European Journal of Marketing

Emerald Article: Antecedents and consequences of trust and satisfaction in

buyer-seller relationships
Fred Selnes

Article information:
To cite this document: Fred Selnes, (1998),"Antecedents and consequences of trust and satisfaction in buyer-seller
relationships", European Journal of Marketing, Vol. 32 Iss: 3 pp. 305 - 322
Permanent link to this document:
http://dx.doi.org/10.1108/03090569810204580
Downloaded on: 22-07-2012
References: This document contains references to 57 other documents
Citations: This document has been cited by 64 other documents
To copy this document: permissions@emeraldinsight.com
This document has been downloaded 6950 times since 2005. *

Users who downloaded this Article also downloaded: *

Olusegun Folorunso, Oluwafemi Shawn Ogunseye, (2008),"Challenges in the adoption of visualization system: a survey", Kybernetes,
Vol. 37 Iss: 9 pp. 1530 - 1541
http://dx.doi.org/10.1108/03684920810907841

Charles Inskip, Andy MacFarlane, Pauline Rafferty, (2010),"Organising music for movies", Aslib Proceedings, Vol. 62 Iss: 4 pp.
489 - 501
http://dx.doi.org/10.1108/00012531011074726

James DeLisle, Terry Grissom, (2011),"Valuation procedure and cycles: an emphasis on down markets", Journal of Property
Investment & Finance, Vol. 29 Iss: 4 pp. 384 - 427
http://dx.doi.org/10.1108/14635781111150312

Access to this document was granted through an Emerald subscription provided by University of Calgary

For Authors:
If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service.
Information about how to choose which publication to write for and submission guidelines are available for all. Please visit
www.emeraldinsight.com/authors for more information.
About Emerald www.emeraldinsight.com
With over forty years' experience, Emerald Group Publishing is a leading independent publisher of global research with impact in
business, society, public policy and education. In total, Emerald publishes over 275 journals and more than 130 book series, as
well as an extensive range of online products and services. Emerald is both COUNTER 3 and TRANSFER compliant. The organization is
a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive
preservation.
*Related content and download information correct at time of download.
 A ntecedents and
A ntecedents and consequences
consequences of trust and of trust

satisfaction in buyer-seller
305
relationships
Received September
Fred Selnes 1995
Revised October 1996
School of Marketing, Norwegian School of Management (BI), Oslo,
Norway

Introduction
T he acknow ledg ment that exchanges between buyers and sellers to an
increasing extent take place within long-term relationships (e.g. A rndt, 1979;
Berry, 1983; Dwyer et al., 1987; Ford, 1980; Grönroos, 1990) has drawn the
attention of both researchers and practitioners to the role of marketing within
relationships (e.g. A ijo, 1996; Biong and Selnes, 1995; Grönroos, 1994; Jackson,
1985; O’Neal, 1989; Sheth and Parvatiyar, 1995; Webster, 1992). The objective in
relationship marketing is, according to Grönroos (1994), to establish, maintain
and enhance relationships with customers (at a profit)[1]. A lso, Sheth and
Parvatiyar (1995) and A ijo (1996) emphasize that relationship marketing
involves a dynamic process with continuity as an important objective. Ravald
and Grönroos (1996) sug gest that the success of a relationship, that is a
mutually profitable relationship for supplier and buyer, depends on the ability
to provide episode value and relationship value continuously. Episode value is
improved by increasing the benefits and/or reducing the sacrifice for the buyer.
T his will improve satisfaction and stimulate repurchasing (or continuity).
Relationship value has, according to the authors, a deeper meaning. A s the
relationship develops, the buyer starts to feel safe with the supplier, and thus
trust is developing. Trust through safety, credibility, and security reduces the
sacrifices for the buyer and is assumed to be of value by itself.
A lthough the importance of both trust and satisfaction is well acknowledged
in the literature related to relationship marketing, some important questions
regarding the interrelationship between these two have not been addressed
properly. The objective of this research is to address the complementary role of
satisfaction and trust in maintaining and enhancing the relationship between a
supplier and a buyer. The theoretical rationale for our proposition is grounded
on a discussion of how trust and satisfaction can reduce perceived risk, and we
suggest that the issues of relationship enhancement and relationship continuity
constitute different types of decision processes and thus different types of European Journal of Marketing,
Vol. 32 No. 3/4, 1998, pp. 305-322,
perceived risk. We will also address how relationship variables like supplier © MCB University Press, 0309-0566
European competence, communication, commitment and conflict handling may affect
Journal of trust and satisfaction.
Marketing
Theoretical model
32,3/4 T he objective in relationship marketing is to establish, maintain and enhance
the relationship at a profit so that the objectives of both parties are met
306 (Grönroos, 1994). T he buyer has to make decisions regarding if a relationship
should be established (first time purchase), if a relationship should be continued
(repurchase), and if a relationship should be enhanced in scope (increase
commitment with the supplier). In the following we will not discuss the former,
but concentrate on decisions within an established relationship.
A decision to continue (repurchase) is of a different kind than a decision to
enhance the scope of the relationship. Continuity of a relationship is a type of
repetitive decision making and may very well continue “at an arm’s length”
distance. A decision to enhance the scope of the relationship involves a more
strategic decision which will usually change the buyer’s value-chain, for example
by exchanging strategic information, joint product development projects, or by
integrating some of the business functions. As we will discuss below, the roles of
trust and satisfaction are likely to be quite different in decisions related to
relationship continuity and decisions related to relationship enhancement.

