The Effect of Relative Power on Interorganizational Knowledge Transfer and Relationship Quality in the Buyer-Supplier Relationship: A Bilateral Perspective

Considerable attention has been paid to relative power that decides the type of buyer-supplier relationship. However, most prior studies have limitations as they have focused only on one focal firm’s (buyer’s or supplier’s) perspective, failing to achieve a more balanced view from both sides of a buyer-supplier relationship. This study proposes a research framework by integrating both the buyer’s and the supplier’s perspectives and develops three hypotheses on the effects of relative power on interorganizational knowledge transfer and relationship quality in the buyer-supplier relationship. The proposed framework and its hypotheses were tested using cluster analysis and ANOVA with data from the survey of 89 dyadic pairs of participants of the buyer-supplier relationship. The results showed four distinguished types of buyer-supplier relationship: (1) confident buyer and supplier, (2) diffident buyer and supplier, (3) arrogant buyer but diffident supplier, and (4) confident buyer but cowed supplier. In addition, we also found that buyers and suppliers have their own different perceptions on relative power, degrees of knowledge flow, and relationship quality. Interestingly, when a buyer and a supplier believe that the power is balanced between them, inter-organizational knowledge transfer activities and quality of relationship were improved. The results help sharpen our understanding of how relative power affects knowledge transfer and relationship quality in the buyer-supplier relationship, and enable us to explore the different standpoints between the buyer and the supplier. Such findings based on a bilateral view of relative power in the buyer-supplier relationship may be used as a stepping stone for further empirical research. It also offers valuable practical suggestions for managers who want to facilitate knowledge flow with their partners.