Market power and relational conflicts in Russian retailing

Abstract

PurposeThe purpose of this paper is to examine new rules of exchange in retailer‐supplier relationships imposed by the retail chains, to analyse factors facilitating this institutional change and to reveal the links between channel power and relational conflicts.Design/methodology/approachSurvey data were collected from 500 managers of retail chains and their suppliers in five Russian cities. The sample includes firms of different sizes that sell food and home electronic appliances. After the diffusion of new contract arrangements is examined, logistic regression models are constructed to evaluate major sources of relational conflicts.FindingsThe findings indicate that power‐advantaged firms disseminate new rules of exchange effectively. However, relational conflicts largely originate not from these new demands but from the frequent contract infringements by both exchange parties.Research limitations/implicationsThe study is confined to two sectors of retail trade in one country. Further research is required to determine the effects on channel relationships of the financial crisis and of the adoption of restrictive federal legislation.Practical implicationsPractitioners should recognise the need to provide socio‐political legitimacy for the new rules of exchange. Otherwise, they may face relational conflicts and provoke restrictive state regulations. Public officials should know that relational conflicts may originate largely from opportunistic behaviour by exchange parties rather than from abuse of market power.Originality/valueThis paper presents the first systematic quantitative study of retailer‐supplier relationships in Russia. It investigates institutional change and relational conflicts as perceived by both exchange parties.