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Corporate Identity, Ethics and Reputation
in Supplier–Buyer RelationshipsMichael Bendixen
Russell Abratt
ABSTRACT. Multi-national corporations (MNCs) have
been criticised for not behaving ethically in some situa-
tions, which could have a negative effect on their repu-
tation. This study examines the ethics of a large MNC in
its relationship with its suppliers. A brief literature review
of corporate identity, business ethics and buyer–supplier
relationships is undertaken. The views and perceptions of
the buying staff and the suppliers to a large South African
MNC are obtained and discussed. The results indicate
that this MNC has a good corporate reputation among
both its suppliers (an important stakeholder) and its own
buying department. The existence and implementation of
formal codes of ethics was found to be a necessary, but
not sufficient condition for good ethical practice. Candid
relationships with suppliers emerged as a second and
important factor. Ethical perceptions of buyers by sup-
pliers are driven by the management of corporate identity,
through the elements of ethical standards and candid
relationships. We present a model of corporate identity/
reputation in Buyer–Supplier Relationships.
KEY WORDS: corporate identity, business ethics,
supplier–buyer relationships, reputation
Introduction
Executives today have to pay attention to the
expressed needs and preferences of many interest
groups. It is no longer appropriate for companies to
behave as if their owners, shareholders and employ-
ees are the only important stakeholders. Within the
company there are numerous stakeholders with dif-
ferent interests, but there are also stakeholders outside
the company, including suppliers (Verkerk et al.,
2001). For example, the use of local suppliers has
been common for dominant employers and large
corporations to maintain good community relations
(Logsdon and Lewellyn, 2000). One of the stake-
holders that has been neglected in the corporate
identity management process and the corporate social
responsibility (CSR) literature is suppliers. The scope
of CSR is broad, and the supply chain is one of its
important elements as it covers procurement policy,
and purchasing guidelines (Fukukawa and Moon,
2004). Interest in supply chain policy appears as a
relatively recent wave of CSR internationally, and
reflects increased corporate responsibility for human
rights, labour standards and environmental responsi-
bility of their suppliers and business partners
(Fukukawa and Moon, 2004; Moon, 2002). A
company does not project a unique image through
corporate identity management. Rather, it may
possess various images which differ according to
specific interest groups, such as customers, employees
and shareholders, each of whom have different types
of experiences and contexts with the company
(Dowling, 1988). Corporate identity can be seen as
the way in which a company makes itself known to
the world. Behaviour, communication and symbols
are its indicators (Korver and van Ruler, 2003).
Corporate reputation indicates a value judgement
about the company�s attributes and evolves over time
Michael Bendixen is a Professor of Research Methodology and
Statistics at the H. Wayne Huizenga School of Business at
Nova Southeastern University, Florida. His research interests
include business ethics, governance and culture. His articles
have appeared in the European Journal of Marketing,
Industrial Marketing Management, Journal of Business
Research, Journal of International Business Studies and
Journal of Marketing Management amongst others.
Russell Abratt is a Professor of Marketing at the H. Wayne
Huizenga School of Business at Nova Southeastern Univer-
sity, Florida. His research interests include corporate identity
management and business ethics. His articles have appeared in
the Journal of Business Ethics, Journal of Business and
Psychology, European Journal of Marketing, Journal of
Marketing Management, Industrial Marketing Man-
agement, and Business Horizons amongst others.
Journal of Business Ethics (2007) 76:69–82 � Springer 2007DOI 10.1007/s10551-006-9273-4
as a result of consistent performance (Gray and
Balmer, 1998). The current reputation of an orga-
nisation is determined by the signals that interest
groups receive concerning its behaviours, whether
directly or via other information channels (Fombrun
and Shanley, 1990). In addition, the logic of trans-
action cost economics suggests that companies with
good reputations are attractive business partners,
since their reputation can substitute for expensive
governance mechanisms (Williamson, 1996). In this
article, we explore the consequences of the ongoing
interaction between a company�s buying department
and the salespersons representing its suppliers. This is
examined through perceptions of ethical behaviour
and its consequential impact on corporate reputa-
tion. This element of corporate identity manage-
ment is critical because of the external nature of the
interface between buyers and sellers.
Purchasing departments are exposed to greater
ethical pressures than individuals in many other jobs.
They work with salespersons from supplier organi-
sations; they are primarily responsible for very large
budgets, and they are often evaluated on the dis-
counts or ‘‘deals’’ they negotiate with the sellers. On
the other hand, salespersons from supplier organisa-
tions work in relatively unsupervised settings; they
are primarily responsible for generating sales, and
they are often evaluated on the basis of short-term
objectives (Futrell, 2002). Razzaque and Hwee
(2002) reviewed the ethical issues in the purchasing
environment. A salesperson�s ethical behaviour can
play a critical role in the formulation and mainte-
nance of long-term buyer–seller relationships
(Gunlach and Murphy, 1993). Despite the impor-
tance of ethics in buyer–seller relationships, very
little empirical work has been published in this area.
