and it usually
takes very little time and effort by either party to go through with an agreement.
Collaborative relationships must be supported from the entire organization. A buyer must have
the authority to negotiate with a supplier and come to an agreement that carries mutual trust and
benefit. This is not possible if executives push only for cost savings or if the labour force is
are: lower overall costs, higher quality products, less time to market due to open communication
and improved technology and innovation. Supply disruptions are also less likely as the
relationship is similar to friendship and suppliers and buyers look out for one another rather than
opportunities to take advantage of one another. Drawbacks are the amount of time and effort
involved. Buyers’ time must be spent nurturing the relationship opposed to other value adding
activities. There must also be time spent to begin the relationship and earn the trust of the
supplier. Also there are higher switching costs if problems were to arise with the supplier. Lastly
there is a sharing of proprietary information, strategy, planning, and goals, and most firms do not
feel comfortable exposing such elements to other firms, fearing a loss of control Benton et al.,
(2005). Collaborative relationships might not be desirable when a company has a certain amount
of leverage over its suppliers, or if the suppliers have all the power then the buyer might not be
The third type of buyer-supplier relationship is the alliance relationship. An alliance is formed
for a systematic approach to enhance communication between the two firms. Unlike
collaborative relationships, an alliance is built to have a trust where both firms can be on the
same level and help each other out when there is a time of need or uncertainty. If there is no
motive to have trust or manage it then the alliance will most likely fail. Having an alliance can be
very beneficial as there is asset specialization and human specialization as well. With human
specialization, certain people in companies have experience working together and they have
information that allows them to communicate with others effectively. Because of this, companies
are less likely to have breakdowns between them that will result in errors (Burt et al., 2003).
• Procurement Performance
According to Dobler and Burt (1996) “purchasing” and “procurement” is often used
interchangeably. Van Weele (2000) added that sometimes the term “supply management” or
“logistics management” is also used. The definitions of purchasing are different, but they have
something in common (Scheuing, 1989; Fearon et al., 1992; Lysons, 1996). For example,
“obtaining external products or services” are something that they all have in common, as is the
fact that “procurement should help the organization to reach its objectives” (Knudsen, 1999). As
can be seen from the definitions of performance measurement, in order for an organization to
achieve its goals to satisfy its customer, the two most fundamental dimensions of performance
Cavinato and Kauffman (1999) have discussed ten different purchasing performance
measurement areas in their handbook. Van Weele (2000) and Knudsen (1999) recommended
measurement areas that are derived from purchasing effectiveness and purchasing efficiency.
Purchasing effectiveness is defined as the extent to which, by choosing a certain course of action,
a previously established goal or standard is being met. Further, purchasing efficiency is defined
as the relationship between planned and actual sacrifices made in order to be able to realise a
material and information flows. It is not as simple as to just convey a need from an internal
customer to a supplier and then deliver the item to the internal customer. Instead, this process
consists of activities that are continuously changing in intensity, duration and quality, thus
work.
• Company Profile
agency of the Ministry of Education, Kenya. It was established through a Legal Notice No. 17 of
14th February 1986. The Institute is currently run by a council appointed by the Minister for
Education. The Head of the Institute is the Director who is also the Secretary to the Council
(www.kise.co.ke, 2016).
The institute perform several functions such as to conduct teacher training courses for teachers of
children with special needs and disabilities, conduct in-service courses for personnel working in
all fields of special needs education, prepare and conduct correspondence courses for personnel
in the field of special needs education - run an educational and psychological assessment centre
for the training of teachers of children with special needs and disabilities, Run an orientation and
mobility centre for training and demonstration purposes - run a model training unit for the
integration and inclusion of children with special needs and disabilities into the regular school
schools and run a pre-school department where training and the stimulation of young children
with special needs and disabilities can be carried out for the purpose of teacher training.
• Statement of the Problem
“Buyer - supplier relationships” is an increasingly important area of interest in the academic and
the business world. Companies focus strongly on the development of closer ties with other
organizations in search of competitive advantage and improved market positioning. So far, little
is known about the mechanisms determining the evolution of collaborative relationships, nor
about the existence and interplay of buyer – supplier relationships at various levels within
Kenya is the most industrially developed country in East Africa, but it has not yet produced
results to match its potential. The government tertiary training institutions has to put in more
effort to ensure that it performs better and contributes more to the academic growth in the
country. For every procurement unit/department, suppliers play a major role on the performance
of that unit. Therefore a study on the level at which this sector has embraced the concept of
buyer – supplier relationships and how these relationships affect procurement performance is
important.
