Table of contents
1. Introduction............................................................................................................................................... 2
2. The definition and antecedents of supplier satisfaction..............................................................................2
3. Preferred customer status and associated benefits.....................................................................................3
4. The definition of competitive advantage and the relationship between supplier satisfaction, preferred
customer status, and competitive advantage.................................................................................................4
5. Conclusion................................................................................................................................................. 4
6. Discussion.................................................................................................................................................. 5
References..................................................................................................................................................... 7
1
, 1. Introduction
Nowadays, since businesses are operating in a competitive environment, relationships with suppliers
offer important opportunities for buyers (Pulles, Schiele, Veldman, & Hüttinger, 2016). Additionally,
companies face pressure to create a resilient supply network to stay ahead of their competition (Essig
& Amann, 2009; Rice & Caniato, 2003). Moreover, Hansen (2019) states that in the current business
world, simply surviving is not sufficient for businesses. Pulles et al. (2016) argue that businesses have
to improve their performance and gain a preferred status to stay ahead of their competitors. This
means that companies that can obtain better resources than their competitors can create a resource
advantage, which could lead to a competitive advantage. Lately, more attention is paid to the concepts
of supplier satisfaction and preferred customer status, because of the reduction of demand and growing
dependence on suppliers (Schiele, Calvi, & Gibbert, 2012).
Multiple studies have discussed the relationship between supplier satisfaction and preferred
customer status. However, Pulles et al. (2016) state that the conceptual boundaries between the
constructs in the current literature proved to be challenging. This creates a weakness in the literature.
The goal of this literature review is to build on previous research and gain more knowledge on the
effects of supplier satisfaction and preferred customer status on competitive advantage. Therefore, the
following research question is formulated: “How can supplier satisfaction and preferred customer
status lead to competitive advantage?”. To provide an answer to the research question, this literature
review consists of three parts. The first part is about the antecedents of supplier satisfaction. In the
second part, the benefits of preferred customer status will be discussed, and the final part is about
competitive advantage and the relationship between the three variables. Finally, a discussion and
conclusion are drawn to answer the research question.
2. The definition and antecedents of supplier satisfaction
The antecedents of supplier satisfaction vary widely among different researchers. To begin with, the
meaning of supplier satisfaction is an important factor. Essig and Amann (2009) define supplier
satisfaction as “a supplier’s feeling of fairness with regard to buyer’s incentives and supplier’s
contributions within an industrial buyer-seller relationship as relates to the supplier’s need fulfilment”
(p. 104). Given this definition, supplier satisfaction means that the buyer has to satisfy the needs of the
supplier as part of the buyer-seller relationship. Compared to this, various authors have determined the
different antecedents of supplier satisfaction. Firstly, Maunu (2003) defined a structure with nine
levels of supplier satisfaction. Hence, she identifies the following antecedents of supplier satisfaction:
profitability, agreements, early supplier involvement, business continuity, planning, roles and
responsibilities, openness and trust, feedback, and value of the buying company. Secondly, Benton and
Maloni (2005) argue that supplier satisfaction appears to depend mainly on the type of relationship
2
1. Introduction............................................................................................................................................... 2
2. The definition and antecedents of supplier satisfaction..............................................................................2
3. Preferred customer status and associated benefits.....................................................................................3
4. The definition of competitive advantage and the relationship between supplier satisfaction, preferred
customer status, and competitive advantage.................................................................................................4
5. Conclusion................................................................................................................................................. 4
6. Discussion.................................................................................................................................................. 5
References..................................................................................................................................................... 7
1
, 1. Introduction
Nowadays, since businesses are operating in a competitive environment, relationships with suppliers
offer important opportunities for buyers (Pulles, Schiele, Veldman, & Hüttinger, 2016). Additionally,
companies face pressure to create a resilient supply network to stay ahead of their competition (Essig
& Amann, 2009; Rice & Caniato, 2003). Moreover, Hansen (2019) states that in the current business
world, simply surviving is not sufficient for businesses. Pulles et al. (2016) argue that businesses have
to improve their performance and gain a preferred status to stay ahead of their competitors. This
means that companies that can obtain better resources than their competitors can create a resource
advantage, which could lead to a competitive advantage. Lately, more attention is paid to the concepts
of supplier satisfaction and preferred customer status, because of the reduction of demand and growing
dependence on suppliers (Schiele, Calvi, & Gibbert, 2012).
Multiple studies have discussed the relationship between supplier satisfaction and preferred
customer status. However, Pulles et al. (2016) state that the conceptual boundaries between the
constructs in the current literature proved to be challenging. This creates a weakness in the literature.
The goal of this literature review is to build on previous research and gain more knowledge on the
effects of supplier satisfaction and preferred customer status on competitive advantage. Therefore, the
following research question is formulated: “How can supplier satisfaction and preferred customer
status lead to competitive advantage?”. To provide an answer to the research question, this literature
review consists of three parts. The first part is about the antecedents of supplier satisfaction. In the
second part, the benefits of preferred customer status will be discussed, and the final part is about
competitive advantage and the relationship between the three variables. Finally, a discussion and
conclusion are drawn to answer the research question.
2. The definition and antecedents of supplier satisfaction
The antecedents of supplier satisfaction vary widely among different researchers. To begin with, the
meaning of supplier satisfaction is an important factor. Essig and Amann (2009) define supplier
satisfaction as “a supplier’s feeling of fairness with regard to buyer’s incentives and supplier’s
contributions within an industrial buyer-seller relationship as relates to the supplier’s need fulfilment”
(p. 104). Given this definition, supplier satisfaction means that the buyer has to satisfy the needs of the
supplier as part of the buyer-seller relationship. Compared to this, various authors have determined the
different antecedents of supplier satisfaction. Firstly, Maunu (2003) defined a structure with nine
levels of supplier satisfaction. Hence, she identifies the following antecedents of supplier satisfaction:
profitability, agreements, early supplier involvement, business continuity, planning, roles and
responsibilities, openness and trust, feedback, and value of the buying company. Secondly, Benton and
Maloni (2005) argue that supplier satisfaction appears to depend mainly on the type of relationship
2
