BUILDING SMES PERFORMANCE THROUGH RELATIONSHIP QUALITY. THE ROLE OF SUPPLY CHAIN FLEXIBILITY

Background: Although the existing literature has examined the association between relationship quality and SME performance, no attempt has been made to assess the impact of supply chain flexibility on this association. The impact of supply chain flexibility is important because although SMEs are inherently more flexible than large firms, allowing them to respond more quickly to changing customer needs and environmental conditions, they seek to build their advantage on relational resources due to their limited financial and human resources. However, previous research suggests that maintaining relationship quality is costly and not always cost-effective. This raises the question of whether relationship quality affects SME performance per se or whether it has an indirect effect through supply chain flexibility. The purpose of this article is to examine the role that supply chain flexibility plays in the connection between relationship quality and SME performance.

Methods: Combining relationship quality with SME performance, we analysed how supply chain flexibility moderates this association. Data collected from 1286 Polish SMEs using the CAPI method were analysed using SEM modelling.

Results: The results confirm the direct impact of relationship quality on both supply chain flexibility and SME performance. The study also provides empirical evidence that supply chain flexibility moderates the impact of relationship quality on SME performance and that this impact is stronger than the direct impact of relationship quality on SME performance.

Conclusions: Our findings have important implications for SME managers, providing arguments for the desirability of managing relationship quality in conjunction with supply chain flexibility. While previous research suggests that relationship quality is important for SMEs because it can be treated as a substitute for limited tangible assets as well as financial, infrastructural and human resources, our research has demonstrated the desirability of building relationship quality in conjunction with supply chain flexibility, which seems to be an important insight given the limited resources of SMEs.