A close examination into studies on buyer supplier relationships and procurement performance
confirms that there is research that has been carried out in this field. For example (Bart and
Akkermans, 2009) carried out a study on collaboration in buyer supplier relationships. The study
concluded that, that there are five relationship variables (commitment, conflict, economic & non-
economic satisfaction, and trust) that are important in developing and maintaining good buyer-
supplier relationships. However, the research did not look at the effect of these collaborations on
procurement performance.
Another study conducted by (Cousins et al 2008) on Performance measurement in strategic
buyer-supplier relationships. The study established that supplier performance measures alone are
not sufficient to generate superior performance outcomes. Instead, the influence of performance
socialization mechanisms.
To the best knowledge of the researcher, no study has been carried out on the effect of buyer –
supplier relationships and the effects of such relationships on procurement performance. This
study therefore seeks to bridge this gap by determining how buyer- supplier relationships affect
the performance of procurement. Therefore, this study seeks to address whether there is any
effects on buyer – supplier relationships answer the following questions: to what extent is the
This study is a moderate attempt to address whether there is relationship between buyer –
• General Objective
• Specific Objectives
training institution.
• Research Questions
institution?
training institution?
‘Buyer- supplier’ relationship is an important area of study in the broader field of supply chain.
This study will be very important to different parties in the supply chain such as the following:
Supply chain managers- They will be able to know the kind of buyer- supplier relations their
organizations can adopt. They will also be able to know whether there is any effect of buyer-
Scholars- They will be able to enrich their knowledge in the areas of buyer- supplier
relationships. Also other researchers will be able to step in and fill the gaps that will have been
left by the researcher. They will also be able to recognize whether the buyer- supplier
and if there is any negative relationship the can come up with the measures to overcome such
negative relationships.
It is also important to note that other scholars will greatly benefit from this study for it will build
a basis for their studies and a source of research information, thus it will be an empirical base for
A research work is never an easy work to overcome. There are occasions when the researcher
would encounter numerous problems, which are basic and unavoidable. This research work was
not an exception. The respondents were unwilling to participate in filling the questionnaires for
fear of victimization. The researcher had to convince them that the findings will be confidential
The respondents were busy and it was difficult to have them filling in the questionnaires. To
overcome this, the researcher had to drop the questionnaires and leave them with the respondents
The study will be looking into effects of buyer- supplier relationship on procurement
performance in government tertiary training institutions within Nairobi County. The study
Education. The study was conducted between November 2015 and February 2016.
• Introduction
This chapter contains theoretical literature, critical literature, summary and gaps to be filled and
Previous study has illustrated various theories used to explain the relationship between buyer-
supplier relationships on procurement performance. This study is anchored on the agency theory
• Agency Theory
Agency theory is relevant when one part (principal) depends on another part (agent) for doing
something for the principal. An agency perspective can provide insight into inter-organizational
relationships (Lassar and Kerr 1996; Rossetti and Choi 2008). Eisenhardt (1989) suggests that
agency theory is relevant in situations of supplier and buyer relationship and product innovation.
Agency theory handles principal-agent relationships within or between organizations where the
principal delegates work to the agent. In this paper, the principal represents the buying firm
while the agent is the supplier. In agency theory the contract between the principal and agent is
investigated with concerns on two problems, namely the agency problem and the problem of risk
sharing. The agency problem involves basically two parts, goal conflict and verification
(Eisenhardt 1989). Risk sharing concerns the difference in attitude towards risk of the principal
and agent. Often agency theory takes the principal’s point of view (Aulakh and Gencturk 2000;
Rijsdijk and Van den Ende 2011) but some more recent studies take both the principal and
agent’s perspective (Dou et al. 2009; Van der Valk and Van Iwaarden 2011).
