Leveraging IT resources, embeddedness, and dependence: A supplier's perspective on appropriating benefits with powerful buyers

Abstract

The relationships between suppliers and buyers are often characterised by power differentials and dependence at the same time. This leads to the ability of a powerful buyer to benefit more from the relationship than the supplier. We examine how a supplier can strengthen its use of relation-specific IT with embeddedness to appropriate its share of relational benefits. We developed and tested a model of supplier relation-specific IT use, embeddedness, and buyer dependence on supplier. The results showed that embeddedness did not lead directly to the sharing of relational benefits; rather the appropriation of relational benefits is derived from buyer dependence. AbstractThe relationships between suppliers and buyers are often characterised by power differentials and dependence at the same time. This leads to the ability of a powerful buyer to benefit more from the relationship than the supplier. We examine how a supplier can strengthen its use of relation-specific IT with embeddedness to appropriate its share of relational benefits. We developed and tested a model of supplier relation-specific IT use, embeddedness, and buyer dependence on supplier. The results showed that embeddedness did not lead directly to the sharing of relational benefits; rather the appropriation of relational benefits is derived from buyer dependence.

How Do Information Technology Resources Facilitate Relational and Contractual Governance in Green Supply Chain Management?

“…Firstly, advanced and fast IT devices and professional software (or systems), as I predicted, could improve the joint-actions by improving the communication and coordination between firms. Such a finding is similar to Lee and Scott [37] and Chang et al [3], both of which suggest that IT infrastructure resources could improve joint-actions between two parties. Similarly, I find that advanced and fast IT infrastructure resources could enhance both the design of the explicit clauses and the contingent clauses by improving the communication and coordination between firms on the green supply chain.…”

“…This implies that, during joint-actions (i.e., relational governance in this study), the firm would have higher communication and coordination efficiency, and the data and information needed for joint-actions would be easier to access or more abundant. Therefore, based on the high-level communication and coordination, and abundant and well-prepared data and information, the joint-actions between two firms would be more efficient and effective [3,37]. On the other hand, during the design of explicit and contingent contract clauses, highly efficient and effective communication and coordination can create more time and energy for firms to exchange ideas, discuss duties and rights of each party, and consider as many contingencies, situations, and circumstance as possible.…”

Key supplier involvement in IT-enabled operations: When does it lead to improved performance?

“…Information technology (IT) is a critical organizational resource in cultivating strategically important interfirm relationships (Lee & Scott, 2015). While there is no unanimously agreed-upon definition, IT resources typically include two interrelated elements:…”

“…IT-enabled integration with a strategically important partner (e.g., key supplier) can turn their complementary knowledge and skills into valuable, causally ambiguous, and hard-to-imitate interfirm resources and routines. Consistent with this view, researchers have advocated investigating how IT resources can be deployed to integrate with other resources in an interorganizational setting, which ultimately affects firm performance (Jean et al, 2010;Lee & Scott, 2015;Ryssel et al, 2004).…”

“…This is particularly relevant in the IT-enabled supply chain context because IT infrastructure and investments can easily be duplicated by competitors, which keep IT resources from meeting the RBV criteria of being rare, valuable, non-substitutable, and hard-to-imitate firm-specific resources (Bharadwaj, 2000;Davis & Golicic, 2010). Noteworthy is that resources can extend beyond the focal firm's boundary, which can be integrated in interfirm routines and operations processes (Das et al, 2006;Lee & Scott, 2015;Petersen et al, 2003). In particular, when IT infrastructure is used to integrate the focal firm's and its key supplier's resources (e.g., skills and technologies), the learning, bundling, and synchronizing process is socially complex, causally ambiguous, and imperfectly understood by competitors (Bharadwaj, 2000;Das et al, 2006).…”