How Do Institutionalized Supplier Development Initiatives Affect Knowledge Transfer and Operational Performance? Evidence from SME Construction Companies in Zambia

The purpose of the study is, first, to examine how, and which institutionalized supplier development initiatives are associated with knowledge transfer, and, second, to investigate the mediating role of knowledge transfer between institutionalized supplier development and operational performance. Data were collected through a survey of SME contractors in the construction industry in Zambia. A total of 171 successful questionnaires were analyzed using hierarchical regression and the bootstrapping procedure. The findings show that direct institutionalized supplier development approaches such as the 20% subcontracting policy and training are related to knowledge transfer. The findings also reveal that knowledge transfer mediates the relationship between the 20% subcontracting policy and operational performance, as well as between training and operational performance. However, there is no evidence of a relationship between knowledge transfer and indirect supplier development such as the construction finance initiative, preferential and reservation schemes. Regarding policy implications, the study suggests that policymakers should prioritize direct institutionalized supplier development initiatives that stimulate knowledge transfer. The original contribution of the article is the application of indirect and direct supplier development and knowledge transfer in the context of public-funded construction projects.