The Analysis of Collective Psychological Ownership, Trust and Interdependence in the Purchasing Process

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The Analysis of Collective Psychological Ownership, Trust

and Interdependence in the Purchasing Process

University of Groningen

Faculty of Economics and Business

Master Supply Chain Management

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Abstract

Psychological ownership has been substantially exploited in organization management, but correspondently, on a group level, the phenomenon of collective psychological ownership has not drawn much attention. This research aims to discover the impact of collective psychological ownership between supplier and buyer on the purchasing performance. Additionally, this research examines the relationship of three behavioural factors, namely, interdependence and trust and collective psychological ownership. A descriptive survey study was conducted on four Chinese manufacturing companies. Based on the complete questionnaires that filled by these four companies, both of the separate and dyadic data analysis were conducted. The findings reveal that collective psychological ownership has a positive effect on purchasing performance on the separate and dyadic level, and factor interdependence and trust has a positive relationship with collective psychological ownership. Additionally, collective psychological ownership does not play as the mediator between interdependence and purchasing performance, and trust and purchasing performance. As there are several limitations of this research, some suggestions for further research are offered.

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Acknowledgement

This paper is the final step in completing the master Supply Chain Management. During the process of finishing this master thesis, I was helped by several people who contribute to the establishment of my thesis. I would like to use this opportunity to express my appreciation to these people who were involved in this project.

Firstly, I would like to thank supervisor Dr. Van Wezel for his continuous supports, excellent comments and the patience during this project. He gave me many good ideas in the beginning of this project, which helped me to establish the topic of the thesis. Additionally, Dr. Van Wezel enlightened me a lot during the questionnaire checking process. He helped to ensure that my thesis was on the right track.

Next I would like to thank Mr. Ziengs for his technical support during the data analysis process. He provided me with many step-by-step statistic resources for analysing separate and dyadic data. Moreover, I would like to thank him for his enthusiasm and patience during the last step of this project, which gave me great spiritual support.

Lastly, I would like to thank all the people who participated in this survey study during data collection process. Overcoming all kinds of difficulties, we did a good job. Finally, I would like to thank my parents and friends for their support and care while I was completing this master.

Yingxiao Geng

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It is widely recognized that realizing firm’s success is much more dependent on supply chains than the firm itself. Today’s organizations have been paying an increasing amount of attention to supply chain strategy. In order to be more competitive, they re-plan operations to raise the service level, increase flexibility, and reduce cost of the entire supply chain process (Ganesh, Kumar & Nambirajan 2013). Located in the upper position of the entire supply chain, suppliers are essential for the supply chain competition. Moreover, their performance is vital for the success of the supply chain as well.

Because of the fierce global competition, a short time of new product introduction, and the increasing customer service level (Ganesh Kumar & Nambirajan 2013), supplier and buyer work more collaboratively than decades ago. An effective and stable supply chain organization relationship is the foundation of successfully managing the flow of information and resources across the supply chain (Handfield and Nichols, 1999). Due to this, differentiating between the conventional and adversarial managerial relationships, a close, long-term working relationships with supply chain partners is suggested (Spekman et al., 1998). Correspondingly, supplier involvement in the new product development has been a widely encouraged practice (Harbour-Felax, L. A. 2009). Moreover, a collaborative supplier-buyer relationship is critical for the success of joint projects (Petersen, Handfield, & Ragatz, 2005; Primo & Amundson, 2002). Therefore, this study proposes that during the closely collaborative process, buyer and supplier may sense that they work as a team, and team members define themselves and also are defined by others as a group (Simon et al., 1998). They may exprience such feelings as “My supplier/buyer and us collectively manage and control the purchasing process”. On the individual level, the target of the ownership might be a job or task (Liu et al. 2012). Inherently, in this case, the target of the collective psychological ownership is the purchasing process.

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Resource interdependence and congruent goals are the most important antecedents to collaborative behaviours (Lundin, 2007). In addition to interdependence, trust is as an important factor that will increase cooperation (Smith, Carroll, & Ashford 1995), since it prompts the acceptance of people and expedite openness of expression (Zand, 1972). Moreover, trust is regarded as an effective relationship capital that can effectively eliminate exchange roadblocks and facilitate cooperation among supply chain partners (Wang et al., 2011). Hence, with a balanced dependent relationship, supplier and buyer may experience a higher level of trust and vice versa.

So far there are few empirical studies regarding the collective psychological ownership (CPO) and its influence in the supply chain setting. In addition, the relationship of interdependence, trust and collective psychological ownership has not been examined in practice. Inspired by this, this study strives to fill these gaps by answering the following three questions: 1. Does the collective psychological ownership (CPO) between supplier and buyer improve purchasing performance? 2. Does the interdependence and trust between buyer and supplier influence the collective psychological ownership they shared? 3. Could the collective psychological ownership mediate the relationship between interdependence and purchasing performance, and trust and purchasing performance? By answering these questions, this study aims to add literary value to the field of behavioural operation management and provide theoretical knowledge for practitioners working for organisations. In addition, this research provides insight for purchasing managers about methods of increasing the performance of purchasing process in a psychological perspective. Lastly, this research also sheds a light on the study of human resource management.

