Customer bargaining power and supplier profitability: the moderating role of product market overlap

Abstract

Purpose Research on the relationship between customer bargaining power and supplier performance in supplier–customer relationships has flourished in recent decades. This study aims to empirically investigate whether product market overlap (PMO) in a supply chain moderates the effect of customer bargaining power on supplier profitability. Design/methodology/approach This study uses large-scale secondary data from multiple databases. Econometric panel data techniques are used to test the hypotheses. Findings The results show that PMO in a supplier–customer relationship and PMO in supplier–supplier relationships both exacerbate the negative effect of the bargaining power of customers on supplier profitability. Originality/value This study contributes to the field of supply chain management. This study brings new insights into the ongoing debate surrounding the relationship between customer bargaining power and supplier profitability. The study also contributes to the literature on supply chain networks by showing the impact of indirect supply chain relationships.