1. Introduction
With increasing numbers of nodes and links in supply network relationships, understanding partnership management and the required level of collaboration is important for sustainable supply network alignment [
1,
2]. Supply chain collaboration represents various independent firms working collaboratively to design and arrange supply chain operations [
3]. Successful collaboration is expected to generate benefits for both a firm and its partner firm [
4]. In anticipation of “digitalized supply chains of the future” (Supply Chain Management (SCM) 4.0) facilitating globalization and sustaining relationships with alternative suppliers, research on partnership management from supplier, buyer, and parallel-aligned (or competing) firms’ perspectives continues to multiply [
5,
6,
7].
A key factor in supply chain partnership development is acknowledging the role of collaborative relationship [
8]. To increase the collaboration benefit, existing studies sought various antecedents, such as collaborative awareness [
5], collaborative culture and technology-driven inter-organizational systems [
9], and supplier–buyer cooperation [
10]. Based on social capital theory, which emphasizes the importance of relational resources, such as relational capital, cognitive capital, and structural capital, social capital was emphasized as the relational glue that contributes to a collaborative behavioral outcome [
11]. Specifically, we are interested in the structural capital part of social capital, which can turn into a positive behavioral outcome, such as sustainable commitment through appropriate partnership. Consequently, two key antecedents of partnership commitment can be viewed from two different angles. How much time and resources are a firm and its partner firm willing to invest for their partnership sustainability? How strictly should practitioners require partnership involvement and performance through a legal contract?
In addition to the investigation of means to improve positive behavioral outcome, such as partnership commitment, researchers were warned by the previous literature regarding the dark side of a social capital-driven outcome [
12]. Villena et al. [
12] found that either too little or too much social capital could hurt performance. However, a successful goal alignment between two partners would produce a sense that the firms were “in this together”, thereby creating mutual interest in the overall supply chain success [
5]. Sustainable and strategic partnership developed based on joint efforts in planning and information sharing provides a foundation for trust, which can lead to mutual success and improvement [
13,
14]. In conclusion, partnership commitment is a delicate behavioral antecedent that must be examined carefully and in-depth for its potential positive and negative associations with firm performance.
The impact of collaborative relationship extends to the innovation context as well. To create value through sustainable innovation, identification of business models and clear understanding of an innovation network is required [
15]. An innovation network is composed of various innovation actors who are either direct or indirect participant of business model. A sustainable innovation market is dependent on the interaction among these participants, and scholars emphasized the need of collaboration-based partnership activities for a successful marketing of sustainable innovation [
15,
16]. For example, Lin et al. [
17] noted that that sustainable product innovation decisions should strategically incorporate collective knowledge about market demand characteristics. A high level of market demand knowledge can provide specific research and development (R&D) quality, which leads to distinct innovation and, ultimately, higher firm performance. Similarly, Kushwaha and Sharma [
18] emphasized the need for a green supply chain management initiative as it can bolster higher firm performance in the long run. For a connected network to collectively achieve environmental compliance and improve firm performance, a clear understanding of the orientation and depth of partnership is required.
Based on the direct associations between the presence and depth of partnership and the three types of firm performance (innovation, operational, and financial), this study further investigates partnership structure type (parallel-aligned, supplier, or buyer firms) to obtain a better understanding of various firms’ perspectives. The various partnership structure types remain largely unexplored using a single model in the extant literature [
19]. To offer a more complete view of strategic partnership management and its impact on firm performance for SCM sustainability, different levels of social capital must be examined across the relationship. This study aims to fill this gap in the literature. For practitioners, this approach offers an important implication, as it explores the differential effect of partnership orientation and commitment on firm performance. Managers would be able to better evaluate and allocate resources for an expected level of performance gain while sustaining a supply chain (SC) collaborative relationship.
The objective of this study was to explore the impact of partnership orientation on partnership commitment and firm performance. Based on a theoretically driven model, the research aimed to help both researchers and business practitioners to gain a deeper understanding of appropriate partnership orientation for the desired level of commitment and firm performance, including innovation, operational, and financial performance. Using a survey of 423 respondents representing various partnership structure types, the research aimed to develop reliable and valid instruments, and to perform structural equation modeling for the empirical findings.
