Building capabilities via suppliers' effective management of relationships

This paper is an empirical study identifying the role of a relationship-specific capability of building capabilities through relationships (CBC) when suppliers put efforts into increasing their perceived market effectiveness by managing the effects of relationship quality. The relationship between relationship quality and effectiveness is mediated by CBC. Suppliers in a supply chain form different levels of relationship quality with partners in response to market conditions and industry characteristics. Relationship marketing by suppliers requires a deep understanding of the role of CBC that is developed by a supplier and an effective utilization of CBC to lead an effective relationship to better outcomes. This leads to maximizing of the competitive advantages for suppliers and will help maintain effective relationships.

► We identify the role of a relationship-specific capability of building capabilities through relationships (CBC) empirically as a mediation variable between relationship quality and performance.
► Suppliers should understand the role of CBC and utilize it to convert relationship quality with their partners into better market effectiveness.
► Suppliers with CBC can maximize the competitive advantages and maintain effective relationships.