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Knowledge acquisition in supply chain partnerships: The role of power

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ABSTRACT Knowledge is recognised as an important source of competitive advantage and hence there has been increasing academic and practitioner interest in understanding and isolating the factors that contribute to effective knowledge transfer between
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  Knowledge acquisition in supply chain partnerships: The role of power Qile He a , Abby Ghobadian b, n , David Gallear c a University of Bedfordshire Business School, Luton, Bedfordshire, LU1 3JU, UK  b Henley Business School, University of Reading, Greenlands, Henley-on-Thames, Oxfordshire, RG9 3AU, UK  c Brunel Business School, Kingston Lane, Uxbridge, Middlesex, UB8 3PH, UK  a r t i c l e i n f o  Article history: Received 1 April 2011Accepted 14 September 2012Available online 9 October 2012 Keywords: Supply chain partnershipKnowledge acquisitionPowerSupply chain performance a b s t r a c t Knowledge is recognised as an important source of competitive advantage and hence there has beenincreasing academic and practitioner interest in understanding and isolating the factors that contributeto effective knowledge transfer between supply chain actors. The literature identifies power as a salientcontributor to the effective operation of a supply chain partnership. However, there is a paucity of empirical research examining how power among actors influences knowledge acquisition and in turnthe performance of supply chain partners. The aim of this research is to address this gap by examiningthe relationship between power, knowledge acquisition and supply chain performance among thesupply chain partners of a focal Chinese steel manufacturer. A structured survey was used to collect thenecessary data. Two conceptually independent variables – ‘availability of alternatives’ and ‘restraint inthe use of power’ – were used to assess actual and realised power, respectively. Controlling forcontingencies, we found that the flow of knowledge increased when supply chain actors had limitedalternatives and when the more powerful actor exercised restraint in the use of power. Moreover, wefound a positive relationship between knowledge acquisition and supply chain performance. This paperenriches the literature by empirically extending our understanding of how power affects knowledgeacquisition and performance. &  2012 Elsevier B.V. All rights reserved. 1. Introduction This paper examines the relationship between power andknowledge transfer among supply chain partners because this isan important relationship and research in this area is scarce. Supplychain partnership is one of the most widely adopted forms of collaborative interfirm alliance (Pekar and Allio, 1994). This islargely due to features that afford flexibility within the relationshipsuch as contractual agreements between partners (if one exists atall) that are unlikely to possess the rigidity and legal agreements of the contracts prevalent in other forms of interfirm relationship, forexample joint ventures, R&D partnerships and cross licencing (e.g.,Wilson, 1995; Frankel et al., 1996; Lambert et al., 1996). A number of theories are used to explain the rationale forentering into collaborative agreements. These include transactioncost economics (TCE) (Williamson, 1975), the resource-based view(RBV) (Barney, 1991), resource dependence theory (RDT) (Pfeffer and Salancik, 1978), and the relational view (Dyer and Singh, 1998). According to TCE firms enter into collaborative agreements in orderto reduce the cost of participating in the market. Here, collaborativeagreements unlike merger and acquisition offer a restricted hier-archy because of partial absorption of interdependencies (Fitzroyet al., 2011). The RBV posits that firms enter into collaborativeagreements to complement their resources (Murray et al., 2005).AccordingtoRDTorganisationsareconstrainedandaffectedbytheirenvironments and attempt to manage resources dependencies bypursuing from amongst five options one of which is interorganisa-tional collaboration (Pfeffer and Salancik, 2003). As such, RDT positsthat firms use collaborative arrangements to reduce uncertainty andinterdependence (Harrigan and Newman, 1990). The relational viewpostulates that idiosyncratic interfirm linkages are a source of superior rent. Dyer and Singh (1998) identify four sources of relational rents: (a) relation-specific assets; (b) knowledge