The impact of supplier downsizing on performance, satisfaction over time, and repurchase intentions

Purpose - The purpose of this study is first to investigate how well downsized suppliers, as compared to non-downsized suppliers, are able to satisfy their business customers over time; and second whether these same business customers having stronger or weaker repurchase intentions toward downsized suppliers, as compared to non-downsized suppliers. Design/methodology/approach - A random sample of 560 purchasing professionals from a wide range of industries and firms provide responses on the performance of, their satisfaction with, and their repurchase intentions toward downsized and non-downsized industrial suppliers. Findings - The results of the study indicate that downsized suppliers, as compared to non-downsized suppliers, overall are doing a significantly poorer job of satisfying their business customers, leading to significantly lower ratings of loyalty and repurchase intentions. However, some surprising results emerge regarding the non-linear pattern of low, medium and high levels of downsizing on performance and repurchase intentions. Practical implications - Suppliers who downsize are at risk of losing important business customers as their abilities to deliver ancillary value-added services are diminished through the elimination/loss of key customer support personnel. It is important for these suppliers to recognize these risks, and to implement strategies to avoid the potential negative outcomes associated with downsizing. Originality/value - To date, with possibly one or two exceptions, all studies focusing on downsizing have had an intra-firm focus. This study investigates downsizing from an inter-firm perspective, and is the first to focus on the effect of downsizing on business customers' satisfaction, loyalty, and repurchase intentions.