Relationship continuity
Purchases can be divided into new task, modified rebuy, and straight rebuy
(Robinson et al., 1967). A new task decision to purchase a product or service
constitutes higher levels of perceived risk in situations characterized by
complex products and technology where purchases entail high switching costs,
such as mainframe computers (Jackson, 1985), or in situations where the buyer
is unable to infer intrinsic qualities of the product or service, such as with
strategic market research consulting (Moorman et al., 1993). A rebuy decision is
usually equivalent to a decision to continue a business relationship. This type of
decision is quite different from either a new task decision or a relationship
development decision. T he buyer is familiar with both the product and the
supplier, and the decision does not entail an increase in investments o r
commitments. Ring and Van de Ven (1994) proposed that a decision to continue
an interorganizational relationship is based on an assessment of economic
efficiency and fairness of past transactions, and thus satisfaction with the
supplier. It is reasonable to assume that this type of decision entails a relative
low level of perceived risk, and thus trust should be less important in this type
of decision as compared to a relationship development decision.
Satisfaction with delivered products and services has been suggested and
empirically documented as affecting the buyer’s decision to continue a
relationship (e.g. Anderson, 1994; Fornell, 1992; Hirchman, 1970), and conversely
reduce the likelihood of exit from the relationship and negative word-of-mouth
(e.g. Hirchman, 1970; Richins, 1983; Singh, 1988). Confirmation/disconfirmation
theo ry (e.g. Churchill and Surprenant, 1982; Oliver, 1980) predicts that
satisfaction is achieved when expectations are fulfilled (confirmed), that A ntecedents and
negative disconfirmation of expectations will result in dissatisfaction, and that consequences
positive disconfirmation will result in enhanced satisfaction. W hen a customer is
of trust
satisfied with a supplier this also means that they know that the supplier is able
to deliver what is expected, and thus the perceived risk associated with choosing
a familiar supplier (who fulfils expectations) is less than the perceived risk
associated with choosing an unfamiliar supplier, or a familiar supplier who has 307
not met expectations in previous experiences. Therefore we hypothesize:
H1 : T he higher the satisfaction with the supplier the more motivated the
buyer is to continue the relationship with the supplier.

Relationship enhancement
Dwyer et al. (1987) suggested that buyer-seller relationships may develop in a
number of stages from a unilateral type of relationship towards a bilateral type
of relationship, where both parties are highly committed to the relationship.
They argue that as the relationship between the two parties develops over time,
and as they gain experience and learn to trust each other, they will gradually
increase their commitment throug h transaction-specific investments in
products, processes, or people dedicated to the particular relationship. A
common motivation to enhance the scope of a relationship is that the
enhancement is attractive in some way (Ring and Van de Ven, 1994). On the
other hand, even an attractive venture will usually contain risk, and the parties
are likely to consider the attractiveness relative to the risk they perceive.
Perceived risk increases with both uncertainty of future outcomes and the
possible negative consequences of a poor decision (Bauer, 1960).
Relationship enhancement decisions may create perceptions of risk in a
number of ways. A decision to enhance a relationship with a supplier usually
entails some sort of idiosyncratic investment, and the potential pay-off from this
investment is, like other investments, often highly uncertain. First, the pay-off of
a mutual effort is often uncertain due to unpredictable market demands or other
changes in the market environment. For example, if the two parties join their
activities in developing a new product, future demand for the new product is
usually highly uncertain. Second, the pay-off of a mutual effort is contingent on
a successful implementation in both organizations (Kanter, 1994). For example,
if the joint effort is to improve lead-time in the order-production cycle, both
organizations will have to change operations and rearrange power-structures.
Such changes are rarely straig htfo rw ard. One impo rtant implication of
interdependence is that performance of the focal party is contingent on the
cooperativeness of the other party (A xelrod, 1984; Bonoma, 1976). We expect
these contingencies to increase uncertainty and thus perceived risk.
One impo rtant consequence of idiosy ncratic investments, o r related
commitments in a relationship development process, is the increased
interdependence such investments usually entail. A s the parties invest in the
relationship, they simultaneously increase their dependence on the other party
European (Emerson, 1962). In a situation where a prospective buyer considers closer
Journal of integration with a supplier, they may consider that this will most likely limit the
number of other potential suppliers and fear that the partner may take
Marketing
advantage of this by increasing prices, delivering poorer quality, or poorer
32,3/4 service. A lso, they may fear that such an interlocking will limit the opportunity
of acquiring future innovations as the partner may lack the capability of being
308 a leading-edge supplier.
Perceived risk in a relationship enhancement decision may be reduced by
trust alone or in combination with a number of other mechanisms. One way to
reduce risk is to limit the scope of the investment and thus reduce the potential
negative consequences. T his is probably why we see that most relationship
development processes are gradually developed in smaller incremental steps.
Unless trust is present, no one will risk moving first, and thereby sacrifice the
gains of cooperation to the safe pursuit of self-interest (A xelrod, 1984; Sabel,
1993). A nother advantage of gradual development is that the parties become
more familiar and thus are better able to predict future behaviours. A nderson
and Narus (1990) found a close connection between cooperation and trust. They
suggested an iterative process in that cooperation leads to trust, which in turn
leads to greater willingness to cooperate in the future, which then generates
trust, and so on. It has also been argued in the literature that trust plays a less
important role at the beginning of a relationship development process where the
integration is less complex as compared to later stages in the process (Dwyer et
al., 1987; Gundlach and Murphy, 1993).
Perceived risk can in principle be reduced by collecting more information,
however, information is often not available or is perhaps too costly to acquire.
Contractual arrangements are another way to reduce risk, but a common
problem is the difficulty of defining the conditions of a contract because
relevant future events are hard to foresee. A number of researchers have argued
that the importance of trust comes about just because of the difficulty or
impossibility of acquiring info rmation about future events or defining a
contract that covers such future events (Bradach and Eccles, 1989; Macaulay,
1963; Macneil, 1980). A s described by Macaulay (1963): “Businessmen often
prefer to rely on ‘a man’s word’ in a brief letter, a handshake, or ‘common
honesty and decency’ – even where transactions involve exposure to serious
risks”. Trusting the other party may be an option when investments cannot be
limited, when information is not available or is too costly to acquire, or when
contractual arrangements are not applicable. Trust may thus be applied
because it is the only option available, or it may be employed because it is a cost-
efficient mechanism. It follows that trust can be an important antecedent of
relationship enhancement to the deg ree that it reduces perceived risk more
efficiently than other available mechanisms.
A lthough both trust and satisfaction are suggested to be two of the key
concepts in relationship marketing, little effort has been devoted to explaining
the relationship between them. Both concepts are similar in the sense that they
represent some overall evaluation, feeling, or attitude about the other party in
the relationship. However, in line with Ravald and Grönroos (1996) we propose A ntecedents and
that trust is an aggregate evaluation at some higher level than satisfaction, and consequences
that satisfaction in fact is an important source for trust. A common definition of
of trust
trust is that it is a “generalized expectancy” of how the other party will behave
in the future (A nderson and Narus, 1990; Moorman et al., 1993; Morgan and
Hunt, 1994; Rotter, 1967). Such a “generalized expectancy” is derived both from
a type of cultural context of how business partners are expected to behave and 309
from experiences or episodes within the relationship (Sabel, 1993). In a way,
satisfaction is a manifestation of the other party’s ability to meet relational
norms, and thus manifest trust (Ring and Van de Ven, 1994; Sabel, 1993). It
follows that even though the two concepts are closely connected, they are
ex pected to have different antecedents and consequences. Following the
discussion above we hypothesize that:
H2 : T he more the buyer trusts the supplier the higher the motivation to
enhance the scope of the relationship.
H3 : T he higher the satisfaction with the supplier the more the buyer will
trust the supplier.