Social exchange theory posits that human relationships are formed by the use of a subjective
cost-benefit analysis and the comparison of alternatives. It is the exchange of activity, tangible or
intangible, and more or less rewarding or costly between at least two parties. Based on the social
exchange theory a business network may be seen as a type of exchange network (Blakenburg and
Johanson, 1992). (Prenkert and Hallen, 2006) defined it as a set of interconnected exchange
relationships. This is directly linked to supply relationships, and underlines the importance of the
supply network within the business network context. Social exchange models assume that
rewards and costs drive relationship decisions. Eriksson, (2001) argues that the main focus of
such a system is on the transformation and exchanges of resources, and less on the social
exchange component. It is from this perspective that buyer-supplier networks sometimes referred
to as supply networks are most frequently analyzed. These relationships are however usually
exchange transformation and exchange of resources, as well social exchange perspectives trust,
collaboration, etc. should play equal parts. However, despite this, there still exists a gap in the
existing literature in appropriately balancing both of these perspectives in the study of buyer-
supplier relationship. Thus, while the marketing literature has so far focused mainly on the
impact of trust and commitment on satisfaction and loyalty, supply chain management has
focused narrowly on the hard determinants of flexibility, like information optimization and
inventory management. Claro (2004) also emphasizes how business networks, supply chains,
networks and buyer-supplier relationships are all types of business relationships raging from a
Several authors have carried out studies related to buyer seller relationships and have come up
with different results related to this topic. The following are some of these studies and they give
an overview of different relationship models that have been developed relating to buyer seller
relationships.
Anderson and Narus (1990) were among the first to test the relationships between both
partnership “as the extent to which there is mutual recognition and understanding that the success
of each firm depends in part on the other firm, with each firm consequently taking actions so as
to provide a coordinated effort focused on jointly satisfying the requirements of the customer
marketplace” (Anderson and Narus 1990). Using social theory as their foundation and interviews
with managers, constructs and a model were developed and tested that was meant to apply to
Although their proposed model needed re-specification, comparison level of alternatives, relative
between manufacturers and distributors. The constructs of trust, cooperation and satisfaction,
which had previously been ‘understudied’, were given substantial support for inclusion in
models of channel working relationships. An important implication of their study was the need
for understanding, for marketing practice, partner’s requirements and expectations as these
An important distinction made by Mohr and Spekman (1994) in their definition of partnerships
was the need of partners to ‘strive for mutual benefit’. Results of their study found that trust,
commitment, and communication, among other variables were important in predicting the
success of partnerships. In partnerships that had higher degrees of these variables, there was a
outcome variable that was based on the partners’ perception of how well expectations were met
by the partnership. A limiting factor in the research to this point had been the lack of research
that differentiated successful and unsuccessful partnerships. Indeed, partnership success may be
measured along two outcome dimensions: endurance or achievement of mutual goals. The
outcome that will have greatest managerial appeal is that which can be related to firm
performance.
• Wilson (1995)
Wilson (1995) proposed that buyer-seller relationships advance through various phases of
development. In each phase, he proposed that different relationship variables would have varying
levels of importance. Trust, satisfaction, power and comparison level of alternatives were
proposed to be important during partner selection and defining purpose of the relationship.
Commitment was important to the relationship when the goal was to create value and maintain
the relationship. Other constructs were also proposed to have varying degrees of importance
throughout the relationship life cycle. The researcher recommended more research in
understanding and conceptualizing how buyer and sellers work together to add value to their
partnership. He recommended further work in order to conceptualize how a set of buyer and
Trust leads retail buyers and sellers to the focus on long - term benefits of the relationship
(Ganesan 1994), and eventually enhance the performance outcomes in buyer- supplier
relationships, including firm competitiveness and transaction costs reduction (Noordewier et al.
1990). Doney and Cannon (1997) indicated that trust influences long - term relationships, while
Morgan and Hunt (1994)found trust has the strongest effect on achieving cooperation in
relationship. Anderson and Weitz (1989) demonstrate the evidence that trust is a key to
concluded distributor trust is related significantly and positively to both cooperative norms and
Benefits of trust have been investigated in different fields of studies and explained through
diverse theories, mainly the transaction cost economics and the relational exchange theory.
