Buyer dependency and relational capital formation: The mediating effects of socialization processes and supplier integration

Effective supply chain configurations are increasingly cited as a key driver of value creation. However, many supplier relationships are characterized by differing levels of dependence between the parties, which has the potential to influence the outcomes achieved. We build and test an empirical model to examine how buyer firms respond to dependency on a supplier by undertaking either socialization processes or closer integration in order to achieve relational capital. Using empirical data collected from 111 UK purchasing executives, a structural equation model is used to test the theoretical framework. The results provide support for four of the five hypotheses developed. Buyer firms facing high supplier dependency are found to undertake socialization processes to mitigate the dependency and generate relational capital. However, buyer dependency did not, in isolation, lead to increased levels of supplier integration. The study extends our understanding of how firms deal with asymmetric power within their supplier relationships and suggests important implications for both research and practice. © 2008 Institute for Supply Management, Inc.™.