sharingroutines; (c) complementary resources/capabilities; and (d) effectivegovernance. The unit of analysis in the case of the relational view isnetworks and/or dyads of firms, while the firm is the unit of analysisin the case of the other three theories. There are two importantpoints to note. First, RBV, the relational view, and RDT are com-plementary. For example, the RBV posits that inter-organisationcollaboration facilitates the development of valuable resources,while the relational view argues that shared resources and routinesare a source of competitive advantage. In essence RBV describeshow/why, and the relational view describes what/why. Second, aswe discuss later, RDT is the only theory that implicitly recognisesthe significance of power. Contents lists available at SciVerse ScienceDirectjournal homepage: www.elsevier.com/locate/ijpe Int. J. Production Economics 0925-5273/$-see front matter  &  2012 Elsevier B.V. All rights reserved.http://dx.doi.org/10.1016/j.ijpe.2012.09.019 n Corresponding author. Tel.:  þ 44 1491 418756. E-mail addresses:  Qile.He@beds.ac.uk (Q. He),abby.ghobadian@henley.reading.ac.uk (A. Ghobadian),David.Gallear@brunel.ac.uk (D. Gallear).Int. J. Production Economics 141 (2013) 605–618  The knowledge based view (KBV) uses the logic of RBV toposit that ‘‘knowledge’’ is a major determinant of competiveness(Kogut and Zander, 1992; Grant, 1996). Moreover, scholars postulate that knowledge sharing between alliance partners is amajor contributor to enhanced competitiveness (Levinson andAsahi, 1995; Mowery et al., 1996; Inkpen, 1998). Not surprisingly, knowledge management practices among supply chain partnershave attracted much attention (e.g., Beecham and Cordey-Hayes,1998; Kotabe et al., 2003; Hult et al., 2004; Handfield and Lawson, 2007; Modi and Mabert, 2007; Rauniar et al., 2008; Pedroso and Nakano, 2009). The literature suggests that partnerships betweenbuyerandsupplierfirmsareaconduitforknowledgesharingthatcanresult in improved performance along the entire supply chain (Heideand Miner, 1992; Dyer and Nobeoka, 2000; Krause et al., 2007; Rauniar et al., 2008; Lawson et al., 2009; Cao and Zhang, 2010). One strand of empirical research on supply chain partnershipshas focused on isolating and examining the impact of keyattributes of partnership (most commonly trust, commitment,interdependence and shared meaning) on the exchange of knowl-edge between supply chain partners (e.g., Spekman et al., 2002;Hult et al., 2004; Dyer and Hatch, 2006; Krause et al., 2007; Modi and Mabert, 2007; Panayides and Venus Lun, 2009). According to the extant literature, power among supply chain partners isanother key attribute influencing the operational behaviour andperformance of supply chain partners (Lascelles and Dale, 1989;New, 1998; Cox, 1999; Cox et al., 2001; Hallikas et al., 2005; Ke et al., 2009; Liu et al., 2010). The relative power of partners is likely to significantly influence the distribution of responsibilitiesand the flow of benefits between them (Benton and Maloni, 2005;Hingley, 2005; Zhao et al., 2008; Ke et al., 2009; Esmaeili and Zeephongsekul, 2010).The importance of power goes beyond academic curiosity.According to Cox (1999), cognisance of power is of significantimportance to practitioners as well as academics. He argued thatif they fail to understand power within the supply chain, bothpractitioners and academics ‘may well be guilty of recommendingstrategies and operational practices that are inappropriate for thesupply chains in which they operate’ (Cox, 1999, p. 172). Maloni and Benton (2000) echoed this view and suggested that supplychain practice or research that does not account for the influenceof power cannot be entirely realistic or implementable.Research examining the relationship between power anddifferent attributes of supply chain partnership is relativelysparse and generally suffers from methodological shortcomings.As far as we were able to ascertain, the majority of publicationsthat do exist are either conceptual (e.g., Cox, 1999, 2004; Watson, 1999; Cox et al., 2001; Li et al., 2002; Sucky, 2006; Crook and Combs, 2007; Muthusamy et al., 2008), or descriptive (e.g., Ogbonna and Wilkinson, 1998; Ireland, 1999; Watson, 2001). The lack of empirical research is potentially detrimental to thescholarly development of the field and to practice. Moreover, thelimited number of empirical studies we were able to locate alsodisplayed methodological limitations. The majority were casebased, hence limiting the opportunity to develop