Factors Influencing Coffee Growers’ Perception on Coffee Buyers’ Opportunism: A Case of Coffee Buyer – Supplier Relationships in Tanzania

Abstract

This study examined the relationship between smallholder coffee growers (suppliers) and the licensed buying companies (buyers). The study reports on the factor (Transaction-Specific Supplier development efforts undertaken by the buyer in the supplier) that influences on suppliers’ perceived buyer opportunism. Literature review on Transaction Cost Theory led to formulation of the research model and hypothesis in order to test the proposed relationship between buyer opportunism and transaction-specific supplier development. Data from a survey of seventy three (73) small holder coffee farmers of Tanzania were used. Ordinary Least Square method through SPSS was used to estimate results of the model and assumptions underlying
regression analysis were observed. Empirical findings revealed that transaction-specific supplier development has a significant negative relationship with buyer opportunism. This re-enforces that buyer opportunism should be eradicated in the supply chain of coffee since it reduces both trust and supplier satisfaction. In order for management to overcome buyer opportunism, they need to incorporate transaction-specific supplier development in coffee buyer-seller relationship.