Multi-national Corporations (MNCs) have been
subjected to intense public criticism because, in
seeking new markets, they have ignored the
oppressive working conditions and abuse of workers�basic human rights in those countries. MNCs cannot
ignore criticism because it reflects a growing gap
between societal expectations and corporate perfor-
mance (Sethi, 2002). The aim of this article is to
report on a case study in which the views of the
buying staff and the suppliers to a large South African
MNC rate and perceive its ethical behaviour.
Literature review
Corporate identity
Originally, corporate identity was synonymous with
organisational nomenclature, logos, and visual
identification. Corporate identity is more than just
an organisational mark or symbol of recognition
(Balmer, 1995). Today, the role of symbolism has
grown from its original purpose of increasing
organisational visibility to a position where it is seen
as having a role in communicating corporate strategy
(van Riel and Balmer, 1997).
Corporate identity has been studied by manage-
ment and marketing academics since the 1990�s as a
strategic management tool. Today there is a gener-
ally accepted distinction between corporate identity
(what the firm is) and corporate image (what the
firm is perceived to be), even in the absence of a
clear meaning of corporate identity itself (Abratt,
1989; Balmer and Soenen, 1997; Balmer, 1998).
Corporate identity denotes the characteristic way in
which an organisation goes about its business, how it
thinks, feels, behaves and interfaces with the external
world via its employees (Kiriakidou and Millward,
2000).
A strong identity has a number of potential
benefits to an organisation, including attracting
quality personnel and breeding employee motivation
(Balmer, 1995; van Riel and Balmer, 1997). Balmer
and Soenen (1997) conducted a major review of the
corporate identity literature. They stated there was a
lack of effective models of corporate image forma-
tion. According to Balmer (2001: 280), ‘‘an orga-
nisation�s identity is a summation of those tangible
and intangible elements that make any corporate
entity distinct. It is shaped by the actions of the
corporate founders and leaders, by tradition and the
environment. At the core is the mix of employees�values which are expressed in terms of their affinities
to corporate, professional, national and other iden-
tities. It is multidisciplinary in scope and is a melding
of strategy, structure, communication and culture. It
is manifested through multifarious communications
channels encapsulating product and organisational
performance, employee communication and behav-
iour, controlled communication and stakeholder
70 Michael Bendixen and Russell Abratt
and network discourse.’’ Identity is the embodiment
of the organisation.
Every firm has a philosophy, whether tacit or
codified (Abratt, 1989; Alessandri, 2001; Leuthesser
and Kohli, 1997). This philosophy is personified
through the behaviour of the firm as well as in the
visual presentation of the firm. The corporate
identity concept encompasses issues such as business
scope and culture, among others (Balmer and
Greyser, 2003). The importance of culture to the
identity of an organisation has been recognized by
identity researchers for the last decade (Balmer,
1998; Balmer and Wilson, 1998). Culture plays an
important role in the development and enactment of
corporate identity. Culture is defined by Kiriakidou
and Millward (2000) as the corporate values that are
held by staff and management and their concrete
manifestation in organisational symbolism and
behaviour, which frame the way that the organisa-
tion operates. The values held by personnel within
the organisation are at the heart of its identity
formation process (Abratt, 1989).
The identity of an organisation encompasses a
bundle of values that are derived from a federation
of subcultures, which are found within and outside
the organisation (Balmer and Wilson, 1998) they
continually evolve and are amorphous. This mix of
values, to a considerable degree, gives an organisa-
tion its distinctiveness (Balmer and Gray, 2003).
Interaction or an experience with a corporate
identity is what produces a corporate image in the
minds of the public (Gray and Balmer, 1998).
Buyer–seller relationships
Firms worldwide are faced with the challenge of
becoming more attractive to their shareholders, their
clients/customers, their suppliers, the environment
and also to their employees. Stakeholder manage-
ment really is a question of balancing the different
stakeholder interests and creating added value. The
stakeholder model assumes a partnership between
management and stakeholders; this partnership is a
real, dynamic and changing process of dialogue.
Management can stimulate the involvement of the
stakeholders by early stage participation and devel-
oping a culture of common responsibility with the
focus on a clear corporate identity (Goodijk, 2003).
In building relationships, any vision of corporate
values whose aim is the creation of documents is
usually stultified by a static and uniform vision of the
corporate identity. Corporate values are relational
values. They only express what an organisation is in
as far as they express, among other concepts, how it
expects to relate to stakeholders. Values do not ex-
press a fixed, de-contextual identity (Lozano, 2005).
Working with values always describes what the
company does and what the company wants to do,
partly because corporations are what they do (Post
et al., 2002). The shared values of an organisation
are those that emerge from its ongoing self-reflexive,
constitutive dialogue as to its identity, purpose and
relationship to its stakeholders (Pruzan, 1998).
