Are Your Suppliers True Business Partners?

Another piece to the mutually supportive network built by 100 year old companies is that of their suppliers. As with their relationship with customers and employees, old companies see their connection with vendors as something more than economic transactions and they believe the maintenance of these relationships with their suppliers from generation to generation is an important factor in their long-term success. This commitment to retaining suppliers requires investment on the part of both entities to each others' success: the old companies work with suppliers to develop capabilities that are necessary to continue to support their organization in the future, and in return suppliers share their new technologies and ideas. Mutual learning results in mutual long-term success. This only works if the two parties are true business partners. Knowing the company's intent to stay around for the long term eases any qualms a supplier may have about making investments in development of future products.

So what type of behaviors result from old companies' long-term relationships with suppliers? Besides communicating their intent to build long-term relationships with business partners, the old firms were significantly more likely than younger companies to share information about their business with suppliers. This includes information about their production and sales processes, about products and services, as well as information about customers and markets. Further, they make an effort to understand their suppliers' business strategy and processes.

Supplier relations is one area in our research where old U.S. companies showed weaker support than the old Japanese firms. Though 100 year old companies in both countries indicated a strong intent to build long-term relationships with their suppliers, Japanese firms were more likely to actually engage in the behaviors that would ensure such longevity. Though these behaviors were reported as important by old companies in both countries, old Japanese firms were significantly more likely to exchange information about production, sales, products, services, customers, and markets with their suppliers.

The importance of this web of interconnecting, mutually-supportive, long-term relationships between companies and their customers, suppliers, employees, and communities cannot be overstated when trying to describe the factors contributing to corporate longevity.