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2. Theoretical framework

2.1 collective psychological ownership

The concept of collective psychological ownership is relatively new. However, numerous scholars have studied individual psychological ownership, which appears in a working environment and deals with the employees' possessive feeling towards their organisation or their individual tasks. Pierce et al. (2001) define the individual psychological ownership as ‘the state where an individual feels the target of ownership or a piece of that target of is “theirs”’. In an organization, the psychological ownership is a psychological experienced phenomenon that illustrates the possessiveness that employees feel towards targets (Van Dyne & Pierce 2004). This target may range from as small as a set of tools to as big as a whole organization (Liu et al. 2012). In other words, the sense of possession towards an object (as though an object, entity, or idea is 'MINE' or 'OURS') forms the core of psychological ownership (Furby, 1978). In line with this statement, some studies show that the power of control over an object or a target can be seen as a promotion of psychological ownership (Liu et al., 2012). For example, customer participation combined with feedback and cooperation, and a sense of belonging and identification is positively related to psychological ownership (Asatryan and Oh, 2008). Paré et al. (2006) indicate that user participation (overall responsibility and communication) predicts psychological ownership in a physicians’ acceptance of a clinic information system study. Pierce et al. (2004) found that the experienced control plays a mediated role between environmental structuring and psychological ownership in the workplace. However, those studies were mainly conducted at an individual level, and there are few scholars that have researched the psychological ownership on a higher level, e.g. the employees’ working team.

Pierce and Jussila (2010) propose that feelings of ownership also exist at the group or organization level. They use street gangs as an example to show that social entities come to a collective sense of ownership over certain neighbourhoods (cf. Thrasher, 1927). Collective psychological ownership shares the same conceptual core with the individual psychological ownership, which is the sense of possession. In a group or organization, individuals consider themselves as “us” and they subsequently come to a single and shared mind-set (Pierce and Jussila, 2010). According to Pierce and Jussila (2010), the collective psychological ownership is a collectively held cognitive sense that the target of ownership (or a piece of that target) is collectively ‘‘ours’’. For example, in an organization, the business founder and his/her partners may have such feeling as –“my partners and I sense this firm is collectively ours!” (Rantanen and Jussila, 2011). Moreover, in a family business, all involved family members may feel that “my family members and I own this business” (Rantanen and Jussila, 2011). A “fusion” exists between the target and the object of ownership. In other words, it is difficult to distinguish between ‘‘us’’ and the target that is ‘‘ours’’ (Rantanen and Jussila, 2011). This collective cognitive or affective state breaks the limits of individual cognition/affect. Consequently, individuals in the group or organization experience shared feelings, knowledge, and beliefs about the target of ownership, individual and collective rights (e.g., use and control) and responsibilities (e.g., protection of the targeted object) in relation to that target (Pierce and Jussila, 2010).

2.2 conceptual model and hypotheses

The link between collective psychological ownership and purchasing performance

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with good work performance, job satisfaction, commitment, intent to stay, and citizenship behaviour (e.g. Avey et al., 2009; O’Driscoll et al., 2006; Parker et al., 1997; Pendleton et al., 1998; Wagner et al., 2003), no studies investigated its influence on purchasing process or related it to supply chain management. In the global environment, competition is increasingly focused on supply chains. A close, long-term working relationship with supply chain partners is more likely to achieve supply chain successes (Spekman et al., 1998). Consistent with this thought, numerous firms currently build close and strategic relationships with their suppliers in order to be more competitive on the market. Many theories are also generated and employed to reach a better purchasing or supply chain performance, e.g. Portfolio’s Kraljic theory and so on. In a practical world, suppliers are involved in the joint projects, e.g. joint forecasting, planning, and new product development process with manufacturers (Petersen et al., 2005).

Pierce and Jussila (2010) state that, on a group level, collective psychological ownership should bring several positive effects, such as psychological safety, group learning, group effectiveness (e.g. efforts, productivity), and group potency. Psychological safety is a shared belief which states that team members could take more risk when the team is in a safe context (Edmondson, 1999). When team members collectively experience the ownership for a particular target, team members come to a belief that they can safely take more risks, make mistakes, and be more open to discuss errors and seek feedbacks with a good intention (Pierce and Jussila, 2010). According to Edmosdson (1999), seeking for feedback and discussing errors belong to group learnings behaviours, which include seeking feedback, asking for help, talking about errors, and experimenting. By conducting those behaviours, groups could adapt and improve (Druskat and Pescosolido, 2002). Overall, the behavioural pattern has an implication for the group’s capability of completing subsequent work tasks (Hackman, 1987; Hackman and Oldham, 1980). As for the group effectiveness and group potency, Pierce and Jussila (2010) proposed that collective psychological ownership could facilitate the employees’ working performance by increasing their commitment to high-quality work and enhancing their willingness to make personal sacrifices to protect the team’s reputation and identity. They acknowledge that there is likely to be a reciprocal relationship between collective psychological ownership and group potency.

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been drawn much attention. Accordingly, based on the former theoretical statement, this study argues that during collaboration and corporation process, supplier and buyer may develop a special relationship in which they regard themselves as an organization/group/team. Individuals in this supplier-buyer group define, and are defined by, others as a group member, and all group members share a same mind-set (Pierce and Jussila, 2010). Additionally, suppliers want to keep customers and market shares, and buyers want to find a reliable supplier while eliminating the costs as much as they can. Therefore, keeping a sustainable relationship and making profit is their collective single mind-set. Aiming for this goal, buyers and suppliers need to work collaboratively with buyers. Moreover, they also need to respond and provide services to buyers in a timely manner. Inherently, higher level of supplier-buyer collective psychological ownership leads to a higher level of purchasing performance, which is illustrated in figure 1.

H1. The higher level of supplier-buyer collective psychological ownership, the higher level of purchasing performance.

Figure 1

Determinants of collective psychological ownership

Trust has long been considered a key element in close relationships and cooperation (Rempel, Holmes, & Zanna, 1985; Blau, 1964). According to Wieselquist et al. (1999), trust is examined by many theories as a phenomenon of disposition, an enduring personal attribute that can generate considerable stability in cognition, affect, and behaviour across all kinds of situations and across all kinds of interaction partners. Moreover, trust constructs a quality that is specific to a particular relationship and particular partner. Rempel, Holmes & Zanna (1985) conceptualize trust as a relationship-specific phenomenon. They defined the level of trust as the extent of expectation of a given partner that can be relied on, and is responsive to, others’ needs. Therefore, some other factors, e.g. competency, consistency combined with trust enhance the stability of a relationship (Morgan and Hunt, 1994).