Sources of trust and satisfaction

The confirmation/disconfirmation theory (e.g. Churchill and Surprenant, 1982;
Oliver, 1980) does not distinguish different types of expectations, and thus does
not make a distinction between expectations towards the core product (or
service) and expectations towards the supplier providing the core product. In
addition to expectations towards the core product, buyers are likely to have
expectations towards the supplier regarding their competence, communication,
commitment, and conflict handling. Below we will argue how these are likely to
affect trust and satisfaction.
In the communications literature it is widely recognized that the perceived
expertise or competence of a source is a major determinant of the effect of any
communication (e.g. Hovland and Weiss, 1951). The underlying rationale is that
the “message” can be trusted to be true or important in some sense. Competence
of a supplier is, however, a complex concept that includes both technical
expertise regarding products and production methods, and knowledge of the
customer’s organization, markets, competitors, and industry (Cravens et al.,
1992). It has been suggested that competent salespeople are more successful
because they are expected to be good at communications, which in turn reduces
uncertainty and leads to more trust within the relationship (A nderson and
Weitz, 1989; Swan et al., 1985). Frazier and Summers (1984) proposed that a
major strategy employed in developing a relationship is to influence the other
party’s perceptions of one’s abilities or competencies. They argue that the result
may be a stronger interfirm relationship in the sense of hig her target
dependence and higher credibility for the source. Thus, we propose:
H4 : Perceived competence of the supplier increases the buyer’s trust in the
supplier.
European Communication is the exchange of information between supplier and customer.
Journal of Several studies suggest that the exchange of information is an important part
of both traditional industrial selling and relationship marketing (A nderson and
Marketing
Weitz, 1989; Behrman and Perreault, 1982; Dwyer et al., 1987; Frazier and Rody,
32,3/4 1991; Metcalf et al., 1992). A nderson and Narus (1990) found communications to
be a strong determinant of trust. Because language is so imperfect, an open
310 dialogue is often a necessary means of developing and preserving a shared
understanding of the relationship and thus preserves trust (Sabel, 1993).
Because satisfaction is an evaluation of an outcome compared to some norm,
communication is expected to be an important source for satisfaction because it
can lead to a shared understanding of performance outcome and expectations
(or norms). Thus, we propose:
H5a: Communication will increase trust in the supplier.
H5b: Communication will increase satisfaction with the supplier.
Commitment has been identified as one of the key characteristics of successful
relationships (e.g. Dwyer et al., 1987; Morgan and Hunt, 1994; Parasuraman et
al., 1985). In an ongoing relationship, the parties expect each other to be
committed to what they have in common (Bonoma, 1976; Cook and Emerson,
1984). Commitment can manifest itself in various w ay s like making
adjustments to standard products or services, or by investing in the relationship
(Johanson et al., 1991). Commitment is also a way of responding to customer
needs and is a key dimension of being market oriented (Kohli and Jaworski,
1990). Thus, commitment is expected to be a central expectation or norm within
a business relationship, and fulfilling this expectation is thus postulated to
drive customer satisfaction. Thus, we hypothesize that:
H6 : Signalling commitment will increase satisfaction with the supplier.
Conflict resolution may be crucial for the life of the relationship. Within a buyer-
supplier relationship, conflict, as a consequence of different perceptions of goals
and roles, is as predictable as misperceptions and incorrect deliveries (Dwyer et
al., 1987). Conflict can be destructive, with hostility, bitterness, and isolationism
resulting. On the other hand, a total suppression of conflict can result in a
relationship that loses vitality and does not develop into a more fruitful
cooperation. Furthermore, relationship marketing demands the establishment
of mutually accepted norms of redress (Dwyer et al., 1987). T he buyer will
ex pect the seller o r supplier to show responsibility in unforeseen and
unplanned events (Gundlach and Murphy, 1993). Therefore, we propose:
H7 : Constructive conflict handling will increase satisfaction with the
supplier.
Following the discussion above, a theoretical model of the relationships between
the presented constructs is summarized in Figure 1. We propose that trust is a
key antecedent of the motivation to enhance the scope of a relationship, and that
satisfaction is a key determinant of relationship continuity. We also propose that
satisfaction drives trust, as satisfaction is a manifestation of the other party’s A ntecedents and
ability to meet relational norms. consequences
Logically, an implicit assumption is that relationship enhancement implies
of trust
business continuity as illustrated in the model (H8 ). Competence and
communication are proposed to drive trust, whereas communication,
commitment, and conflict handling drives satisfaction.
311

Competence

Trust Enhancement

Communication
Figure 1.
A theoretical model of
Commitment antecedents and
consequences of trust
Satisfaction Continuity and satisfaction in
buyer-seller
Conflict handling relationships

