Over the past few decades, the source of a firm's competitive advantage has changed from physical assets such as plant and machinery to market-based assets (intangible assets) such as innovation, brands and supplier relationships (Day 1994; Eisenhardt and Martin 2000; Wernerfelt 1984). As such, the contribution of market-based assets (MBA) toward the market capitalization of firms has substantially increased (Ramaswami et al. 2009). For example, firms such as Apple and Google are not valuable because of their buildings and machinery, but rather because of their strong brands and ability to develop innovative products and services. Although MBAs have grown in importance, it is hard to measure their value since they are intangible and typically not recorded on a firm's balance sheet (Sharp 1995). To help determine the contribution of MBA to a firm, Srivastava et al. (1999) developed a conceptual framework (MBA framework) that links MBA to performance. They assert that MBA must be transformed and leveraged as part of an organization's processes if they are to generate economic value to the organization. In a nutshell, a firm's business processes should mediate the relationship between its MBA and performance. Although the literature recognizes that MBA contribute to a firm's performance through improvements to its business processes, very few studies have empirically tested the framework (Ramaswami etal. 2009). Also, those studies focus more on a firm's relationships with its customers and channel members while focusing inadequately on supplier relationships. This paper tests the MBA framework and also extends it to a firm's supply chain. The paper focuses on an important MBA, a firm's supplier relationships, and examines how a buyer firm's supplier development programs contribute to the buyer firm's performance. Supplier development refers to a program developed by a buyer firm to foster ongoing improvements and upgrade its supplier's capabilities (Krause and Handfield 2007). Supplier development programs are created by buyer firms to help their suppliers, particularly their deficient ones, improve their capabilities and business processes (Wagner 2006). Numerous firms including United Technologies and Toyota have developed supplier development programs aimed at helping their suppliers.
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