Hegemony in asymmetric customer-supplier relationships

This paper explores the concept of hegemony to understand how power relates to hegemony and the potential influence of hegemony on business relationships. The nature of hegemony, its connections to the power literature, and its impacts on customer-supplier relationships can expose the mechanisms that contribute to sustaining inequality in asymmetric relationships. We bridge the concept of hegemony (with roots predominantly from the international relations and sociology fields) to the relationship and interaction literature showing the derivations, distinctions and potential evolutions of literature combining power and hegemony in customer-supplier relationships. A conceptual framework, ‘the hegemonic triangle’, identifies a hegemonic approach to customer-supplier relationships involving dominance, mastery and authority. Hegemonic relationships may evolve from imbalanced power of a customer over a supplier through determinedly and unilaterally imposing these three facets to exert influence over a supplier. The hegemonic triangle is situated at three boundary levels of influence; the contract, the market, and ideology. Hegemony is positioned at the meta level and represents a spatial domain impacting mental models of actors who legitimize practices and ideas. The paper presents an agenda for research linking hegemony and power to guide future conceptual and empirical developments in B2B relationship and interaction studies.     

The impact of network relationships on internationalization process: An empirical study of Chinese private enterprises

Chinese private enterprises have been internationalizing rapidly during the last two decades. This study adopts a network approach to examine what factors affect the internationalization process of Chinese private enterprises. Our survey of 108 private Chinese enterprises in the manufacturing sector in Zhejiang province in southeastern China revealed that business networks and personal networks affect the internationalization activities of Chinese private enterprises. Specifically, business networks have a positive impact on the timing of the first foreign market entry, the internationalization pace, and resource commitments, whereas personal networks have a positive impact on the internationalization pace and resource commitments, but not on the timing of the first foreign market entry. In this paper, we report our findings of our survey, discuss the contribution that this study makes to the existing internationalization literature, and suggest future research directions. Policy implications on how to facilitate the internationalization process are also discussed.     

The power roots and drivers of infidelity in international business relationships

We propose a conceptual model of the power roots and drivers of infidelity in exporter-importer (E-I) working relationships. Based on data collected from 262 Greek export manufacturers, we confirm that the exercise of coercive power in the E-I working relationship by the exporter has positive effects on distance, opportunism, and uncertainty, as opposed to the exercise of non-coercive power that exhibit negative effects. In turn, distance, opportunism, and uncertainty each contribute toward driving infidelity in the relationship by the importer. The relationship length and relationship status were also found to have a control effect on infidelity.     

The power of emotional value: Moderating customer orientation effect in professional business services relationships

Just recently, the literature has established the existence of a dark side with regard to customer orientation (CO) in terms of sales performance. However, no clear position is presented about the possible dark side of CO when it comes to B2B relational outcomes, preventing managers from knowing when to accentuate/suppress CO activities. The aim of this study is to examine the relational consequences of suppliers' CO seen through the customers' lenses, and to investigate the moderating role of perceived emotional value in a professional service relationship context. A conceptual model anchored in value and relationship marketing theories is tested on a sample of 226 professional service firms' business customers, using the PROCESS routine. The study finds that perceived CO is related to satisfaction with the relationship and with relationship performance in an inverted U-shaped form, while satisfaction is positively related to relationship performance. We show that, although preferring to receive CO from their supplier, customers might want a relationship that is not as intense/comprehensive as the one that the supplier aims to achieve. The study unfolds emotional value as a moderating mechanism that can prevent the diminishing effect of CO activities.     

A diagnostic model of private control and collective control in buyer-supplier relationships

This study examines the control-based governance in buyer-supplier relationships. Building on boundary spanning theory and governance literature, we propose an integrated model that consists of exchange parties' private control (aimed at individual gains) and collective control (aimed at joint gains) in boundary spanning activities, along with their structural antecedents and relationship consequences in interorganizational governance. Using data collected from manufacturer-distributor dyads, we demonstrate that a buyer-supplier relationship characterized by a high degree of distributive justice and low degrees of goal difference and power asymmetry promotes exchange parties' collective control while inhibiting private control in boundary spanning conduct. The impact of private and collective controls on dyadic relationship performance is further mediated through governance costs and returns. Specifically, private control results in conflict and transaction costs that undermine dyadic relationship performance, whereas collective control leads to solidarity and reciprocity that sustain dyadic relationship performance. Recognizing and distinguishing between private control and collective control is essential to managing boundary-spanning behavior in buyer-supplier relationships and to solidifying relationship performance in supply chain and channel management.     

