Do Supply Chain Exemplars Have More or Less Dependent Suppliers?

Abstract

Extant literature offers differing perspectives regarding whether buying firms benefit from having highly dependent suppliers. One view is that buyers benefit from having dependent suppliers as this provides buyers the ability to dictate terms in the relationship. An alternative perspective is that buyers are worse off from having dependent suppliers in that this dependence can lead to conditions that harm value creation. In this manuscript, supply chain management theory is extended by evaluating these differing predictions. This is accomplished by analyzing a database from Bloomberg of objective, secondary data for more than 3,000 supplier relationships for 49 firms independently recognized as possessing exemplar supply chains and 530 of these firms’ largest industry rivals based on GICS industry codes. These data are utilized to develop a portfolio‐level measure of buyer–supplier dependence that incorporates the bilateral nature of dependence. The findings indicate that, relative to their industry rivals, firms with exemplar supply chains have suppliers with a lower level of dependency. These results contribute to theory, inform management practice, and suggest avenues for future research.