4. Data Analysis and Results
4.1. Hypothesis Test Results
A structural equation model was used to assess the overall relationships between investment-oriented partnership, contract-oriented partnership, partnership commitment, innovation performance, operational performance, and financial performance. The model showed a good fit with normed-
χ2 = 2.80, CFI = 0.93, TLI = 0.92, and RMSEA = 0.065. From
Figure 2, we can observe that all hypotheses were supported at the
p < 0.001 level with the exception of hypothesis 2c (H2c).
For a commitment relationship that is driven by partnership type, the empirical results revealed that higher investment-oriented and contract-oriented partnership leads directly to better commitment (β = 0.35; p < 0.001 and β = 0.36; p < 0.001, respectively), thereby supporting both H1a and H1b. Specifically, contract-oriented partnership had a marginally higher impact than investment-oriented partnership on the level of commitment, with a higher coefficient.
For commitment–performance hypothetical relationships, higher commitment directly affects operational performance (β = 0.33; p < 0.001) and innovation performance (β = 0.67; p < 0.001), thereby supporting H2a and H2b. However, the relationship between commitment and financial performance showed a p-value greater than 0.01 and the estimate β was almost zero. The absence of influence of commitment on financial performance is further investigated in the next section.
Finally, for the direct effect of innovation performance on operational and financial performance, statistically positive relationships were found (β = 0.62; p < 0.001 and β = 1.04; p < 0.001, respectively).
4.2. Structure-Dependent Results
Further evaluations of hypothesis testing were carried out by the respondent’s structure type (A: parallel-aligned firm’s perspective, B: buyer firm’s perspective, C: supplier firm’s perspective), as shown in
Table 4. The model fit results showed marginally acceptable fit statistics: (Structure A) normed-
χ2 = 1.73, CFI = 0.91, TLI = 0.91, and RMSEA = 0.07; (Structure B) normed-
χ2 = 1.62, CFI = 0.95, TLI = 0.94, and RMSEA = 0.06; and (Structure C) normed-
χ2 = 1.46, CFI = 0.92, TLI = 0.90, and RMSEA = 0.08.
A statistically positive relationship between investment-oriented partnership and partnership commitment was found for structures A and B with loadings of 0.379 and 0.358, respectively, and a
p-value less than 0.001, as shown in
Table 4. This finding indicates that an increase in partnership investment can lead to a higher sustainable commitment level from interconnected partners. However, in the case of structure C, in which the respondent firm is in a supplier position, the effect of partnership investment on commitment level is insignificant.
Contracted-oriented partnership had significant positive relationships with partnership commitment for structure A (β = 0.342; p < 0.001), structure B (β = 0.407; p < 0.001), and structure C (β = 0.274; p < 0.001). In other words, partnership built on a formal and legal contract had a strong relationship with the level of partnership commitment. Noticeably, contractual-oriented partnership had a higher effect on commitment level than investment-oriented partnership for structure. Moreover, for structure C, despite the lack of statistical findings on the effectiveness of partnership investment, the contract-based partnership was found to drive a high partnership commitment.
As hypothesized, the level of partnership commitment is related to the levels of operational and innovation performance. In the order of structures B, C, and A, the effectiveness of commitment strongly indicated positive outcomes. Specifically, structure B showed a strong result in operational performance (β = 0.463, p < 0.001) and innovation performance (β = 0.834, p < 0.001). Moreover, for all structure types, higher commitment directly affected innovation performance more than it affected operational performance (β = 0.436 > 0.206 for structure A, β = 0.834 > 0.463 for structure B, and β = 0.617 > 0.306 for structure C). The most interesting result was that partnership commitment has either an insignificant or even a negative effect on financial performance. This result may indicate that commitment comes at great cost and could negatively affect financial outcome despite an improvement in other types of performance.
Lastly, statistically significant relationships between innovation performance and operational performance and financial performance were found for all structure types. Structure C showed the strongest relationship between innovation and operational performance (β = 0.751, p < 0.001) and financial performance (β = 1.186, p < 0.001).
4.3. Post Hoc Analysis
In addition to the proposed model testing, we performed a post hoc analysis to explore the moderating roles of investment-oriented partnership and the relative investment levels between two firms, that is, whether the relationship between partnership commitment and firm performance is contingent on a certain level of investment-oriented partnership or the relative level of investment by a respondent firm versus a partnership firm. Hierarchical regression analysis and a supplementary analysis of two-way interaction effects were conducted.
