Supply Uncertainty and Firm Performance in Developing Economy Environments: Examining the Role of Buyer- Supplier Relationships

Transactions cost economics theory suggests that firms will alter their governance structures with suppliers in an environment of high uncertainty. Using data from firms in Ghana, a developing country, we demonstrate that when firms face high supply uncertainty, a governance structure that emphasizes joint cooperation and information sharing with suppliers will lead to benefits in terms of enhanced competitive capabilities and increased firm performance. Specifically, we show that supplier relationship management (SRM) has a positive impact on cost, delivery, flexibility and quality competitive capabilities. Further, SRM also has a positive impact on sales growth and market share performance.