A dark side of long-term VMI relationships: supply chain trust

Supply chain management literature is rich in pointing to the benefits generated by collaborative supply chain arrangements. While there is consensus that supply chain integration can improve supply chain performance, research studying relational factors in long-term collaborative buyer-supplier relationships is still scarce. Focusing on distributor-manufacturer relationships that use VMI, and based on the theory of psychological contracts, this paper investigates the relationship between the length of a VMI relationship and the supply chain trust in that relationship using survey data. While our findings confirm that average distributor trust in the manufacturer is quite high, we also shed light on a dark side of long-term VMI relationships by providing evidence that they are associated with lower levels of distributor trust in the manufacturer (relative to short-term relationships). Our findings demonstrate that in order to maintain the initially high trust levels in VMI relationships, good inventory performance may not be sufficient.