generalisableconclusions (e.g., Bates and Slack, 1998; Sanderson, 2001; Cousins, 2002; Faria and Wensley, 2002; Hingley, 2005; Krajewski et al., 2005; Narasimhan et al., 2009). The few published studies using survey methodology lacked clarity on validity and reliability issues(e.g., Provan and Gassenheimer, 1994; Yeung et al., 2009). Further- more, the previous quantitative studies we located that dealt withmultiple dependent variables (e.g., Provan and Gassenheimer, 1994;Berthon et al., 2003; Caniels and Gelderman, 2007) generally used analytical methods such as multiple regression, rather than techni-ques such as canonical correlation, MANOVA, MANCOVA and SEM(structural equation modelling) as recommended by Podsakoff andDalton (1987), which can simultaneously handle multiple dependentvariables, and account for systematic variances of dependent vari-ables and potential interrelationships between dependent variables.There are a small number of exceptions (e.g., Zhao et al., 2008; Ke et al., 2009). For example, Zhao et al. (2008) examined the impact of  power and relationship commitment on supply chain integrationusing SEM. Ke et al. (2009) examined the impact of mediated andnon-mediated power on electronic supply chain management sys-tem adoption, following a partial least squares technique. However,the foci of these two studies are significantly different from the focusof the present study.Turning our attention to research specifically concerned withthe relationship between power and knowledge sharing amongsupply chain partners, additional shortcomings are evident. First,despite its apparent importance (Beecham and Cordey-Hayes,1998; Dyer and Nobeoka, 2000; Ke and Wei, 2007; Muthusamy et al., 2008; Ke et al., 2009) there is a dearth of empirical studies examining this relationship. It is a specific field of study thatrequires greater attention. Second, there is a divergence of viewsabout the impact of power. Some authors argue that power isdetrimental (Beecham and Cordey-Hayes, 1998; Maloni and Benton, 2000; Muthusamy et al., 2008), while others argue that power is helpful (Cox, 1999; Dyer and Nobeoka, 2000; Yeung et al., 2009). This lack of consistency, which we return to in thenext section, provides a further impetus for this study.Despite the existence of numerous literature contributionsexamining relationship factors such as trust, commitment, inter-dependence and shared meaning, the literature suggests thatthere is a lack of empirical research examining power in supplychain partnerships (see also Caniels and Gelderman, 2007), andespecially its influence on interfirm knowledge transfer. Giventhat power tends to be a complex factor influencing the dynamicsof supply chain partnership, we argue that it is critically impor-tant to give power due consideration in its own right throughempirical study. For example, if we find that the restraint of power enhances knowledge acquisition, then management beha-viour that seeks to take advantage of actual power purely for self-interest is likely in the long term to be detrimental to improvingperformance, and such behaviour needs to be re-evaluated.This paper therefore contributes to the extant literature by examin-ing the relationship between power and knowledge transfer amongsupply chain partners. Furthermore, we extend the understandingbyexamining the effecton supplychainperformance. If we findthatknowledge acquisition enhances overall supply chain performancethen boundary-spanning employees and managers should beempowered and equipped better to lead knowledge acquisitionefforts, and supply chain partners should be encouraged to identifyand develop the context-specific practices that will provide thenecessary, sustainable communication and collaboration platforms.We use two constructs rooted in appropriate theory – ‘availability of alternatives’ and ‘restraint in the use of power’ – to assess power,and we also examine their interactional effect. We controlled for theeffects of partnership duration in our model. As a further methodo-logical extension, we controlled for contingencies present in pre-vious studies that used a cross-section of independent firms, byfocusing on actors operating within the supply chain of a singlefocal firm. 2. Literature In this section we start by examining the concept of power andreview how power might influence the behaviour of supply chainpartners. This is followed by a discussion of the two indicators of power among supply chain partners. We then discuss knowledgeacquisition which underpins any interfirm