COMMITMENT, TRUST, AND MUTUAL ADAPTATION BY FIRMS: AN EXAMINATION OF SUPPLIERS AND BUYERS RELATIONSHIPS ANANDA MUKHERJI Texas A&M International University College of Business Administration Laredo, TX 78041 JOHN D. FRANCIS Iona College New Rochelle, NY 10801 INTRODUCTION In this research, we are interested in ascertaining the components of interfirm relations in terms of their causal relationship. In what sequence does mutual adaptation (Cannon & Perreault, 1999) take place in terms of antecedents and consequences? We are interested in developing and testing a model based on the way some of the arguments have been presented in the extant literature. In modeling interfirm relations, we examine and posit the effects of certain key variables that are known to play an important role in relationships between firms. INTERFIRM RELATIONS In interorganizational relationships firms and their customers develop close, frequently lasting relationships. One kind of relationship may be characterized by domination and power due to the economic dependency of a supplier on its principal buyer. Another kind of relationship is based more on trust and commitment between two organizations. We are interested in studying the full range of relationships between firms and buyers in order to understand the processes of adaptation. We know, for example, that supplier firms who depend significantly on a major buyer are likely to be influenced and dominated by that buyer. We would expect such supplier firms to adapt in order to suit the requirements of the buyer. We are also interested in examining other reasons as to why suppliers adapt to suit their buyers and what roles trust and communication play. Does trust drive adaptation by buyers, or are there other intervening variables between trust and buyer adaptation? How does commitment between two firms come about? What creates commitment and what follows commitment? How and why do firms undertake joint activities of their business operations? Under what conditions would a buyer adapt in order to suit the needs and capabilities of its supplier? The basis for our work is rooted in the idea of social exchange. Exchanges in social relationship are interaction processes where the interaction is any set of observable behavior on the part of two or more individuals when there is reason to believe that some parts of these individuals are responding to each other (Hallen, Johanson, & Seyed-Mohamed, 1991, 29). We examine a portion of the U.S. automobile industry because it operates in a setting where major assemblers are associated with tier 1 suppliers, which are in turn associated with additional tiers of suppliers. America’s big three automobile manufacturers have developed and partly implemented aggressive plans to reduce the number of suppliers they deal with, and to relate to suppliers in fundamentally different ways. According to Shimokawa (1999), automotive Academy of Management Best Conference Paper 2003 BPS: C1 Table of Contents Best Paper Index Find (Cntl-F)