Perceptual distance between buyer and supplier and project outcomes: an exploratory study in the construction industry

Buyer-supplier relationships are key in competitive strategy. To manage these relationships and its outcomes, buyers apply both formal and social control mechanisms. Nevertheless, due to information asymmetry between and social identification within collaborating partners, perceptual distance (i.e., differences in perceptions between collaborating partners regarding important relationship issues) may cause misalignment, conflict, and distrust, and therefore adversely affect project outcomes. In this study, we investigated the causes and effects of perceptual distance regarding cognitive, regulative, normative and/or operational issues in buyer-supplier relationships. We gathered quantitative (i.e. questionnaires) and qualitative (i.e. interviews) data from both buyers and suppliers within ten projects in the Dutch construction industry. Using a newly developed measure, we found that buyer and supplier representatives showed perceptual distance on multiple relationship issues and that this negatively affected social control and subsequent project outcomes. Understanding perceptual distance in buyer-supplier relationships, therefore, is of pivotal importance for both practitioners and academics for securing project outcomes.