knowledge transferprocess. Q. He et al. / Int. J. Production Economics 141 (2013) 605–618 606   2.1. Power and supply chain partnerships The study of power and its consequences has its roots in socialand political sciences. More recently power has been used byscholars to study the behaviour of marketing channels and supplychain relationships (e.g., Ramsay, 1996; Maloni and Benton, 2000; Cox et al., 2001). Power is defined as the ability of one party (A) toget another party (B) to undertake an activity that B would nototherwise undertake (Cox et al., 2001). The literature distin-guishes between ‘possessed power’ and ‘realised power’. ‘Realisedpower’ is the outcome of exercising ‘possessed power’ to bringabout intended changes in the behaviour of the counterpart.According to Muthusamy and White (2006) power is eitherbalanced or unbalanced. Balanced power exists where partner-ship actors possess broadly similar levels of power in influencingeach other’s decisions, while unbalanced power exists when oneor more actors are able to manipulate decisions of the other actors(Muthusamy and White, 2006).RDT characterises the firm as an open system, dependent oncontingencies in the external environment (Pfeffer and Salancik,1978). The theory attempts to address two key questions. First,where power and dependence come from? Second, how managersuse organisation’s power and manage their dependence? It positsthat managers can and do act to reduce environmental uncer-tainty and dependence (Hillman et al., 2009). Central to thisaction is the concept of power — control over vital resources(Ulrich and Barney, 1984). According to Pfeffer and Salancik (1978) firms engage in interorganisational relationships to mini-mise uncertainties and dependencies. According to RDT if firm A,supplying intermediate goods, supplies only one major customer(firm B), then firm A is dependent on firm B, but if A suppliesmany firms and amongst these is firm B, then the two firms aremutually dependent on one another. To ensure consistency withRDT, through the rest of this paper we use ‘‘mutual dependence’’to signify ‘‘balanced power’’ and ‘‘dependence’’ to signify ‘‘asym-metric power’’. Furthermore, as will become clear, our measure of power is rooted in dependence.A number of scholars argue that in practice, mutual depen-dence among supply chain actors is a rarity due to differences insize, business resources, availability of alternatives and reputation(Ramsay, 1996). Moreover, New (1998), p.18 argued that ‘even amongst firms who wished to work collaboratively, there seemedlittle chance of abandoning the sanctions and mechanism of the market’. This suggests that irrespective of intentions, powerconsiderations play a role in every type of supply chain.The existence of two archetypal buyer–supplier relationships — ‘-strong buyer–weak supplier’ and ‘weak buyer–strong supplier’was illustrated by Bates and Slack (1998). However, the relation-ship between exchange partners is dynamic and may shiftbetween partners from one transaction to another (Pfeffer andSalancik, 1978).The literature is divided on how dependence influencespurchaser–supplier relationships with some scholars pointing toa positive and others to a negative consequence. In his conceptualpaper, McDonald (1999) argued that dependence of one party onanother in the case of buyers and suppliers is likely to result inunproductive partnerships. This is a view shared by industrycommentators. For example, the Competition Commission con-cluded that ‘the transfer of excessive risk and unexpected costs bygrocery retailers to their suppliers through various supply chainpractices, if unchecked, will have an adverse effect on investmentand innovation in the supply chain, and ultimately on consumers’(Competition Commission, 2008, p. 6). A number of empiricalstudies also support this proposition (Heide and Miner, 1992;Beecham and Cordey-Hayes, 1998; Maloni and Benton, 2000). Maloni and Benton (2000) argued that dependence has thepotential to upset the mutuality of relationships, and thereforeacts as a barrier to win–win integration. That is, that in anunbalanced relationship the dependency may not be reciprocal,such that one partner has power over the other but not vice versa(Wilson, 1995). Under such circumstances, exploitation ratherthan cooperation might result (Heide and Miner, 1992).Other scholars argue that dependency may result in favourableconsequences. For example, Lascelles and Dale (1989) suggestedthat buyers’ purchasing power often contributes to successfulquality