Dirks and Ferrin (2001) state that scholars mainly focuses on a relatively straightforward influence of trust; trust results in distinctive effects such as a more positive employee attitude, a higher level of cooperation, and a superior level of performance. They indicate that, except from these direct effects, trust may play a moderate role in a certain environment where the expected outcomes, such as higher cooperation and performance, are more likely to occur. Based on that theory, this paper suggests that the environment of trust may provide a prerequisite for the emergence of a collective psychological ownership. First, when the supplier and buyer experience a same mind-set, they could work intimately and collaboratively, but there is still a large chance that suspicion exists between them, which will possibly jeopardize the way of reaching the expected achivement. Due to the lack of trust, group members prefer to conceal some potentially important information and finish their tasks, rather than sharing it with other group members. Second, Brown, Crossley and Robinson (2014)

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indicate that the low level of trust may results in certain behaviours such as protecting and maintaining job-related objects the employees feel belong to them. This kind of behaviour not only impedes cooperation and collaboration, but also undermines the collective psychological ownership between the buyer and supplier. In contrast to this, an environment with a high level of trust would facilitate interaction and communication between group members, enhance information transmittal, and increase their willingness of sharing and contributing to the team. Hence, put more formally:

H2. The higher the trust between the buyer and supplier, the higher the level of collective psychological ownership that can be reached.

Pierce and Jussila (2010) state that under highly interdependent conditions, collective psychological ownership is more likely to develop. Task, goal, feedback, outcome interdependence are expected to influence the emergence of a collective psychological ownership. When supplier and buyer work collaboratively as a team, experiencing a single mind-set, everyone in this team is aware that he or she is responsible for the outcome. Driven by this, supplier and buyer have more interactions with each other and activities like sharing knowledge and jointly solving problems would occur more frequently during their collaboration. In this way, individuals’ activities would be more dependent upon the action of other group members. Wageman (1995) points out that under such a high level of task interdependence, the expected results can be achieved by the group member’s intensive cooperation and collaboration with the other group members. Moreover, when the goals of each member are coupled the goals of the other members in the group and the team as whole (goal interdependence), the expected outcome is more likely to be attained (Campion, Medsker, & Higgs, 1993; Wageman, 1995). In addition, Pierce and Jussila (2010) discuss the importance of feedback interdependence. According to Campion et al. (1993), an aggregated feedback helps group members collectively understand the current situation of where we are.

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be more powerfully combined and a stronger sense of “us in one” could be generated, which would contribute to the collective cognition (Pierce and Jussila, 2010). The above mentioned ideas are translated into the following propositions:

H3. The higher the interdependence of the supplier and buyer, the higher the level of collective psychological ownership they reached.

Figure 2: H2 and H3

According to the statement above, this research proposes that CPO (Collective Psychological Ownership) could be the mediator between the relationship of trust and purchasing performance and interdependence and purchasing performance, as described in figure 3 and 4.

Hypothesis 4: Collective psychological ownership positively mediates the relationship between trust and purchasing performance.

Hypothesis 5: Collective psychological ownership positively mediates the relationship between supplier-buyer interdependence and the purchasing performance.

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Figure 4

Figure 5

The conceptual research model is illustrated in figure 5.

3. Methodology

This research aims to investigate the relationship between behavioural factors (collective psychological ownership, interdependence and trust) and supplier performance. In doing so, a survey approach is conducted in the present paper. Because of the lack of empirical studies on the relationship between collective psychological ownership and its influence on purchasing performance, a descriptive survey method is employed to answer the previously stated three research questions. This descriptive survey aims to research and understand “the relevance of a phenomenon and describe the incidence or distribution of a phenomenon in a population” (Karlsson, 2009). Consequently, this survey may explain the relationship between collective psychological ownership, interdependence, trust, and purchasing performance.

3.1 Sample

Companies will be chosen from the author’s hometown due to the convenience of finding cooperative companies in China. After the first round of contacting, 4 companies promised they would take part in this study. All of the 4 companies are in the manufacturing industry. One is public limited company that produces rubber chemicals and works with nearly 100 suppliers. The second

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company mainly produces pesticides and they have almost 100 of suppliers. The last two companies are cable manufacturers and each of them has nearly 100 suppliers. The different type of industries increases the external validity of the study.

The questionnaire is built on the largest online survey web in China, called ‘WENJUANXING’. After composing the questions, a URL of the questionnaire was directly sent to the responsible person in purchasing department of these four manufacturing companies. Each of these companies helped me distribute this URL to their suppliers. After two reminders through video calls and emails, 338 filled-out questionnaires were received, of which 300 contained complete and useful data. Among the useful questionnaires, 163 came from buyers and 137 from suppliers. By examining all the complete questionnaires, 126 pairs of dyadic questionnaires were found. Data analysis will be based on these questionnaires.

3.2 Unit of analysis

Firstly, the data from buyers and suppliers will be analyzed seperately. Therefore, any individual repondent is the unit of analysis. Afterwards, the dyads between supplier and buyer will be anaylzed as the second unit of analysis. Manufacturers are responsible for both the first and the second tier of suppliers, but due to a limited time span and limited resources, this research will only investigate the behavioural factors (collective psychological ownership, interdependence and trust) between manufacturers and their first tier of suppliers. The figure below describes the unit of analysis of this research.

