Push and pull strategies by component suppliers when OEMs can produce the component in-house: The roles of branding in a supply chain

Abstract

In the supply chains that consist of component suppliers (CSs), original equipment manufacturers (OEMs) and industrial customers (ICs), CS managers must manage the relationships with both their direct customers (OEMs) and indirect customers (ICs). In this research, we explore the effects of CSs' push and pull strategies on OEMs' component adoption decision in situations where OEMs can produce the components in-house. We hypothesize on how CS branding and OEM branding moderate the effects of push and pull strategies and on a boundary condition for the moderating effects. Survey measures from 195 Chinese mining-equipment companies and their actual component adoption data support our hypotheses. Our analysis shows that both push and pull strategies induce OEMs' adoption of the CS's components (instead of the ones made in-house). A strong CS brand image promotes the adoption, but a strong OEM brand image curbs it. Both of the brand images strengthen (weaken) the effectiveness of push (pull) strategies. Moreover, an IC's loyalty to an OEM weakens (strengthens) the positive moderating effects of CS (OEM) brand image on the relationship between push strategies and the adoption of the CS's components.