The Impact Of Power And Relationship Quality On Value Creation and Appropriation in Buyer–Supplier Relationships

Saâd Mdarhri Alaoui; Amine Noureddine

doi:10.1515/roms-2019-0054

Published by De Gruyter November 28, 2019

The Impact Of Power And Relationship Quality On Value Creation and Appropriation in Buyer–Supplier Relationships

Saâd Mdarhri Alaoui and Amine Noureddine

From the journal Review of Marketing Science

https://doi.org/10.1515/roms-2019-0054

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Abstract

Business relationships provide the means to create and appropriate superior value in business markets. However, despite the proliferation of research on the phenomenon, many questions remain unaddressed. Previous work focused almost exclusively on value after its creation and its sharing between the two exchange partners. Consequently, the appropriation of value as well as its interaction with value creation remains relatively unknown. Similarly, a few studies have examined the role of relational variables and power asymmetry in customer–supplier exchange relationships. To fill this gap, this study aims to examine the influence of relationship quality and power on value creation and appropriation and ultimately, on satisfaction and relationship continuity. Based on the theory of social exchange, this study proposes a conceptual model, which positions value creation and appropriation as central variables in the nomological network of business relationships. A quantitative study of 174 suppliers was carried out in order to compare the theoretical model with the empirical reality. The results obtained show that the relationship quality promotes greater value creation and appropriation in ongoing business relationships. As for power, its influence differs depending on how it is exercised within the relationship. Moreover, the appropriation of value remains the main driver of partner satisfaction, a sine qua non condition for the continuity of the relationship. This present research contributes to a better understanding of value creation-appropriation in ongoing business relationships. By strategically managing their customer–supplier relationships, managers can create and capture greater value and gain a competitive advantage.

Keywords: customer–supplier relationship; value creation; value appropriation; relationship quality; power; relational satisfaction; relationship continuity

Appendix 1. Item formulations

TRUST
Trust 1	Our main customer kept promises it made to our firm
Trust 2	Our main customer was always honest to us.
Trust 3	We believed the information that our main customer provided us.
Trust 4	Our main customer was genuinely concerned that our business succeeded.
Trust 5	When making important decisions, our main customer considered our welfare as well as its own.
Trust 6	We trusted our main customer keeps our best interests in mind.
Trust 7	Our main customer was trustworthy.
COMMITMENT
COMMIT1	The relationship with our main customer is something to which we are very committed
COMMIT2	The relationship with our main customer is very important to our business
COMMIT3	The relationship with our main customer is something our business intends to maintain indefinitely
COMMIT4	The relationship with our main customer is very much like being family
COMMIT5	The relationship with our main customer is something our business really cares about
COMMIT6	The relationship with our main customer deserves our business’ maximum effort to maintain
COMMUNICATION
COMMIT1	In this relationship, it is expected that any information that might help our main customer will be provided to them
COMMIT2	Exchange of information in this relationship takes place frequently and informally and not only according to a pre-specified agreement
COMMIT3	It is expected that the parties will provide proprietary information if it can help the other party
COMMIT4	It is expected that we will keep each other informed about events or changes that affect the other party
COMMIT5	The communication effort between our main customer and our firm involves many inter-firm contacts
COMMIT6	Exchange of information in this relationship takes place in a timely manner
COERCIVE POWER
CPW1	Failure to comply with the requests of our main customer will result in financial and other penalties against our company.
CPW2	Our main customer threatens to withdraw from what they originally promised if we do not comply with their request.
CPW3	Our main customer threatens to take legal action if we do not comply with their requests.
CPW4	Our main customer withholds important support for our firm, in requesting compliance with their demand.
CPW5	Our main customer threatens to deal with another supplier, in order to make us submit to their demand.
NON-COERCIVE POWER
NCPW1	Our main customer offers specific incentives to us when we are reluctant to cooperate with them.
NCPW2	Our main customer has the upper hand in the relationship due to power granted to them by the contract.
NCPW3	Our main customer demands our compliance because of knowing that we appreciate and admire them.
NCPW4	Our main customer use their unique competence to make our company accept their recommendations
NCPW5	Our main customer partner withholds critical information concerning the relationship to better control our company.
VALUE CREATION AND VALUE APPROPRIATION
Input supplier	Our company’s contributions to the relationship
Input customer	Customer X’s contributions to the relationship
Outcome supplier	The outcomes we received from the relationship
Outcome customer	The outcomes Customer X received from the relationship
Tangible input supplier	Our company’s tangible (financial and personnel) contributions to the relationship
Tangible input customer	Customer X’s tangible (financial and personnel) contributions to the relationship
Tangible outcome supplier	The tangible (financial) outcomes we received from the relationship
Tangible outcome customer	The tangible (financial) outcomes customer X received from the relationship
Intangible input supplier	Our company’s intangible (know-how and patents) contributions to the relationship
Intangible input customer	Customer X’s intangible (know-how and patents) contributions to the relationship
Intangible outcome supplier	The intangible (know-how and patents) outcomes we received from the relationship
Intangible outcome customer	The intangible (know-how and patents) outcomes customer X received from the relationship
Relational satisfaction
SATISFAC1	We were very satisfied with the relationship with our main customer
SATISFAC2	We were pleased to work with our main customer
SATISFAC3	The relationship with our main customer was very favorable for us
Relationship continuity
CONTIN1	We expect our relationship with our main customer to continue for a long time
CONTIN2	Renewal of relationship with our main customer is virtually automatic
CONTIN3	It is unlikely that our firm will still be doing business with our main customer in two years

