The impact of boundary conditions on the relationship between value creation and value appropriation in buyer-supplier relationships

Abstract

Purpose This study aims to investigate whether higher value creation leads to higher value appropriation and to identify the boundary conditions in a buyer–supplier relationship that can explain why a particular supplier can appropriate higher value than others. Design/methodology/approach The study uses questionnaire surveys. The sample of the survey has 150 publicly-listed supplier firms in Taiwan. The unit of analysis is the buyer–supplier relationship. Findings In the buyer–supplier relationship, suppliers’ bargaining power, partnership and a supplier’s original brand manufacturing (OBM) business can strengthen the positive relationship between value creation and value appropriation. Research limitations/implications This study adopts the unilateral viewpoint of suppliers; however, some constructs might require dyadic evaluation. This study only explores the spillover effect of OBM business on the relationship between value creation and appropriation. Practical implications The spillover effect of a supplier’s OBM business in a buyer–supplier relationship allows the buyer to share more common benefits and the supplier to capture more private benefits as compensation. By broadening its customer base, a supplier can increase its bargaining power. A supplier can also maintain a strategic partnership with each essential buyer. Originality/value To avoid the dark-side effect of partnership, the model provides the contingency that a supplier can capture more value from a buyer–supplier relationship.