Within the transaction cost economics theory, trust is of economic value because it reduces
transaction costs, negotiation costs, monitoring and oversight costs, and uncertainty in
information sharing, acting as a substituting of control (Dyer and Chu, 2003).Within relational
exchange theory, trust is seen critical to foster and maintain relational exchanges. It increases the
probability that organizational actors will exchange information and knowledge, will be involved
in joint learning processes, and will share costs for exploring and exploiting new opportunities
(Inkpen, 2001; Ladoet al., 2008).In operations management studies, trust is seen as significant
responsiveness, and cost reduction (Handfield and Bechtel, 2002; Ireland and Webb, 2007;
Laaksonen et al ., 2009, Narasimhan and Nair, 2005). Trust is a key factor for the development
of partnerships among the different agents of a supply chain, distinguished between interpersonal
and inter-firm trust hence high procurement performance (Johnston, Mccutcheon, Stuart, and
Kerwood, 2004). The creation of trust in inter-firm relationships can be considered related to a
country’s cultural context (Dyer and Chu, 2003; Sako, 1992; Zaheer and Zaheer, 2006).
Commitment among buyers and suppliers brings the desire to develop a stable relationship, a
stability of the relationship, and investments in the relationship thus improving procurement
is very important and hence it deserves maximum efforts to maintain it for long-term period thus
improving the procurement performance (Stanko et al., 2007). Relationship commitment makes
both parties to have the willingness to invest resources in a relationship. They are able to secure a
relationship due to its identification with and internalization of the goals and values of another
Commitment is the key driver of long-term relationship and both buyers and suppliers need to
develop high levels commitment for developing long-term relationship for achieving sustainable
Stanley, (2004) in his study argues that commitment has become an important issue in supply
chain integration because effective planning is based on information shared among partners that
is an essential element for the successful integration making and high procurement performance.
Success of the procurement performance is based on the high level of trust and commitment
among supply chain partners. Supply chain planning is based on information sharing and
commitment between partners that is essential for the successful management of the supply
chain. According to one study, one third of strategic alliances have failed due to a lack of
professionals utilize a variety of media to communicate with suppliers, including phone, fax,
face-to-face, mail, e-mail, Internet, and electronic data interchange (EDI) thus improving
Dion 2001). In fashion apparel industry, frequent communication between retailers and suppliers
can expedite quick and accurate response to volatile market, and reduce the costs and impact of
inaccurate forecasts. With the presence of trust and support, channel members are more willing
to pass information upward and promote bidirectional communication. Consequently, it will help
better match supply with demand and increase profitability for channel members. On the other
hand, under unequal power relationship a less powerful channel party has a tendency not to
provide information and feedback to more powerful ones. Thus, the restricted information flow
will impede the channel relationships and affect the supply chain performance as well. Effective
Cooperation is essential for exchange partners to achieve coordination in supply chains. To cope
with highly uncertain demand in fast changing market, retailers are demanding for greater supply
flexibility and responsiveness from their suppliers. Studies showed that when parties cooperate,
they understand each other’s expectation and needs better, which eventually help them to achieve
In addition, cooperating parties tend to maintain the long-term relationships and enhance
contributing to firm's success because of increased procurement performance (Liu and Wang,
2000). Cooperation among buyers and sellers is assessed by their integrity, credibility,
trustworthiness, and reputation. When cooperation is established, exchange parties will be more
confident to engage in cooperative activities and avoid opportunistic behaviours thus improve
According to Maloni, (2000) the power of a supplier over a retailer is increased by the level of
retailer's cooperation the supplier. Cooperation results from the need to maintain the channel
relationship to achieve desired goals and reflects the essentiality and replace ability of the goods
There are several gaps in the communication literature. First, the influence of the various types
of variables on the buyer- supplier relationships that affect procurement performance are
unknown. A close examination into studies on buyer supplier relationships and procurement
performance confirms that there is research that has been carried out in this field. For example
(Bart and Akkermans, 2009) carried out a study on collaboration in buyer supplier relationships.
The study concluded that, that there are five relationship variables (commitment, conflict,
economic & non-economic satisfaction, and trust) that are important in developing and
maintaining good buyer-supplier relationships. However, the research did not look at the effect
Plane and Green (2011) also conducted a study on Buyer-supplier collaboration and the aim of
Facilities Management procurement. The study established that there emerged a general
consensus that a more relational procurement process has a positive influence on the relationship
established and also that the perceived benefits of relational approaches included clarity of
service requirements, value delivery, and cultural alignment. This study however did not show
performance. The study found that indeed supply chain management practices have an effect on
the procurement performance. However this study was general in referring to supply chain
management and not specific areas in supply chain management that affects procurement
performance.
