Supply Chain Power Configurations and Their Relationship with Performance

Supplier selections are complex but nonetheless strategically important decisions that are influenced by numerous factors. Drawing on the resource‐based and relational view of the firm, we investigate how suppliers’ economies of scale influence the buyer's selection decision, and we illustrate how the influence of scale is contingent upon important economic, buyer, and relationship characteristics. We test the model with a large secondary dataset of actual supplier selection decisions from the automotive industry and show that economies of scale have a strongly positive but diminishing effect on the buying firm's supplier selection decision. These effects are reinforced or extenuated by economic, buyer, and relationship characteristics, with characteristics that are more specific to the buyer‐supplier situation (e.g., relationship duration and power balance) having a stronger moderating effect than do characteristics that are more global (e.g., economic cycle). Our research helps suppliers to better understand how to manage selection probabilities with buyers and provides buying firms with a better understanding of how contextual factors affect the benefit of supplier‐provided economies of scale.

Section: Discussionsupporting

confidence: 90%

How Supplier Economies of Scale Drive Supplier Selection Decisions

Badorf

Wagner²,

Hoberg

et al. 2019

“…Huo, Flynn, and Zhao () develop a conceptual framework that expands the perspective on power from the dyad to a triad, including a focal firm's upstream and downstream relationships. They identify distinct configurations of upstream and downstream power positions that may have different effects on the focal firm's performance.…”

Section: Open Questions and Overview Of The Special Topic Forum Articlesmentioning

confidence: 99%

“…Huo et al. () extend the investigation of power beyond the dyad, simultaneously considering configurations of different types of power in upstream and downstream relationships. This is an important step toward a more holistic view on how power is distributed in the entire, multitier supply chain.…”

Section: The Way Aheadmentioning

confidence: 99%

“…Such research may lead to a better understanding of how power results from network positions and how power dynamics in one relationship influence exchanges in other network links. Huo et al (2017) extend the investigation of power beyond the dyad, simultaneously considering configurations of different types of power in upstream and downstream relationships. This is an important step toward a more holistic view on how power is distributed in the entire, multitier supply chain.…”

Section: The Way Aheadmentioning

confidence: 99%

See 1 more Smart Citation

Power in Supply Chain Management

Reimann

Ketchen

2017

123

138

Power is a central yet underexplored element in supply chain relationships. In this introduction to the Special Topic Forum (STF), we provide a brief overview of key concepts underlying the current literature on power in supply chains. We then highlight open questions that we see at the forefront of the literature and explain how the five STF papers inform these developing research streams. We close by offering directions for future research on power in supply chains.

“…Prior research also indicates that the power-dependence structure (Brito & Miguel, 2017;Chae, Choi & Hur, 2017;Huo, Flynn & Zhao, 2017;Reimann & Ketchen, 2017) may affect relationships at both the interpersonal and interorganizational levels. Future research could thus address the interaction between power and trust or dependence and trust at multiple levels of analysis.…”

Section: Limitations and Future Researchmentioning

confidence: 99%

Toward Relationship Resilience: Managing Buyer‐Induced Breaches of Psychological Contracts During Joint Buyer–Supplier Projects

Kaufmann

Esslinger

Carter

2018

This research examines buyer–supplier relationship resilience associated with a psychological contract breach by the buying organization. Our study covers the span of buyer‐induced negative events from prebreach to postrepair. Specifically, we investigate the role of the nature of the interorganizational and interpersonal relationships in preventing initial trust loss (prebreach) and the effectiveness of different repair processes (penance and regulation) in promoting subsequent trust repair (postbreach). The effects are analyzed on two levels: interorganizational and interpersonal. We use social exchange theory to derive the study's hypotheses and a scenario‐based role‐playing experiment to test them. The results suggest that effective interorganizational trust repair can help to transform the nature of an interorganizational buyer–supplier relationship from adversarial to collaborative. Furthermore, initially adversarial interpersonal ties exacerbate the extent of interorganizational trust loss in collaborative interorganizational buyer–supplier relationships, while collaborative interpersonal ties help prevent initial interorganizational trust loss. Our study makes three contributions. First, it extends the psychological contract literature by investigating purchasing managers’ mitigation strategies in response to a buyer‐induced negative event. Second, it accounts for the role of interpersonal ties in buyer–supplier relationship resilience. Third, it underscores the effectiveness of trust repair mechanisms, such as penance and regulation, in actually improving buyer–supplier relationship resilience after a psychological contract breach.