The impact of supplier downsizing on performance, satisfaction over time, and repurchase intentions

Purpose – The purpose of this study is first to investigate how well downsized suppliers, as compared to non‐downsized suppliers, are able to satisfy their business customers over time; and second whether these same business customers having stronger or weaker repurchase intentions toward downsized suppliers, as compared to non‐downsized suppliers. Design/methodology/approach – A random sample of 560 purchasing professionals from a wide range of industries and firms provide responses on the performance of, their satisfaction with, and their repurchase intentions toward downsized and non‐downsized industrial suppliers. Findings – The results of the study indicate that downsized suppliers, as compared to non‐downsized suppliers, overall are doing a significantly poorer job of satisfying their business customers, leading to significantly lower ratings of loyalty and repurchase intentions. However, some surprising results emerge regarding the non‐linear pattern of low, medium and high levels of downsizing on performance and repurchase intentions. Practical implications – Suppliers who downsize are at risk of losing important business customers as their abilities to deliver ancillary value‐added services are diminished through the elimination/loss of key customer support personnel. It is important for these suppliers to recognize these risks, and to implement strategies to avoid the potential negative outcomes associated with downsizing. Originality/value – To date, with possibly one or two exceptions, all studies focusing on downsizing have had an intra‐firm focus. This study investigates downsizing from an inter‐firm perspective, and is the first to focus on the effect of downsizing on business customers’ satisfaction, loyalty, and repurchase intentions.