Moderate effect of cost leadership and differentiation strategy on relationship between supplier development practice and performance of Korean companies

Abstract

This study aimed to check whether supplier development practice has positive effect on company’s production performance by using sample consisting of companies in Korean industry. Furthermore, the authors check if companies’ implementing either cost leadership strategy or differentiation strategy, as an effort of companies, have positive moderating or accelerating effect on relationship between supplier development practice and production performances. The first goal of this research is to verify the hypothesis that supplier development practice has positive effect on production performance of Korean companies. The second one is to verify further hypotheses that cost leadership strategy and differentiation strategy have positive moderating effect on relationship between supplier development practice and production performance respectively. To achieve these goals, the researchers conducted surveys and empirical researches using validity check, reliability analysis, regression model and moderate regression model. Results of further research showed that the researchers found that supplier development practice affects production performance positively in Korean sample companies. As the further research results, cost leadership strategy has positive moderate effect on relationship between supplier development practice and production performance, while differentiation strategy does not. From these research results a managerial implication that implementing supplier development practice and cost leadership strategy at the same time gives Korean companies more improvement in production performance due to the synergetic effects between them. © Rushing Water Publishers Ltd. 2019.