Manufacturing firms’ credibility towards customers and operational performance: the counteracting roles of corruption and ICT readiness

ABSTRACT

Firms benefit from being reliable and trustworthy towards their customers. In many countries, however, corruption spills over to supply chain relationship practices and weakens a firm’s credibility towards its customers (CTC). In this study, we investigate the influence of corruption on the relationship between CTC and firm performance. Empirical analyses of manufacturing firms in multiple countries demonstrate that corruption diminishes the effect of CTC on firms’ operational performance. Moreover, a country’s information and communication technology (ICT) readiness can counteract the negative impact of corruption. Our study adds to the literature on supply chain relationship management by considering the influence of two institutional contingencies (i.e. corruption and ICT readiness) on the effectiveness of CTC as an important mechanism of supply chain governance. Our study complements the literature on transaction cost economics and urges managers to consider the two characteristics of their firms’ institutional environments when managing relationships in their supply chains.

KEYWORDS:

• Credibility towards customers
• corruption
• information and communication technology
• supply chain relationship
• operational performance
• ridge regression

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

The HPM data that support the findings of this study are available from the HPM team. Restrictions apply to the availability of these data, which were used under license for this study. These data are available from the corresponding author with the permission of the HPM team. The CPI data that support the findings of this study are openly available in the Transparency International at https://www.transparency.org/en/cpi/2015. The NRI data that support the findings of this study are openly available in the Global Information Technology Report at https://networkreadinessindex.org.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China under Grant 72010107002.