Figure 6

3.3 Survey instruments and pre-test

Before the formal survey distribution, a pilot test was conducted in which the questionnaire was read by five of the researcher’s Chinese friends to ensure that the questions on the questionnaire are translated as clearly as possible. Because there are two different groups of people (suppliers and buyers) participating in this study, two versions of questionnaires were developed to suit the positions of the respondents (suppliers and buyers). Next, as a pre-test, the questionnaire was sent to four purchasing executives who were willing to fill in the questionnaire. All of them assisted their purchasing managers in various purchasing activities. All questionnaires were completed. According to the results of pre-test, some questions were elaborated upon more clearly. The pre-test did not reveal major concerns about survey length and response formats.

3.3 Measurements

Collective psychological ownership: Although in this field study substantial work focuses on

psychological ownership, the present study is exploratory because no previous research has been conducted on measuring the collective psychological ownership state. This study adapted the measurements from the work by Van Dyne and Pierce (2004), who developed the measurements of psychological ownership for organizations. Consistent with the core meaning of collective psychological ownership, this study emphasized possessions as the basis of the attitudinal

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measurement of collective psychological ownership. Based on the work of Van Dyne and Pierce (2004), this study used questions associated with the purchasing process, which is the property that both supplier and buyer feel possessive of. Seven items were measured on a 7-point Likert scale.

Interdependence: The four-item scale was generated from Jap and Ganesan (2000). It measures the

extent to which the buyer (supplier) found it difficult to switch the supplier (buyer), find a new partner and constitutes the sales volume if their relationship is terminated.

Trust-This six-item scale follows the organizational trust in previous research (Morgan and Hunt,

1994). Buyers will only have this suppliers they trust, which possibly will lead to a result with less variance. To avoid this, this study designed a “-3 to 3” 7-point Likert scale to provide the respondents with more choices: 0 stands for the average level of trust, negative values means the level of trust is below the average, and positive values means the level of trust is above the average.

Purchasing performance: This eight-item scale was generated from Mohr and Spekman, (1994) and

Ntayi et al. (2010). It measures the purchasing performance from seven angles, namely, product quality improvement, responsiveness, conflicts resolve, communication quality, information exchange, feedback, and delivery reliability. This measurement also used the “-3 to 3” 7-point Likert scale that was previously mentioned.

This study implemented several tests for the validity of the above measures. Firstly, by using principal component analysis we conducted the exploratory factor analysis (EFA) with Promax rotation for each constructs in both supplier and buyer studies. In the buyer study, three factors emerged, which almost all items related to collective psychological ownership and interdependence are loaded onto the expected factors without significant cross-loadings in both buyer and supplier studies. This study deleted one item in collective psychological ownership because the loaded value exceeded value 1.0. (See Table 1.1) However, items of factor trust and purchasing performance are highly correlated, which means that, instead of a predictor of purchasing performance, trust between buyer and supplier is more like a dimension of purchasing performance (see Table 1.1). In the supplier study, although four factors emerged, factor trust and purchasing performance are still highly correlated (see Table 1.2). Nevertheless, this study kept trust as a factor and remained the original hypotheses because scholars have proved that buyer-supplier trust leads to a better purchasing performance (Ahimbisibwe, 2014) and trust is a key element to the achievement of the expected benefits from collaborative supplier-buyer relationships (Doney and Cannon, 1997; Villena et al., 2011). Additionally, as mentioned earlier, few items were overlapped in both buyer and supplier studies, since these items were quite few in number and they were applied in previous studies, this study included them to keep the integrity of the questionnaire.

Table 2.1 and Table 2.2 show the description of, and correlations between the main variables. The inter-item consistency was validated by high Cronbach alphas (reliability) for the above measures in both buyer and supplier studies. All variables (CPO, Interd, Tru, and PP)1 are significantly and positively correlated to each other. In both supplier and buyer studies, all the mean values of each variable are slightly above the average value of the Likert scale. For example, in the buyer study, the

1

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mean value of CPO and Inter are 4.5818, 4.5859, which is higher than average “4”. As table 2.1 shows, the mean value of trust and PP are 1.5112 and 1.6419 individually, which is slightly higher than the average “0”. Furthermore, by comparing the mean value of same variables in supplier and buyer studies (see Table 2.1 and 2.2), we found that the supplier graded higher than the buyer did, especially for the variable of Interdependence (buyer: 4.5859; supplier: 5.2410), which means that the supplier depended more on the buyer. The second big difference between buyer and supplier can be seen in regard to the variable of PP, where the buyer got 1.6419 and the supplier got 1.8622. This means that, generally speaking, the supplier graded were more satisfied with the performance of their relationships (supplier and buyer).

Exploratory Factor Analysis (EFA) Buyer

Buyer Study

Construct/item Factor Loadings

F1-Trust/PP F2-CPO F3-Interd

cpo1 0.662 cpo2 0.944 cpo3 0.901 cpo4 0.833 cpo5 1.008 cpo6 0.985 cpo7_recoded 0.753 Interd1 0.905 Interd2 0.945 Interd3 0.914 Interd4 0.715 Trust1 Trust2 0.907 Trust3 0.83 Trust4 956 Trust5 0.941 Trust6 0.614 PP1 0.551 PP2 0.779 PP3 0.912 PP4 0.784 PP5 0.75 PP6 0.811 PP7 0.985 PP8 0.581 Initial Eigenvalue 15.008 2.73 1.544 % of variance 60.03% 19.92% 6.18% Cumulative % of variance 60.03% 70.95% 77.13%

CPO stands for collective psychological ownership; Interd stands for interdependence; PP stands for purchasing performance

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Exploratory Factor Analysis (EFA) Supplier

Table1.2

4. Hypothesis testing

Separate studies

This study analysed the data of the buyer and supplier separately. Firstly, we performed simple linear regression to test the relationship of Collective Psychological Ownership (CPO) and purchasing performance. As Table 3 shows, in both buyer and supplier studies, the collective psychological ownership is positively and significantly related with the purchasing performance when regressed with purchasing performance (β=0.633, р=0.000 in buyer study; β=0.487, р=0.000 in supplier study), which means that hypotheses 1 is supported. Secondly, we performed multiple regressions for hypotheses 2 and 3. The results show that the trust and interdependence are positively and significantly related with Collective Psychological Ownership in both buyer and supplier studies. Hence, hypotheses 2 and 3 are supported. The Beta and р value of model 2 and 3 are displayed in Table 3, which are β=0.489, р=0.000; β=0.290, р=0.000 in buyer study, and β=0.373, р=0.000; β=0.331, р=0.000 in supplier study.