improvement of the supplier. Cox (1999) makes asimilar point, highlighting that Toyota used its suppliers’ depen-dency to force them to adopt innovations such as an assemblybased, demand-pull and just-in-time (JIT) system. Yeung et al.,(2009) study concluded that coercive power improves supplierintegration in Chinese supply chains, with or without the pre-sence of trust. He argued that the exercise of power can poten-tially assure congruence in goals and activities, particularly in theabsence of a well specified cooperation agreement. Each of thesestudies supports the view dependency may result in beneficialeffects.In addition to the disagreement present in the literature, thereis a paucity of empirical research specifically examining theinfluence of power on the transfer of knowledge between supplychain partners.  2.2. Indicators of power  Unlike other attributes of supply chain partnerships, powercannot be readily measured (New, 1998). This is because power isan amalgam of complex social, economic and even psychologicalfactors. It is a subjective phenomenon predicated on one’s belief or expectation of how another actor will create an impact ononeself (Cho and Chu, 1994). Cox (1999) notes that when examining the power relationship between purchasers and sup-pliers operating within the same supply chain, it is the relativerather than the absolute power that is of interest. In this researchwe were interested in ascertaining the impact of power amongthe supply chain actors of a focal firm on the transfer of knowl-edge between them, rather than measuring the absolute power of each actor, which presents significant challenges.The literature identifies two main indicators of power amongactors within a focal firm’s supply chain – ‘availability of alter-natives’ and ‘restraint in the use of power’ (e.g., Hardwick andFord, 1986; Ganesan, 1994; Kim et al., 2004; Crook and Combs, 2007). Power-dependence theory posits that inequalities independence create power imbalances that can lead to conflict insocial exchange (Emerson, 1962). Although both actors could bemutually dependent in an exchange, it does not mean that theyare equally dependent on each other (Kim et al., 2004). The lessdependent actor will maintain a power advantage, resulting in apower imbalance. According to both marketing channel theory(e.g., Ganesan, 1994) and bargaining theory (e.g., Yan and Gray, 1994), an important source of dependence is a lack of alternatives.This accords with Hardwick and Ford’s (1986) proposition thatdependence, at whatever level, represents a poor option since itderives from a lack of choice. Although a supply chain partnershipis formed on the basis of vertical complementarities (Christopher,1998), which result in a certain level of mutual dependence, thelack of alternatives for one party will still limit the extent of equalsay in the partnership (Anderson and Weitz, 1989). Building onthis point, Crook and Combs (2007) suggest that members of acollaborative supply chain who furnish important resourcesor resources where control is concentrated, enjoy superior bar-gaining power. That is to say, a lack of alternatives increasesdependency and reduces opportunity for independent behaviour.Conversely, a supply chain actor with alternatives is more likely Q. He et al. / Int. J. Production Economics 141 (2013) 605–618  607  to exploit those actors with fewer options (Anderson and Narus,1990; Ganesan, 1994). Thesecondfactorexplainingpower,‘restraintintheuseofpower’,affects ‘realised’ power. It is highly probable that in a supply chainone party may be dependent on another due to differences inavailability of alternatives (Ramsay, 1996; New, 1998; Cox, 1999). However, dependency may be neutralised if those with powerexercise restraint in its exploitive use (Muthusamy and White,2006). Consideration of long-term interests and future gains mayencourage firms to adopt a policy predicated on the restricted use of power (Heide and Miner, 1992; Muthusamy and White, 2005), or power may, in fact, be used to positively influence a less powerfulactor (Dyer and Nobeoka, 2000). Maloni and Benton’s (2000) study showed that some automobile manufacturers with objective powerchose to follow a cooperative approach, encouraging communicationand sharing of benefits; while others opted for a competitiveapproach, exercising their leverage over weaker supply chain part-ners. In particular, however, Maloni and Benton (2000) observed thatif a boundary-spanning manager is willing to restrain the excessiveuse of power over their