Although several studies have stated that they expect a direct effect (Krause et al., 2000), the
relationship has not been empirically tested. Third, if there is an indirect effect, the literature
suggests that the buyer–supplier relationship (BSR) may be a mediator (Johnston & Lewin,
1996).
The literature review confirms that a lot has been done on buyer supplier relationships. But little
has been done on the effect of these buyer-supplier relationships on procurement performance. It
procurement performance.
Carr and Pearson (1999) found that formal communication of supplier evaluations positively
influenced BSR. Similarly, Davey and Sheehan (2002) found that communication formality had
(Moorman, Zaltman and Deshpande 1992). Hardwick and Ford (1986) point out that
commitment assumes that the relationship will bring future value or benefits to the partners.
Wilson (1995) defined the concept of mutual goals as the degree to which partners share goals
that can only be accomplished through joint action and the maintenance of the relationship.
Lastly, frequent and collaborative communication with key suppliers will benefit the buying
firms in the long run, as it fosters a climate of mutual support, thereby improving customer
responsiveness among channel partners. Clearly, effective communication improves the buying
firm’s performance (D‟amours et al., 1999), and is an important factor in the development of
organization and supplier so as to know whether one party has understood the message in the
same terms as intended by the other party and whether he agrees to that message or not.
• Conceptual Framework
Trust
Communication
Procurement
Performance
Commitment
Cooperation
Dependent variable
Procurement performance
Purchasing performance can be considered as the extent to which the purchasing function is able
to realize its predetermined goals at the sacrifice of a minimum of the organization's resources.
Hence, the four dimensions which measurement and evaluation of purchasing activities can be
responsiveness, and the firm's financial performance (Chen and Paulraj, 2004). Internal and
external customers judge the value received from procurement and will defect if their
expectations are not satisfied. In this regard, procurement should emphasize value creation and
delivery, not procedures. One-tool procurement can use to improve both its supply chain
performance and service to other functions, while helping to improve the firm's competitive
position, is to develop a cooperative relationship with appropriate suppliers. The influence of the
Janda et al., (2002) argue that by treating suppliers as allies and sharing strategic information
with them, firms can achieve better lead times and quality, increase operating flexibility, and
establish long-term cost reductions, all of which could help these firms enhance value for the
ultimate customer. According to Chin-Chun (2008), the benefits that result from collaborative
relationships come in the form of a firm’s ability to engage suppliers and other partners in
Independent variables
Trust
Trust is a willingness to rely on an exchange partner in which the firm has confidence
(Moorman, Zaltman, and Deshpande, 1992). Trust is an expectation about an exchange partner
that results from the partner's expertise, reliability, and intentionality (Ganesan, 1994). Trust
plays a significant role in shaping interaction and long-term relationship building (Andersen &
Kumar, 2006). Trust as ―the extent to which a firm believes that its exchange partner is honest
and/or benevolent or some variant thereof. Moorman et al.'s (1992) definition reflects two
Credibility reflects the customer's belief that the supplier has sufficient expertise to perform the
job effectively and reliably, while benevolence reflects the extent of the customer's belief that the
supplier's intentions and motives are beneficial to the customer even when new conditions arise
about which a commitment has not been made (Ganesan,1994). An interesting perspective on
trust is that long- term relationships may not require trust; rather the relationship may be based
on the necessity of having a supplier or distributor (Kumar, 2005). Although trust can be
important at all stages of the relationship, the measurement of trust can only occur after a partner
has been in a relationship long enough to evaluate this dimension. Similar to performance
satisfaction, trust becomes of greater and measurable importance in the last two stages of
relationship development.
Communication
Communication processes underlie most aspects of organizational behaviour and are critical to
organizational success (Mohr and Nevin, 1990). The relationship literature identifies three
planning and goal setting. Communication quality includes the accuracy, timeliness, adequacy,
and credibility of information exchanged, Participation refers to the extent to which partners
engage jointly in planning and goal setting. When one partner’s actions influence the ability of
the other to effectively compete, the need for participation in specifying roles, responsibilities,
and expectations increases. Input to decisions and goal formulation are important aspects of
Commitment
Commitment is the most common dependent variable used in buyer-seller relationship studies
(Moorman, Zaltman and Deshpande 1992). Hardwick and Ford (1986) point out that
commitment assumes that the relationship will bring future value or benefits to the partners.