Knowing me,knowing you: Self- and collective interests in goal development in asymmetric relationships

This paper investigates how self-interests and collective interests in goal development are manifested in the context of asymmetric customer–supplier relationships. Taking an interaction approach (IMP Group, 1982), a conceptual structure highlighting possible patterns of characteristics of the asymmetric customer–supplier relationship and approaches to self- and/or collective interests in goal development has been created.Based on a multiple case study approach, the findings suggest that smaller suppliers who deliberately pursue self-interest in their business activities with larger customers experience better outcomes. Larger customers recognise that the creation of collective business goals enhances the outcome of joint efforts in terms of market impact and profitability. The findings also highlight that trust is perceived as a necessity for the development of collective interests in asymmetric relationships and that the power of the larger customer is not perceived as a constraint. A key conceptual contribution is the identification of two distinct types of asymmetric relationships: ‘product/technology-oriented’ in which self-interest dominates by focusing on one party's resources for developing new products or technology and ‘complementary competencies-oriented’ in which collective interests link the competencies of the larger and smaller party for new joint business ambitions.     

Ownership,organization, and private firms' efficient use of resources

The principal–agent theory asserts that public firms' performance is driven by efficient capital and labor markets but is silent about non‐listed private companies, which are less permeable to market forces (both capital and labor) than are public companies. We propose and test a 2 × 2 framework distinguishing owner‐controlled vs. agent‐led firms from firms with a flat vs. multilayer organization. Our findings provide highly contrasted results and raise important issues for further study of private firms. Copyright © 2003 John Wiley & Sons, Ltd.     

Power in a startup's relationships with its established partners: Interactions between structural and behavioural power

Power plays a key role in the relationships between startups and established organisations. Yet researchers have devoted little attention to the startup's perspective on power in such relationships. To study startups' view on power, a useful starting point is their structural power, but this also requires an investigation of their power behaviour. We explore how structural and behavioural power interrelate in a startup's relationships with its established partners in the medical device business. Our longitudinal, embedded case study reveals nine interaction episodes in which power plays a decisive role. The power episodes show that the case startup often uses hostile power use tactics because it overestimates its structural power. Since its established partners recognise its lack of power, they usually do not accept such behaviour. Thus, the case startup could not extract the intended benefits. Nonetheless, we find that the case startup could benefit from its relationships if it employs conciliatory power use tactics or power change tactics. With these insights, we contribute to the startup business relationship literature by providing a better understanding of startups' experience with power. We also extend the power literature by showing that it is the perception of power that determines power behaviour rather than the de facto structural potential.     

Strategic use of private standards to enhance international competitiveness: Vegetable exports from Kenya and elsewhere

The paper examines how European retailers are using private standards for food safety and ‘quality’ as risk management and competitive tools and the strategic responses of leading Kenyan and other developing country supplier/exporters to such standards. Despite measures to harmonize a ‘single market’, the European fresh produce market is very diverse in terms of consumer preferences, structural dynamics and attention to and enforcement of food safety and other standards. Leading Kenyan fresh produce suppliers have re-positioned themselves at the high end, including ‘high care’, segments of the market – precisely those that are most demanding in terms of quality assurance and food safety systems. An array of factors have influenced this strategic positioning, including relatively high international freight costs, the emergence of more effective competition in mainstream product lines, relatively low labor costs for produce preparation, and strong market relationships with selected retail chains. To succeed in this demanding market segment, the industry has had to invest substantially in improved production and procurement systems, upgraded pack house facilities, and quality assurance/food safety management systems.     

