Quality risk management: effects of cognitive bias and supplier risk levels

Purpose Cognitive bias is highly likely to have an impact on quality risk, a critical factor in supplier management. Manufacturers can reduce such risk by adopting a stakeholder perspective during their reviews of how their suppliers perform. However, there is a paucity of research that has examined the relationship between manufacturers and their suppliers using real-life supplier assessment data. Furthermore, the application of stakeholder theory in understanding supplier–buyer relationship management, particularly within the context of the semiconductor industry, remains limited. By exploring quality-value discrepancies between a semiconductor manufacturer and its suppliers, this study helps fill that gap. Design/methodology/approach Stakeholder theory has been incorporated into the SERVQUAL model in order to investigate discrepancies in quality values between a manufacturer and its suppliers. A database containing four years’ worth of information about 210 entities that supplied a prominent Taiwanese semiconductor manufacturer was used as the basis of our investigation, guided by stakeholder theory, of the quality-risk issues associated with quality-value gaps. Findings The results reveal that supplier self-assessed performance was better than the case company’s on-site assessment of its suppliers. Also, suppliers react differently to pressure from buyers because suppliers have different risk levels. Research limitations/implications Using the lens of stakeholder theory, its analytical results elucidate the crucial buyer–supplier behavior associated with a manufacturer and her suppliers as a basis to develop best practices and guidelines to address quality risk. Practical implications Pressure from manufacturers is not always strong enough to control suppliers. A manufacturer should develop appropriate strategies to mitigate the quality risk across suppliers. Originality/value This case study of the relationship between a manufacturing buyer and her suppliers in the semiconductor industry represents a valuable contribution on quality risk to the field of buyer–seller relationship management.