Appendix 2. Measurement model results

Construct name/items	Factor loading	Cronbach alpha	Composite reliability	AVE
Trust		0.887	0.912	0.596
TRUST1	0.793
TRUST2	0.725
TRUST3	0.765
TRUST4	0.728
TRUST5	0.803
TRUST6	0.794
TRUST7	0.791
Commitment		0.886	0.917	0.689
COMMIT1	0.828
COMMIT2	0.857
COMMIT3	0.868
COMMIT4	0.756
COMMIT6	0.838
Communication		0.865	0.903	0.653
COMM2	0.700
COMM3	0.770
COMM4	0.875
COMM5	0.799
COMM6	0.883
Relationship quality		–	0.893	0.857
TRUST	0.846
COMMITMENT	0.868
COMMUNICATION	0.859
Coercive power		0.867	0.903	0.652
CPW1	0.788
CPW2	0.888
CPW3	0.815
CPW4	0.761
CPW5	0.778
Non-coercive power		0.739	0.848	0.650
NCPW1	0.780
NCPW3	0.829
NCPW4	0.808
Value creation		0.948	0.975	0.950
VALUE1	0.975
VALUE2	0.975
Value appropriation		0.915	0.959	0.921
VAL SUPL1	0.959
VAL SUPL2	0.961
Satisfaction		0.914	0.946	0.853
SATISFAC1	0.898
SATISFAC2	0.951
SATISFAC3	0.921
Relationship continuity		0.826	0.896	0.741
CONTIN1	0.878
CONTIN2	0.849
CONTIN3	0.856

Appendix 3. Discriminant validity (Cross-loading)

