Improving power position with regard to non-mediated power sources – The supplier's perspective
Introduction
Cooperating companies are rarely similar in terms of their resources and competencies. Actually, one would even demand business partners to be meaningfully different, because such differences enable synergy effects (e.g. in joint product development, or supply chain integration). Therefore, an important management task for the smaller company would be to implement tactics that mitigate power asymmetry in relationships with big, valued partners and, at the same time, maximize the benefits acquired from such relations. In this paper, we explore power asymmetry-related tactics using the example of SMEs supplying multinational companies, and we provide evidence that such tactics may be beneficial for SMEs and do not come at the cost of losing business partners.
Empirical research on balancing power by suppliers dealing with bigger business customers is very limited. Only recently, Lacoste and Johnsen (2015) and Pérez and Cambra-Fierro (2015) applied case study research to identify process-related practices leveraging performance of suppliers and improving their power position in relation to powerful customers in the FMCG industry and computer software industry. Our study follows the same research avenue and assumes that even if a power imbalance is typical in relationships with big customers, it should be carefully managed to protect the seller from effects related to the dark side of a relationship, and to safeguard relationship investments. Thus, our study has two interrelated objectives. Firstly, it is aimed at exploring supplier tactics related to non-mediated power which improves the suppliers' power position in relationships with big customers. Secondly, our study provides an understanding of how these power-related tactics leverage benefits acquired by suppliers in relationships with their key customers.
We utilize a longitudinal case study approach with regard to Polish small and medium-sized suppliers selling to big customers that have recognizable brands and occupy strong positions within international supply chains. We focus on exchange relationships that take place within two industries: SMEs providing manufacturing outsourcing to big manufacturers, and SMEs developing real estate facilities for international retail brands such as supermarkets. All the business dyads that we focused on were characterized by clear power asymmetry and strong inter-cultural differences between sellers (Eastern Europe) and buyers (Western Europe).
Section snippets
Power asymmetry and the power sources perspective in B2B relationships
Although power utilization and power asymmetry are commonly perceived as typical features of exchange business relationships (Belaya & Hanf, 2009; Ford, Gadde, Håkansson, & Snehota, 2003; Wilkinson, 1973) and utilizing power may increase satisfaction in the supply chain (Benton & Maloni, 2005), remaining in asymmetrical relationships and maintaining a strong dependence on a business partner are treated as risky and demand the application of management tools. This is mainly because power
Research method
We applied a longitudinal multi-case approach to explore and understand specific interrelations between suppliers' tactics, their power position in relation to key customers, and the relationship benefits acquired by these suppliers. The case study method was often used in prior studies of power asymmetry in B2B relationships (e.g. Cox, Watson, Lonsdale, & Sanderson, 2004; Pérez & Cambra-Fierro, 2015). Our study focuses on the evolution of a dyadic relationship between suppliers and their key
Research results
We analysed the relationships between the suppliers located in Poland and their key customers – mostly companies with recognizable brands located in North-Western Europe. We studied the history of these relationships to understand the distribution of power between such different partners, and Polish suppliers' practices in improving their power position and leveraging various relationship benefits. Following the research approach that we described above, we identified 4 main suppliers'
Discussion and conclusions
This research contributes to our understanding of how companies should be managed within a complex environment comprised of business relationships and networks (Ford et al., 2003), by proposing 4 general tactics and 15 sub-tactics that may be applied by small and medium-sized suppliers oriented towards leveraging their power position and benefits in relationships with powerful business buyers. Our longitudinal case studies have provided evidence that these tactics improved the position of
Managerial implications
This research motivates business practitioners involved in relationships with powerful customers to implement a set of management tactics that may help them to maximize relationship benefits and mitigate risks connected with deep cooperation and a strong dependence on key customers. The set of supplier practices should be adjusted to the specific industry features influencing the supplier – the buyer relationship and the specific features of every buyer itself, although our study illustrates
Research limitations and future research
Our qualitative research findings are restricted to the small number of business relationships we investigated, and therefore cannot be uncritically generalised. Further research can overcome these limitations by studying the power balance in the context of other industries, regions and countries (e.g. the high-tech industry, where there are usually strong dynamics in alliancing). Apart from the methodological approach, our research is also limited in terms of its scope. In this research we
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- 1
The research project undertaken by Dariusz Siemieniako as a co-author of this paper has been financed by Bialystok University of Technology Statute Research Grant no. S/WZ/1/2013.
- 2
The research project undertaken by Maciej Mitrega as a co-author of this paper has been financed by National Science Centre in Poland on the basis of decision no. UMO-2015/19/B/HS4/01699.