The role of the purchasing function in the busi-
ness has significantly increased in importance due to
the emphasis on building and maintaining long-term
relationships with external constituencies. Buyers
are key linkages between the firm and many of its
external environments (Turner et al., 1995). An
ethical purchasing function is imperative if the
organisation is to develop relationships with key
constituents that are based upon mutual trust. Buyers
and suppliers typically have competing goals and
objectives. Thus, the ‘‘give and take’’ that occurs
between these individuals can be a potential source
of serious legal and ethical problems. Ethicality of
the purchasing function has an impact on the bottom
line of the organisation as bribes and kickbacks can
be costly.
Buyer–Seller or customer–supplier interdepen-
dence is an integral part of business marketing
(Webster, 1992) and the effectiveness of business
marketing is largely determined by long-term rela-
tionships between buyers and sellers. Wilson (1995),
reviewing research on buyer–seller relationships,
concludes that this domain appears to a large extent
to share a common set of constructs: trust, com-
mitment, adaptation, reputation and relationship
history. Kalafatis (2000) states that there is a general
realisation, and acceptance, that the development
and management of relationships with both cus-
tomers, and suppliers are central themes of current
practice and research.
Suppliers and customers need to be viewed as a
partnership. The benefits of cooperation rather than
conflict in buyer–supplier relationships include
ongoing cost reductions, quality improvements,
Corporate Identity, Ethics and Reputation in Supplier–buyer Relationships 71
increased operating flexibility and more powerful
competitive strategies (Peck et al., 2000). Customers
who work more closely with suppliers will also be
able to create a more responsive supply chain that
can meet final demand in a timely manner.
According to Gronroos (1994), relationship mar-
keting is to identify and establish, maintain, enhance
and when necessary, also to terminate relationships
with customers and other stakeholders, at a profit, so
that the objectives of all the parties are met, and that
this is done by mutual exchange and fulfilment of
promises.
Supplier relations are recognised as important in
developing a sustainable competitive advantage, yet
most buyer–supplier relationships are characterised as
being adversarial (Mudambi and Helper, 1998). As
trust is relational, it is an ongoing process that must
be initiated, maintained and sometimes restored.
Certain conditions must exist for trust to develop
and evolve. First, persons and organisations must
interact for trust to develop. Second, parties must be
willing to depend on one another and take risks.
Third, trust is context dependent, such as the stakes
involved, the balance of power in the relationship,
and the perception of the level of risk (Bell et al.,
2003). In a buyer–seller relationship, trust is built by
the exchange performance, the negotiations and
conflict resolution.
Partnership is based upon commitment, trust and
continuous improvement. Marketing attempts to
create an impression of a personal relationship to
customers even if the supplier does not know the
customers or even meet them. It is a pseudo-
personal relationship, but, all the same, it could be an
efficient one (Gummesson, 2002). Several employ-
ees from both the supplier and buyers side are
involved in the relationship. They are involved in
negotiation, communication, bargaining, the transfer
of goods, services and money. Ethical issues and
personal values always influence such transactions
and will have an influence on the reputation of the
parties involved.
Buyer–supplier relationships and corporate identity
A relationship deemed to be trustworthy is one in
which a partner is more likely to make a long-term
commitment. Trust creates the conditions under
which commitment develops and firms become
willing to make relationship-specific investments
capable of developing competitive advantage
(Turnbull et al., 1996). Trust in a partner is likely to
build slowly over time. Achrol (1997) notes that
many business decisions superficially based on
‘‘trust’’ may in reality be judgements related to the
reputation of an organisation. Reputation is an
overall cognitive impression of an organisation that
has been formed over time. This is based on its
image, which is the immediate impression of an
organisation, whilst reputation is a stakeholder�soverall assessment of the ability of the organisation to
meet defined criteria (set by the stakeholder), such as
integrity (Bick et al., 2003). Thus, the image and
reputation of an organisation is a reflection of its
corporate identity. We contend that the buyer–
supplier relationship, together with the ethical values
behind that relationship, is key to corporate identity
management, and forms part of the vital process of
an organisation�s reputation formation in the eyes of
the various stakeholders.
Business ethics
Ethics are concerned with doing good, or the right
thing in a given human situation (Wilson, 1975).
Business ethics are concerned with an evaluation of
business practices in the light of some concept of
human value, it looks at corporate profits not for
their own sake but with respect to the achievement
of some human good.
Carroll (1981), while recognising that social
responsibility issues do have ethical dimensions,
distinguishes social responsibility and business ethics
on the basis that the former is primarily an organi-
sational or corporate concern, while the latter is the
concern of the individual manager or business
decision-maker. This distinction is, however, by no
means universally accepted and debate still continues
as to whether organisations, because they are artifi-
cial creations, can be said to have social responsi-
bilities at all or whether the term is only applicable to
individuals within the organisation.
Bartels (1967), in developing his model for ethics
in marketing, regards ethics as referring to a standard
in terms of which business action can be judged
‘right� or ‘wrong� – not in an absolute sense, but
72 Michael Bendixen and Russell Abratt
relative to another entity whose expectations have
either been violated or fulfiled.