Creating value in business relationships: The role of sales

Understanding the creation of value in business relationships has been a long-standing goal of researchers and managers alike. By adopting a relational perspective, recent research on business relationships has made much progress in understanding value-creating processes. As the sales function is thought to be a pivotal part of the value-creating processes in business relationships, the evolving view on creating relationship value clearly has implications for our understanding of the role of sales in these processes. In contrast to its importance, the question of how the sales function contributes to creating value in business relationships has been largely neglected in extant literature. The objective of our paper is to answer this question by systematically linking the relational value creating process to the sales function's content. Interpreting value creation as interaction process, we identify four features of value-creating processes in business relationships suggested in recent research (i.e., jointness, balanced initiative, interacted value, and socio-cognitive construction) and, based on these, outline a framework that is used to define a set of tasks that are key to creating value in business relationships and hence become critical for sales in its hitherto neglected role as co-creator of relationship value. We illustrate the various tasks of this new role of sales with data from 43 interviews with sales managers and salespeople. Along with related normative recommendations in extant literature, the interviews provide support for the validity and relevance of our framework for understanding the role of sales in creating relationship value. This framework puts forward a much-needed first effort towards a theory of sales' role in creating relationship value and offers several opportunities for future research.     

Recent developments in intellectual property and power in the private sector related to food and agriculture

The legal protection of intellectual property (IP) has allowed private persons and enterprises to assert exclusive rights in relation to certain agricultural innovations. Whether through the protection of breeding innovations under plant variety rights protection laws or through the patenting of genes and gene fragments, the increasing involvement of IPRs in agriculture has effected a shift of agricultural research from public to private institutions. This article examines the changes in the international IP landscape which has facilitated these developments and looks at the impacts of modern IP developments upon agricultural research and farmers. It concludes with a consideration of IP liability issues arising from the development of GM agriculture.     

Transferring hybrid maize technology : The role of the private sector

Developing countries have tried a variety of policies concerning new technology as a source of agricultural growth; there is still much debate on which is the most efficient. More study of private methods of technology transfer is needed. This article presents some preliminary statistical tests of the relationships among seed imports, private research, public research and yield. Seed imports and private research are found to be important potential sources of improved technology. Countries which restrict imports and activities by multinational seed companies may impose costs on their farmers and consumers in terms of foregone productivity.     

Exercised power as a driver of trust and commitment in cross-border industrial buyer-seller relationships

The article reports the findings of a study conducted among 151 U.S. export manufacturers of industrial goods regarding their working relationships with foreign customers. Specifically, the emphasis is on the sources of power exercised and how these affect trust and commitment in the relationship through the mediating role of conflict and satisfaction. Using structural equation modelling, it was confirmed that the exercise of power derived from coercive sources increases conflict and reduces satisfaction, while the exercise of non-coercive power sources leads to lower conflict (but not significantly increasing satisfaction). Conflict was found to be negatively associated with trust, as opposed to satisfaction which enhances trust. Trust was subsequently revealed to foster commitment in the relationship. Conclusions and implications are derived from the study findings and directions for further research are provided.     

Conflict-coordination learning in marketing channel relationships: The distributor view

Although a fairly large body of literature exists on channel conflict management, little research has been done from an interorganizational conflict-learning perspective. This study explores how channel members can use conflict-coordination learning (CCL), as a conflict resolution mechanism, which leads to improved capabilities, which in turn can enhance co-created value in marketing channel relationships from a distributor point of view. Drawing on both a resource-based view of the firm, an absorptive capacity perspective, and an interorganizational learning approach, we propose that conflict values (positive conflict attitudes and avoidance of conflict behaviors) can be viewed as firm resources that directly influence CCL, which in turn can enhance co-created value (joint marketing strategy quality and joint profit performance). To explore these issues, we developed and tested our hypotheses with data from 101 distributors within the food industry in Taiwan. As predicted, we find that positive conflict attitudes are positively related to CCL, and that avoidance of conflict behaviors is negatively related to CCL. Furthermore, the results indicate that joint marketing strategy quality mediates the relationship between CCL and joint profit performance. Specifically, under high positive conflict attitudes, CCL strongly appears related to joint marketing strategy quality.     