Research method
Respondent sample
The objective of the current research project was to test the relative importance
of trust and satisfaction on relationship enhancement and relationship
continuity respectively. A s both decisions are affected by a number of business
specific variables, we chose to limit our investigation to the customers of one
supplier. T his w ill reduce the ex ternal validity of the finding s, but w ill
hopefully create insight into the dynamics of trust and customer satisfaction.
Such a case study approach is in line w ith a proposed research process
suggested by Eisenhardt (1989) in an early stage of theory development.
The selected supplier is a food producer serving the Norwegian institutional
market, and the selected product line is food for cafeterias and restaurants. The
supplier has an objective of developing closer relationships with its customers
in order to achieve a higher deg ree of customer loyalty, and to develop new
products and concepts in cooperation with its customers. T he technological
complexity of the selected type of relationship is quite low as compared to what
is usually studied in buyer-seller relationships.
Qualitative interviews with four buyers conducted prior to the main study
indicated that the daily manager was the one possessing the best overview and
knowledge of the supplier relationship. Further, the prestudy indicated that
these managers were also motivated to provide the type of information we
European wanted. Thus, the person in charge of purchasing had the desired qualifications
Journal of to serve as key informant (Campbell, 1955). T he informants, however, were
encouraged to confer with their colleagues when completing the questionnaire,
Marketing
if necessary. A random sample of 400 customers of the supplier was selected.
32,3/4 T he manager was contacted by telephone and asked to participate in the
survey. Of the 400 contacted respondents, 210 agreed to participate in the study.
312 Of these 210, 177 answered the questionnaire and returned it. The response rate
is thus 44 per cent, which is quite high compared to other similar studies. We
evaluated non-response biases by comparing early with late respondents,
following the procedure suggested by A rmstrong and Overton (1977). No
significant differences were found with variables like sales volume, number of
employees, supplier dependence, and motivation to continue the relationship,
suggesting that non-response bias may not be a problem.

Development of measures
Trust, satisfaction, relationship enhancement, and relationship continuity were
assessed by single items. A lthough the preference in marketing seems to be
multi-item scales (Churchill, 1979), we argue that these four constructs are
unidimensional and are directly accessible for the informant and thus multi-
item scales do not make sense. Multi-item scales of trust, for example the one
suggested by Morgan and Hunt (1994), include sources of trust as a measure of
trust. That is, they use reliability, integrity and confidence as a measure of trust,
whereas we will argue that these are sources or antecedents, and by themselves
not part of the construct. This parallels a discussion raised by the measurement
of power (Howell, 1987), where researchers have been criticized because they do
not measure power but rather sources of power. Thus we asked the informants
to evaluate on ten-point scales to what degree they trusted the supplier, to what
deg ree they were satisfied with the supplier, to what deg ree they wanted to
cooperate and enhance the scope of the relationship with the supplier, and to
what degree they intended to continue the relationship. In the following, these
four variables are labeled TRUST, SATISF, ENHA NCE and CONTIN.
A multi-item approach was selected fo r the four antecedent variables
competence, communications, commitment and conflict handling. T hese
constructs are by nature multidimensional and not directly accessible to the
informant. Convergent and discriminant validity of the scales were tested by
using a confirmatory factor analysis procedure recommended by A nderson and
Gerbing (1988). Convergent validity was assessed by the goodness of fit indices
and t-values associated with individual items of the scale. Discriminant validity
was assessed by pairwise comparisons of the scales. Discriminant validity can
be assessed fo r two estimated constructs by constraining the estimated
correlation parameter between them to 1.0 and then performing a chi-square
difference test on the values obtained for the constrained and unconstrained
models. “A significantly lower chi-square value for the model in which the trait
correlations are not constrained to unity would indicate that the traits are not
perfectly correlated and that discriminant validity is achieved” (Bagozzi and
Philips, 1982). A complementary assessment of discriminant validity was done A ntecedents and
by testing that the confidence interval (± two standard errors) around the consequences
correlation estimated between the pair of scales did not include 1.0 (A nderson
of trust
and Gerbing, 1988). Finally, Cronbach’s alpha was computed to assess the
internal consistency of the scales. A ll the measures used in the study are
reported in the Appendix. A ll measures are on ten-point scales.
Competence (COMPET ) w as defined as the buyer’s perception of the 313
supplier’s technological and commercial competence. T his is in line with the
operationalization employed in A nderson and Weitz (1989). T he four items on
the scale were:
(1) knowledge about the market for the buyer’s products;
(2) ability to give good advice on operating the business;
(3) ability to help the buyer plan procurements; and
(4) the ability to provide effective sales promotion material.
Communication (COMMUN) was defined as the ability of the supplier to
provide timely and trustworthy information, similar to the definition and
operationalization employed by A nderson and Narus (1990). T he scale
contained four items related to: providing information that can be trusted;
providing information if delivery problems occur; providing information of
quality problems; and fulfilling their promises.
Commitment (COMMIT) was defined as actions or communications leading
to adaptation to specific customer needs, paralleling the definition of Johanson
et al. (1991). T he scale contained four items related to: the supplier makes
adjustments to the customer’s need; the supplier tailor-makes products to the
customer’s need; the supplier is flexible when the customer’s product offering is
changed; and the supplier is flexible when the production process (formula) is
changed.
Conflict handling was defined as the supplier’s ability to minimize the
negative consequences of manifested and potential conflicts. This definition is
in line with Dwyer et al. (1987). The three items on the scale reflected ability to:
avoid potential conflicts, solve manifest conflicts before they create problems,
and openly discuss solutions when problems arise.
The scale means, standard deviations, and coefficient alphas are reported in
Table I. T he coefficient alphas for the four multi-item scales are all high,
indicating reliable measures. A confirmatory factor analysis model for the four
multi-item scales was carried out using the maximum likelihood procedure in
LISREL VII. T he estimated model is reported in Table II. We see that all item
coefficients (loadings) are significant (p < 0.000) as all t-values are high (the
lowest t-value is 8.87). Chi-square for the total measurement model is 279.47
with 84 degrees of freedom (p = 0.000). The goodness of fit index is 0.803, and
the root mean square residual is 0.066. T he pairwise comparison tests of the
constructs are reported in Table III. A s can be seen, all chi-square differences
are clearly significant (significant drop in chi-square from the restrained to the
European Number of
Journal of items Meana SD Skewness Kurtosis A lpha
Marketing
32,3/4 TRUST 4.605 0.870 –0.640 0.468 –
SATISF 1 3.252 1.327 0.190 –0.734 –
ENHA NCE 1 4.110 0.874 –0.147 0.145 –
314 CONTIN 1 3.724 1.230 –0.094 –0.893 –
COMPET 4 4.788 0.920 –1.040 1.021 0.856
COMMUN 4 4.284 0.850 –0.544 0.489 0.846
COMMIT 4 2.427 1.100 0.654 –0.283 0.886
CONFLT 3 2.215 0.799 0.503 0.013 0.929
Table I.
Statistical description Note:
aLow scores indicate high degree
of estimated scales