These various explanations of the field of business
ethics indicate that the distinction between social
responsibility and business ethics is not easily made,
certainly not insofar as their application to the
societal marketing concept is concerned. Thus,
while certain aspects of social responsibility may
be discretionary – such as donations to charitable
institutions – and therefore their non-fulfilment
cannot be regarded as ‘wrong� or ‘unethical�, other
aspects of social responsibility are clearly based on
obligatory standards of behaviour which, if isolated,
can certainly be labelled as unethical (Carroll, 1981).
Perhaps, ethical responsibilities are only one fact
of a wider range of responsibilities known as ‘social
responsibilities�. Whatever the precise distinction
may be, business ethics and business social respon-
sibility can both be said to constitute the philo-
sophical foundation upon which the societal
marketing concept is grounded.
Murphy (1988) and Tsalikis and Fritzsche (1989)
stated that codes of conduct represent the most
effective way of implementing an ethical policy and
reducing ethical conflict. It is further stated that the
argument for instituting a code of conduct could be
based on efficiency, with codes being a binding ideal
for a profession, in the interest of the public, con-
sistent with rational self-interest and an effective tool
towards self-regulation. Globalisation of markets is
pressuring companies to develop codes as public
statements of core principles that are universally
applicable (Carasco and Singh, 2003).
We must note, however, that there are arguments
for and against codes of ethics. Schlegelmilch and
Houston (1990) discuss these arguments. The main
reason why companies support such codes is that it is
useful in defining and clarifying policy and it is part
of a ‘‘total quality approach’’. The main argument
for not having a code was that behaviour is more
important than words, and that they tend to be too
broad to be of any use. Schlegelmilch and Houston
(1990) conclude that the limited value of codes of
ethics as an isolated measure suggests that they need
to be accompanied by ethical education and other
processes that support their enforcement.
It is not only strong leadership from above that
ensures ethical standards; ethical business stems from
an ethical corporate culture (Sinclair, 1993). Sinclair
(1993) states that there are two approaches to
moulding an organisation�s culture towards ethical
ends. The first is the approach of creating a unitary
corporate culture around ethical values. In this ap-
proach, it is argued that management can and should
actively manage organisational culture. The second
approach fosters the coexistence and diversity within
the organisation of underlying national and racial
cultures as well as professional and occupational
subcultures. Both approaches, according to Sinclair
(1993), contain different risks for business ethics. In
the first approach, the risks are that the ethics are
those of the managerial elite. The risks in the second
approach are that the plethora of competing values
of subcultures allows deviant groups to flourish,
leaving management unable to find a common basis
on which to proceed. Sinclair (1993) concludes that,
while the debate occurs in a broadly managed
framework, it alternatively relies on individual, ra-
ther than institutional processes to produce better
ethics.
There is evidence that excellent companies appear
to be more ethical, implying a relationship between
excellence and ethics. Although excellence in
companies seems to imply a strong presence of
ethical behaviour in those companies, the reverse is
not always true, as ethical companies are not nec-
essarily excellent (van der Merwe et al., 2003).
Methodology
The methodology used in this study was a single case
study comprising a large South African MNC in the
fast-moving consumer goods field. The study was
conducted in the South African market and, while not
quite a monopoly, this MNC has a dominant position
in this market. As a consequence, it could take sig-
nificant advantage of its suppliers, particularly those for
which it is the largest customer. This raises questions as
to the way in which the buying department of the
MNC is perceived in terms of its ethical behaviour.
The MNC is a significant player in the international
market with operations in sub-Saharan Africa, western
and central Europe, Russia, India, China and North
America. The purpose of this research was to assess the
perceptions that both the MNC�s suppliers and the staff
of their buying department have about the ethical
behaviour of the company.
Corporate Identity, Ethics and Reputation in Supplier–buyer Relationships 73
The study was conducted in two phases. During
the first phase, in-depth, open-ended interviews
were conducted with a convenience sample of
20 representatives of suppliers to the MNC. These
representatives qualified for selection if they inter-
acted on an ongoing basis with the MNC in terms of
the supply of goods and services. The purpose of this
phase of the research was to identify constructs that
may be used both to assess ethical behaviour and to
distinguish between poor and excellent ethical
behaviour.
Two qualitative research techniques were used in
this phase of the research. The critical incident
technique (Flanagan, 1954; Bitner et al., 1990) was
used to allow respondents to describe critically good
and bad ethical incidents and the behaviour of the
staff of the MNC that created these incidents. A
Kelly repertory grid technique (Fransella and
Bannister, 1977; Tan and Hunter, 2000) was used to
allow respondents to express constructs that distin-
guished different organisations (in this case the
MNC and two other major customers of the
supplier) in terms of ethical behaviour.
This phase of the research resulted in 30 state-
ments that seemed to discriminate ethical behaviour
in the supplier – customer relationship. In consul-
tation with the management of the MNC, it was
agreed that further five statements be added to this
battery for use in the second phase of the research.
During the second phase of the research, the
35 above-mentioned statements formed the items on
ethical scale that respondents were asked to rate
using a five-point Likert scale. Approximately one-
third of the statements were phrased in the negative
sense so as to facilitate the usage of all elements of the
Likert scale. A complete list of the 35 statements is
presented in Appendix I.