partner and at the same time allow thepartner to have a say, then each partner is more likely to havepositive feelings or psychological attachment to the relationship dueto a better balance in realised power.The preceding arguments illustrate that availability of alter-natives determines dependency among supply chain partners,while policy towards the deployment of power determines therealised power, and that together, these two variables determinethe level of dependency among supply chain actors of a focal firm.  2.3. Knowledge acquisition Knowledge acquisition is the process of accessing and absorbingknowledge through direct or indirect contact or interaction withknowledge sources (e.g., Inkpen and Dinur, 1998; Albino et al., 1999; Hult et al., 2004). KBV posits that the relative ability to acquire anddevelop knowledge is the key reason for variances in organisationalperformance (Grant, 1996). Accordingly knowledge acquisition cap-ability is an essential contributor to the enhanced operation of supplychain partners. Typical knowledge acquisition mechanisms in supplychains include joint problem solving, ongoing manual adjustment(Love and Gunasekaran, 1999; Kotabe et al., 2003), supplier co-design (Beecham and Cordey-Hayes, 1998; Handfield et al., 1999) and co- location (Cousins et al., 2008). In the next section we discuss theinfluence of power on knowledge acquisition. 3. Research hypotheses In this section we develop our hypotheses. In this researchwe deploy two conceptually distinct constructs to assess power:actual power and realised power. Fig. 1 illustrates the hypothesisedrelationships between the study variables, namely availability of alternatives, restraint in the use of power, knowledge acquisitionand supplychain performance, as well as between our two predictorvariables.  3.1. The influence o power on knowledge acquisition The measure of actual power in this study is the availability of alternative partners, that is to say, the greater the number of potential alternatives the firm has, the less dependent the firm isand hence the more powerful it is. The extant literature suggeststhat actors with many alternative partners in a supply chain areless likely to become dependent on a partnership, and that thesestronger actors might be tempted to exploit their power (Canielsand Gelderman, 2007). Moreover, a partner with many alterna-tives is more likely to restrict the out-flow of knowledge toprotect its core proprietary assets or market position, althoughat the same time it is acknowledged that it may be more able tocoerce knowledge out of the dependent partners (Albino et al.,1999). It has been noted, nevertheless, that stronger partners’ lackof recognition for weaker partners can result in missed opportu-nities because valuable knowledge possessed by the weaker partyis ignored (Beecham and Cordey-Hayes, 1998). Others argue thatweaker partners with fewer alternatives are also likely to limitexposing valuable knowledge to stronger partners to avoidexploitation and to reduce the likelihood of obsolescence(Anderson and Weitz, 1989; Provan and Skinner, 1989). Anderson and Weitz (1989) note that there is ample evidencethat the weaker party becomes mistrustful and apprehensiveabout the stronger party’s intentions. The weaker partner conse-quently may even engage in a pre-emptive strike against themore powerful partner to protect its knowledge assets (Kumaret al., 1995). The evidence suggests that availability of alternativesis likely to discourage actors operating within a focal supply chainfrom being open with each other and sharing knowledge, as fearof exploitation and obsolescence are likely to be higher. Therefore, Hypothesis 1.  The availability of alternatives to partners isnegatively related to the level of knowledge acquisition betweena firm and its supply chain partners.The measure of realised power in this study is the voluntaryrestraint in the use of power or its constructive deployment.As discussed in Section 2, firms’ policies towards the use of power and the manner in which power is used has been shown to influencecommunication and information sharing (Maloni and Benton, 2000).Moreover, the evidence suggests that different levels of intention toexercise power may contribute to different levels of knowledgesharing and partnering from ‘uninvolved’ to ‘integrated’ (Beechamand Cordey-Hayes, 1998). For example, technology partneringinvolves extensive exchange of knowledge. This line of reasoninghas a direct resonance for our study. Commitment to a relationship isenhanced when partners in less powerful positions observe andexperience the willingness of a more powerful partner not to exercisethatpowerforself-interest,butrathertorestrainexcessiveuseofthatpower in the interests of long-term gains (Muthusamy and White,2005). The positive impressions generate positive reactions, openingup communication channels and engendering genuine desires towork more closely for mutual benefit. This enhanced communicationand cooperation provides the platform for knowledge exchange.The arguments proffered suggest that restraint in the use of powerwill enhance knowledge sharing between supply chain partners.Therefore, Hypothesis 2.  