Governance modes in supply chains and financial performance at buyer, supplier and dyadic levels: the positive impact of power balance

Abstract

PurposeThis study analyzes whether power in the supply chain, based on governance modes and network centrality, explain financial performance at different levels of analysis: buyers, suppliers and dyads.Design/methodology/approachThe study employs a dual macro-micro lens based on global value chain (i.e. market, modular, relational and captive governance modes) and social network analysis (network centrality) to assess the impact of power (im)balance onto financial performance. Different from previous research, this study adopts information reliability techniques – such as information entropy – to differentiate the weights of distinct financial performance metrics in terms of the maximal entropy principle. This principle states that the probability distribution that best represents the current state of knowledge given prior data is the one with largest entropy. These weights are used in TOPSIS analysis.FindingsResults offer insightful reflections to SCM research. We show that buyers outperform suppliers due to power asymmetry. We ground our findings both analyzing across governance modes and comparing network centrality. We show that market and modular governances (where power balance prevails) outperform relational and captive modes at the dyadic level – thus inferring that in the long run these governance modes may lead to financially healthier supply chains.Originality/valueThis study advances SCM research by exploring the impact of governance modes and network centrality on performance at both firm and dyadic levels while employing an innovative combination of secondary data and robust set of techniques including TOPSIS, WASPAS and information entropy.

Fashion supply chain transparency: do as I say not as I do

“…Moreover, we confirm that institutional voids may hinder sustainability and transparency: while Jestratijevic et al (2021) study showed 4 secretive out of 98 participants (∼4%), in the Brazilian sample, six out of 20 provided no sustainability information (∼30%). In line with the study by Marques et al (2021a) this shows that institutional voids allow firms to operate “below the radar” even when under scrutiny if there is no enforcement for sustainability compliance.…”

“…In the proportionality dimension, the emphasis on tier-1 suppliers suggests that fashion brands are not disclosing to the extent that there is threat to consumers. This results from the fact that most social risk lies beyond the brand and tier-1 suppliers (Marques et al , 2021a). Finally, regarding the actionability dimension, the study shows incipient best practices related to stakeholder engagement.…”

“…Considering the impact of purchasing order cancellation to supplier's financial health, it is paramount to pressure firms to advance on the disclosure of such policies. This holds a practical implication for fashion brands engaging with supply chain finance for example should re-consider the transparency strategy related to purchasing policies and practices (Marques et al , 2021b).…”

Conceptual Model for Effects of the Buyer Supplier Relationship, Purchasing Process, and Measures of Performance in Supply Chains

“…According to Marques, Lontra, Wanke, and Antunes [3], positive buyer-supplier interactions may boost both manufacturer and supplier performance, as well as supply chain performance. To better understand the impact of buyersupplier interactions on SCM is crucial for two main reasons.…”

Diffusion of Innovation in Technological Platforms: The Uber Case

“…There is already comprehensive literature on the diffusion of innovation focusing on adopting novel technologies (Currie & Spyridonidis, 2019;Lai 2017;Marques, Lontra, Wanke, & Antunes, 2021). However, such literature has been limited to the adoption of novel technologies only by consumers and focuses on describing the variables involved in user adoption (Cheng, 2016;Chu & Chen, 2016;Marangunić & Granić, 2015;Rahman, Lesch, Horrey, & Strawderman, 2017;Rondan-Cataluña, Arenas-Gaitán, & Ramírez-Correa, 2015;Scherer, Siddiq, & Tondeur, 2019;Williams, Rana, & Dwivedi, 2015).…”