This formed the main body of the questionnaire
which was supplemented with demographic details
of the respondents, two questions pertaining to the
overall perceptions of ethical behaviour of the MNC
and two open-ended questions where respondents
could give examples of good and poor ethical
behaviour by the MNC staff. The first of these
questions required respondents to rate the MNC�sethical standards on a 10-point numeric scale, where
1 represented poor and 10 excellent. Respondents
were then asked to rate the MNC�s ethical standards
relative to suppliers� other customers on a five-point
verbal scale ranging from much better to much
worse.
The database of contact details of people at
supplier organisations with whom the MNC staff
interact was updated and an e-mail was sent to each
of these people (approximately 500 in total) advising
them that a survey regarding the ethical behaviour of
the MNC was to be undertaken and inviting them
to participate. This letter was sent in the name
of both the MNC management and one of
the researchers. Respondents were assured of the
absolute confidentiality of their responses. Shortly
thereafter, a further e-mail was sent asking potential
respondents to visit a website and complete the
survey (surveymonkey.com). After 2 weeks, a
reminder was sent to potential respondents encour-
aging them to complete the survey if they had not
already done so. The staff of the MNC�s buying
department was also invited to participate in the
survey. After the cut-off date, the data was down-
loaded from the website and sent to the researchers
for analysis. This was done in the presence of the
MNC�s internal auditors so as to assure that the data
was not tampered with in any way.
Results
Sample details
A total of 129 supplier representatives and 28 mem-
bers of staff responded to the survey. The typical
supplier respondent was: male, aged 35–49, a Dire-
ctor/Board Member or Sales Manager/Consultant,
located in Gauteng province, interacts with the
buying department, has been doing so for more than
3 years and with the MNC representing less than
10% of sales volume. The typical staff respondent
was: female, located in Gauteng, works in the buying
department and has worked for the MNC for more
than 3 years.
Data analysis
In order to conduct multivariate statistical analysis on
the data, the 35 statements rated on the Likert scale
were rescaled from ordinal to interval data using
correspondence analysis (Bendixen and Sandler,
74 Michael Bendixen and Russell Abratt
1995). The result of the rescaling is as follows: strongly
disagree 1.000; disagree 1.846; neither agree/disagree
3.122; agree 4.213; and strongly agree 5.000.
The mean scores of the 35 statements are also
presented in Appendix I.
Dimensions of perceived ethical behaviour
In order to test the dimensionality and to identify
any underlying dimensions of ethical behaviour, the
rescaled responses to the 35 statements were subject
to factor analysis. Although 2, 3, 4, 5 and 6 factor
solutions were examined, a two-factor solution
yielded the most meaningful results.
Factor 1: Ethical Standards
The primary dimension underlying the constructs
of perceived ethical behaviour comprises the state-
ments shown in Table I.
The underlying theme in this factor seems to be
perceived ethical standards. This factor embraces
nepotism, the existence and adherence to a code of
ethics, legal and moral principles, management atti-
tude, respect for the confidentiality of suppliers�
information, respect for suppliers� products, polite-
ness of staff, justice (with respect to bribery) and
product quality.
The average score on this factor (on the same
5-point Likert scale with reverse scoring of state-
ments with negative loadings) was 3.95. The only
statistically significant difference on this score was
over the length of time the respondents had inter-
acted or worked for the MNC. For those that
worked for less than a year the score is 4.23, between
1 and 3 years 3.81 and more than 3 years 3.93. It is
apparent that respondents who have interacted/
worked for the MNC for less than a year agree more
strongly that it has high-ethical standards than those
who have interacted/worked for the MNC longer.
Factor 2: Candid relationships
The second dimension underlying the constructs
of perceived ethical behaviour comprises the
following statements shown in Table II.
The underlying theme in this factor seems to be
perceived candid relationships. This factor embraces
the speedy resolution of problems, respect, trans-
parency, clear communications and fair but firm
negotiations. This latter aspect is of interest in that
TABLE I
Ethical standards
Statement Loading
(2.20) Family and friends are given preference when contracts are awarded. )0.705
(2.27) MNC is a large organisation so people can get away with unethical behaviour. )0.658
(2.21) Management turns a blind eye to unethical behaviour. )0.657
(2.18) MNC management and staff adhere to the code of ethics. 0.632
(2.29) MNC staff is professional in their conduct. 0.625
(2.26) MNC respects the confidentiality of supplier pricing and other information shared during negotiations. 0.599
(2.17) MNC has a strict code of ethics. 0.591
(2.19) MNC will discuss proposals with our competitors in an attempt to bring down the price. )0.579
(2.31) MNC staff often denigrate their competitors� products. )0.530
(2.32) Some MNC employees spend far too much on entertainment. )0.529
(2.34) Management at the MNC have an open door policy. 0.516
(2.25) Everybody is given an equal opportunity to submit proposals for contracts. 0.506
(2.10) Staff members are often rude. )0.488
(2.5) MNC is not only concerned with what is legal, but also with what is morally right. 0.473
(2.24) MNC is socially responsible. 0.465
(2.13) Staff members who take bribes face penalties. 0.441
(2.30) MNC does not accept second-rate work. 0.435
The internal reliability of this factor, as measured by Cronbach�s co-efficient a, is 0.8800.