The restraint in the use of power in a relationshipis positively related to the level of knowledge acquisition betweena firm and its supply chain partners.  3.2. The relationship between the two indicators of power  The indicators of power in this study are availability of alternatives and restraint in the use of power. Their relationship H1 (-)H2 (+) Knowledge acquisitionSupply chain performance Availability of alternatives Restraint in theuse of power H4 (+)H3 (-) Fig. 1.  Framework of relationships between the indicators of power, knowledgeacquisition and supply chain performance. Q. He et al. / Int. J. Production Economics 141 (2013) 605–618 608  needs to be examined. The literature indicates that the twoindicators of power are associated. Both resource-dependencetheory (Pfeffer and Salancik, 1978) and power-dependence theory(Emerson, 1962) suggests that power can be viewed in terms of dependency. Dependence will increase when fewer alternativesources of exchange are available to the focal firm, or whenreplacing or substituting a current exchange partner is difficult(Heide and John, 1988). Waheed and Gaur (2012) built on the power-dependence theory and posited that the dependence of one party on a source is directly related to the rewards obtainedfrom that source and inversely related to the number of alter-native sources of those rewards. Thus the availability of alter-natives to one party in a relationship reduces its dependency andoften contributes to its power over the other (Anderson andWeitz, 1989). Especially in circumstances where one party pos-sesses substantial leverage over the other, the stronger party willoften exploit the dependence of its partner and create terms of trade in favour of itself (Heide and John, 1988; Anderson and Weitz, 1989). In the absence of moral or altruistic reasons, policy/belief, or the absence of tight contractual agreements as isparticularly the case with supply chain partnerships, there islittle incentive for a stronger partner with many alternatives toexercise restraint in the use of that power. In such circumstances,it is more likely to use that power in order to strengthenits competitive position (Ganesan, 1994). These argumentsimply that restraint in the use of power is less likely to existin situations when there is an availability of alternatives. Simi-larly, resource dependency theory (Caniels and Gelderman, 2007)supports the proposition that in circumstances where restraint inthe use of power is observed to be exercised, it is likely to be asituation where there are less alternatives available, in otherwords, a situation where there is reason for restraint to beexercised (Muthusamy and White, 2006). These two situationsequate to an inverse (or negative) correlation between the twoindicators of power. Therefore, Hypothesis 3.  The availability of alternatives to actors in a supplychain partnership is negatively correlated with restraint in theuse of power by more powerful actors.  3.3. Knowledge acquisition and performance improvement  The suggestion that acquisition of external knowledge enhancesthe performance of firms operating within a supply chain enjoysbroad support (Wu and Hsu, 2001; Kotabe et al., 2003; Modi and Mabert, 2007; Rauniar et al., 2008; Yeung et al., 2008; Lawson et al., 2009).AccordingtoDyerandNobeoka(2000)andEthirajetal.(2005) theprocessofknowledgeacquisitionhasapositiveimpactonafirm’scapability. They noted that the process generates ‘dynamic learningcapabilities’ and ‘client-specific capabilities’, respectively. Similarly,the quantity and variety of knowledge acquired by a firm has beenfound to enhance its innovativeness, eventually improving its perfor-mance (Wu and Hsu, 2001). Kotabe et al. (2003) study showed that sharing of technical know-how improved suppliers’ performance.Similarly, it has been shown that undertaking knowledge transferactivities helps a firm create value for itself in the form of improvedsupplier performance (Modi and Mabert, 2007). Key attributes of customer knowledge that when shared have a significant impact onoperational performance of the focal firm have also been identified(Yeung et al., 2008). Thus the thrust in the literature suggests thatknowledge acquisition has a positive impact on performance.Therefore, Hypothesis 4.  