Abstract
The purpose of this study is to analyze the effect of power asymmetry, commitment and trust to business performance. In a business relation, the role of power asymmetry, commitment and trust are importance to maintain the quality of a relationship. Business performance is an important factor to decide whether a business relation should be continued or terminated. We conducted a survey with traditional SME retailers in Indonesia as the respondents, which were obtained through purposive sampling methods. This study involved 245 SME retailers who have business relation with modern companies as their supplier. We adopted Morgan and Hunt’s (1994) model of relationship marketing for business to business in order to analyze the relationship among companies in business network. The result shows that power asymmetry, commitment and trust have significant, positive effects on business performance. The implication of this study is: power asymmetry between modern companies and SME potentially accelerates their performance, while commitment and trust will provide firm foundation for the companies involved in the business relation. In overall, power asymmetry has impact for firm with lack of bargaining position in business relation, thus instead of being exploited, SME retailers can increase their business performance due to partner’s pressure and demand to their performance.
Highlights
Relationships between large companies and SMEs become critical issue among business partnerships in Indonesia
The present study investigates the relationship between power asymmetry, trust and commitment in business relations in the Indonesian retail industry
Trust is a vital aspect that sustains the continuity of business relations between suppliers and SME retailers
Summary
Relationships between large companies and SMEs become critical issue among business partnerships in Indonesia. Such a partnership is a vital element to encourage the improvement in SME business performance. Studies of business relation among companies in the field of marketing management basically employ a relationship marketing framework (Morgan and Hunt 1994, Gronroos 1994, Viitaharju and Lahdesmaki 2012). Maloni and Benton (2000) claim that in a business relation, each party has certain power which brings positive and negative implications. The positive aspect is that it can enhance the business performance of both parties to meet the quality standards set by the business partnership. The negative aspect is exploitation by one party that has dominant power over the partner
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