There is little doubt that commitment is a critical variable in measuring the future of a
valued relationship. Relationship value corresponds to the belief that relationship commitment
exists only when the relationship is considered important. Enduring desire to maintain the
relationship reflects a committed partner who wants the relationship to endure indefinitely and is
Cooperation
Cooperation has been defined as, “similar or complementary coordinated actions taken by firms
reciprocation over time” (Anderson and Narus, 1990). Morgan and Hunt (1994) seem to accept
the above definition of cooperation but continue to expand the definition by emphasizing the
proactive aspect of cooperation vs. being coerced to take interdependent actions. The interaction
of cooperation and commitment results in cooperative behaviour allowing the partnership to
work ensuring that both parties receive the benefits of the relationship.
• Introduction
This chapter describes the research design and the research methodology to be employed in this
study. This is set out in sections under sub-headings containing research, research design, target
population, sampling for the study, data collection instruments and procedures and finally the
• Study Design
The descriptive design was employed in the study. The design was used to describe the
mutual goals). This was appropriate to obtain information concerning the current status of the
phenomenon to describe what the current situation is with respect to the variable of the study.
Gharry and Gronhaug (2005) asserts that in descriptive design the problem is structured and well
understood a fact that Mugenda and Mugenda (2003) agrees that descriptive design is most
The Kenya Institute of Special Education with a work force of about 79 employees is one of the
special needs government tertiary institutions in the Republic of Kenya. According to Sekaran,
(2005), population is a group of individuals, objects or items from which samples are taken for
measurement or it is an entire group of persons, or elements that have at least one thing in
• Sample Design
Purposive sampling involves selecting certain units or cases based on a specific purpose rather
than randomly (Kothari, 2011). The purpose of sampling will be to gain an understanding about
some features or attributes of the whole population based on the characteristics of the sample.
This study used purposive sampling. This method exposes the researcher to various stakeholders
The purpose of sampling is to gain an understanding about some features or attributes of the
whole population based on the characteristics of the sample. A sampling frame is the list of all
the items where a representative sample was drawn for the purpose of research. In this study, a
sample size of 24 employees was used. Mugenda and Mugenda, (2003) asserts that sampling is
that part of the statistical practice concerned with the selection of individual or observations
intended to yield some knowledge about a population of concern, especially for the purposes of
statistical inferences. They advise that a researcher would have to use 30% of the total target
ICT 5 2
Academics 19 6
Total 79 24
The data collection instrument that was used is a Questionnaire which was designed using the
variables identified as important for meeting the case study objectives. A closed- ended was
administered to the respondents. The questionnaire was used since it was easy to administer and
The questionnaire was administered using a drop and pick later method. The respondents in the
questionnaire were employees of KISE. The primary source of data collection method that was
used in the study include use of questionnaire that will be used to source for crucial information
from the Institute. The questionnaire took both take the form of open and closed ended questions
in order to enable effective data collection. The secondary data was attained from the written
materials which included the journals magazines, and other past studies and other relevant books.
This enabled the researcher to compare the data from the questionnaires with the written
materials. This enabled effective data collection and analysis from KISE.
Sekaram, (2003) asserts that there are three objectives in data analysis; getting a feel for the data,
testing the goodness of the data, and answering the research question. He notes that establishing
the goodness of data lends credibility to all subsequent analysis and findings because it measures
the reliability and the validity of the measures used in the study. After gathering data from
questionnaire schedules, they were checked adequately for reliability and clarification. The data
was analyzed using quantitative techniques, whereby the findings were presented in the form of
frequency distribution tables and pie charts while qualitative techniques were incorporated in the
study to facilitate description and explanation of the study findings. By so doing this created
• Introduction
This chapter deals with the presentation and analysis of data collected through questionnaires
from the field. The data collected was analyzed and presented in tabular form, graphs, and charts
and shown in percentages. Out of forty (24) respondents issued with questionnaires, thirty seven
(22) successfully filled and returned them for analysis, hence giving the study 92% response rate.
Received responses 22 92
None- responses 2 8
• Presentation of Data
Total 24 100
The results revealed that 16.7 % had working experience of 1-2 years, 12.5 % had working
experience of 3-5 years, and 25 % had experience of 6-9 years, while 45.8 % had experience of
over 10 years.
