Dependence structure, relational mechanisms and performance: teasing out the differences between upstream and downstream supply chain partners
International Journal of Operations & Production Management
ISSN: 0144-3577
Article publication date: 27 January 2023
Issue publication date: 29 May 2023
Abstract
Purpose
Firms are subject to power from both upstream and downstream partners; those partners may have different or even opposing impacts on supply chain relationships and financial performance. The purpose of this study is to investigate how upstream and downstream dependence structures affect a firm's financial performance through upstream and downstream relational depth (DEP) and relationship extendedness (EXT).
Design/methodology/approach
Data representing both upstream and downstream supply chain perspectives was collected using a multiple-respondent survey and was further augmented using financial performance data from an archival database.
Findings
Dependence advantages (ADVs) and disadvantages from upstream and downstream partners affect relational mechanisms and firm performance differently. Only downstream ADV will enhance a firm's DEP and EXT and subsequently affect firm's revenue and profit. Contradictory to widely held belief, the results reveal that firms that maintain long-term relationships with buyers and suppliers may experience lower revenue/profit.
Originality/value
This research represents a significant step in understanding the economic ramifications of dependence by (1) highlighting the difference between upstream and downstream supply chain dependence structure and (2) understanding the indirect effects of dependence structure on financial performance.
Keywords
Acknowledgements
This study is funded by grants from the National Natural Science Foundation of China (72102116, 72150610503), Zhejiang Natural Science Programme (LQ22G020011) and Zhejiang Soft Science Programme (2021C35017).
Citation
Pu, X., Cai, Z., Chong, A.Y.L. and Paulraj, A. (2023), "Dependence structure, relational mechanisms and performance: teasing out the differences between upstream and downstream supply chain partners", International Journal of Operations & Production Management, Vol. 43 No. 7, pp. 1009-1039. https://doi.org/10.1108/IJOPM-04-2022-0235
Publisher
:Emerald Publishing Limited
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