The level of knowledge acquisition from its supplychain partners is positively related to the supply chain perfor-mance of a focal firm. 4. Research method To test the hypotheses, our research design was informed byHult et al. (2002) and Hallikas et al. (2005). We used the supply chain of a single focal firm as our sampling frame. Examining thesupply chain of a single focal firm is inherently fine grainedbecause it avoids the confounding effects of studying a collectionof firms operating within different supply chains (Hult et al.,2004). This is because management practices, power and sectoralcontingencies vary from supply chain to supply chain. Therefore, ourprimary data were collected from the supply network of a largeChinese steel producer using a structured survey instrument.The choice of industry is also important and the steel industryoffers a number of advantages. First, the steel industry’s supplychain represents a traditional chain with discernible explicitmovements of raw materials and products, as well as flow of funds and information. Second, it is possible to accurately andreadily locate upstream and downstream supplier firms, andhence develop a sample where both are well represented.Finally,thisapproachislikelytoyieldamuchhigherresponseratecompared with the cold calling approach. Once the participation of the focal firm is secured, the assistance or sponsorship from the focalfirmtosecure access to other firms withinits networkmaylegitimisethe survey and encourage greater response. 4.1. Instrument design and administration We followed Dillman’s (2000) tailored design method for devel-oping and administrating our questionnaire in order to (a) ensure aclose fit between the constructs, research context and the targetpopulation; and (b) maximise the response rate. To enhance validityand reliability, we adopted predictor variables from previous studies,provided that they were suitable for our target sample and congruentwith our aims. To identify the appropriate measures of availability of alternatives and restraint in the use of power, we compared therelevant items from Anderson and Weitz (1992), Heide and Miner (1992), Ganesan (1994), Maloni and Benton (2000) and Muthusamy and White (2006). The items for availability of alternatives fromGanesan (1994) and the items for restraint in the use of power fromHeide and Miner (1992) were found to be the most suitable. Theseitems have been widely acknowledged and adopted by previousresearchers as measures of power in inter-organisational research(e.g., Kemp and Ghauri, 2001; Storer et al., 2005; Waheed and Gaur, 2012). Similarly, we compared the measures of knowledge acquisi-tion from Kotabe et al. (2003), Hult et al. (2004) and Ramasamy et al. (2006),andfoundHultetal.,(2004)itemstobethemostappropriate. Table 1 presents the items adopted. The predictor variables (avail-ability of alternatives, restraint in the use of power, and knowledgeacquisition) were measured using a 7-point Likert-type scale, where1 ¼ strongly disagree and 7 ¼ strongly agree.For supply chain performance we adopted the frameworkproposed by Gunasekaran et al. (2001) because of its comprehen-siveness. The literature examining specific facets of supply chainperformance affected by knowledge transfer is underdeveloped,and hence we did not have a strong justification for including orexcluding any of the 35 measures proposed by Gunasekaran et al.(2001) a priori. On the other hand, from a practical point of viewwe needed to include only measures of performance relevant tothe supply chain under consideration. To this end we conductedfour in-depth interviews with the appropriate senior managers of the focal firm and two field experts and consequently weeliminated 21 of the measures because of their poor fit with theneeds of the focal firm and its supply chain partners, and retained14 measures deemed most relevant (see Table 2).Following the approach of previous researchers (Murray et al.,1995; Wu and Cavusgil, 2006), a relative-term scale was used. Q. He et al. / Int. J. Production Economics 141 (2013) 605–618  609
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