How and when does relational governance impact lead-time performance of developing-country suppliers in global value chains?

Purpose: This study aims to integrate social capital theory and the knowledge-based view of firms to develop and test a theoretical framework of the mechanisms that explain the influence of relational governance (RG) on lead-time performance (LTP) of developing-country suppliers in global value chains (GVCs). The authors distinguish between the relational and structural dimensions of RG to explain how they interact to create knowledge and leaning opportunities that transform into performance outcomes. Design/methodology/approach: Hypotheses were tested using data collected from a sample of 321 Bangladeshi suppliers embedded in apparel GVCs by using structural equation modeling. Findings: RG creates knowledge and learning opportunities that transform into LTP. Relationship quality (RQ) is found to contribute positively to knowledge learned (KL) contingent on relationship structure. KL is found to fully mediate the influence of buyer-supplier RQ on LTP of suppliers. Research limitations/implications: The dyadic nature of buyer-supplier interactions calls for multisource approaches in measuring buyer-supplier RQ. The authors also recommend future research to test the model in other industries for greater generalizability. Practical implications: Developing-country suppliers in low-technology labor-intensive GVCs can improve their LTP by strengthening their capabilities for internalizing external knowledge and developing and maintaining high quality relationships with wide networks of buyers. Originality/value: The conceptualization of RG that explicitly distinguishes between the relational and structural dimensions is novel and should inspire future theoretical and empirical research on GVC governance and performance.