Supply Chain Contagion

Abstract

Drawing on research from the interfirm relationship, marketing channels, operations management, and network theory literature and on the basis of qualitative depth interviews, the authors identify a new phenomenon they call “supply chain contagion.” Supply chain contagion is the propagation of interfirm behaviors from one dyadic relationship to an adjacent dyadic relationship within the supply chain. Contagion can occur inadvertently and with or without the knowledge of the affected parties. Using institutional theory, the authors develop a conceptual model that predicts the conditions under which contagion is likely to occur. Although contagion may take the form of any number of interfirm behaviors, operationally, the authors focus on whether the downstream influence strategies that manufacturers use with their dealers are imitated by these same dealers with end customers. They conduct conclusive research using a sample of 151 vertically linked manufacturer–dealer–customer supply chain triads and explain a large variance (R2 = .30) in the use of downstream influence strategies in terms of supply chain contagion. Given extensive prior empirical support for alternative antecedents to influence strategy usage, the explanatory power of supply chain contagion is impressive and suggests that how intermediaries treat end customers is explained, to a large degree, as the intermediaries simply imitating how their suppliers treated them. In addition to the identification of a new theoretical concept, the study provides empirical support for the effects of both macro- and microinstitutional factors on interfirm behavior. Specific factors that are positively related to the level of manifest contagion are environmental uncertainty and the perceived similarity and frequency of contact between boundary personnel; dependence asymmetry has a negative effect on manifest contagion. Managers and boundary-spanning personnel who are aware of supply chain contagion effects should be better able to influence strategically the behavior of channel partners and may be better inoculated against their own unintended imitation of other organizations within their supply chain.