The Impacts of Collaboration on Relational Performance: Evidence from Furniture SMEs in a Developing Country

Abstract

Business and marketing literature has documented collaboration improves performance in the supply chain context, including within small-medium enterprises (SMEs). However, little studies have been done in capturing the impact of collaboration on relational performance and the linkage paths among them. In addition, little has been done in the context of developing economies. This study aims to fill the voids by empirically investigating the impact of collaboration on relational performance between small-medium furniture manufacturers and their retailers at Jepara District, a main furniture cluster in Indonesia. Researches reveal furniture SMEs across Jepara experience continuous drawback and as such collaboration may become a solution. Using Structural Equation Modeling analysis on 199 usable responses, the study finds collaboration influences firm’s agility, relational performance, and opportunism. On the contrary, agility and opportunism do not influence relational performance. This likely indicates manufacturers prefer to collaborate with their retailers even in a minimum level, regardless the presence of risks from opportunism. The absence of the influence of opportunism and agility on relational performance provides avenue for future research.