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Customer Bargaining Power, Strategic Fit, and Supplier Performance

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  • Hsihui Chang
  • Sheng Liu
  • Raj Mashruwala

Abstract

Prior studies report mixed evidence on the impact of customers' bargaining power on supplier performance. We shed light on this mixed evidence by considering the moderating role of strategic fit. A strategically aligned supplier can provide long‐term benefits to the customer. As a result, powerful customers may trade off the short‐term benefits obtained through supplier concessions with the long‐term benefits derived from strategic fit. Thus, strategic fit can mitigate the negative impact of customers' bargaining power on supplier performance. We use data on supplier–customer dyads identified using financial disclosures of firms' major customers to examine this research question. We find that a strategic fit between suppliers and their customers on three distinct dimensions (innovation, customer orientation, and efficiency) attenuates the negative association between customers' relative bargaining power and supplier performance. These findings are robust to several sensitivity tests.

Suggested Citation

  • Hsihui Chang & Sheng Liu & Raj Mashruwala, 2022. "Customer Bargaining Power, Strategic Fit, and Supplier Performance," Production and Operations Management, Production and Operations Management Society, vol. 31(4), pages 1492-1509, April.
    • Handle: RePEc:bla:popmgt:v:31:y:2022:i:4:p:1492-1509
    DOI: 10.1111/poms.13627
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    References listed on IDEAS

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    1. Sining Song & Yan Dong & Thomas Kull & Craig Carter & Kefeng Xu, 2023. "Supply chain leakage of greenhouse gas emissions and supplier innovation," Production and Operations Management, Production and Operations Management Society, vol. 32(3), pages 882-903, March.
    2. Jyun‐Ying Fu, 2023. "Customer concentration and corporate charitable donations: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 545-561, January.
    3. Schniederjans, Dara G. & Khalajhedayati, Mehrnaz, 2023. "Corporate Responsibility Communication and Score Trends: A Buyer and Supplier Perspective," International Journal of Production Economics, Elsevier, vol. 257(C).
    4. Guo, Chenhao & Ke, Yun & Zhang, Jinkang, 2023. "Digital transformation along the supply chain," Pacific-Basin Finance Journal, Elsevier, vol. 80(C).
    5. Wenjin Hu & Keith Skowronski & Yan Dong & Yongyi Shou, 2023. "Mergers and acquisitions in supply bases," Production and Operations Management, Production and Operations Management Society, vol. 32(4), pages 1059-1078, April.
    6. Sunil Mithas & Yanzhen Chen & Yatang Lin & Alysson De Oliveira Silveira, 2022. "On the causality and plausibility of treatment effects in operations management research," Production and Operations Management, Production and Operations Management Society, vol. 31(12), pages 4558-4571, December.

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