Cartel formation and pricing: The effect of managerial decision-making rules

We experimentally investigate how the managerial decision-making process affects choices in a Bertrand pricing game with an opportunity to form non-binding cartels. To do so we compare the effects of three decision-making rules for the firm (decisions by CEOs, majority rule and consensus) to each other and to decisions in a benchmark consisting of single-individual firms. It has been argued elsewhere that groups behave more competitively than individuals. In this setting this predicts that for all three decision-making rules we should observe fewer cartels and lower prices. This is not what we find. For the formation of cartels, there are no differences across treatments. For prices asked, we find that first, cartels lead to higher prices in all treatments, despite the fact that they are non-binding. Second, the decision-making rules strongly affect the prices asked. One thing that stands out is that firms run by CEOs ask higher prices (i.e., defect less often from the cartel) than observed in the other treatments.     

The welfare effects of mobile termination rate regulation in asymmetric oligopolies: The case of Spain

This paper examines the effects of mobile termination rate regulation in asymmetric oligopolies. It extends existing models of asymmetric duopoly and symmetric oligopoly where consumer expectations about market shares are passive. First, demand and product differentiation parameters are calibrated using detailed data from the Spanish market from 2010. Next, equilibrium outcomes and welfare effects under alternative scenarios of future termination rates are predicted. Lowering termination rates typically lowers profits of all networks and improves consumer and total surplus.     

Securing business-to-business relationships: The impact of switching costs

While the relationship marketing literature acknowledges the importance of switching costs for increasing customer retention, little is known about its relevance in industrial markets. In particular, it is unclear whether switching costs, and associated dimensions, impact on behavioral outcomes of buyer–seller relationships in business-to-business (B2B) markets. In order to contribute to theory development in this important area, our research first explores the dimensions of switching costs for the B2B domain and also tests the relative impact of these dimensions on business customers' actual purchase behavior. Results suggest that switching costs in B2B settings are a multi-faceted construct, including (i) procedural, (ii) financial, and (iii) relational switching costs. Moreover, we find relational switching costs to be most important for securing B2B buyer–seller relationships since they impact a customer's (a) share-of-wallet, (b) cross-buying behavior, and (c) actual switching behavior. While procedural switching costs only influence share-of-wallet, financial switching costs solely impact customer's cross-buying behavior. These findings contribute to a better understanding on how to secure B2B buyer–seller relationships.     

Dynamics of asymmetric conflict: The case of the German Milk Conflict

The German Milk Conflict developed when an emerging farmer association challenged the large incumbent in the wake of an insufficiently communicated policy change, abolition of the milk quota. The organizations represent opposing sides of a common policy debate, market liberalization versus regulation. The study analyzed the patterns between the two organizations and proposed a grounded theory of asymmetric conflict. Due to the elevated level of emotions during the conflict, the study used a qualitative research approach based on 34 in-depth interviews. The analysis uncovered the interlocking patterns of simplification and emotionalization by the smaller association and rationalizing by the larger association. Results indicate how an active opponent can use policy changes to its advantage and how to prevent such a development. Recommendations based on the grounded theory developed, such as implementing suitable communication strategies, are transferable to a variety of changes and conflict situations in complex environments, such as the food and agricultural sector.     

The organizational form of vertical relationships: Dimensions of integration

In this paper we argue that the organizational form of a buying firm's vertical relationship with a supplier can be defined as a configuration of four distinct, but related dimensions of integration. These dimensions pertain to ownership integration (the extent that the firm owns the upstream component supplier), coordination integration (the intensity of information exchange to align the two stages of production), task integration (the extent that the buying firm performs upstream tasks), and knowledge integration (the extent that the buying firm possesses knowledge about the upstream component). Ranging from fully integrated to fully disintegrated, these dimensions can be combined to form various organizational configurations that better reflect the true nature of organizational forms than one-dimensional conceptualizations. Drawing on distinct fields of research (e.g. transaction costs economics, information-processing theory, and learning) the goal of this paper is to improve our understanding of the four dimensions of integration and their interrelationships. This is an important step for future processes of configurational theory building and normative testing.