COMPET COMMUN COMMIT CONFLT

1 0.750 (10.31)
2 0.727 (9.89)
3 0.833 (12.02)
4 0.779 (10.91)
5 0.731 (10.06)
6 0.899 (13.69)
7 0.863 (12.84)
8 0.666 (8.87)
9 0.699 (9.62)
10 0.708 (9.79)
Table II. 11 0.935 (14.94)
Estimated coefficients 12 0.939 (15.04)
(standardized) and 13 0.814 (11.93)
t-values in 14 0.959 (15.59)
measurement model 15 0.911 (14.26)

unconstrained model), indicating discriminant validity of the scales. In addition,

none of the confidence intervals around the estimated correlations between the
pair of scales includes 1.0 (± two standard errors). The fit indices of the overall
measurement model and the pairwise comparison tests indicate only moderate
fit. Care must therefore be taken when the results are interpreted, and future
research should try to obtain better measures. However, the reliability
coefficients indicate internally consistent scales, the confirmatory factor
analysis reveals that all scale-items loaded significant on their respective scales,
and finally the pairwise comparison tests of the scales show discriminant
validity. T hus, we conclude that the theoretical measurement model fits the
data reasonably well and is acceptable given the exploratory nature of the
study.
The estimated correlation matrix between the scales is shown in Table IV.
 A ntecedents and
d.f. Chi-square Chi-square p-value GFI
restrained restrained unconstrained unconstrained unconstrained consequences
of trust
COMPET vs
COMMUN 20 255.74 126.14 0.000 0.837
COMPET vs
COMMIT 20 178.21 81.02 0.000 0.890 315
COMPET vs
CONFLT 14 230.95 35.56 0.001 0.939
COMMUN vs
COMMIT 20 235.44 133.79 0.000 0.829 Table III.
COMMUN vs Chi-square difference
CONFLT 14 189.20 110.70 0.000 0.828 test between each
COMMIT vs pair of scales
CONFLT 14 322.37 85.53 0.000 0.881 employing LISREL VII

TRUST SATISF ENHA NCE CONTIN COMPET COMMUN COMMIT CONFLT

TRUST 1.000
SATISF 0.710 1.000
ENHA NCE 0.569 0.521 1.000
CONTIN 0.550 0.647 0.466 1.000
COMPET 0.464 0.668 0.384 0.443 1.000
COMMUN 0.643 0.733 0.478 0.500 0.659 1.000 Table IV.
COMMIT 0.574 0.698 0.501 0.465 0.782 0.659 1.000 Estimated correlation
CONFLT 0.593 0.654 0.401 0.524 0.563 0.685 0.547 1.000 matrix

Results
T he proposed model was tested through a structural equation model using
maximum likelihood LISREL VII (Joreskog and Sorbom, 1989). We defined
competence, communications, commitment and conflict handling as exogenous
variables, and trust, satisfaction, enhancement, and continuity as endogenous
variables. We did not include measurement errors in the model, and thus it
becomes similar to path analysis. The effect of trust on continuity and the effect
of satisfaction on enhancement were both expected to be non-significant, and in
order to test this these paths were included in the model. The overall fit of the
model was moderate with a chi-square of 23.66 (df = 11; p = 0.014), goodness of
fit of 0.965 and root mean square residual of 0.037. The results from the analysis
are shown in Table V.
A s expected, satisfaction has a significant impact on both trust (b = 0.560;
p < 0.000) and continuity (b = 0.484; p < 0.000). Trust has a significant impact
on intention of future enhancement (b = 0.402; p < 0.000), and enhancement
drives continuity (b = 0.143; p = 0.05). A lso, as expected, the effect of trust on
continuity was not significant (b = 0.125; p > 0.05). However, satisfaction has
European
Structural path Standardized coefficients t-values
Journal of
Marketing COMPET on TRUST
32,3/4 (Gamma 1, 1) –0.111 –1.49*
COMMUN on TRUST
(Gamma 1, 2) 0.304 3.58
316 COMMUN on SATISF
(Gamma 2, 2) 0.354 4.83
COMMIT on SATISF
(Gamma 2, 3) 0.341 5.35
CONFLT on SATISF
(Gamma 2, 4) 0.225 3.42
TRUST on ENHA NCE
(Beta 3, 1) 0.402 4.42
TRUST on CONTIN
(Beta 4, 1) 0.125 1.41*
SATISF on TRUST
(Beta 1, 2) 0.560 6.83
SATISF on ENHA NCE
(Beta 3, 2) 0.236 2.59
SATISF on CONTIN
(Beta 4, 2) 0.484 5.65
Table V. ENHA NCE on CONTIN
Structural paths in (BETA 4, 3) 0.143 1.95
the tested model, their
standardized coefficients Note:
and t-values * Not significant

not only an indirect effect, through trust, on enhancement, but also a direct
effect (b = 0.236; p < 0.010). Competence does not have the expected effect on
trust, but all the other four proposed effects of the antecedent variables were
significant. Modification indexes did not indicate that other paths should be
opened in the model. The model explained 54.5 per cent of the variance in trust,
64.5 per cent of the variance in satisfaction, 35.2 per cent of the variance in
enhancement, and 44.9 per cent of the variance in continuity.

