Dependence structure, relational mechanisms and performance: teasing out the differences between upstream and downstream supply chain partners

Abstract

PurposeFirms are subject to power from both upstream and downstream partners; those partners may have different or even opposing impacts on supply chain relationships and financial performance. The purpose of this study is to investigate how upstream and downstream dependence structures affect a firm's financial performance through upstream and downstream relational depth (DEP) and relationship extendedness (EXT).Design/methodology/approachData representing both upstream and downstream supply chain perspectives was collected using a multiple-respondent survey and was further augmented using financial performance data from an archival database.FindingsDependence advantages (ADVs) and disadvantages from upstream and downstream partners affect relational mechanisms and firm performance differently. Only downstream ADV will enhance a firm's DEP and EXT and subsequently affect firm's revenue and profit. Contradictory to widely held belief, the results reveal that firms that maintain long-term relationships with buyers and suppliers may experience lower revenue/profit.Originality/valueThis research represents a significant step in understanding the economic ramifications of dependence by (1) highlighting the difference between upstream and downstream supply chain dependence structure and (2) understanding the indirect effects of dependence structure on financial performance.

Bridging versus buffering: how IT capabilities and dependence advantage shape responses to supply chain disruptions?

“…A firm in a dependence advantage relies less on relationship-specific investments in a specific relationship with the supplier (Gulati and Sytch, 2007), which means alternative channels for extra resource availability beyond the existing relationship can afford repairment and recovery. The dominant position is prone to exercise its power to engage in adversarial tactics other than develop relational depth and relationship extendedness (Pu et al ., 2023). In this situation, the effectiveness of IT integration on bridging is weakened as the bridging strategy only serves for the existing relationship (Su et al ., 2014).…”

The role of relationship commitment in managing logistics outsourcing in the digital economy

“…Organizations need to acquire scarce external resources for survival and development, which results in dependence Industrial Management & Data Systems on the outside units that control the scarce resources (Hillman et al, 2009). The dependence on external resources brings uncertain risks to organizations (Pu et al, 2023). Accordingly, they will be motivated to adopt various strategies that reduce their dependence on other players (Pu et al, 2023).…”

“…The dependence on external resources brings uncertain risks to organizations (Pu et al, 2023). Accordingly, they will be motivated to adopt various strategies that reduce their dependence on other players (Pu et al, 2023).…”

“…Therefore, the digital economy has amplified the importance of 3PL providers for companies and makes companies increasingly dependent on these 3PL providers' critical resources and capabilities, such as logistics services and digital technologies (Lou et al, 2020). To access the valuable resources and capabilities offered by 3PL providers, 3PL users are willing to invest their specific resources in the relationship (Huo et al, 2015a;Pu et al, 2023). Meanwhile, over-dependence may induce 3PL providers to take advantage of their dominant position to behave opportunistically, such as using/leaking information unethically or illegally, raising the price of service, or providing low-quality service (Chu et al, 2019;Yin et al, 2023), which further exacerbates outsourcing risks.…”

“…, 2009). The dependence on external resources brings uncertain risks to organizations (Pu et al. , 2023).…”