Vertical Trade Relationships: The Role of Dependence and Symmetry in Attaining Organizational Goals

Abstract

The perspective that dependence on vertical trade partners should be avoided has been countered recently by the view that there are advantages to strong ties between firms. The author offers a framework from which trade partners can assess the potential costs and benefits of trade relationships and empirically investigates the impact of trade relationships on the firm's ability to realize performance goals.

Toward an encompassing theory of business marketing relationships (BMRS) and interpersonal commercial relationships (ICRS): An empirical generalization

“…Outcomes of BMRs include results such as greater profitability and strategic advantage (Anderson and Weitz, 1989;Bello and Gilliland, 1997;Buchanan, 1992;Bucklin and Sengupta, 1993;Lusch and Brown, 1996) and relationship maintenance results, such as satisfaction (Anderson and Narus, 1990;Mohr, Fisher, and Nevin, 1996;Smith and Barclay, 1997) and anticipated future interaction (Doney and Cannon, 1997;Morgan and Hunt, 1994). Successful relational outcomes are enhanced by an absence of conflict (Anderson and Narus, 1990;Bucklin and Sengupta, 1993;Mohr, et al, 1996), the presence of trust (Anderson and Narus, 1990;Doney and Cannon, 1997), communication (Anderson and Narus, 1990;Mohr, et al, 1996), interdependence (Anderson and Narus, 1990;Buchanan, 1992;Keith, et al, 1990;Lusch and Brown, 1996), a symmetric balance of power between the partners (Buchanan, 1992;Bucklin and Sengupta, 1993;Keith, et al, 1990;Mohr, et al, 1996;Rinehart and Page, 1992;Scheer and Stern, 1992), and a long-term relationship orientation (Anderson and Weitz, 1989;Bucklin and Sengupta, 1993;Doney and Cannon, 1997;Ganesan, 1993;Kalwani and Narayandas, 1995;Lusch and Brown, 1996).…”

“…Successful relational outcomes are enhanced by an absence of conflict (Anderson and Narus, 1990;Bucklin and Sengupta, 1993;Mohr, et al, 1996), the presence of trust (Anderson and Narus, 1990;Doney and Cannon, 1997), communication (Anderson and Narus, 1990;Mohr, et al, 1996), interdependence (Anderson and Narus, 1990;Buchanan, 1992;Keith, et al, 1990;Lusch and Brown, 1996), a symmetric balance of power between the partners (Buchanan, 1992;Bucklin and Sengupta, 1993;Keith, et al, 1990;Mohr, et al, 1996;Rinehart and Page, 1992;Scheer and Stern, 1992), and a long-term relationship orientation (Anderson and Weitz, 1989;Bucklin and Sengupta, 1993;Doney and Cannon, 1997;Ganesan, 1993;Kalwani and Narayandas, 1995;Lusch and Brown, 1996). Giving mutual goals a high priority also contributes to their success (Buchanan, 1992;Bucklin and Sengupta, 1993;Heide and John, 1990).…”

“…Boyle, Dwyer, Robicheaux, and Simpson, 1992;Keith, et al, 1990;Scheer and Stern, 1992). These attempts at influence are of interest because balanced, symmetric power structures are thought to be more conducive to mutual, long-lasting relationships (Buchanan, 1992). Asymmetric power structures are hierarchical, with one party having greater influential and dictatorial abilities over the other.…”

“…In turn, greater balance in power structures has positive impacts on trust (Anderson and Weitz, 1989;Kumar, et al, 1995a;Moorman, et al, 1993;Scheer and Stern, 1992), the absence of conflict (Anderson and Narus, 1990;Frazier and Rody, 1991;Kumar, et al, 1995a), commitment (Anderson and Weitz, 1989;Gundlach, et al, 1995;Kumar, et al, 1995a), and positive performance outcomes (Buchanan, 1992;Bucklin and Sengupta, 1993;Keith, et al, 1990;Mohr, et al, 1996;Rinehart and Page, 1992;Scheer and Stern, 1992). Interdependence also contributes to balanced power (Anderson and Narus, 1990;Buchanan, 1992;Gundlach and Cadotte, 1994;Rinehart and Page, 1992).…”

Information Asymmetries as Antecedents of Opportunism in Buyer-Supplier Relationships: Testing Principal-Agent Theory

“…In this way, the buyer has to recourse more on the supplier's resources to achieve his own goals (i.e., the supplier gets more dependent; Emerson 1962). Arguably, there is a correspondence between the balance of power in a relationship and dependency (Bresnen 1996;Buchanan 1992;Provan and Skinner 1989), which means that the supplier could feel tempted to take advantage of his increasingly strong position, which may foster to opportunistics conflicts (Heide and John 1988;Kumar, Scheer, and Steenkamp 1995). In a situation of buyer dependency on the supplier it could be expected that the supplier will care less about the consequences of hidden action in case they become apparent, as the options for the buyer to switch to another supplier are limited.…”