EXPRESS: Impact of Buying Groups on Buyer-Supplier Relationships: Group-Dyad Interactions in Business-to-Business Markets

Abstract

This paper examines the impact of business-to-business (B2B) buying groups on buyer-supplier relationships. The authors outline two distinct initiatives — monitoring and community building — through which buying groups help govern buyer–supplier exchange and impact supplier performance toward buyers. Two boundary conditions are identified for the performance efficacy of the buying group's governance efforts, namely, the buyer's own governance of the supplier and the dependence relations among the focal parties. Analyses using two-wave primary data collected from the U.S. healthcare sector and replications using secondary outcomes suggest support for the proposed framework. A conjoint experiment is conducted to further enhance the generalizability of the findings. We find that a buying group's monitoring of suppliers enhances supplier performance both by itself and with increasing supplier monitoring by the buyer firm. Further, the supplier’s dependence on the buying group and the buyer’s dependence on the supplier, both sharpen the efficacy of the buying group’s monitoring program. However, the performance effects of community building are weakened as the buyer–supplier relationship becomes stronger and as the buyer grows more dependent on the supplier. The paper thus uncovers novel interplays between B2B buying groups and B2B dyads, and documents their consequences for firm performance.