Power and relationship quality in supply chains

Abstract

Purpose The purpose of this paper is to test the impact of power (coercive and non-coercive) on supply chain (SC) relationship success. In particular, this paper aims to examine the moderating effect of relationship quality (RQ) on the associations between power bases and relationship success. In turn, RQ and relationship success can impact the operational performance of the suppliers. Design/methodology/approach A survey of 284 Australian suppliers (growers of organic fruits and vegetables) was conducted to elucidate the associations among power, RQ, relationship success and operational performance. Findings RQ was found to only moderate the positive relationship between non-coercive power and relationship success. Moreover, RQ and relationship success were positively related to the suppliers’ operational performance. The findings conform those of previous research in which coercive power is negatively related to the supplier’s perception of relationship success while non-coercive power is positively related to the supplier’s perception of relationship success. Relationship success was found to mediate the relationships between the power bases and operational performance. Research limitations This study only collected data from one-side of the dyad (the suppliers). Another potential limitation is the existence of respondent bias, which can arise when a single respondent is asked to assess both the nature of the relationship and the performance outcomes of the relationship. Practical implications This study highlights the importance for managers to understand the dynamic shaping relationships when they want to signal their influence and RQ in inter-firm relationships associated with the SCs. Originality/value This study applies signaling theory as an alternative theoretical lens that looks into the moderating role of RQ on the associations between power bases and relationship success in the SC. This study argues that when the buyer increasingly develops RQ, the effect of non-coercive power on relationship success diminishes. Both RQ and relationship success positively influence the supplier’s operational performance.