Corporate Identity, Ethics and Reputation in Supplier–buyer Relationships 75
good ethics allow for fair but firm negotiations.
The average score on this factor (on the same
5-point Likert scale with reverse scoring of state-
ments with negative loadings) was 3.97. The only
statistically significant difference on this score was
between suppliers and staff. For staff, it was 4.18
and for suppliers it was 3.93. It would seem that
staff is more prone to agree that the MNC has
candid relationships with suppliers than suppliers
themselves do.
Rating of ethics
Respondents were asked to rate the MNC on ethical
standards on a 10-point numeric scale, where
1 = very poor and 10 = excellent. In addition,
respondents were asked to assess the MNC�s ethical
standards relative to their other customers using a
5-point verbal rating scale ranging from much worse
to much better.
The mean score achieved on the 10-point scale
was 7.73; this is a high value with scores ranging
from 5 to 10 and a median score of 8. The distri-
bution of ratings is illustrated in Figure 1.
This good rating is also reflected in the rating of
the MNC relative to other customers of suppliers.
While the median of these ratings is on the cusp of
similar to better, the distribution is strongly skewed
toward the positive as illustrated in Figure 2.
While 46.3% of respondents saw the MNC as
similar to other customers, 52.9% saw the MNC as
better or much better.
Relationship between the dimensions of ethical
behaviour and perceived ethics ratings
Assuming a causal relationship between the two
dimensions of ethical behaviour and the rating of
ethics, multiple regression analysis was performed
on the data yielding the following regression
equation:
Rating ¼ � 0:622þ 0:719�Ethical Standards
þ 1:393�Candid Relationships
the output of the multiple regression procedure is
presented in Table III.
The regression yielded an R2 value of 0.483,
i.e. 48.3% of the variance in the ratings of ethical
behaviour can be explained by the two dimensions
of ethics. It is interesting to note that the standar-
dised regression co-efficient for ‘‘Candid Relation-
ships’’ is nearly double that of ‘‘Ethical Standards’’.
This implies that the former dimension plays a more
TABLE II
Candid relationships
Statement Loading
(2.14) A loyal and enduring relationship with suppliers of products and services is important to the MNC. 0.696
(2.7) When there is a problem or a query I know it will be sorted out quickly. 0.655
(2.4) When there is a problem or a query I know whom to contact. 0.588
(2.23) MNC treats its suppliers with respect. 0.565
(2.35) MNC is concerned with the long-term health/sustainability of the supply chain. 0.561
(2.33) MNC expect suppliers to be transparent, but are not transparent themselves. )0.558
(2.8) We have regular meetings with MNC, which helps to maintain a good working relationship. 0.534
(2.15) MNC is highly regarded as far as business ethics is concerned. 0.515
(2.2) Contracts are clear and precise everyone knows what is expected. 0.446
(2.16) MNC abuses its position of dominance. )0.441
(2.6) MNC are tough, but fair in their price negotiations. 0.432
(2.1) I can trust MNC; once a commitment has been made they will ensure that it is honoured. 0.421
(2.9) The staff is not well trained – it is difficult to find anyone who knows what is going on. )0.404
The internal reliability of this factor, as measured by Cronbach�s co-efficient a, is 0.8491. Statement 2.12 (MNC always
pays accounts on time) was removed from this factor as its inclusion reduced internal reliability.
76 Michael Bendixen and Russell Abratt
important role in determining perceived ratings of
ethical behaviour.
Examples of ethical behaviour
Open-ended questions were used to ask respondents
for examples of both good and poor ethical behav-
iour by the MNC.
Good ethical behaviour
The major theme emerging from the cited examples
of good ethical behaviour by the MNC is the
fairness and professional way in which the tender
process is handled. The following direct quotations
illustrate the sentiment of suppliers.
At no point have we been played against our own
competitors. Discussions with regards to market
related offers have always been open and fair.
Prices submitted are dealt with confidentially and
competitors are never shown each others pricing.
In contract negotiations to date, there is always an
open forum but agreements are kept confidential.
Poor ethical behaviour
No clear themes are apparent from the few examples
of poor ethical behaviour cited. The few direct
quotes presented below represent the diverse senti-
ments of suppliers.
Had one instance some years ago (+)1999) where
I felt price negotiations extended beyond tough
and into the bullying of a small supplier. But this
is only instance in a 9 year relationship.
When new suppliers are found at much lower
pricing orders are sometimes placed not taking all
aspects of quality into consideration. We are left
reducing the quality of our products in order to
be competitive and remain in business.
Tend to ask for transparency from supplier but are
not willing to display the same transparency
(pricing etc).