To examine the effect of partnership commitment on firm performance, and the moderating effect of investment-oriented partnership, we developed four models (
Table 5): Model 1 served as a reference model, including only control variables; Model 2 added an independent variable (partnership commitment); Model 3 added a moderating variable (investment-oriented partnership); and Model 4 placed the interaction terms. We examined the contribution from Models 1 to 4 based on the significance of the
F-statistic associated with the change in
R2. The control variables consisted of partnership structure (i.e., parallel-aligned, buyer, or supplier firm’s perspective), length of partnership year (actual numbers were entered), likelihood of recontract, and firm size (actual numbers were entered).
F-statistics for all models were found to be significant at a
p-value of less than 0.001 and, thus, we proceeded with the regression result analysis. For partnership commitment, innovation performance, and financial performance, both the moderator and interaction terms were significantly associated with firm performance (
β = 0.697 (innovation); 0.650 (financial),
p < 0.001). While the moderator was not significantly associated with operational performance, the interaction term was found to be significant (
β = 0.466,
p < 0.01). Among the control variables, recontract likelihood was negatively associated with all three performance types of firms in Model 4.
To further examine the effect of investment level on partnership commitment and firm performance (i.e., negative moderating effect of investment-oriented partnership on innovation performance and financial performance), we operationalized two investment characteristic groups: a positive investment exchange group, represented by firms whose partnership firms’ investment average was higher than that of the respondent firm (
n = 71, distance average = 0.92 ± 0.47, distance range between 0.67 and 4.0); and a negative group, comprising firms with higher investment by respondent firms than that by partnership firms (
n = 95, distance average = −0.98 ± 0.55, distance range between −3.67 and −0.67).
Table 6 shows that, when investment exchange is positive, noted as INVX (+), the interaction term (investment-oriented partnership × commitment) is more significantly associated with innovation performance (
β = 0.988,
p < 0.05) and operational performance (
β = 0.715,
p < 0.01) than when investment exchange is negative (
β = 0.596 (innovation) 0.512 (operational), not significant). As shown in
Figure 3, the results are illustrated by the plots of the two-way interaction effects, which enabled us to identify the partnership commitment effects on firm performance for two different investment exchange levels for the three different partnership structure types.
Based on a supplementary analysis of two-way interaction effects, as shown in
Figure 3, we could further observe the level of commitment and that of investment exchange gap based on partnership structure types. Two-way interaction effects are useful for visually identifying the direction and extent of the moderating role [
27].
We firstly observed that, regardless of the investment exchange level, investment exchange positively moderated the relationship between commitment and firm performance. This finding indicates that, regardless of whether investment exchange is negative or positive, the presence of an investment exchange relationship enhances the effectiveness of commitment. This finding is aligned with the regression results in the case of innovation performance and operational performance. Specifically, for partnership structure B, in which the respondent firm is a buyer and the partnership firm is a supplier, the negative investment exchange level depicted higher levels of all three types of performance: operational, innovation, and financial. A possible explanation for this finding is that a buyer firm that invests relatively more in a partnership than its suppliers expects better firm performance than buyer firms that invest relatively less. The nature of the exchange relationship can be partly explained by relationship-specific assets, which are resources that both a buyer and a supplier allocate to the relationship, such as machinery and systems [
4,
69]. Recurring collaborations that build the basis for such relationship-specific investments are expected to enable buyer firms to accumulate knowledge about suppliers, which is then utilized to predict suppliers’ transactional behavior [
4]. Consequently, Um and Kim [
4] concluded that, when there is genuine collaboration signaling high mutual understanding of the partnership, the buyer firm undertakes collaborative activities, such as incentive alignment and resource sharing, to positively increase its transaction cost advantage. In addition to existing findings in the literature that a relation- or partner-specific investment positively moderates commitment and firm performance, we posit that the extent of investment level also drives higher firm performance, even if the firm’s absolute investment is larger than the supplier’s investment.
