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Title: Factors influencing shifts from exploitative to ideal relationships - power versus benefits in sea freight buyer-supplier relationships.
Authors: Aggelen, Sven van
Keywords: Buyer Supplier Relationship
Cowan et al
Contingency theory
Relationships shifts
relationship types
contingent factors
Issue Date: 13-Dec-2017
Publisher: Open Universiteit Nederland
Abstract: Relationships are started around creating value. Cowan et al (2015) developed a matrix with four relationship types: (1) exploitative relationship, (2) tolerable relationship (3) awkward relationship and (4) ideal relationship. The relationship types are based on Benefits Received by the More Dependent Partner and by Power Type Used by More Powerful Partner. We applied this model within buyer-seller relationships to further study Power and Benefits in Sea Freight Buyer-Supplier relations. Besides Power and Benefits we looked at other contingent factors which could support the earlier defined Power and Benefits in relationships and its shifts. The problem statement of this study is: ‘what is the impact of weaker party benefits, stronger party power and other factors on relationship shifts in the model of Cowan et al. (2015) within the Dutch containerized sea freight market? We defined three relationship shifts. (1) The shift from an exploitative relationship to a tolerable relationship, (2) The shift from a tolerable to an ideal relationship, (3) The shift from an awkward relationship to either an exploitative- or ideal relationship. What to influence was related to commercial and operational issues regardless of relationship status we found out via our literature review. Further elaborating on Power we used the Power Matrix (Cox, 2000, 2003) to learn more about the basic power positions of: buyer dominance, interdependence, independence and supplier dominance which can be seen as attributes to buyer power in relation to supplier. As well we looked at influence strategies referring to the means of which power is applied to achieve influence. Taking a closer look at benefits we defined two main types of benefits, tangible benefits and intangible benefits. Relating to benefits is the principle of reciprocity, the giving of benefits to another in return for benefits received. Readings were found in regards to contingency theory and this resulted in defining environment, strategy, structure, resource, size, innovation/technology and uncertainty as contingent factors. Also, we found supporting literature around Trust and Goal Congruence which led to the assumption this as well could be contingent factors. We assumed beside the earlier mentioned Power and Benefits these factors are influencing relationships and relationship shifts. An exploratory case study design was selected to further explore the model. We took a multiple case design and investigated four cases. We took our study in the Dutch containerized sea freight market and used a forwarder BDP International as the more dependent party. As more dominant party we took interviews with the managing directors of CMA-CGM, Hapag-Lloyd and MSC. We found clear evidence relationships are based around Power and Benefits. Benefits can change when Power is changing. We as well found mitigating factors such as Goal Congruence and Trust influencing Benefits received. Benefits received by the dependent partner can as well be influenced by shifts in the relationship caused by contingencies such as environment, innovation and strategy. Evidence was found that the statement of ‘More dominant Partner’ is subject to factors influencing relationship shift where Benefits based on reciprocity are a key driver. Finally the study proved the possible impact on relationships of several contingencies which could heavily impact the described relationships within the model studied. Mainly since it is reasonable to assume these contingencies could impact Power and Benefits. A possible change in environment, strategy, structure, resource, size, innovation(technology) and uncertainty is influencing Power and Benefits and therefore can cause relationship shifts. Although our model clearly refers to ‘ideal relationships’, based on our literature review and empirical findings given the ever-changing circumstances business relationships are in, we suggest ‘viable relationships’ or ‘the best possible relationship’ would be a more appropriate wording.
Appears in Collections:MSc Management Science

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