Social power configurations influencing relationship strength and supplier performance in the construction industry

Abstract

The construction industry in South Africa is a significant contributor to the economy, contributing considerably to the gross domestic product and generating employment opportunities in both the construction sector and other related industries. Despite the substantial role played by the construction sector in South Africa, there is growing pressure to provide high-quality products efficiently and cost-effectively. This compels construction firms to seek better ways to attain a competitive edge. Modern construction firms recognise that a better approach than relying on internal efficiencies is required to gain a competitive edge. Instead, they can achieve more excellent benefits through cultivating stronger buyer-supplier relationships (BSRs) to enhance supplier performance. This study sought to examine how the construction industries in South Africa can attain success by effectively managing social power (mediated and non-mediated power) to enhance the strength of buyer-supplier relationships and, ultimately, supplier performance.

The study employed a quantitative approach to collect data from 389 South African construction industry professionals in Gauteng and KZN through an online, five-section, self administered questionnaire survey. The collected data was tested using a partial least squares structural equation modelling (PLS-SEM) through Smart-PLS 3 and the Statistical Package for Social Sciences (SPSS) for data screening (descriptive statistics). The study's results revealed that social power sources, such as coercive power, referent power, and legitimate power, exert a positive and significant influence on relationship strength, which positively influences supplier performance, specifically supplier quality performance and supplier delivery performance in the South African construction sector. However, the results also showed an insignificant relationship between manipulation, reward, expert power, and relationship strength. Additionally, the study revealed that relationship strength does not influence supplier cost, flexibility, and sustainability performance. Therefore, construction supply chains must harness coercive, referent, and legitimate power to build strong relationships with suppliers and enhance performance.

The study proposes a refined model for configuring the relationship between social power, relationship strength and supplier performance. Construction firms can adopt this model to attain a competitive advantage. Theoretically, the study is significant, as it contributes to supply chain scientific development by equally testing the concepts of social power (mediated and non-mediated power), relationship strength, and supplier performance. This study contributes to the existing body of knowledge, adding to the new literature on social power, relationship strength, and supplier performance in the South African construction supply chains.

The study recommends that construction firms in South Africa should exhibit integrity, and ethical behaviour, lead by example, serve as mentors for their suppliers, and prioritise respect and trust as fundamental principles, as well as establish recognition and reward systems to improve the use of coercive, legitimate, and referent power. To enhance relationship strength, the study proposes that construction firms should adopt supplier integration, invest in supplier development, and incorporate a supplier relationship management (SRM) division into supply chain management (SCM). Construction firms are encouraged to define clear performance expectations and metrics to enhance supplier performance, incorporate continuous improvement initiatives, and implement a comprehensive supplier evaluation system.