A firm's responses to deficient suppliers and competitive advantage

Supplier development involves the customer firm's support of a deficient supplier in a channel. This research examines the relationship between supplier development, improvements and the support of the customer firm's competitive strategy with the resource-based view and the relational view as theoretical explanatory perspectives. The results show that appropriate supplier development activities are powerful to substantially back up the customer firm's differentiation as well as cost leadership strategy. Supplier development activities focusing on supplier relationship improvement demonstrate to have a strong impact on both generic competitive strategies. Furthermore, this research questions the benefits from direct supplier development measures. Supplier development in channel research is a widely neglected interfirm relationship management practice, and should therefore receive more attention from practice and research. © 2006 Elsevier Inc. All rights reserved.