Dependence Asymmetry and Joint Dependence in Interorganizational Relationships: Effects of Embeddedness on a Manufacturer's Performance in Procurement Relationships

Abstract

This study of the procurement relationships of two major U.S. auto manufacturers examines the effects of two dimensions of organizational interdependence on the performance of those relationships for the manufacturer: dependence asymmetry, the difference in actors' dependencies on each other in a dyadic exchange relationship, and joint dependence, the sum of dependence between actors in the relationship. Rather than focusing solely on dependence advantage and the concomitant logic of power, we focus on joint dependence, which operates through a logic of embeddedness. We examine how the effect of joint dependence on performance is mediated by specific elements of embeddedness: joint action, trust, and the quality and scope of information exchange. Results show that joint dependence enhances the performance of procurement relationships for manufacturers and that this effect is partially mediated by the level of joint action and the quality of information exchange between the partners. Decomposing dependence asymmetry into the conditions of a manufacturer's and a supplier's dependence advantage, we also find that while the manufacturer's dependence advantage diminishes its performance, the supplier's dependence advantage has a null effect. We discuss the implications of these findings for studies of interorganizational interdependence.