The study wanted to find out the position of every respondent in the organization and the
Administrator 12 15.1
Accountant 8 10.1
Procurement 7 8.8
Finance 10 12.6
Auditor 3 3.7
Electrician 5 6.3
IT 5 6.3
Tutor 19 24.1
Total 79 100
The findings in table (4) above shows that administration officers represents 15.1 % of total staff,
12.6 % of them are in the human resource office, 10.1 % are in the accounts, 8.8 % in the
procurement, 12.6 % in the finance, 3.7 % are in the audit department, 6.3 % are in the electrical
department, also 6.3 % are in the IT department, while the majority which represent 24.1 % are
tutors.
• Gender of Respondents
The study wanted to find out the distribution of respondents by gender and the findings are
The findings revealed that 59 % of the respondents were males, while 41 % were females.
The researcher sought to find out how trust affects procurement performance and the summary of
The findings show that trust positively influences procurement performance. There was high
level of performance in cases where trust was strong. This was consistent with (Ganesan 1994),
who found out that Trust leads retail buyers and sellers to the focus on long - term benefits of the
relationship, and eventually enhance the performance outcomes in buyer- supplier relationships,
including firm competitiveness and transaction costs reduction (Noordewier et al. 1990).
(Morgan and Hunt, 1994; Doney and Cannon, 1997) also found out that trust between the buying
firm and its suppliers improves cooperation, enhance satisfaction, reduce conflicts, facilitate
Table 6 below shows the findings on the effect of communication on procurement performance.
performance. Communication received a high rating among firms which maintained a strong
buyer-supplier relationship. Reduced lead time was noted, unforeseen challenges were
communicated and therefore there was enhanced procurement performance .this conquered with
(Bird, 2005) findings that effective communication is crucial to maintain a long-term buyer-
Table 7 below shows findings on the level of agreement on the statement concerning the effect of
The findings revealed that cooperation has a positive and significant effect on procurement
performance. Previous research on channel distribution has suggested that there is a positive
relationship between cooperation and satisfaction (Anderson and Narus 1990; Skinner et al.
1992). Cooperation between channel members will increase channel efficiency and help
members attain their mutual goals. Therefore, the study was in line with prior findings.
The table 8 below shows the findings of the effect of commitment on procurement performance.
The findings revealed that commitment has a positive and significant effect on procurement
performance. This is in line with prior findings. According to (Stanko et al., 2007) Commitment
enables the suppliers and buyers to develop the belief that the existing relationship is very
important and hence it deserves maximum efforts to maintain it for long-term period thus
improving the procurement performance. Relationship commitment makes both parties to have
They are able to secure a relationship due to its identification with and internalization of the
goals and values of another party thus improving procurement performance of a firm (Kwon,
2005).
The researcher sought to know how buyer-supplier relationship had affected procurement
The research findings revealed that buyer-supplier relationship has lead to improved competitive
pricing, reduced lead time, reduced risk of non supply, improved dependability of deliveries,
improved inventory management, and increased sales and improved customer satisfaction. This
The study also sought to determine the relationship that exists between buyer–supplier
Nairobi County.
Data was analyzed using descriptive statistical techniques, which included frequency, percentage
and tables. From the research findings, it can be concluded that trust, commitment, cooperation
and communication influence procurement performance. All the four independent variables were
also measured using the responses on each of the variables obtained from the respondents. The
RECOMMENDATIONS
• Introduction
The study was carried out to establish the effect of buyer–supplier relationships on procurement
performance in government tertiary training institutions in Nairobi County. The study had four
institution. This chapter presents the summary of findings for the four objectives mentioned
above, the conclusions, recommendations made based on findings and the suggestions on areas
• Summary of Findings
The study found out that trust between the buying firm and its suppliers improves cooperation,
enhance satisfaction, reduce conflicts, facilitate information exchange, and lead to long-term
relationships.
The study results showed that Communication have a positive and significant effect on
procurement performance. Communication received a high rating among firms which maintained
a strong buyer-supplier relationship. Reduced lead time was noted, unforeseen challenges were
The findings revealed that cooperation has a positive and significant effect on procurement
performance. Cooperation between channel members will increase channel efficiency and help
members attain their mutual goals. Therefore, the study was in line with prior findings.