The most visually unstandardized interaction effects were shown for the moderating role of investment exchange on the commitment–financial performance relationships, as shown in
Figure 3 (A3, B3, C3). While the regression results showed an insignificant effect of the interaction term on firm performance, we further observed and verified that the interactivities had different results based on partnership structure types. For partnership structure B, the negative investment exchange level depicted a greater interaction effect with commitment on firm performance. However, for structure C, while both the positive and negative effect had a relatively similar level of interaction role, the performance levels showed a significant scale of difference. For structure C, positive investment exchange level is strictly necessary for better financial performance, while, for other partnership structures, it might not be necessary. This finding, to a certain extent, is consistent with the view of Oh et al. [
70], who argued that external (partnership) collaboration makes a greater contribution to financial performance. In our case, relational investment in terms of resources and time—accompanied by high levels of commitment—affects financial performance from the supplier’s perspective.
5. Discussion
The objectives of this study were to examine how to sustain an SC collaborative partnership, i.e., how partnership orientation motivates partnership commitment and, in turn, how this relationship enhances firm performance, from the supplier, buyer, and parallel-aligned firms’ perspectives. This study additionally investigated the moderating role of the commitment–investment exchange relationship on the hypothesized relationships.
Following previous research, this study’s findings are expected to expand understanding of (i) supply chain collaboration through the lens of partnership orientation, (ii) relation exchange attribute and commitment-based performance outcomes by partnership structure types, and (iii) firm performance management based on the interaction effect of commitment and firms’ relative investment exchange level. The proposed partnership-based performance improvement model may help both researchers and practitioners gain a deeper understanding of the appropriate partnership orientation for the desired level of sustainable commitment and firm performance.
The research identified partnership orientation as two key antecedents of partnership commitment. Partnership orientation was examined based on two dimensions: investment and contractual. Investment-oriented partnership was defined in the study using indicators to quantify the level of resource and time investment made as collaborative efforts, while contractual-oriented partnership was represented by the level of official and legal details that enforce and ensure a partner’s involvement. As hypothesized, the presence of either investment- or contractual-based partnership orientation positively contributes to partnership commitment. Firstly, the finding that both investment- and contract-oriented partnerships are positively associated with commitment from the perspectives of parallel-aligned and buyer firms (partnership structures A and B) is consistent with the existing empirical evidence. Relation-specific investment-driven partnership characteristics enable interconnected firms to (i) undertake long-term planning based on mutual capital expenditure [
33], (ii) create effective strategic partnership value [
34], (iii) reinforce support for involved partners [
35], and (iv) participate in collaborative recycling management as sustainability practice [
11]. Investment-oriented partnership also contributes to specific development of partnership commitment through bilateral resource dedication from both the supplier and buyer firms, which effectively increases partnership commitment. Specifically, because buying firms utilize outsourcing strategy to focus on their own core competencies while receiving non-core services from suppliers [
40], we argue that partnership structures A and B benefit the most in terms of gaining competitive advantage through investment-oriented partnership.
Secondly, for the supplier firm (partnership structure C), this study verified that only contract-oriented partnership is positively associated with partnership commitment, whereas investment-oriented partnership had an insignificant result. This result supports previous findings that the inter-firm governance mechanism is emphasized for partnership stabilization in anticipation of concerns about opportunism and uncertainties [
71]. From the supplier firm’s perspective, both the alleviation of potential opportunistic behavior of an exchange partner and the development of reliability between partner firms are vital [
39,
72]. Earlier studies provided support for the importance of establishing contracting norms and shared expectations among business partners for inter-firm behavioral regulation [
40]. Specifically, the authors advocated a contract-based transactional mechanism for effective minimization of the outcome of uncertainties through legal rights and economic incentives.
