Power and firm profitability in supply chains: french manufacturing industry in 1993

Abstract

The paper examines the relationships between the power of suppliers and buyers and the profitability of sellers who are situated in supply chains between both sets of firms. A review of the literature on power in exchange relations shows there are several power concepts which may have a different impact on seller profitability and whose impact possibly can offset each other. This may be the source of the conflicting evidence on this topic. A failure to distinguish among the concepts may also lead to an underestimation of industry effects relative to resource effects as drivers of firm profitability. The paper uses a new data base of the Banque de France on French manufacturing industry. The anlayses examine whether different power concepts may be empirically identified and what their relationships are with seller profitability. The findings point to the existence of multiple power concepts and indicate that, in the sample, industry effects are more important than firm effects (as measured by relative market share) in explaining seller profitability. The findings also suggest that buyer power explains a much larger percentage of the variance in seller profitability than supplier power. © 1998 John Wiley & Sons, Ltd.

Power in distribution channels — Supplier assortment strategy for balancing power

“…Inspired by economic theory, management scholars make a connection between power and profitability for actors in a distribution channel (Galbraith and Stiles, 1983;Ailawadi et al, 1995;Cook and Henderson, 1998;Collins, 2002). Increasing market power enables an actor to increase relative profitability.…”

The Effect of Use of Power in Buyer-Seller Relationships: An Investigation on the Firm Size Dependency

“…During the pilot test phase, according to the feedback for face validity, some items were modified and some reverse items were removed. Items for the market power variable were adopted from studies by Butaney & Wortzel (1988) and Cool & Henderson (1998).…”

“…Indicators Emerson (1962) Power structure (authority, legitimacy) Power balance El-Ansary & Stern (1972) Power as a function of dependence Power as a function of sources of power Frazier (1983) Operational measures of power based on dependence Butaney & Wortzel (1988) Market power Anderson & Weitz (1989) Power imbalance Cronin et al (1994) Marketing programs Ordering policies Pricing policies Brown et al (1995) Information power Expert power Referent power Legitimate power Reward power Coercive power Balance of dealer-supplier power Frazier & Antia (1995) Use of interfirm power Cool & Henderson (1998) Structural power Dependence power Attributed power Integration power Frazier (1999) Interfirm power Maloni & Benton (2000) Expert power Referent power Legal legitimate power Coercive power Reward power Hingley (2005) Power symmetry Power and polarity Power imbalance Benton & Maloni (2005) Power-satisfaction Power-affected buyer-seller relationship Kumar (2005) Punitive capability based power Dependence-based power Power structure Hansen (2009) Shifting buyer-supplier power…”

“…Legitimacy, for instance, is one of the sources of power. In relationship marketing literature, in the context of use, the sources of power are reward, coercive, expert, referent, legitimate and information (e.g., French & Raven, 1959;Brown et al, 1995;Maloni & Benton, 2000), while others examined this classification as the function of power sources (e.g., attributed power, market power) in channel relationships (e.g., El-Ansary & Stern, 1972;Cool & Henderson, 1998;Butaney & Wortzel, 1988). Likewise, in some later studies these constructs of power sources were categorized as mediated (shown in Brown et al's (1995) paper as referent, information, expert, legitimate) and non-mediated (coercive, legitimate, reward; or in Maloni & Benton's article (2000), expert, referent and legitimate) power.…”

“…Likewise, in some later studies these constructs of power sources were categorized as mediated (shown in Brown et al's (1995) paper as referent, information, expert, legitimate) and non-mediated (coercive, legitimate, reward; or in Maloni & Benton's article (2000), expert, referent and legitimate) power. Furthermore, the market and bargaining power dimensions have been added to the literature to explore the new insight of power in a channel context (e.g., Cool & Henderson, 1998;Butaney & Wortzel, 1988). Table 1 shows some of the important empirical studies and their featured dimensions.…”