Power, shared goals and supplier flexibility: a study of the HUB-and-spoke supply chain

Liu, Gordon; Aroean, Lukman and Ko, Wai Wai (2022). Power, shared goals and supplier flexibility: a study of the HUB-and-spoke supply chain. International Journal of Operations and Production Management, 42(2) pp. 182–205.

DOI: https://doi.org/10.1108/IJOPM-08-2021-0538

Abstract

Purpose
Supplier flexibility reflects a supplier’s operations-related decisions in responsively providing the necessary inputs to the focal firm. Drawing on resource-dependency theory and transaction cost economics, this study develops a conceptual framework to explain the differential effects of a focal firm’s power over supplier flexibility in the context of the hub-and-spoke supply chain (SC). This study also considers the goals shared between the focal firm and its suppliers as an important contingency factor within the framework.

Design/methodology/approach
This study tests the proposed conceptual framework using dyadic survey data from a hub-and-spoke SC consisting of a large construction contractor and its 100 suppliers in Indonesia.

Findings
The findings show that coercive power has an inverted U-shaped effect on supplier flexibility, while legal-legitimate power has a U-shaped effect. Furthermore, shared goals positively moderate the U-shaped effect between legal-legitimate power and supplier flexibility.

Originality/value
This study differentiates between the impacts of coercive power and legal-legitimate power on supplier flexibility in the hub-and-spoke SC. It also demonstrates that shared goals play a moderating role in affecting the impacts of legal-legitimate power on supplier flexibility. These findings also have important implications with regard to integrating resource-dependency theory and transaction cost economics to explain these associations.

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