	Value appropriation	Communication	Trust	Relationship continuity	Value creation	Commitment	Coercive power	Non Coercive power	Relationship quality	Satisfaction
VAL SUPL 1	0.959	0.318	0.347	0.438	0.808	0.287	−0.191	0.179	0.373	0.490
VAL SUPL 2	0.961	0.280	0.350	0.420	0.854	0.221	−0.292	0.221	0.335	0.478
COMM2	0.275	0.700	0.458	0.325	0.309	0.453	−0.243	0.049	0.619	0.240
COMM2	0.275	0.700	0.458	0.325	0.309	0.453	−0.243	0.049	0.619	0.240
COMM3	0.318	0.770	0.441	0.364	0.292	0.555	−0.194	0.059	0.675	0.402
COMM3	0.318	0.770	0.441	0.364	0.292	0.555	−0.194	0.059	0.675	0.402
COMM4	0.265	0.875	0.490	0.340	0.309	0.647	−0.136	0.048	0.768	0.313
COMM4	0.265	0.875	0.490	0.340	0.309	0.647	−0.136	0.048	0.768	0.313
COMM5	0.191	0.800	0.427	0.212	0.214	0.554	0.023	0.206	0.678	0.233
COMM5	0.191	0.800	0.427	0.212	0.214	0.554	0.023	0.206	0.678	0.233
COMM6	0.217	0.883	0.449	0.279	0.212	0.584	−0.030	0.096	0.729	0.293
COMM6	0.217	0.883	0.449	0.279	0.212	0.584	−0.030	0.096	0.729	0.293
TRUST1	0.248	0.508	0.794	0.318	0.302	0.495	−0.147	0.104	0.712	0.424
TRUST 1	0.248	0.508	0.794	0.318	0.302	0.495	−0.147	0.104	0.712	0.424
TRUST 2	0.238	0.365	0.725	0.373	0.247	0.467	−0.328	0.088	0.620	0.393
TRUST 2	0.238	0.365	0.725	0.373	0.247	0.467	−0.328	0.088	0.620	0.393
TRUST 3	0.274	0.463	0.765	0.289	0.321	0.503	−0.277	0.159	0.686	0.371
TRUST 3	0.274	0.463	0.765	0.289	0.321	0.503	−0.277	0.159	0.686	0.371
TRUST 4	0.227	0.396	0.728	0.302	0.248	0.355	−0.294	0.095	0.590	0.351
TRUST 4	0.227	0.396	0.728	0.302	0.248	0.355	−0.294	0.095	0.590	0.351
TRUST 5	0.311	0.386	0.803	0.251	0.328	0.304	−0.285	0.286	0.601	0.464
TRUST 5	0.311	0.386	0.803	0.251	0.328	0.304	−0.285	0.286	0.601	0.464
TRUST 6	0.361	0.438	0.794	0.314	0.373	0.431	−0.279	0.259	0.663	0.451
TRUST 6	0.361	0.438	0.794	0.314	0.373	0.431	−0.279	0.259	0.663	0.451
TRUST 7	0.302	0.452	0.791	0.192	0.306	0.453	−0.174	0.078	0.675	0.477
TRUST 7	0.302	0.452	0.791	0.192	0.306	0.453	−0.174	0.078	0.675	0.477
CONTIN 1	0.423	0.370	0.347	0.889	0.471	0.536	−0.232	0.144	0.484	0.586
CONTIN 2	0.405	0.339	0.357	0.837	0.450	0.395	−0.406	0.204	0.425	0.438
CONTIN 3	0.310	0.242	0.257	0.854	0.389	0.322	−0.323	0.067	0.319	0.415
VALUE 1	0.845	0.335	0.403	0.490	0.975	0.334	−0.298	0.218	0.421	0.503
VAL UE 2	0.844	0.306	0.365	0.507	0.975	0.293	−0.312	0.240	0.378	0.498
COMMIT 1	0.222	0.558	0.502	0.434	0.304	0.828	−0.177	0.054	0.729	0.359
COMMIT 1	0.222	0.558	0.502	0.434	0.304	0.828	−0.177	0.054	0.729	0.359
COMMIT 2	0.248	0.579	0.463	0.394	0.275	0.857	−0.069	0.082	0.730	0.332
COMMIT 2	0.248	0.579	0.463	0.394	0.275	0.857	−0.069	0.082	0.730	0.332
COMMIT 3	0.212	0.595	0.444	0.447	0.298	0.868	−0.086	0.216	0.732	0.343
COMMIT 3	0.212	0.595	0.444	0.447	0.298	0.868	−0.086	0.216	0.732	0.343
COMMIT 4	0.193	0.532	0.450	0.335	0.239	0.756	−0.192	0.068	0.669	0.308
COMMIT 4	0.193	0.532	0.450	0.335	0.239	0.756	−0.192	0.068	0.669	0.308
COMMIT 6	0.220	0.618	0.469	0.454	0.219	0.838	−0.102	0.008	0.739	0.301
COMMIT 6	0.220	0.618	0.469	0.454	0.219	0.838	−0.102	0.008	0.739	0.301
CPW 1	−0.138	0.005	−0.152	−0.234	−0.218	0.017	0.796	0.101	−0.058	−0.207
CPW 2	−0.277	−0.105	−0.253	−0.297	−0.307	−0.080	0.890	0.004	−0.178	−0.212
CPW 3	−0.171	−0.197	−0.248	−0.380	−0.233	−0.231	0.799	0.071	−0.265	−0.248
CPW 4	−0.126	−0.090	−0.241	−0.222	−0.199	−0.111	0.771	0.066	−0.178	−0.144
CPW 5	−0.260	−0.161	−0.395	−0.319	−0.281	−0.189	0.777	−0.035	−0.300	−0.382
NCPW 1	0.168	0.151	0.285	0.206	0.221	0.143	−0.154	0.771	0.232	0.333
NCPW 3	0.191	0.053	0.098	0.094	0.181	0.012	0.114	0.833	0.066	0.248
NCPW 4	0.140	0.047	0.044	0.068	0.152	0.080	0.214	0.818	0.066	0.090
SATISFAC1	0.436	0.320	0.478	0.527	0.440	0.379	−0.293	0.209	0.464	0.898
SATISFAC2	0.482	0.355	0.497	0.546	0.484	0.370	−0.280	0.296	0.482	0.951
SATISFAC3	0.478	0.342	0.530	0.501	0.499	0.348	−0.265	0.315	0.483	0.921