Discussion
T he estimated path coefficients in the hypothesized model are illustrated in
Figure 2. A ll eight hypotheses except H4 , the effect of competence on trust, were
confirmed. In addition, we found an effect from satisfaction with the supplier on
motivation to enhance the scope of the relationship, which was a relationship
we hy pothesized to be non-ex istent. Given the objectives in relationship
marketing of continuity and enhancement of the buyer-supplier relationship, a
major finding in the present study is the strong effect of satisfaction. T hat is,
satisfied customers are more motivated to:
• continue the relationship with the focal supplier; and
• enhance the scope of the relationship.
Thus, any attempt from a supplier to enhance the scope of a relationship with a A ntecedents and
customer that is dissatisfied is more or less doomed to fail. A nother major consequences
finding in the present study is that:
of trust
• trust is a strong antecedent of motivation to enhance the scope of the
relationship; and
• trust is not necessary when the decision is relationship continuity. 317

Competence n.s.
0.402
Trust Enhancement
0.304
Communication
0.354 0.236 0.143 Figure 2.
0.560
The estimated model of
Commitment 0.341 antecedents and
0.484 consequences of trust
Satisfaction Continuity and satisfaction in
0.225
buyer-seller
Conflict handling relationships

T hus relationship continuity does not always require a close relationship but
may well be carried on at arm’s length. A lso, we find satisfaction as a strong
antecedent of trust. However, these finding s must be seen as a step in a
continuous development of relationship marketing theory (as discussed in the
method section) and thus care must be taken in generalizing these findings to
other markets.
Honest and timely communications with the buyer have a strong effect on
both trust and satisfaction. Unexpectedly, competence did not effect trust,
however, competence may operate through communications as suggested by
A nderson and Narus (1990). In the present study the correlation between
competence and communications was as high as 0.659, indicating a c lose
interrelationship. T hus, competence may only be important in the sense of
improving communications with the buyer. Communications, together with
commitment and conflict handling, has strong effects on satisfaction. T hus,
communications, signalling commitment, and solving problems that may arise
in a spirit of cooperativeness seem to be expected and warranted by the buyers.

Directions for future research

A major limitation of the study is the cross-sectional data from a single supplier.
Future research should collect data from multiple cases from other industries,
and longitudinal observations in order to extend external validity. A nother
methodolog ical problem is related to the measurement scales. A lthoug h
European validation tests showed both convergent and discriminant validity of the multi-
Journal of item scales, the fit indices indicated that the scales should be improved. A lso,
future research should address more systematically whether single-item scales
Marketing
are theoretically more appropriate than multi-item scales fo r relationship
32,3/4 constructs like trust, satisfaction, development, and continuity. However, the
study provided insight into the constructs of trust and satisfaction regarding
318 their consequences, their antecedents, and their interrelationship. Theories from
decision making in general, and the concept of perceived risk in particular,
appear to provide a fruitful theoretical rationale for understanding the roles of
trust and satisfaction in buyer-seller relationships.
Future research should in our opinion explore relationship marketing in the
perspective of decision making, and thus further develop a theo ry of
relationship marketing along the concept of perceived risk. Perceived risk is
expected to vary across different types of buying-situations reflecting the
nature of buyer-seller relationships, complexity of products, and complexity of
markets. Perhaps the most challenging finding in this study was the relative
low importance of trust in terms of maintaining a relationship. It is, however,
possible that levels of perceived risk in repurchase situations will vary and that
there are likely to be situations where trust will be mo re important than
satisfaction in terms of relationship maintenance. For example, there may be
situations w here buyers are less able to evaluate product o r serv ice
performance. This is in line with Selnes (1993), who argues that satisfaction will
only have a direct effect on loyalty (i.e. continuity) when customers are able to
evaluate product quality through their experience with the product or service.
W hen customers are not able to evaluate quality, Selnes (1993) predicts that
brand reputation (which is a related construct to trust) is driving loyalty. Thus,
we believe future research should develop a typology of decisions buyers make
within relationships where the relative importance of trust and satisfaction in
terms of maintaining and enhancing the scope of the relationship is contingent
on the level and kind of perceived risk. T he model suggested by Ravald and
Grönroos (1996) appears to be a sound theoretical framework for developing
such a typology.

Managerial implications
The current study has several managerial implications, although care should be
taken due to the limited external validity of the research. Both trust and
satisfaction are important in order to achieve relationship continuity and
enhancement. Customers’ experiences and satisfaction with the supplier
appears to be a necessary premiss in order to achieve not only continuity, but
also enhancement of the relationship. Trust in the supplier plays an important
role in terms of reducing perceived risk in ex tending the scope of the
relationship. T hus, if a firm wants to expand its relationship with a potential
buyer, trust is a key determinant. If the potential buyer is satisfied with past
performance, the willingness to cooperate is more likely to be present. On the
other hand, if the buyer is not satisfied, trust will be reduced and a willingness
to develop the relationship may not exist. Several suppliers are probably failing A ntecedents and
in developing closer relationships with their customers due to low or moderate consequences
levels of satisfaction and trust. Thus, managing customer satisfaction and trust
of trust
are key variables in both relationship maintenance and enhancement.
T he study indicates what relationship behaviours are likely to produce
satisfied customers and trust in the supplier. First, communicating all relevant
information without disguising potential unfavourable data appears to be very 319
important in order to achieve a cooperative relationship. In an ongoing business
relationship buyers have to rely on their supplier in terms of delivering
according to what has been ag reed, and trust that the supplier understands
when deviations or unforeseen events may cause irregularities and problems in
the buyer’s value-chain. Exchange of information is critical in order to manage
supply processes in a satisfactory way. Second, handling unforeseen problems
and conflicts in a way that shows responsibility for the wellbeing of the buyer
is appreciated and probably one of the key responsibilities of the salesperson.
Suppliers should probably cover themselves less behind contractual terms and
rather try to find solutions that meet the needs of both firms in a win-win spirit.
Third, the supplier may achieve satisfied customers through flexibility and the
ability to adjust their products and deliveries according to the demands of the
customer. T he dynamics within the customer’s market environment creates
many changes in production and supply processes, and suppliers are expected
to be able to adjust to these changes. In short, managers should emphasize the
dynamics of buyer-seller relationships and position themselves as part of their
customers’ value chain (e.g. Ravald and Grönroos, 1996). Open communication,
proactive conflict handling, and commitment are key behaviors the suppliers
need to master. A s they learn to manage their relationships, customers will be
more satisfied and more willing to trust, and thus secure the demand for the
supplier’s products and services.