This study verified the direct association between partnership commitment and firm performance types for different types of partnership structures. Firstly, regardless of the partnership structural relationships, a high level of commitment leads to high levels of innovation performance and operational performance. This finding heightens the importance of the partnership commitment-building process to yield desirable innovation performance, as well as to increase operational performance and financial performance. Sustainable innovation cannot be driven by a sole firm, but a collective knowledge of market characteristics can be driven by interconnected firms [
17]. Successful green product innovation can increase end-customers’ interests in cost and environmental protection, thereby strengthening the firm’s performance [
18,
29] Highly innovative firms have the advantage of quickly identifying and seizing new market opportunities through close working relationships with interconnected partners [
40]. Previous studies strongly indicate the importance of commitment in collaboration relationship, which determines the level of risk of opportunism and information sharing in new product development [
40] and operation, planning and control processes, and performance [
47]. Secondly, while partnership commitment does not statistically influence financial performance from the perspectives of both parallel-aligned and buyer firms, the results indicated a negative association from the supplier firm’s perspective. We argue that, from this perspective, an excessive level of commitment leads to financial sacrifice as a trade-off for the development of a social relationship. A high level of partnership commitment may merely depict a sole local-level management decision rather than a collective decision by participating firms, thereby disregarding both short- and long-term financial outcomes [
53]. To sustain an SC collaborative partnership and its commitment level, a careful evaluation of the bilateral exchange relationship based on mutual interest is required. Thus, sustainable commitment is a distinctive attribute, as it is developed only when both firms engage in activities through cooperative behavior [
73].
In addition to the abovementioned direct effects, this study linked the investment-based exchange relationship and collaboration literature for a further examination of changes in firm performance. By proposing a partnership-based performance improvement model, this study aimed to improve understanding of the role of partnership structure type in the supply chain context. The investment exchange level is operationalized based on the difference between a respondent firm’s level of investment and its partner firm’s level of investment. In conclusion, four different interactivity terms were developed: low commitment and negative investment exchange, low commitment and positive investment exchange, high commitment and negative investment exchange, and high commitment and high investment exchange. These interactivity groups were utilized to verify the moderating role in firm performance increases. The findings displayed in
Table 6 and
Figure 3 indicate that (i) investment exchange level moderates the relationship between commitment and innovation and operational performance regardless of partnership structure type, (ii) negative investment exchange instead signals higher firm performance from the buyer firm’s perspective, and (iii) positive investment exchange is strictly necessary for financial performance from the supplier firm’s perspective. This finding is consistent with previous findings that buyer firms capitalize on supplier firms’ competencies and gain significant benefits from the corresponding inter-firm relationship [
40], and that supplier firms’ performance is negatively affected by an excessive production–information exchange relationship when there is no credible commitment from the buyer firm [
73]. From a sustainability management perspective, Luzzini et al. [
50] addressed an under-explored investigation of a commitment-driven performance improvement measurement. Their results provided a strong support for the link between commitment in sustainble practice, collaborative capabilities, and overall performance (environmental, social, cost). Simliarly, we argue that the mutual commitment from both buyer and supplier firms is a precondition for overall performance improvement.
In addition to the theoretical contributions of this study, practical implications can be deduced. The proposed model development and empirical results can help managers plan for strategic partnership management for a desired level of innovation, operational, and financial performance. While supply chain collaboration is predominantly emphasized as a relationship orientation primarily for long-term and multi-faceted relationships [
9], it must be accompanied by a complementary role for legal contracts and firm rules. Partnership development based on both investment exchange-based relationships and formal agreement-based contractual relationships are likely to strengthen overall partnership commitment from the perspectives of parallel-aligned, supplier, and buyer firms. Moreover, in the context of innovation, partnership commitment is a strong behavioral antecedent for overall improvement in sustainable partnership-driven innovative activities, which in turn strengthens operational performance and financial performance. A high level of partnership commitment can take advantage of network externalities and critical mass [
44], thereby spreading innovation and its related performance improvements within the entire supply network.
Some limitations and future avenues should be mentioned. Firstly, the national context potentially limits the generalizability of the findings; therefore, this study should be extended to other countries and include other industries prior to applying our findings in other contexts. Secondly, the measurement indicators of constructs were chosen from literature reviews, and future studies should rigorously select for comprehensiveness. Thirdly, although a single respondent is frequently applied to partnership management research, it lacks full representation of a firm’s strategic perspective. Thus, future research may utilize multiple source respondents of a single firm to improve the representativeness of firm’s strategic positioning. This research may be perceived as an iterative process and would benefit from further empirical research based on a replicate model [
74]. Future research should consider investigating the role of market dynamism in existing versus new markets. A more complete picture of the exchange relationships driving firm performance can be created by measuring the partnership commitment level from both sides of the buyer–supplier dyad. Lastly, future research should also carry out a longitudinal study to capture the varying effects of constructs using different time horizons.