New study explores the negative impact unethical practices have on buyer-supplier relationships

In the context of business-to-business (B2B) supply chains, business customers who engage in unfair and socially irresponsible business practices significantly reduce suppliers’ willingness to continue the relationship, according to researchers from Monash University and Northeastern University. has been shown to reduce

The study, published in the Journal of Business Ethics, is the first to examine the impact of unethical customer behavior on a supplier’s intention to continue the relationship, and provides new information for companies trying to navigate ethical dilemmas. Provide insight.

This study is conducted in a business-to-business (B2B) context and focuses on relationships between businesses. For example, suppliers or customers.

Professor Daniel Prajogo, from Monash Business School’s School of Management, said the study surveyed 506 managers from small and medium-sized Australian suppliers who, due to their size and limited resources, were unable to manage their own companies. He said it is likely that the company has weak bargaining power with suppliers. customer. Suppliers span sectors such as manufacturing, retail, transportation, construction, and healthcare.

“Our research distinguished two types of unethical behavior exhibited by customers: unfair business practices that have a direct negative or detrimental impact on the supplier’s profits, e.g. ”Professor Prajogo said.

“Another was socially irresponsible behavior, such as polluting the environment or paying low wages. Socially irresponsible behavior may not have a direct impact on suppliers, but such Actions can have far-reaching effects on society and cause indirect harm to suppliers, such as loss of work due to negative publicity.

“Our findings show that both unfair or opportunistic business practices toward customers’ suppliers and socially irresponsible practices negatively impact suppliers’ intentions to maintain relationships with customers. is shown.

“However, we also found that the negative impact is balanced by the level of dependence that suppliers have on their customers and the benefits that suppliers derive from their relationships with customers. Similarly, dependence on suppliers may lead to their socially irresponsible behavior due to their dependence, or lack of alternative customers in the market. It will withstand. ” added Professor Prajogo.

Associate Professor Brian Cooper from Monash Business School’s School of Management said: “Overall, our research shows that the intention to continue buyer-supplier relationships by countering unethical practices is self-interest and resources. “We showed that it is determined by the dependence on

“Our findings encourage us to rethink governance in supply chain relationships.While there are no simple answers to mitigating and/or eliminating unethical practices, we We call for institutional reforms in the chain so that small and medium-sized suppliers can be treated appropriately.” there is. ”

Associate Professor Ross Donoghue, also from Monash Business School’s School of Management, said: “The ethical implications of this research are of vital importance to business leaders. How unethical behavior impacts supplier relationships. By understanding this, companies can better adjust their actions to promote fairer behavior.” , more sustainable partnerships.

“Furthermore, regulators and policymakers need to play a key role in improving fairer business practices, especially where there is a power imbalance between suppliers and buyers.”