Note
1. We do not attempt to make a sharp distinction between the terms seller and supplier, and
consumer and buyer, which are usually used in consumer markets and industrial markets
respectively. We believe relationship marketing is a generic concept which includes both
markets. However, our theoretical discussion and empirical setting is from the industrial
market, and we will therefore use the terms supplier and buyer.

References
A ijo, T. (1996), “T he theoretical and philosophical underpinnings of relationship marketing:
environmental factors behind the changing marketing paradigm”, European Journal of
Marketing, Vol. 30 No. 2, pp. 8-18.
A nderson, E. and Weitz, B. (1989), “Determinants of continuity in conventional industrial channel
dyads”, Marketing Science, Vol. 8 No. 4, Fall, pp. 310-23.
A nderson, E.W. (1994), “Cross-category variation in customer satisfaction and retention”,
Marketing Letters, Vol. 5 No. 1, pp. 19-30.
A nderson, J.C. and Gerbing, D.W. (1988), “Structural equation modeling in practice: a review and
recommended two-step approach”, Psychological Bulletin, Vol. 103, pp. 411-23.
European A nderson, J.C. and Narus, J.A . (1990), “A model of distributor firm and manufacturer firm
working partnerships”, Journal of Marketing, Vol. 54 No. 1, January, pp. 42-58.
Journal of A rmstrong, J.S. and Overton, T.S. (1977), “Estimating nonresponse bias in mail surveys”, Journal
Marketing of Marketing Research, Vol. 14 No. 3, August, pp. 396-402.
32,3/4 A rndt, J. (1979), “Toward a concept of domesticated markets”, Journal of Marketing, Vol. 43 No. 4,
Fall, pp. 69-75.
A xelrod, R. (1984), T he Evolution of Cooperation, Basic Books, New York, NY.
320
Bagozzi, R. and Philips, L.W. (1982), “Representing and testing o rg anizational theo ries”,
A dministrative Science Quarterly, Vol. 27 No. 3, pp. 459-89.
Bauer, R.A . (1960), “Consumer behavior as risk taking”, in Hancock, R.L. (Ed.), Dynamic
Marketing for a Changing World, A merican Marketing A ssociation, Chicago, IL.
Behrman, D.N. and Perreault, W.D. Jr (1982), “Measuring the perfo rmance of industrial
salespersons,” Journal of Business Research, Vol. 10 No. 3, pp. 355-70.
Berry, L.L. (1983), “Relationship marketing”, in Berry, L.L., Shostack, G.L. and Upah, G.D. (Eds),
Emerging Perceptions on Service Marketing , A merican Marketing A ssociation, Chicago, IL,
pp. 25-8.
Biong, H. and Selnes, F. (1995), “Relational selling behavior and skills in long-term industrial
buyer-seller relationships”, International Business Review, Vol. 4 No. 4, pp. 483-98.
Bonoma, T.V. (1976), “Conflict, cooperation and trust in three power systems”, Behavioral Science,
Vol. 21, pp. 499-514.
Bradach, J.L. and Eccles, R.G. (1989), “Price, authority and trust: from ideal types to plural forms”,
A nnual Review of Sociology, Vol. 15, pp. 97-118.
Campbell, D.T. (1955), “T he informant in quantitative research”, T he A merican Journal of
Sociology, Vol. 60, pp. 339-42.
Churchill G.A . Jr (1979), “A paradigm for developing better measures of marketing constructs”,
Journal of Marketing Research, Vol. 16 No. 1, February, pp. 64-73.
Churchill, G.A . and Surprenant, C. (1982), “A n investigation into the determinants of customer
satisfaction”, Journal of Marketing Research, Vol. 19 No. 4, November, pp. 491-504.
Cook, K.S. and Emerson, R.M. (1984), “Exchange netwo rks and the analy sis of complex
organizations”, A nnual Review of Sociology, Vol. 15, pp. 97-118.
Cravens, D.W., Grant, K., Ingram, T.N., Laforge, R.W. and Young, C. (1992), “In search of excellent
sales organizations”, European Journal of Marketing, Vol. 26 No. 1, pp. 6-23.
Dwyer, R.F., Schurr, P.H. and Oh, S.(1987), “Developing buyer-seller relationships”, Journal of
Marketing, Vol. 51 No. 2, April, pp. 11-27.
Eisenhardt, K.M. (1989), “Building theory from case study research”, A cademy of Management
Review, Vol. 14 No. 4, pp. 532-50.
Emerson, R.M. (1962), “Power-dependence relations”, A merican Sociological Review, Vol. 27,
February, pp. 31-41.
Ford, D. (1980), “The development of buyer-seller relationships in industrial markets”, European
Journal of Marketing, Vol. 14 No. 5/6, pp. 339-53.
Fornell, C. (1992), “A national customer satisfaction barometer: the Swedish experience”, Journal
of Marketing, Vol. 56 No. 1, January, pp. 6-21.
Frazier, G.L. and Rody, R.C. (1991), “T he use of influence strategies in interfirm relationships in
industrial product channels”, Journal of Marketing, Vol. 55 No. 1, January, pp. 52-69.
Frazier, G.L. and Summers, J.O. (1984) “Interfirm influence strategies and their application within
distribution channels”, Journal of Marketing, Vol. 48 No. 3, Summer, pp. 43-55.
Grönroos, C. (1990), Service Management and Marketing: Managing the Moments of Truth in
Service Competition, Lexington Books, Lexington, MA .
Grönroos, C. (1994), “From marketing mix to relationship marketing: towards a paradigm shift in A ntecedents and
marketing”, Management Decision, Vol. 32 No. 2, pp. 4-20.
Gundlach, G. and Murphy, P. (1993), “Ethical and legal foundations of relational marketing
consequences
exchanges”, Journal of Marketing, Vol. 57 No. 4, October, pp. 35-46. of trust
Hirchman, A .O. (1970), Exit, Voice and Loyalty Responses to Declines in Firms, Organizations and
