How do supplier development programs affect suppliers?: Insights for suppliers, buyers and governments from an empirical study in Mexico

Purpose - The purpose of this paper is to evaluate the effects of supplier development programs on the short-term performance of suppliers and the more long-term development of their capabilities given the relational learning context of the dyad. Design/methodology/approach - Data were collected through a survey of strategic suppliers from original equipment manufacturers of the automotive industry located in Mexico. Findings - Results suggest that basic and widely used forms of supplier development hardly lead to improved operational and financial performance of suppliers. More demanding and less frequently used forms of supplier development may lead to improved supplier performance given the suppliers have sufficient absorptive capacity and the presence of an adequate collaborative and relational learning context. Research limitations/implications - Only suppliers of firms in the automotive industry were surveyed; participant suppliers were referred by buying firms operating in Mexico. Practical implications - When designing supplier development activities, buying firms need to take into consideration that high involvement and investment on supplier development activities is required when their goal is to improve the supplier base. Social implications - Governments organizing supplier development programs should consider the importance of promoting knowledge transfer activities above evaluation and feedback to assure the success of their efforts to develop the national supply industry. Originality/value - The value of supplier development programs is explored in this paper, taking into account the efforts of the buying firms to transfer knowledge and the moderating effect of the relational and learning context. Relevant recommendations for the design of such programs to buyers, suppliers and government are discussed.