Fairness in Supply Chain Relationships: The Value and Consequence for Reputation and Sustainability

The purpose of this research is to examine a notion, which is commonly perceived as subjective and endogenous known as fairness (also referred to as justice or impartiality) in the supply chain context. The principal aim of supply chain relationships is to create an avenue where competitive advantage can be achieved both as individual firms and as a chain through working collaboratively on supply chain operations and tasks. By collaborating with autonomous firms, concerns arise about whether the benefits, rewards and risks of relationships are apportioned in a fair (just) and satisfactory manner. This is evident in today’s supply chains where chain partners portray opportunistic and unethical behaviours using their bargaining power negatively and betraying partner’s trust. A number of studies have reported the significance of fairness in supply chain relationships, particularly promoting collaboration and improving relationship performance. Nonetheless, the significance of fairness in supply chain relationships has been a rather neglected area in the supply chain literature. Therefore, this study aims to fill some of the gaps that are present in the literature. Through a socio-economic lens, this study will probe the issue of fairness in supply chain relationships using the social exchange and equity theories as the analytical lens. Conceptualizing fairness into three main types (distributive, procedural and interactional), this study aims to understand the concept in the business to business relationship setting. A particular focus steers towards how perceiving fairness affects the development of relationships between buyers and suppliers in the supply chain. This aspect is of significant value because a good relationship between supply chain partners is a crucial antecedent for any stable exchange relationship. To fully understand the worth of fairness in this context, there is a need to consider the consequence for long-lasting relationships. As a result, this research considers two critical factors that have been neglected in the pertinent supply chain fairness literature such as firm reputation and relationship sustainability. Through in-depth executive interviews, interesting findings were revealed concerning the role that fairness perception plays in moulding a sustainable relationship between businesses and creating a positive firm image. The results of the authors’ exploratory work are presented as quotations to provide the body of the relevant subject. Findings show that the notion of fairness in the inter-organizational relationship context is a double-edged sword with prospective positive and negative effects on relationship development process between supply chain partners. Fairness is also a very ‘sensitive’ subject that many firms elude from, but largely impacts on an organization’s behaviour towards its partners. It is critical that when managing relationships with other firms in a supply chain, fairness should be at the forefront of the relationship banner by managers. on the of The of investigation of supply chain relationships despite being recognized as a driver of buyer-supplier relationship performance. Although fairness has been recognized as a formative means for reducing relationship damage and termination, our findings identify it to be an antecedent for the constructs of collaboration and inter-organizational relationship longevity. Our study ascertains that the concept of fairness is personal and interpreted according to an individual firm’s peculiar situation.