Fairness, trust and commitment in pharmaceutical retailer–supplier coordination

Abstract

Purpose Using social exchange theory (SET) and commitment trust theory (CTT), this study assesses how retailers’ perceptions of suppliers’ distributive and procedural fairness exert trust and commitment in pharmaceutical retailer–supplier coordination. The study further examines how trust acts as a mediator in the link between fairness and commitment. Design/methodology/approach The study uses partial least squares structural equation modeling (PLS-SEM) to analyse the survey data from 203 retail pharmacies on their coordination with pharmaceutical suppliers. The mediation models are evaluated using the Preacher and Hayes technique. Findings According to the results of this study, pharmaceutical suppliers should foster fairness while implementing supply chain coordination. Nevertheless, when limited by available resources, suppliers are advised to prioritise attaining a significant degree of distributive fairness over procedural fairness. Distributive fairness has the most significant positive impact on trust and commitment, while procedural fairness positively impacts trust, not commitment. Moreover, trust has a notable mediating impact on the relationship between distributive fairness–commitment and procedural fairness–commitment. Practical implications The study’s findings may have significant implications for the suppliers in a highly competitive market. Suppliers will have a strategic advantage in attracting and maintaining retailers by effectively utilising fairness to build trust and commitment. Originality/value The findings enhance the current understanding of fairness and commitment by integrating SET and CTT to investigate their complex relationship and by employing the mediating factor of trust within the retailer–supplier coordination framework.