Does Trust Culture Influence Supplier Distribution Decisions

Abstract

The decision-making of supplier distribution is based on the principle of the trade-off between costs and profits. It is a dynamic and continuous adjustment and optimization process, which is restricted by many factors. The reasonable distribution of suppliers is not only an important means to cope with the increasingly fierce competition pattern and the complex market environment, but also an effective way to coordinate the long-term and short-term strategies of enterprises and improve the efficiency of supply chain management. Generally speaking, it is more convenient for closer suppliers to interact with enterprises due to their location advantages. For distant suppliers, the frequency of interaction with enterprises may be reduced, resulting in a higher degree of information asymmetry, which may affect transaction costs. Admittedly, the supplier distribution decision may also be affected by product quality, product prices, supplier reputation, technical level, logistics costs, information costs and other factors. In fact, in addition to these explicit factors that affect transaction costs, the influence of the implicit factor of trust culture on transaction costs between enterprises and suppliers cannot be ignored.As a “lubricant”, trust culture plays an important role in supplier layout and optimal management. This paper uses text analysis to embed trust culture into the analysis framework of supplier selection decision-making. Based on the theory of new institutional economics, this paper examines the impact of trust culture as an important part of informal institution on supplier distribution decision. The results show that compared with suppliers without trust-oriented culture, suppliers with trust-oriented culture are more dispersed, and the weighted average distance increases by 12%. This phenomenon is more obvious in the samples with low dialect diversity and high transportation convenience. Further heterogeneity test results show that, in the samples of fierce market competition, low supplier concentration, and manufacturing enterprises, trust culture has a greater impact on the supplier distribution decision.The possible innovations of this study are as follows: Firstly, it focuses on the important role of trust culture as a deep cultural factor in supply chain management, enriching and expanding the literature in this field. Previous studies focus on the economic consequences of supplier selection, such as the production and operation of enterprises, the quality of accounting information, financing decisions and so on. Based on the background of “dual circulation” strategy, this paper supplements the existing literature from the perspective of the influencing factors of supplier selection. Secondly, as an informal institution, trust culture is embedded into the decision-making model of supplier selection, and the mechanism of trust culture in informal institution on supplier selection decision-making is analyzed theoretically. It helps to clarify the reasons why trust culture plays a role in the economic activity, and provides new evidence for the governance role of culture. Finally, trust culture is conducive to optimize the supply chain management of enterprises, and has an important reference value for the further understanding of enterprise supplier layout and optimal management, especially for the supply chain management and optimization under the “dual circulation” strategy.