Power, Governance, and Value in Collaboration: Differences between Buyer and Supplier Perspectives

Abstract

Early research on buyer–supplier relationships was based on two cornerstones: relational governance mechanisms and superior value creation for the whole supply chain. Relational governance mechanisms, based on trust and informal safeguards, can lead to higher value creation, while lack of trust and opportunism can be controlled by contractual governance mechanisms. To date, however, few studies have investigated the role of power asymmetry in collaboration and how the total value is distributed between buyer and supplier. The amount each partner appropriates depends on their relative power in the relationship, which has further implications in governance and relationship continuation, yet that has not been thoroughly explored in the literature. To fill this gap, this study investigates the influence of power asymmetry on governance and value appropriation in collaborative relationships, from both the buyers’ and suppliers’ perspectives. This article contributes to the buyer–supplier literature by exploring the gains of both the stronger and weaker partners in the dyad. Based on in‐depth case studies with buyers and suppliers of the personal care and cosmetics (PC&C), and food and beverage (F&B) industries in Brazil, we found insights concerning the influence of power asymmetry and interdependence on governance mechanisms, as well as the complementarity of value appropriation inside and outside the dyad. We also propose a framework to represent the interplay between perceived justice and power asymmetry in long‐term relationships.

Supplier dependence and R&D intensity: The moderating role of network centrality and interconnectedness

“…The answer might lie in the supplier firm's R&D intensity, which is an indication of the extent to which the supplier pursues long‐term commitments to exploit advanced knowledge and novel ideas. Managers should be aware that an inter‐organizational relationship with network partners is a critical source of innovation (Brito and Miguel, 2017). The access to reliable information and knowledge available in a network must be obtained regardless of the level of dependence upon major customers.…”

Behavioral Operations and Supply Chain Management–A Review and Literature Mapping

“…These topics are discussed in section Emerging Topics in BOSCM Studies. One of the more established topics is the power balance and trust level between buyers and suppliers and its operational implications (Ireland & Webb, ; Terpend & Ashenbaum, ; Pulles, Veldman, Schiele, & Sierksma, ; Brito & Miguel, ; Aral, Bakos, & Brynjolfsson, ; Kaufmann et al., ). Other related topics are supply chain integration (Enz & Lambert, ; Thornton, Esper, & Autry, ) and supplier development and knowledge transfer (Kim, Hur, & Schoenherr, ; Preston, Chen, Swink, & Meade, ).…”

Power in Supply Chain Management

“…Market-or purchase item-related factors such as dynamism and specificity could be other candidates for further investigation. Brito and Miguel (2017) point out that the power relationship between a buyer and supplier is embedded in a more complex nexus of other relationships and that firms consider spillover effects between these relationships when they decide on their tolerance for power use by the other party. From these ideas, research grounded in a network perspective on power could emerge that would bring together theory on power with concepts from social network analysis such as ties and centrality (Borgatti & Li, 2009;Choi & Kim, 2008;Kim, Choi, Yan & Dooley, 2011;Wichmann, Carter & Kaufmann, 2016).…”