Discussion
The buying department of the MNC is clearly well
perceived by both suppliers and staff in terms of
ethical behaviour. This is illustrated by the fact that
the MNC was rated 7.7 on a 10-point scale and the
fact that 52.9% of respondents saw it as better or
much better than suppliers� other customers and
46.3% saw it as similar. It is thus fair to say that this
MNC has a very good reputation among these
stakeholders. What is of interest in this case is what
the research reveals as to how this was achieved.
There appear to be two dimensions of ethical
behaviour driving perceptions. First there are ethical
standards embracing the existence and adherence to a
code of ethics, legal and moral principles as well as
confidentiality of supplier information. The findings
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2 3 4 5
Worse
Similar
Better
Much better
Rel
ativ
e Fr
eque
ncy
Figure 2. Distribution of ratings of MNC relative to
other customers.
0%
5%
10%
15%
20%
25%
30%
35%
40%
5 6 7 8 9 10
Rel
ativ
e Fr
eque
ncy
Figure 1. Distribution of ratings on 10-point scale.
Corporate Identity, Ethics and Reputation in Supplier–buyer Relationships 77
indicate that the MNC is not only concerned with
what is legal, but also with what is morally right.
Staff members who take bribes face penalties and the
MNC is highly regarded as far as business ethics is
concerned. In addition, it has a strict code of ethics
to which management and staff adhere. This suggests
that the MNC�s values have been communicated to
their suppliers. This supports the notion that cor-
porate values are a relational issue (Lozano, 2005).
The second dimension involves candid relation-
ships that enable the MNC to be firm but fair in
negotiations while having sound and open rela-
tionships with suppliers and the rapid resolution of
any problems. In this case, the second dimension is
more important than the first as a predictor of
perceived ethical behaviour. Suppliers often cited
the fair and professional tender process as an
example of good ethical behaviour by the MNC
staff. There were few and disparate examples of
poor ethical behaviour. The results suggest that
trust is an important factor in the buyer–supplier
relationship, confirming previous studies (Turnbull
et al., 1996). Once the MNC makes a commit-
ment, they make sure that it is honoured. This
reduces both parties� perception of risk, and it also
decreases the search and transaction costs in the
relationship. Respondents also stated that when
there is a problem or a query, they know whom to
contact. In addition they have regular meetings
with the MNC, which helps to maintain a good
working relationship. Open lines of communica-
tion are an important part of corporate identity
management, because the values of the MNC can
become known, and its image and reputation can
be formed and enhanced. All this highlights the
need for greater transparency by both the suppliers
and the buyers. The buyers are building a trusting
relationship with their suppliers by maintaining
good ethical values, which in turn leads to greater
commitment to the relationship.
This case illustrates the importance of the existence
and implementation of formal codes of ethics within
TABLE III
Multiple regression analysis
Independent variable Regression coefficient Standard error T-Value (Ho: B=0) Prob level Decision (5%)
Regression equation section
Intercept )0.6219838 0.786815 )0.7905 0.430753 Accept Ho
Ethic 0.7185847 0.2207199 3.2556 0.001462 Reject Ho
Relat 1.392772 0.2345084 5.9391 0.000000 Reject Ho
R2 0.482552
Independent variable Regression coefficient Standard error Standardized coefficient
Regression coefficient section
Intercept )0.6219838 0.786815 0.0000
Ethic 0.7185847 0.2207199 0.2703
Relat 1.392772 0.2345084 0.4931
T-Critical 1.979439
Source DF Sum of squares Mean square F-Ratio Prob level
Analysis of variance section
Intercept 1 7544.643 7544.643
Model 2 98.61304 49.30652 57.3526 0.000000
Error 123 105.7441 0.8597081
Total (Adjusted) 125 204.3571 1.634857
Root mean square error 0.9272045 R2 0.4826
Mean of dependent 7.738095 Adj R2 0.4741
Coefficient of variation 0.1198233 Press value 111.0044
Sum |Press residuals| 88.3975 Press R2 0.4568
78 Michael Bendixen and Russell Abratt
an MNC, but the bi-dimensional factor solution
indicates that this is but one side of the coin with
respect to good ethical practice i.e. codes are a nec-
essary but not a sufficient condition. In addition to
such codes and standards, sound and candid relation-
ships are the linchpin that enable such good practice.
This places an interesting and different perspective on
relationship marketing as an important strategy for
improving corporate reputation. While suppliers
would inevitably be involved in relationship mar-
keting in order maximise their sales, they need to take
into consideration the fact that customers themselves
are involved in relationship management with a view
to optimising ethical perceptions of their supply
chains. It seems imperative that these relationship
activities are aligned so that both parties may achieve
their goals. This finding confirms the link with pre-
vious research stating that the relationship between
buyers and sellers is crucial (Kalafatis, 2000).
Conclusion
The empirical results identify ethical standards and
candid relationships as the underlying dimensions of
the ethical perceptions in the buying department of an
organisation by its suppliers. These perceptions are
logically a part of the corporate image of the organi-
sation. Literature in the field clearly links this corpo-
rate image of the organisation to its reputation. What
is less obvious, and a new finding of this research, is the
role of the dimensions of ethical perceptions.