Supplier Study

Construct/item Factor Loadings

F1-Trust/PP F2-CPO F3-Interd F4-PP

cpo1 cpo2 0.864 cpo3 0.847 cpo4 0.719 cpo5 0.9 cpo6 0.863 cpo7_recoded 0.793 Interd1 0.94 Interd2 0.987 Interd3 0.944 Interd4 0.895 Trust1 0.588 Trust2 0.776 Trust3 0.836 Trust4 0.842 Trust5 0.907 Trust6 0.752 PP1 0.419 PP2 0.924 PP3 PP4 0.652 PP5 0.726 PP6 0.873 PP7 0.917 PP8 0.582 Initial Eigenvalue 12.216 2.961 2.32 1.129 % of variance 48.87% 11.84% 9.28% 4.52% Cumulative % of variance 48.87% 60.71% 69.99% 74.50%

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This study performed the standard mediation regression procedures by Baron and Kenny (1986) to investigate the mediation effects. The mediation regression equation is described as below, where INTERD is interdependence and CPO presents the collective psychological performance.

Purchasing Performance = β0 + β1TRUST + β2 CPO + E Purchasing Performance = β0 + β1INTERD + β2 CPO + E

Before the mediation analysis, this study firstly performed a (Variance Inflation Factors VIF) test to detect whether the multicollinearity between independent variables would affect the precision of the mediation analysis. As Table 4.1 shows, all the Variance Inflation Factors (VIF) are below 3, thereby trust, CPO, and Interd do not share high consistency.

Variables Tolerance Buyer VIF Buyer Tolerance Supplier VIF Supplier Trust 0.439 2.280 0.667 1.500 CPO 0.488 2.048 0.991 1.009 Interd 0.510 0.672 0.672 1.489

Table 4.1 Dependent variable: Purchasing Performance. (VIF<3, acceptable)

As Table 4.2 shows, in the buyer’s study, variables trust and interdependence are positively and significantly related with purchasing performance when regressed with purchasing performance without the mediator (β=0.94, р=0.000; β=0.719, р=0.000). Trust and Interdependence are also significantly associated with the mediator, which are (β=0.681, р=0.000; β=0.614, р=0.000) separately. Table 4.2 describes whether the positive effect of trust and Interdependence on purchasing performance significantly drop (partial mediate) or disappear (full mediate) when the mediate variable collective psychological ownership is included. When collective psychological ownership is presented, interdependence still has a significant effect on purchasing performance (β=0.53, р=0.000), although its coefficient is much lower than in Analysis one (see Table 4.2). This means that Collective Psychological Ownership is not a significant mediator in the relationship between interdependence and purchasing performance. This evidence does not support hypothesis 5. The strength of the link between trust and purchasing performance remains significant compare to the base model when collective psychological ownership is included (β=0.950, р=0.000). Hence, Hypothesis 4 is also not supported. However, analysis three (see Table 4.2) shows that the strength of the link between collective psychological ownership and purchasing performance drops substantially and no longer stays significant (β=-0.015, р=0.692) when the variable of trust is included. This finding suggests that, instead of collective psychological ownership, trust is a more proper mediator between the relationship of CPO (collective psychological ownership) and performance. To confirm this assumption, this study performed another mediation analysis with trust as a mediator (see Table 4.4). The results confirmed this assumption, when trust is included, the strength of the link between collective psychological ownership and purchasing performance drops substantially and no longer stays significant.

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ownership) and purchasing performance (see Table 4.4). The illustrations of all the mediation analyses are also showed in figures below each table.

Table 2.1: Descriptive, Cronbach alpha and correlations of Collective Psychological Ownership, Interdependence, Trust and Purchasing Performance of buyer data.

Table 2.1

Table 2.2: Descriptive, Cronbach alpha and correlations of Collective Psychological Ownership, Interdependence, Trust and Purchasing Performance of supplier data.

Table 2.2

Hypotheses testing 1, 2 & 3.

Independent variables Dependent variables β (Buyer) β (Supplier) p (Buyer) р (Supplier) Results CPO PP 0.633 0.487 0.000 0.000 H1 Supported Trust CPO 0.489 0.373 0.000 0.000 H2 Supported Inter CPO 0.290 0.331 0.000 0.000 H3 Supported Table 3 Buyer Study

Variables Mean SD Cronbach

alpha 1 2 3 4 1. CPO 4.5818 1.0298 0.946** ---2. Interd 4.5859 1.1042 0.933** .615** ---3. Trust 1.5112 0.8743 0.925** .682** .664** ---4. PP 1.6419 0.8843 0.946** .633** .719** .940** --**significance at p<.01 Supplier Study

Variables Mean SD Cronbach

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Mediation analysis Hypothesis 4 (Rejected) R Buyer R2 Buyer R2 Change Buyer β Buyer R Supplier R2 Supplier R2 Change Supplier β Supplier Analysis one PP on trust 0.94 0.884 0.94** 0.867 0.752 0.867** Analysis two CPO on Trust 0.682 0.465 0.682** 0.562 0.316 0.56** Analysis Three 1.PP on CPO 0.633 0.401 -0.015 0.487 0.238 0.000 2.PP on Trust 0.94 0.844 0.483 0.95** 0.867 0.752 0.515 0.868** Table 4.2 Note *=P<0.5; **=P<0.01

