Effect of relationship building and constraint‐based factors on business buyers' relationship continuity intention : A study on the Indian steel industry

Purpose – The purpose of the study is to examine key antecedent variables that affect buyers' relationship continuity intention and measure the relative importance of these key antecedent variables. It also aims to examine the mediating roles of an inter‐organizational trust (trust in supplier organization) and buyers' dependence in determining buyers' relationship continuity intention. To this effect, the paper groups the predictor variables of relationship continuity under two broad categories of factors, i.e. constraint‐based factors; and relationship building factors. Design/methodology/approach – Data were collected from 137 steel buyers. Exploratory and confirmatory factor analysis was used to test the validity of the measures. The hypotheses were tested using structural equation modelling. The empirical tests included direct effect and mediating effects testing. Findings – Trust in supplier was found to mediate the positive effects of communication and offer quality on buyers' relationship continuity intention. Trust in supplier was also found to mediate the negative effects of opportunistic behavior on buyers' relationship continuity intention. However, dependence on supplier does not predict buyers' relationship continuity intention. Research limitations/implications – The study indicates that it is the relationship building factors and not dependence‐based factors that predict relationship continuity intention of buyers in BtoB relationships. Offer quality aspect has the highest effect on trust in the supplier, pointing to fact that buyers also need tangible evidence to develop trust in the relationship. The study has covered the perception of buyers only and therefore the views can be one sided. Further, there might have been a tendency for the respondents to select a particular supplier with whom they have a good relationship. Practical implications – Marketing managers of suppliers should try to develop trust‐based relationships rather than dependence‐based relationship with their buyers. In order to build trust in the BtoB relationship, the study suggests that steel suppliers should invest in both economic and behavioral aspect of transaction. Further, suppliers should put performance management systems in place in their organizations that do not encourage opportunistic behavior in their salespersons. Originality/value – The study relates to inclusion of both behavioral and economic antecedents of trust. Most of the prior studies in BtoB buyer‐seller relationships have focused on behavioral or economic antecedents of trust, but rarely have both aspects been studied together. This study gives an empirical basis on which steel companies can base their BtoB marketing strategy.