Appendix 4. Discriminant validity (Fornell and Larcker criterion)

	Value appropriation	Communication	Trust	Relationship continuity	Value creation	Commitment	Coercive power	Non-coercive power	Satisfaction	RQ
Value appropriation	0.960
Communication	0.312	0.808
Trust	0.363	0.560	0.772
Relationship continuity	0.447	0.375	0.377	0.860
Value creation	0.866	0.329	0.394	0.511	0.975
Commitment	0.264	0.695	0.561	0.499	0.322	0.830
Coercive power	−0.252	−0.139	−0.326	−0.363	−0.313	−0.149	0.808
Non-coercive power	0.209	0.112	0.197	0.164	0.235	0.103	0.043	0.808
Satisfaction	0.504	0.367	0.543	0.568	0.514	0.396	−0.302	0.297	0.924
Relationship quality	0.368	0.861	0.845	0.485	0.410	0.868	−0.248	0.164	0.516	0.926

Appendix 5. Assessment of the reliability and validity of convergence of the global construct of relationship quality

Elements	Factor loading	Factor loading squared	Error variance = 1 − Factor loading squared
Trust	0.846	0.715716	0.284284
Commitment	0.868	0.753424	0.246576
Communication	0.859	0.737881	0.262119
Total factor loading	2.573	2.207021	0.792979
Total factor loading squared	6.620329
Total factor loading squared + total error variance			7.413308
AVE^a			0.857
CR^b			0.893

^aAVE = (Total factor loading/number of factor).
^bCR = Total factor loading squared/(Total factor loading squared + Total Error variance).

Appendix 6. Estimation of the collinearity between structural model constructs

	Value appropriation	Relationship continuity	Value creation	Satisfaction
Value appropriation				1.000
Relationship continuity
Value creation	1.334
Coercive power	1.154	1.143	1.077
Non-coercive power	1.085	1.124	1.036
Relationship quality	1.241	1.385	1.107
Satisfaction		1.547

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Published Online: 2019-11-28

Published in Print: 2019-11-18

The Impact Of Power And Relationship Quality On Value Creation and Appropriation in Buyer–Supplier Relationships

Abstract

Appendix 1. Item formulations

Appendix 2. Measurement model results

Appendix 3. Discriminant validity (Cross-loading)

Appendix 4. Discriminant validity (Fornell and Larcker criterion)

Appendix 5. Assessment of the reliability and validity of convergence of the global construct of relationship quality

Appendix 6. Estimation of the collinearity between structural model constructs

References

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