Buyer’s use of power and manufacturer’s supplier quality assurance in open triads: a relational perspective
Creators: name: Lai, Manh Khang
Publisher: name: RMIT University
Year: 2024
Subjects: classificationCode: 350903
subject: Logistics

description: Extant studies on achieving supply chain sustainability suggest that in open buyer-manufacturer-supplier triads, where buyers and suppliers have little or no contact with each other, buyers could use various power sources vested in their customer status to induce manufacturers to manage lower-tier suppliers. While power use and relational attributes, such as trust and commitment, are strongly linked, most triadic studies have disregarded the potential influence of buyer-manufacturer and manufacturer-supplier relationships on the effects of power use. 

Supported by empirical evidence that quality management precedes the development of sustainability practices, this thesis explores the effects of buyers’ use of power in influencing manufacturers to achieve supplier quality compliance in open buyer–manufacturer–supplier triads. It employed a mixed method approach, comprising a survey study (Study 1) followed by a multiple case study (Study 2). Study 1 draws on a survey of 219 manufacturers in Vietnam to explore the individual effects of five buyer power sources — coercive, reward, legitimate, expert, and referent power — in inducing manufacturers to engage their upstream suppliers in quality practices via three manufacturer-supplier quality assurance mechanisms: supplier quality monitoring, manufacturer-supplier supportive norms, and supplier quality collaboration. Using a hierarchical regression, Study 1 also examines how these relationships are moderated by buyer-manufacturer and manufacturer-supplier relational ties.

Study 1 reveals the “average” effects of buyers’ use of individual power sources but could not explain why manufacturers may not be receptive to buyers’ use of specific power sources and how manufacturers navigate the complex web of power use and relational dynamics embedded in both ends of triadic chains when responding to buyers’ use of power to achieve supplier quality compliance. To explore the driving forces behind those “average” effects, an inductive multi-case study of five buyer-manufacturer-supplier triads (Study 2) was carried out. Study 2 resulted in the building of a theoretical model that shows the interplay of buyers’ use of power and relational dynamics in open buyer-manufacturer-supplier triads to achieve supplier quality compliance.

In combination, the findings of Study 1 and Study 2 extend current knowledge on buyers’ use of power in open triads. They not only highlight the disparate individual effects of buyers’ use of five power sources on influencing manufacturers to achieve suppliers’ quality compliance, including how these effects were moderated by buyer-manufacturer and manufacturer-supplier relational ties. More importantly, they reveal how manufacturers in open buyer-manufacturer-supplier triadic chains achieve a win-win-win outcome for all chain members using a host of non-confrontational, trust-building approaches. Practically, these findings offer nuanced insights on the likely outcomes to multinational businesses outsourcing their production to Vietnamese manufacturers when exercising their buyer power. They also offer exemplars to Vietnamese manufacturers and suppliers on how to effectively deal with pressures from buyers’ power to maintain production stability and relational harmony within the triadic chain.

The thesis has several limitations. The manufacturer survey did not include the views of buyers and suppliers in the open triads. Both Studies 1 and 2 also did not consider the cultural backgrounds of the buyers in using power to achieve supplier quality compliance through the manufacturers. While this research has opened a new avenue for study of power in supplier management by adopting a relational view, future research on the subject would benefit from including the influence of culture, among other factors, in shaping the interplay between power and relational dynamics in open triadic chains.