Illustration of mediation Hypothesis 4 (Buyer)

Figure 7.1.1 Note*=P<0.5; **=P<0.01

Illustration of mediation Hypothesis 4 (Supplier)

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Mediation analysis hypothesis 5 (Rejected) R Buyer R2 Buyer R2 Change Buyer β Buyer R Supplier R2 Supplier R2 Change Supplier β Supplier Analysis one PP on INTERD 0.719 0.517 0.719** 0.496 0.246 0.496** Analysis two CPO on INTERD 0.615 0.378 0.614** 0.544 0.296 0.543** Analysis Three 1.PP on CPO 0.633 0.401 0.307** 0.487 0.238 0.309** 2.PP on INTERD 0.759 0.576 0.175 0. 53** 0.559 0.313 0.075 0.327** Table 4.3 Note *=P<0.5; **=P<0.01

Illustration of mediation Hypothesis 5(Buyer)

Figure 7.2.1 Note*=P<0.5; **=P<0.01

Illustration of mediation Hypothesis 5(Supplier)

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Mediation analysis Hypothesis 4 (revised) Relation: CPO->Trust->Performance R Buyer R2 Buyer R2 Change Buyer β Buyer R supplier R2 Supplier R2 Change Supplier β Supplier Analysis one PP on CPO 0.633 0.397 0.633** 0.487 0.487** Analysis two Trust on CPO 0.682 0.461 0.682** 0.562 0.562** Analysis Three 1.PP on trust 0.94 0.884 0.95** 0.867 0.868** 2.PP on CPO 0.94 0.884 0.000 -0.015 0.867 0.000 0.000 0.000 Table 4.4 Note:*=P<0.5; **=P<0.01

Illustration of mediation revised Hypothesis 4 (Buyer)

Figure 7.3.1 Note*=P<0.5; **=P<0.01

Illustration of mediation revised Hypothesis 4 (Supplier)

Figure 7.3.2 Note*=P<0.5; **=P<0.01

Dyadic analysis

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supplier are still unknown. Therefore, the results could be totally different if the dyadic analysis is performed.

Firstly, the author checked all the dyadic pairs of questionnaires to see if the trust and interdependence and collective psychological ownership of buyer and supplier are on the same level. Generally, by simply observing these data, this study could tell that when a buyer trusts in their supplier, then the supplier also trusts their buyer. On the contrary, if a buyer does not trust their supplier, then neither does this supplier. Basically, buyer and supplier do not have a big divergence on the level of the trust, interdependence or collective psychological ownership they have reached. In other words, the consistency between buyer and supplier exists. Nevertheless, to be more precisely, this research adopted Gonzalez and Griffin’s (1999) model to test the correlation level on the 126 pair of dyadic data.

To begin with, to adopt the model applied by Gonzalez and Griffin (1999), this study need to recognize the nature of the dyadic partners. Kenny, Kashy & Cook (2006) stated that the dyadic partners could be exchangeable (i.e., the two partners of a dyad from a same class or category) or distinguishable (i.e., the two partners of a dyad come from different class or category). They took the homosexual couples as an example for exchangeable dyadic partners and heterosexual couples as an example for distinguishable partners. Apparently, in this study, the dyadic partners are distinguishable, because buyer and supplier originate from different categories. Thereafter Gonzalez and Griffin’s (1999) correlation model suits for this study. This study developed three models based on the hypotheses 1, 2 & 3 (see figure 8.1, 8.2 & 8.3) to test the correlation level for all classes in each model. As illustrated in Figure 8.1, for instance, there are six possible pairwise correlations in model 1, which are 1) Cross-partner correlation between CPO of buyers and CPO of suppliers; 2) Cross-partner correlation between buyers’ performance and suppliers’ performance; 3) Within-partner correlation between buyers’ CPO and buyers’ performance; 4) Within-Within-partner correlation between suppliers’ CPO and suppliers’ performance. 5) Cross-partner correlation between buyers’ CPO and suppliers’ performance. 6) Cross-partner correlation between suppliers’ CPO and buyers’ performance. This study processed the standard correlation analysis on Model 1, Model 2 and Model 3. The results show that all of the six pairwise correlations in each model are highly correlated, which means that the consistency between the dyadic supplier and buyer is existed. Thus, the dyadic pair of buyer and supplier have mutual trust, interdependence and collective psychological ownership. All the correlations results are shown in Table 5.1, 5.2 and 5.3.

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22 Figure 8.2 Model 2

Figure 8.3 Model 3

Correlation Model1

Correlation1 1 2 Correlation2 1 2 Correlation3 1 2

1. CPOB -- 1. PERFB -- 1. CPOB --

2. CPOS 0.786** -- 2. PERFS 0.773** -- 2. PERFB 0.610** --

1. CPOS -- 1. CPOB -- 1. CPOS --

2. PERFS 0.672** -- 2. PERFS 0.451** -- 2. PERFB 0.583** --

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Correlation Model2

1. INTEB -- 1. CPOB -- 1. INTEB --

2. INTES 0.498** -- 2. CPOS 0.786** -- 2. CPOB 0.621** --

1. INTES -- 1. INTEB -- 1. INTES --

2. CPOS 0.701** -- 2. CPOS 0.508** -- 2. CPOB 0.382** --

Table 5.2 ** =P<0.01

Correlation Model3

1. TRUB -- 1. CPOB -- 1. TRUB --

2. TRUS 0.667** -- 2. CPOS 0.786** -- 2. CPOB 0.619** --

1. TRUS -- 1. TRUB -- 1. TRUS --

2. CPOS 0.600** -- 2. CPOS 0.617** -- 2. CPOB 0.419** --

Table 5.3 **=P<0.01

Graphic analysis

The dyadic analysis shows that either within-partner data or cross-partner data are highly correlated (see Figure 8.1 to 8.3 and Table 5.1 to 5.3). This means that buyers and suppliers do not have strongly differing opinions on the level of trust, interdependence and collective psychological ownership they have reached. This result could prove that, in this study, trust, interdependence and collective psychological ownership mutually exist between buyer and supplier on a high level. Nevertheless, to get more insights of the differences of trust, interdependence and collective psychological ownership between buyer and supplier, this study performed a follow-up graphic analysis based on the 126 pairs of dyadic data.

