Multimarket Contact and the Use of Power in Buyer–Supplier Relationships

Abstract

Buyers and suppliers often have multiple business relationships with each other across different geographical and product markets, forming a potentially complex web of connections. What happens between the firms in one geographical or product market may influence their interactions in others. Prior research in strategic management has found that similar multimarket contact in horizontal relationships between competitors has important consequences for the firms’ use of market power. However, the consequences of multimarket contact in vertical buyer–supplier relationships remain unexplored. Building on resource‐advantage theory, this study proposes that multimarket contact between buyers and suppliers is linked to their respective propensity to use three types of mediated power in their relationships (i.e., reward, coercion, and legal legitimate) and that the effects of multimarket contact differ between buyers and suppliers. A vignette study with 143 purchasing managers and 137 business‐to‐business sales managers tests the developed hypotheses. The findings show that a higher level of multimarket contact encourages suppliers to use legal legitimate power to a greater extent and encourages buyers to use reward power to a greater extent but legal legitimate power to a lesser extent.

Understanding Managers’ Reactions to Blockchain Technologies in the Supply Chain: The Reliable and Unbiased Software Agent

“…The scenario‐based experiment provides a valuable opportunity to understand the nuances of decision making (Eckerd and Bendoly 2011; Knemeyer and Naylor 2011). The vignette methodology is frequently used to assess decision‐making behavior in the operations and supply chain management field (e.g., Mir et al 2017; Reimann et al 2017). There are numerous advantages to using a scenario‐based experiment.…”

Methods to Our Madness: Adapting Methods to the Changing Nature of Our Problems

“…Behavioral experiments are not limited to the consumer, however, as Reimann et al. () and Murfield et al. () apply vignettes and scenario‐based experiments to industrial contexts.…”

Economic sustainability in Short Food Supply Chain. The case of the Horizon 2020 project "Short Food Supply Chain Knowledge and Innovation Network (SKIN)"

“…In fact, in Europe there are many countries characterized by small-medium enterprises (SMEs). Small farms operating without cooperation suffer the deep and old problem of market asymmetry information (Reimann, Shen and Kaufmann, 2017). It causes an excessive level of transaction costs (TCs).…”