The relationship between power asymmetry and strategic fit in supply chain operations.

• Author: Wang, Daisy

1. INTRODUCTION

   Supply chain management has become one of the most important aspects of firm operations. Through proper supply chain management, firms need to integrate their operations to achieve the best performance of the whole chain. One important aspect of supply chain management is supply chain relationships. Since the success of Japanese firms in the 1980s and early 1990s, supply chain relationships have gained a great deal of interest from both practitioners and researchers. A number of firms in various industries such as automobile, electronics, and retailers have developed integrated relationships with their suppliers (Dyer, 1996; Heide & John, 1990; Kalwani & Narayandas, 1995; Kaufman, Wood, & Theyel, 2000).

   The majority of studies argue that building a cooperative relationship will enhance communications in supply chains, which in turn, will lower the uncertainty in demand and finally lead to higher performance. However, even though current literature advocates a specific type of supply chain relationship--cooperative relationship--empirical studies show inconsistent results. Cooperative relationship does not always result in high performance. On the other hand, researches in operations strategies are not conclusive on which type of operations strategies is better than the other. Do these inconsistent results imply that firms actually build more capabilities than just enhancing communication and decreasing uncertainty through supply chain relationships? Do firms adjust their operations strategies while developing supply chain relationships? It is possible that firms adjust their operations strategies to match their supply chain members' operations strategies and over time, they gradually develop similar operations strategies. The similarity or dissimilarity of operations strategies in supply chains may be the reason for the inconsistent results in the association between cooperative supply chain relationship and high performance. Even when a firm has a cooperative relationship with supply chain members, if they have a dissimilar operations strategy, they may not have good performance. Therefore, in this study, the contention is that, other things being equal, no matter what type of relationships a firm has, as long as the supplier has a similar operations strategy, such a supply chain will succeed. In addition, the power asymmetry among the supply chain relationship will impact the "fit" in the supply chain operations strategies.

2. LITERATURE REVIEW

   2.1 Resource Dependence Theory

   The resource dependence theory (RDT) is one of the five major schools of thought in organization theory. This theory basically argues that organizations actively engage in responding and shaping their immediate environment for the purpose of acquiring critical resources needed for achieving their objectives. As such, this theory assumes that (1) organizations are part of a broader environment that controls critical resources needed to achieve their objectives, and (2) organizations are capable of manipulating and changing the external environment in order to acquire resources. In the following summary, the important themes of the resource dependence theory are discussed: interdependence and resource exchange, and power and strategies for managing the external environment such as mergers, acquisitions, cooptation, joint ventures, and especially nowadays supply chain management.

   Despite the widespread application of the works of Pfeffer and Salancik (1978/2003) in recent years, the fundamental concepts of RDT had grown out of the "exchange theory" developed by Levene and White (1961) and Emerson (Emerson, 1962). According to these authors, organizational exchange can be defined as "any voluntary activity between two organizations which has consequences, actual or anticipated, for the realization of their respective goals or objectives" (Levine & White, 1961, p. 583). Levene and White argue that organizations need to engage in exchange relationships with entities in the environment for adequate supply of resources. As such, interdependence among organizations is a function of accessibility of each organization to important external resources, the objectives of the organization and particular functions to which it allocates the elements it controls, and the degree to which domain consensus exists among the various organizations.

   Following the seminal work of Emerson (Emerson, 1962), Casciaro and Piskorski (2005) presented an empirical reformulation of RDT. Their major contribution mainly was the discussion of...