Exploring determinants of perceived interfirm dependence in industrial supplier relations

Three groups of sources of supplier dependence are discussed in the literature: factors related to goal mediation, factors related to relation-specific assets, and factors related to network embeddedness. This paper explores the influence on the dependence of ego and alter, as perceived by the supplier, of factors representative for all three groups of sources of dependence, using data from two separate empirical studies. The findings suggest that sales to a particular buyer as a percentage of total the sales of the supplier (a form of goal mediation) are a very important determinant of perceived supplier dependence. Various forms of asset specificity at the side of the supplier are also related to perceived supplier dependence, in particular human asset specificity. In one of the studies physical asset specificity was found to be negatively associated with supplier dependence, a finding which is strongly counter-intuitive. Buyer dependence, as perceived by the supplier, is related to the extendedness of the relationship (goal mediation) and, counter-intuitively, to dedicated assets at the side of the supplier. The network embeddedness variables play only a minor role in explaining perceived supplier and buyer dependence in this study. The data from the two studies furthermore suggest that perceived supplier dependence and perceived buyer dependence are caused by different factors, and that perceived buyer dependence does not compensate for high perceived supplier dependence.