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and when both buyer and supplier come to share a strong CPO, the performance is graded on a higher level, which is consistent with the first assumption of this research. However, surprisingly this study found that when the CPO of the buyer is low and CPO of the supplier is high, the performance graded by buyer and supplier still remains on a high level (2.03125, Table 5.1; 2.260417, Table 5.2, see blue columns), which are even slightly higher than the situation of both buyer and supplier share a high level of CPO (2.017857, Table 5.1; 2.044643, Table 5.2). Compare this to the situation when CPOSL, CPOBH and CPOSL, CPOBH. It can be concluded that suppliers’ feeling is more powerful in influencing the purchasing performance.

PER by Buyer CPOSL CPOSH

CPOBL 1.230556 2.03125

CPOBH 1.802013 2.017857

Table 5.1

PER by Supplier CPOSL CPOSH

CPOBL 1.322222 2.260417

CPOBH 1.510417 2.044643

Table 5.2 CPO=collective psychological ownership, PER=performance.

Secondly, repeat the same steps, this study classified trust and CPO. Table 5.3 and 5.4 show that when buyers’ and the suppliers’ trust are both low, their CPO is low-otherwise the CPO is high, which is also consistent with the analysis of hypothesis 2. Compare the numbers filled in yellow with those filled in green, this study found that the buyers’ trust in the supplier seems to have a relatively stronger influence on the collective psychological ownership shared by buyer and supplier. Furthermore, when suppliers’ trust is high, and buyers’ trust is low, the collective psychological ownership shared by them is still on a high level (see yellow columns in Table 5.3 and 5.4). It can be concluded that suppliers’ trust in buyer also is critical on the feeling of collective psychological ownership that they experience.

CPOB TRUSL TRUSH

TRUBL 4.116 4.25

TRUBH 4.5 4.8075

Table 5.3

CPOS TRUSL TRUSH

TRUBL 4 4.439

TRUBH 4.857 5.211

Table 5.4 2

Thirdly, following the same steps, this study categorized interdependence and CPO. As described by table 5.5 and 5.6, similarly, when buyer and supplier interdependence are both low, they share a lower level of CPO, as otherwise they experience a high level of CPO, which is also consistent with the analysis of hypothesis 3. The difference between the above results is that when buyer and supplier reach a different level of interdependence, the more dependent part feels a stronger CPO (see purple columns in table 5.5 and 5.6). Moreover, it should be noticed that when INTE supplier is high, INTE buyer is low, the CPO graded by buyer is still high (see the yellow column in Table 5.5).

2

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This means that supplier is in a relatively vulnerable position, and they are more sensitive to the changes of interdependence in the buyer-supplier relationship.

CPOB INTSL INTSH

INTBL 3.8392 4.3485

INTBH 4.4531 4.7540

Table 5.5

CPOS INTSL INTSH

INTBL 3.4558 4.5325

INTBH 3.7679 5.1636

Table 5.6

5. Discussion

To begin with, the factor analyses of both supplier and buyer studies reveal that factors of trust and purchasing performance are highly correlated. The reasons behind this phenomenon could be 1) The sample is not big enough, only 4 buyers and their suppliers participate this survey; 2) Buyers tend to send the questionnaires to the suppliers who they can trust and have a long-time cooperation relationship with; 3) Buyers/suppliers tend to believe that the purchasing performance is better when they are cooperating with suppliers/buyers who they can trust and have a long-term relationship with. 4) Buyers and their corresponding suppliers do not have a big divergence. By simply observing all of the dyadic pairs of data, this study confirmed the fourth conjecture. For an example, if the buyers’ trust is high, then their corresponding suppliers’ trusts are also high.

This result implies that trust is more like a dimension instead of a predictor of interdependence. Even though, it does reflect the importance of trust in achieving expected results in organizations: purchasing performance. This is also in line with Ahimbisibwe’s (2014) study, who indicates that trust has a positive effect on supplier performance in organizational level. In this study, all respondents (buyer and supplier purchasing employees) work on an inter-organizational level, since all of them are from different organizations. Additionally, many scholars addressed the importance of trust in cooperation and commitment (Hoyt and Huq, 2000), information sharing (Dyer and Chu, 2003) and exchange performance (Gulati and Nickerson, 2008). Therefore, trust plays a critical role in improving purchasing performance and determining the occurrence of collective psychological ownership.

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completing tasks and improve group’s efficiency. Secondly, the study analysis shows that interdependence is positive related to collective psychological ownership, which also confirms Pierce and Jussila’s (2010) proposition. This means that in a highly interdependent environment, the collective psychological ownership is more likely to occur. However, according to resource dependent theory (Pfeffer, Jeffery & Salancik, 1978), in an unbalanced interdependent environment, if one organization gains more power over the other one, it would exploit the relationship to their advantage and the vulnerable organization would act opportunistically, which eventually jeopardize the final performance. The regression analyses show there is a positive relationship between trust and collective psychological ownership, which is also in line with the statement in theoretical framework-trust is one of the most important foundations of a good relationship.

Therefore, combining this finding with resource dependence theory, this study can get the following implication: due to the delicate nature of the interdependent relationship between buyer and supplier, managers need to delicately deal their relationships with suppliers or buyers. But how to build a balanced interdependent environment which could generate collective psychological ownership without undermining this purchasing performance? This study suggests that except for interdependent and psychological ownership, when planning strategies to improve purchasing performance, managers may take trust into account and hold in high value on it. Overall, in order to improve purchasing performance, organizations could take collective psychological ownership into consideration, which depends on whether they have a trusting and interdependent relationship with their suppliers or buyers first.