States, Harvard University Press, Cambridge, MA .
Hovland, C.I. and Weiss, W. (1951), “T he influence of source credibility on communication
effectiveness”, Public Opinion Quarterly, No. 15, pp. 636-50. 321
Howell, R.D. (1987), “Covariance structure modeling and measurement issues: a note on
interrelations among a channel entity’s power sources”, Journal of Marketing Research, Vol. 24
No. 1, February, pp. 119-29.
Jackson, B.B. (1985), “Build customer-relationships that last”, Harvard Business Review, Vol. 63
No. 6, November-December, pp. 120-8.
Johanson, J., Hallén, L. and Seyed-Mohamed, N. (1991) “Interfirm adaptation in business
relationships”, Journal of Marketing, Vol. 55 No. 2, pp. 29-37.
Joreskog, K.G. and Sorbom, D. (1989), LISREL V II User Reference Guide, Scientific Software,
Moresville, IN.
Kanter, R.M. (1994), “Collaborative advantage: the art of alliances”, Harvard Business Review,
Vol. 72 No. 4, July-August, pp. 96-108.
Kohli, A .K. and Jaworski, B.J. (1990), “Market orientation: the construct, research propositions,
and managerial implications”, Journal of Marketing, Vol. 54 No. 2, April, pp. 1-18.
Macaulay, S. (1963), “Noncontractual relations in business”, A merican Sociology Review, Vol. 28,
pp. 55-70.
Macneil, I.R. (1980), T he New Social Contract: A n Inquiry into Modern Contractual Relations, Yale
University Press, New Haven, CT.
Metcalf, L.E., Frear, C.L. and Krishnan, R. (1992), “Buyer-seller relationships: an application of the
IMP interaction model,” European Journal of Marketing, Vol. 26 No. 2, pp. 27-46.
Moorman, C., Deshpandé, R. and Zaltman, G. (1993), “Factors affecting trust in market research
relationships”, Journal of Marketing, Vol. 57 No. 1, January, pp. 81-101.
Morgan, R.M. and Hunt, S.D. (1994), “T he commitment-trust theory of relationship marketing”,
Journal of Marketing, Vol. 58 No. 3, July, pp. 20-38.
Oliver, R.L. (1980), “A cognitive model of the antecedents and consequences of satisfaction
decisions”, Journal of Marketing Research, Vol. 17 No. 4, November, pp. 460-9.
O’Neal, C.O. (1989), “JIT procurement and relationship marketing”, Industrial M arketing
Management, Vol. 18 No. 1, pp. 55-63.
Parasuraman, A ., Zeithaml, V. and Berry, L. (1985), “A conceptual model of service quality and its
implications for future research”, Journal of Marketing, Vol. 49 No. 4, Fall, pp. 41-50.
Ravald, A . and Grönroos, C. (1996), “T he value concept and relationship marketing”, European
Journal of Marketing, Vol. 30 No. 2, pp. 19-30.
Richins, M. (1983), “Negative word-of-mouth by dissatisfied consumers: a pilot study”, Journal of
Marketing, Vol. 47 No. 1, Winter, pp. 68-78.
Ring, P.S. and Van de Ven, A .H. (1994), “Development processes of cooperative interorganizational
relationships”, A cademy of Management Review, Vol. 19 No. 1, pp. 90-118.
Robinson, P., Faris, C. and Wind, Y. (1967), Industrial Buying and Creative Marketing, A llyn and
Bacon, Boston, MA .
Rotter, J.B. (1967), “A new scale fo r the measurement of interpersonal trust”, Journal of
Personality, Vol. 35 No. 4, pp. 651-65.
Sabel, C.F. (1993), “Studied trust: building new forms of cooperation in a volatile economy”,
Human Relations, Vol. 46 No. 9, pp. 1133-70.
European Selnes, F. (1993), “A n examination of the effect of product performance on brand reputation,
satisfaction and loyalty”, European Journal of Marketing, Vol. 27 No. 9, pp. 19-35.
Journal of Sheth, J. and Parvatiyar, A .(1995), “T he evolution of relationship marketing”, International
Marketing Business Review, Vol. 4 No. 4, pp. 397-418.
32,3/4 Singh, J. (1988), “Consumer complaint intentions and behavior: definitional and taxonomical
issues”, Journal of Marketing, Vol. 52 No. 1, January, pp. 93-107.
Swan, J.E, Trawick, I.F. and Silva, D.W. (1985), “How industrial salespeople gain customer trust”,
322 Industrial Marketing Management, Vol. 14 No. 3, pp. 203-211.
Webster, F.E. (1992), “The changing role of marketing in the corporation”, Journal of Marketing,
Vol. 56 No. 4, October, pp. 1-17.

A ppendix
Competence (COMPET )
(1) The supplier has knowledge about the market and market trends.
(2) The supplier provides me with advice about how to operate my business.
(3) The supplier helps me to plan sales promotion activities.
(4) The supplier contributes with sales promotion activities.

Communications (COMMUN)
(1) The supplier provides information that can be trusted.
(2) The supplier provides information if delivery problems occur.
(3) The supplier provides information if there are quality problems.
(4) The supplier fulfils promises.

Commitment (COMMIT )
(1) The supplier makes adjustments to meet my needs.
(2) The supplier tailor-makes its products to our needs.
(3) The supplier is flexible when our product offering is changed.
(4) The supplier is flexible when our production process (formula) is changed.

Conflict handling (CONFLT )

(1) The supplier’s representative is good at solving disputes before they create problems in
our working relationship.
(2) T he supplier’s representative makes sure that problems do not arise in our working
relationship.
(3) T he representatives of the supplier have the ability to openly discuss solutions when
problems arise.