Buyer’s Perception of Supplier-Induced Disruptions by Large versus Small Firms

Abstract

While size asymmetry (i.e., large buyer and small supplier) has been discussed in a no-disruption operation context (Lee & Johnsen, 2012), it is unclear whether and how a large buyer reacts differently when different-sized suppliers cause different types of disruptions. Extant research suggests in a supplier-induced disruption that a supplier’s recovery actions are more effective when the supplier is more dependent on the buyer, indicating a need for deeper understanding of what buyers prefer in order to resolve disruptions caused by facing different sized suppliers. Accordingly, we examine the effect of supplier size and supplier-induced disruption type on commitment as well as buyers’ preferred use of mediated power. Grounded in commitment-trust theory, our test examines the key mediating role of commitment in inter-organizational relationships in supplier-induced disruptions. Conducting scenario-based experiments with sample size of 266, we find that a large buyer is more committed to a large supplier than to a small supplier in a supplier-induced disruption. Interestingly, a large buyer prefers to use mediated power strategies with a large supplier than with a small one. Commitment is found to mediate the effect of supplier size and mediated power, particularly with reward and monitor strategies. Although the interaction of supplier size and disruption type does not impact commitment or mediated power, integrity disruption damages buyer commitment more than competence disruption does. Moreover, only in an integrity disruption does supplier size significantly impact the buyer's preference for using a reward strategy.The author would like to acknowledge and thank Dr. Daniel Bumblauskas from the University of Northern Iowa, Department of Management for his contributions to this work. Dr. Bumblauskas provided advisory support to the author for this paper.