The findings revealed that commitment has a positive and significant effect on procurement
performance. Commitment enables the suppliers and buyers to develop the belief that the
existing relationship is very important and hence it deserves maximum efforts to maintain it for
long-term period thus improving the procurement performance. Relationship commitment makes
The research findings revealed that buyer-supplier relationship has lead to improved competitive
pricing, reduced lead time, reduced risk of non supply, improved dependability of deliveries,
improved inventory management, and increased sales and improved customer satisfaction. This
The study results also showed that commitment positively and significantly affects procurement
performance. Particularly, the relationship that the firm has with major suppliers is a long-term
partnership that the firms are very committed to such relationship. Further, communication has a
positive and significant effect on procurement performance. As a result, firms let their suppliers
know what they expect of them at all times and they keep each other informed about events or
changes that may affect the other party. Thus, suppliers are provided with relevant information
that might help them. As well, cooperation was also shown to have a positive and significant
effect on procurement performance. There is evidence from the study that trust has a positive and
significant effect on procurement performance. Through trust, suppliers are genuinely concerned
about the company and they offer the best quality product in the market.
• Recommendations
In light of the research findings, communication, commitment, cooperation and trust have shown
Since trust has a positive and significant effect on procurement performance, there is need for
organizations to employ this element for mutual benefits. This will enable them enjoy many
benefits including reduction in costs, free flow of ideas and knowledge and sharing of sensitive
information.
Communication is also key if procurement performance is to be enhanced. As such there is need
for buyers and suppliers to be in constant communication and to expedite quick and accurate
response. It is necessary for organizations to work towards creating long term relationships.
for buyers and sellers to cooperate in decision making and work jointly. This will enhance
integrity, credibility trustworthiness and bring satisfaction to both parties. Commitment is also
essential in enhancing procurement performance. There is therefore need for buyers and
maintain it for long term. There should be willingness to invest resources and share information
This study focused on the effect of buyer-supplier relations on procurement performance. It can
be replicated with a larger, more representative sample. It is also recommended that this study be
replicated in different business sectors within the Nairobi region. Furthermore, it would be
interesting to know whether the observed findings hold for other firms as well. There is also need
networks.
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APPENDICES
Dear Respondent
procurement performance”. The research is towards the partial fulfilment of the requirements for
the award of the Degree of Bachelor of Purchasing and Supply Management of Dedan Kimathi
University of Technology, Nairobi CBD Campus. I would be grateful if you could spend a few
minutes filling out the questionnaire below. No personal information will be disclosed or made
public, and your answers will be kept strictly confidential. If you are interested in the result of
this research, I would be more than happy to send you a summary upon completion of this study.
The questionnaire is into four sections. Please complete each section as instructed. Do not write
Research Questionnaire
This questionnaire has been designed for the sole purpose of collecting data on the effect of
buyer – supplier relationships on procurement performance in government tertiary training
institutions in Kenya. The data collected will be treated with a very high degree of confidentiality
and it is meant for academic purpose only.
You are kindly asked to fill out this questionnaire by putting an “” in front of the applicable
answer or in the applicable cell.
1-2Years { }
3-5years { }
6 -9 years { }
More Years10 { }
Administrator [ ]
Human Resource [ ]
Accountant [ ]
Procurement Officer [ ]
Finance Officer [ ]
Auditor [ ]
Electrician [ ]
IT Personnel [ ]
Tutor [ ]
Other (specify)………………………………………….
b) 5 to 10 years [ ]
c) 11 to 15 years [ ]
d) Above 15 years [ ]
4. Gender
a) Male [ ]
b) Female [ ]
Section B
Please indicate the extent to which you concur with the following statements concerning the
listed variables by placing a tick (√) where appropriate.
Reduced Costs
Please indicate the extent to which you concur with the following statements concerning the
listed variables by placing a tick (√) where appropriate.
Please indicate the extent to which you concur with the following statements concerning the
listed variables by placing a tick (√) where appropriate.
Please indicate the extent to which you concur with the following statements concerning the
listed variables by placing a tick (√) where appropriate.
Procurement Performance
Please indicate the extent to which you concur with the following statements concerning the
listed variables by placing a tick (√) where appropriate.
Photocopying 3000
Main Data Collection Travel, meals and soft drinks: 1 × 2 days ×500 1000
Sub-total 16100