Academic journal article Academy of Entrepreneurship Journal

Determinants of Trust between Minority Suppliers and Governmental Purchasing Managers

Academic journal article Academy of Entrepreneurship Journal

Determinants of Trust between Minority Suppliers and Governmental Purchasing Managers

Article excerpt

ABSTRACT

The development and conceptualization of the literature on trust have been central issues in determining how exchange relationships are built. A review of this literature reveals that it is important to determine what role trust plays in the selection of a minority supplier. The nature of exchange relationships has taken a new focus due to the growth of a global economy, the development of strategic partnerships, the reduction of supplier bases, the repeal of affirmative action laws, and the emphasis on diversity in the workplace. Since internal as well as external business environments are changing, it is important that minority-owned firms devise business strategies that will enhance trusting exchange relationships with purchasing personnel.

The first objective of this research was to determine the variables that influence trust in salesperson, trust in product/service, and company trust of a governmental purchasing manager's selection of a minority supplier or a non-minority supplier as the preferred vendor. The second objective was to determine whether there is a difference in the amount of trust a minority supplier has to establish to be chosen as the preferred supplier versus a non-minority supplier.

This researcher hypothesized that greater perceived trust would influence the likelihood of a minority or non-minority supplier receiving government business. It was further hypothesized that the minority supplier would have to develop a greater degree of trust than the non-minority supplier to receive government business.

A random sample of 500 purchasing agents was selected from the National Institute of Governmental Purchasing Managers. The sampling criterion required that the respondent be employed in a purchasing capacity for a governmental agency within the State of Florida. These governmental entities included respondents employed by the state, school boards, county, and city governments.

These hypotheses were tested using a one-way analysis of variance, using a .05 alpha level. A 15-item trust scale was used to measure trust in the salesperson, trust in the company, and trust in the product/service.

It was found that trust does appear to be a significant factor in determining whether a minority or non-minority supplier receives business. There appeared to be no difference between the amounts of trust a minority versus a non-minority supplier had to establish to receive contracting opportunities.

INTRODUCTION

The development and conceptualization of trust has been a central issue in supplier relationships. In addition, changes have occurred in the business environment due to the growth of the global economy, diversity issues, supplier reductions, changes in affirmative action programs, and on-line purchasing. These forces are driving governmental agencies to become more efficient in purchasing goods and services in order to meet strategic organizational objectives. Since affirmative action laws are being repealed, compulsory programs are being phased out by many governmental agencies as well as by companies. As a result of the changing business environment, minority owned businesses are encountering a competitive landscape that has changed. Further, these businesses are finding that future reliance on set asides would not be in their best interests. These businesses will need to concentrate on building purchasing relationships with both corporate America and governmental agencies.

The purpose of this study is to make a contribution to the existing literature by exploring the role trust plays in the development of marketing relationships. One of the primary reasons this study is important is because there has been a lack of academic research that examines exchange relationships between minority businesses and suppliers. Marketing literature has also shifted from discrete transactions to a more relational point of view (Webster, 1992). …

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