Thirdly, according to the mediation analysis, this study revised the conceptual research model. To illustrate it more clearly and avoid misunderstandings, this study divided this model into two parts (see figure 9 and 10). The mediation analysis reveals that collective psychological ownership does not mediate the relationship of interdependence and purchasing performance; trust replaced the collective psychological ownership and became the mediator between CPO and purchasing performance. All of the regression analyses indicate that trust and collective psychological ownership are positively correlated. Moreover, this finding also implies that trust has a more powerful influence on the purchasing performance, which is consistent with earlier discussions and once again confirms the importance of trust.

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shows that the suppliers’ trust is not that consistent with the buyers’ collective psychological ownership. Compare the value of correlation 6 to the value of correlation 5, this study can get that the buyers’ trust in the supplier is more powerful in influencing the suppliers’ sense of collective psychological ownership.

Figure 9

Figure 10 Figure 9 and 10 revised conceptual research models

The consistency between buyer and supplier are confirmed by dyadic study, while the graphic analysis could give us more information of the differences between the dyadic buyers and suppliers. First of all, the results of analyses 1 (see Table 5.1 and 5.2) indicate that when a supplier comes to feel they share a high collective psychological ownership to the purchasing process with their buyer, even though the buyer does not, they may initiate more efforts to improve the purchasing process. On the other hand, it implies that the supplier’s feeling is more powerful in influencing the purchasing performance. In order to gain a higher collective psychological ownership to improve purchasing performance, the buyer could establish a series of strategies (i.e., formulating business process, scheduling regular meetings with supplier) to institutionalize the purchasing process, which will make the supplier feel they (both of the supplier and buyer) share a highly collective psychological ownership in the purchasing process while reducing the input they (buyer) need to invest in.

The results of analysis 2 (see Table 5.3 and 5.4) could give some insights for the purchasing managers. When supplier places less trust in the buyer, the buyer could implement some measures such as authorizing certain legitimacy, decentralizing power and so on, which will support the establishment of mutual trust and accelerate the forming of collective psychological ownership. Additionally, it should not be ignored that when supplier has more trust on buyer, the purchasing performance still

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remains on a relatively higher level. This suggests that in this situation, buyer could try to have more trust on the supplier, which will eventually contribute to a better purchasing performance.

In terms of analysis 3 (see Table 5.5 and 5.6), the results show that the more dependent part is more likely to feel a stronger collective psychological ownership. This could be explained through resource dependent theory. In an unbalanced relationship, the dependent party is more likely to be hurt by the other one. Driven by this disadvantage, the dependent party might engage in some endeavours to remedy their unbalanced position. In the context of a purchasing process, these endeavours could be any activities that make them feel they are in charge and control. For instance, requiring more authorities for the purchasing process, initiating changes in existing business procedures and so on. However, unlike the dependent party, because the independent party is passively dragged into these activities by the dependent part, they would not probably not feel that they share a strong collective psychological ownership with the dependent party. Moreover, because suppliers (see yellow column in Table 5.5) are more sensitive to the changes of interdependence in the buyer-supplier relationship, it can be imagined that the purchasing performance would slash down when the tension between buyer and supplier is beyond what they can bear. This finding suggests that organizations should establish a stable relationship with their suppliers/buyers, which not only is a wise way to avoid potential risk but also a solid foundation for further cooperation.

6. Conclusion

6.1 Conclusions

This study investigated the relationship of interdependence, trust and collective psychological ownership and the impact of collective psychological ownership on the purchasing performance. Relevant hypotheses were proposed by reviewing related literature. A descriptive survey study was conducted in the North of China, and four manufacturing companies participated in this survey study. Separate and dyadic data analyses were applied to test all the five hypotheses. Furthermore, a graphical follow-up analysis was conducted to get more insights. This study was started off with one main research question: Does the collective psychological ownership between supplier and buyer increase the purchasing performance. The results of this study are stated as below.

In the separate analysis, the results show that collective psychological ownership could improve the purchasing performance. The same finding could be derived from the results of the graphic analysis, but it is should be noticed that the purchasing performance is better when supplier come to feel a strong collective psychological ownership. Additionally, a trust and interdependent environment would more likely to inspire the occurrence of collective psychological ownership.

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6.2 Recommendations

This study aims to fill the scant literature on collective psychological ownership in the purchasing process. First of all, this study confirms that when buyer and supplier share a strong collective psychological ownership, the purchasing performance will be improved. Secondly, this study investigated that in what kind conditions the collective psychological ownership is more likely to occur.

This study provides managers a new angel to improve purchasing performance. The findings imply that managers could improve the purchasing performance by establishing a trusting and a balanced interdependent environment with their suppliers or buyers, which accelerates the emergence of collective psychological ownership, thereby increasing the purchasing performance.

6.3 Limitations

There are several limitations of this study. Firstly, sample size is not big enough. There are only four companies and their suppliers participated in this survey research. Hence, more or less, the results could not be as precise as those with more than 100 companies’ participating. As mentioned in the discussion part, this sample size might also be one reason of the multiclinearity of factor trust and purchasing performance. Secondly, all the four companies are manufacturing companies located in the author’s hometown of China. The characteristic of industries are different. Hence, probably the results could be different if this study is conducted in other industries or other countries (e.g. The Netherlands). Hereby, the generalizability of this study is limited. Finally, the questions about collective psychological ownership are formed based on the questions of individual psychological ownership, which possibly could lead to some bias.

6.4 Further research

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The Analysis of Collective Psychological Ownership, Trust and Interdependence in the Purchasing Process