Power advantage: antecedents and consequences in supplier–retailer relationships

Abstract

Purpose The research indicates that relatively powerful firms exploit their advantages to damage their weaker partners. However, how power can be abused by advantaged firms remains unclear. This study aims to examine the relationship between power advantage and abuse of power and whether the power advantage mediates the relationship between dependence and personal interests and between trust and company performance. Design/methodology/approach A total of 130 retailers in Taiwan were investigated. Partial least squares regression was performed to test the proposed hypotheses. Findings The results of this study show that power-advantaged firms are more likely to abuse their power; however, the purposes are more for their company performance than for personal interests. Power advantage has different mediating effects on the dependence–personal interests and trust–company performance relationships. Research limitations/implications Considering both time and cost limitations, this study investigated one aspect of the retailer–supplier dyad in northern Taiwan. The samples collected may be influenced by the nature of the industry and sampling method, possibly limiting the generalizability of the research results. Practical implications This study can help channel managers with a power advantage to have an improved understanding of their salespersons’ behavioral patterns, particularly gaining personal interests from customers. Originality/value This study expands the understanding of the antecedents and consequences of power advantages in supplier–retailer relationships. It also highlights in specific institutional arrangements, the weaker parties’ efforts to endure their counterparts’ use of their power advantage to serve their personal interests. Future research may analyze abuse of power by expanding research to other industries and different cultural contexts.