The conceptual frameworks of corporate identity
of both Kiriakidou and Millward (2000) and Balmer
(2001) include the way the organisation behaves as
well as interfaces with its external world. These as-
pects are strongly reflected in the dimensions of
ethical perceptions. Ethical standards and justice
being seen to be done in terms of their implemen-
tation become key tasks for corporate communica-
tions (Korver and van Ruler, 2003). The building
and maintenance of open relationships with suppliers
that are based on trust and mutual respect become
key management tasks, particularly for employees in
the buying department (Kalafatis, 2000). These ele-
ments of corporate communication and relationship
marketing are thus components of the corporate
identity management process. This addresses the
often-neglected area of influence of the interrela-
tionships between the internal staff of an organisa-
tion with external stakeholders. This is schematically
represented in Figure 3.
Our model suggests that an organisation must,
first, have high ethical standards. Elements that
Corporate Reputation of Buyer
Corporate Image of Buyer
Ethical Perceptions
of Buyer by Suppliers
Corporate IdentityManagement Process
Ethical Standards: Existence and adherence to code of ethics Legal and moral principles Respect for confidentiality of suppliers’ information and products Product quality Justice (wrt bribery) Nepotism Politeness of staff
Candid Relationships: Speedy resolution of problemsRespectTransparencyClear communicationsFair but firm negotiations
Figure 3. Corporate identity/reputation model in buyer–supplier relationships.
Corporate Identity, Ethics and Reputation in Supplier–buyer Relationships 79
may be included here include the existence and
adherence to a code of ethics; legal and moral
principles; respect for the confidentiality of suppliers�information and products; product quality; jus-
tice with respect to bribery; nepotism and the
politeness of staff. This will clearly and unambigu-
ously help to establish who the organisation is and
what it stands for and therefore establishes its iden-
tity. Second, the organization must have candid
relationships. Elements that may lead to good
relationships include speedy resolution of problems;
respect for the partner; transparency in its dealings,
which include information sharing; clear commu-
nications; and fair, but firm negotiations. The
reputation of the buyer will be enhanced as a result.
This model needs to be confirmed by way of
future research into other organisations and
contexts.
APPENDIX
List of statements
Statement Mean
(2.1) I can trust the MNC; once a commitment has been made they will ensure that it is honoured. 4.290
(2.2) Contracts are clear and precise everyone knows what is expected. 4.132
(2.3) Giving and receiving gifts/incentives is part and parcel of doing business with the MNC. 1.766
(2.4) When there is a problem or a query I know whom to contact. 4.283
(2.5) MNC is not only concerned with what is legal, but also with what is morally right. 4.180
(2.6) MNC are tough, but fair in their price negotiations. 3.870
(2.7) When there is a problem or a query I know it will be sorted out quickly. 3.790
(2.8) We have regular meetings with the MNC, which helps to maintain a good working relationship. 4.139
(2.9) The staff is not well trained – it is difficult to find anyone who knows what is going on. 1.842
(2.10) Staff members are often rude. 1.864
(2.11) MNC is concerned with protection of the environment. 3.915
(2.12) MNC always pays accounts on time. 3.567
(2.13) Staff members who take bribes face penalties. 4.192
(2.14) A loyal and enduring relationship with suppliers of products and services is important to MNC. 4.173
(2.15) MNC is highly regarded as far as business ethics is concerned. 4.144
(2.16) MNC abuses its position of dominance. 2.788
(2.17) MNC has strict code of ethics. 4.246
(2.18) MNC management and staff adhere to the code of ethics. 4.145
(2.19) MNC will discuss proposals with our competitors in an attempt to bring down the price. 3.161
(2.20) Family and friends are given preference when contracts are awarded. 2.090
(2.21) Management turns a blind eye to unethical behaviour. 1.869
(2.22) Documentation is often vague, which leads to problems. 2.034
(2.23) MNC treats its suppliers with respect. 4.125
(2.24) MNC is socially responsible. 4.190
(2.25) Everybody is given an equal opportunity to submit proposals for contracts. 4.075
(2.26) MNC respects the confidentiality of supplier pricing and other information shared during negotiations. 4.038
(2.27) MNC is a large organisation, so people can get away with unethical behaviour. 2.134
(2.28) MNC is very concerned with safety issues. 4.224
(2.29) MNC staff is professional in their conduct. 4.232
(2.30) MNC does not accept second-rate work. 4.394
(2.31) MNC staff often denigrate their competitors� products. 2.352
(2.32) Some MNC employees spend far too much on entertainment. 2.410
(2.33) MNC expect suppliers to be transparent, but are not transparent themselves. 2.980
(2.34) Management at MNC have an open door policy. 3.857
(2.35) MNC is concerned with the long-term health/sustainability of the supply chain. 4.000
80 Michael Bendixen and Russell Abratt
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82 Michael Bendixen and Russell Abratt
