Being Secure While Being Dependent: Dependence Balancing Strategies for Weaker Partners in Channel Relationships
DescriptionInterdependence is a crucial concept in marketing channels research because buyers andsuppliers are dependent on each other in the process of making products available to the endusers(Kumar, Scheer, and Steenkamp 1995; Gulati and Sytch 2007). Extant research oninterdependence between channel partners has consistently argued and empirically confirmedthat relationships with dependence asymmetry are more dysfunctional, less stable, and lesstrusting than symmetric relationships (Anderson and Weitz 1989; Kumar, Scheer, andSteenkamp 1995; Gulati and Sytch 2007). Asymmetric relationships are especially harmful andunsecure to the weaker partners, as they are the ones being squeezed by the stronger partners andcan be replaced at any moment (Gulati and Sytch 2007; Bastl, Johnson, and Choi 2013).However, asymmetric channel relationships still prevail in reality, as it is difficult to find twopartners with equal power. Examples of channel dyads with imbalanced dependence abound,such as Apple and Foxconn, Wal-Mart and its supplier, and Toyota and its dealer. The questionis: How can weaker partners gain security and benefit from such imbalanced relationship ratherthan suffer from their more powerful partners’ exploitation?To address this issue, our project brings focus to the plight of the weaker player, which has notreceived much attention from existing channels literature. Most channels studies focus on themore powerful buyer or supplier in a channel relationship to examine how it uses its poweradvantage to influence and control the relationship (Bastl, Johnson, and Choi 2013). Byextending power dependence and social network theories, we aim to investigate three researchquestions: (1) Can weaker players leverage their network embeddedness as an external powersource to balance the dependence asymmetry? (2) How can such embeddedness in differenttypes of networks help balance the dependence asymmetry? and (3) Through which tactics canweaker players effectively exercise the potential power in their network embeddedness toinfluence their more powerful partners? We propose that weaker players can rely on theirembeddedness in business and government networks to achieve dependence balancing inemerging markets. Furthermore, we categorize four types of tactics through which weakerplayers can translate the potential power in the network embeddedness into balanceddependence—exchange, coalition formation, alternatives search, and upward appeal—anddelineate their roles in the different networks. To add richness to our theory, we also examinehow the effects of embeddedness in business and government networks vary under differentlevels of dependence asymmetry.Our investigation will be based on a survey of distributor–manufacturer pairs in the Chineseautomotive industry. The aim of the study is not only to contribute to a broader understanding ofpower dependence in channel relationships but also to provide important implications for smallandmedium-sized companies in China to maintain and benefit from long-term relationships withtheir stronger channel partners.
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- Dependence Balancing,Network Embeddedness,Interfirm Relationships,Marketing Channels,