Interlocking gears symbolizing a supply chain, highlighting the importance of relational norms and information sharing.

Unlock Your Supply Chain: How Relational Norms and Information Sharing Boost Supplier Performance

Nico Varela in Business & Economy August 2025 • 4 min read.

"Dive into the strategies that drive efficient supplier development, from fostering relational norms to leveraging the power of shared information."

In today's dynamic business environment, effective supplier development is crucial for maintaining a competitive edge. Companies invest significant resources in helping their suppliers improve, yet the efficiency of these efforts often varies widely. Some businesses see remarkable returns, while others struggle to achieve desired outcomes.

Imagine a scenario where two companies invest equally in supplier development programs. One company fosters open communication, mutual trust, and shared values with its suppliers. The other maintains a more transactional, arms-length relationship. Which company is likely to see a greater return on its investment? The answer lies in understanding the factors that enhance supplier development efficiency.

This article explores those key elements, drawing on research that highlights the importance of relational norms—the unwritten rules of engagement based on trust and reciprocity—and the strategic use of information sharing. By understanding these dynamics, businesses can optimize their supplier development programs, driving better performance and stronger, more resilient supply chains.

The Efficiency Equation: Beyond Just Doing, It's About Doing Right

Interlocking gears symbolizing a supply chain, highlighting the importance of relational norms and information sharing.

Many companies focus on the 'effectiveness' of supplier development—simply implementing practices to improve supplier performance. However, 'efficiency' is about maximizing the impact of those practices. It’s about getting the most out of every dollar and hour invested. Think of it as the difference between simply building a house (effectiveness) and building a house quickly, affordably, and sustainably (efficiency).

Transaction Cost Economics (TCE) offers a valuable lens through which to view supplier development. TCE suggests that relationships involve costs beyond the price of goods and services. These costs stem from factors like the risk of opportunism (a supplier taking advantage of a buyer's investment) and the need for coordination. Supplier development, by its nature, creates a degree of dependence, exposing buyers to these transaction costs.

Relational Norms: Defined as a relationship between exchange partners based on mutual trust, concerns, and shared values.
Supplier Information Sharing: Defined as a commitment and willingness to share relevant data and insights with the other party.
Buyer Information Sharing: Buyers openly communicate and willingly share critical data and insights with their suppliers.

The key is to minimize these costs and maximize the value generated. This is where relational norms and information sharing come into play. They act as lubricants, smoothing the gears of the buyer-supplier relationship and enhancing efficiency.

Turning Insights into Action: A Strategic Path Forward

The journey to efficient supplier development is ongoing. By prioritizing relational norms, encouraging supplier information sharing, and carefully considering the role of buyer-side information, companies can unlock significant improvements in their supply chains. While this research provides a valuable framework, the specific strategies will vary depending on the industry, the nature of the relationship, and the broader business context. The key is to embrace a mindset of continuous improvement, constantly seeking ways to refine processes, strengthen relationships, and maximize the value generated from supplier development investments. This requires a commitment to building trust, fostering open communication, and creating a collaborative environment where both buyers and suppliers can thrive.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1111/jbl.12197, Alternate LINK

Title: Enhancing Supplier Development: An Efficiency Perspective

Subject: Management Science and Operations Research

Journal: Journal of Business Logistics

Publisher: Wiley

Authors: Hung-Chung Su, Yi-Su Chen, Ta-Wei Daniel Kao

Published: 2018-12-01

Everything You Need To Know

What are relational norms, and how do they impact supplier relationships?

Relational norms are the unwritten rules of engagement based on mutual trust, concerns, and shared values between exchange partners. They significantly impact supplier relationships by acting as a lubricant, smoothing the interactions between buyers and suppliers. By fostering trust and shared values, relational norms reduce the risk of opportunism and enhance the willingness of both parties to invest in the relationship, leading to improved supplier performance and a more efficient supply chain.

How does supplier information sharing contribute to better supplier performance?

Supplier information sharing, defined as a commitment and willingness to share relevant data and insights with the other party, is crucial for enhancing supplier performance. When buyers openly communicate and willingly share critical data and insights, suppliers gain a deeper understanding of the buyer's needs, market trends, and expectations. This allows suppliers to align their strategies, improve their processes, and proactively address potential issues, leading to better performance and a stronger bottom line for both parties.

What is the difference between effectiveness and efficiency in supplier development?

Effectiveness in supplier development refers to simply implementing practices to improve supplier performance. Efficiency, on the other hand, is about maximizing the impact of those practices. It’s about getting the most out of every dollar and hour invested in supplier development. While effectiveness focuses on achieving the desired outcome, efficiency focuses on achieving that outcome with the least amount of resources and effort. This distinction is critical because companies can be effective without being efficient, which means they might be achieving results, but at a higher cost than necessary.

How does Transaction Cost Economics (TCE) relate to the importance of relational norms and information sharing in supply chains?

Transaction Cost Economics (TCE) provides a valuable framework for understanding the role of relational norms and information sharing in supply chains. TCE suggests that relationships involve costs beyond the price of goods and services, such as the risk of opportunism and the need for coordination. Relational norms and information sharing help to minimize these transaction costs by building trust, reducing the likelihood of opportunistic behavior, and improving communication and coordination. By focusing on these elements, companies can create more efficient and resilient supply chains, as the costs associated with the buyer-supplier relationship are reduced.

How can companies implement relational norms and information sharing in their supplier development programs?

Implementing relational norms and information sharing requires a strategic approach that prioritizes building trust, fostering open communication, and creating a collaborative environment. Companies can start by clearly defining and communicating their values, expectations, and goals to their suppliers. They should actively encourage supplier information sharing by providing access to relevant data and insights, and by creating channels for feedback and collaboration. Moreover, companies must demonstrate a commitment to fairness, transparency, and reciprocity in their dealings with suppliers, consistently acting in ways that build trust and reinforce the unwritten rules of engagement. This ongoing process requires continuous monitoring, evaluation, and adjustment to ensure it aligns with the evolving business context.