Buyer Power and Supplier Relationship Commitment: A Cognitive Evaluation Theory Perspective

• Author: Sangho Chae,Daesik Hur,Thomas Y. Choi
• Date: 01 April 2017
• DOI: http://doi.org/10.1111/jscm.12138
• Published date: 01 April 2017

BUYER POWER AND SUPPLIER RELATIONSHIP

COMMITMENT: A COGNITIVE EVALUATION THEORY

PERSPECTIVE

SANGHO CHAE XAND THOMAS Y. CHOI

Arizona State University

DAESIK HUR

Yonsei University

Our study investigates how buyer power affects supplier relationship com-

mitment. When a buyer exerts power on a supplier, the supplier response

can be either simple compliance or commitment at a deeper level. Theo-

retically, the latter pertains to a supplier’s intrinsic motivation. Building

on cognitive evaluation theory, our model proposes the distinctive yet

interactive nature of reward power and coercive power, commonly consid-

ered together as mediated powers. It also posits that nonmediated powers

(expert, referent, and legitimate) amplify the influences of reward and

coercive powers. An empirical investigation, based on large-scale multina-

tional survey data, provides support for our theoretical arguments. We dis-

cuss the practical implications for how buyers can use reward and

coercive powers to improve supplier relationship commitment.

Keywords: power bases; interorganizational relationship commitment; cognitive

evaluation theory

INTRODUCTION

Buyers exert reward and coercive powers to facilitate

desired actions from suppliers. Reward power—the

ability to administer positive valence or decrease nega-

tive valence (French & Raven, 1959)—is often used by

buyers to induce desired behaviors from suppliers.

Leading automakers including Toyota, Honda, and

General Motors grant annual awards to suppliers that

attain desired outcomes (General Motors, 2016;

Honda, 2015; Toyota, 2016). Buyers also use coercive

power—the ability to punish if the power recipient

fails to respond (French & Raven, 1959)—to pressure

suppliers to comply with the buyers’ requirements.

For example, Wal-Mart made clear that it would con-

tinue doing business only with the suppliers that

complied with its greenhouse gas emissions require-

ments (Rosenbloom, 2010).

When using reward and coercive powers, buyers

need to consider their suppliers’ relationship

commitment (Brown, Lusch & Nicholson, 1995;

Zhao, Huo, Flynn & Yeung, 2008). Suppliers would

have preferred buyers that they prefer to work for

because of the buyers’ superior knowledge and

respectable business values, philosophies, and norms

(Liker & Choi, 2004). In this regard, the supplier’s

relationship commitment reflects its intrinsic motiva-

tion to contribute to the relationship with the buyer,

over and above economic calculus. Such relationship

commitment facilitates suppliers’ collaborative behav-

iors, investments in buyer-specific assets, and integra-

tion with the buyer (Anderson & Weitz, 1992; Krause,

1999; Krause, Handfield & Tyler, 2007; Krause, Scan-

nell & Calantone, 2000; Prahinski & Benton, 2004;

Zhao et al., 2008).

Then, how can buyers affect suppliers’ relationship

commitment? While the extant literature generally

agrees that reward and coercive powers can effectuate

supplier compliance (i.e., instrumental commitment),

research findings regarding their influence on intrinsic

commitment (i.e., normative commitment) have been

less clear (e.g., Brown et al., 1995; Maloni & Benton,

2000; Zhao et al., 2008). Reward and coercive powers

Acknowledgments: Data collection, in Korea, for this work was

supported by the National Research Foundation of Korea Grant

funded by the Korean Government (NRF-2009-332-B00133).

April 2017 39

Journal of Supply Chain Management

2017, 53(2), 39–60

©2017 Wiley Periodicals, Inc.

are viewed as extrinsic forms of reinforcement and, as

such, they are thought to damage relational norms

and cooperation between exchange partners (e.g., Ben-

ton & Maloni, 2005; Brown et al., 1995; Dapiran &

Hogarth-Scott, 2003; Handley & Benton, 2012a,b; Ke,

Liu, Wei, Gu & Chen, 2009; Maloni & Benton, 2000;

Terpend & Ashenbaum, 2012; Zhao et al., 2008).

However, recent studies have started to recognize the

distinctive effects of reward and coercive powers in

buyer–supplier relationships, calling for further

research (e.g., Nyaga, Lynch, Marshall & Ambrose,

2013; Pulles, Veldman, Schiele & Sierksma, 2014).

Moreover, the extant research has not yet investigated

how distinctive power sources interact each other to

affect suppliers’ relationship commitment. Buyers can

use reward power in conjunction with coercive power

in practice, but it is unclear how this joint use of both

powers affects supplier relationship commitment. In

addition, the literature differentiates nonmediated

powers (expert, referent, and legitimate) from medi-

ated powers (reward and coercive). Such nonmediated

powers can provide the contexts that may either

amplify or hinder the effects of mediated powers on

suppliers’ relationship commitment. While Gaski

(1986) examined interrelationships among different

power bases, interactions between buyer power bases

and their effects on supplier relationship commitment

have not yet been examined in the literature.

We adopt cognitive evaluation theory (CET) as the

theoretical perspective to explain how reward and coer-

cive powers of the buyer influence supplier relation-

ship commitment. CET considers how social factors

influence intrinsic motivation (Deci, 1975; Deci &

Ryan, 1985; Ryan & Deci, 2000). It helps us

distinguish between reward and coercive powers and

understand how they interact with each other and

other types of powers that are nonmediated to influ-

ence intrinsic relationship commitment (see Figure 1).

By developing theoretical arguments based on CET

and using a large-scale multinational dataset, we try to

answer the following research questions. What are the

distinctive effects of the buyer’s reward and coercive

powers on supplier relationship commitment? How do

reward and coercive powers interact with each other?

How do nonmediated powers serve as the contexts that

moderate the effects of reward and coercive powers?

Our investigation offers a more comprehensive

understanding of the relationships between buyer

power and supplier relationship commitment. The

contribution of our study is threefold. First, our study

contributes to the body of research on power by

applying CET and revealing the distinctive effects of

reward and coercive powers on relationship commit-

ment. Second, our study investigates the interactions

among different types of power. Third, by conducting

a large-scale empirical study that encompasses Asia

and the United States, we increase the external validity

of our findings and attempt to resolve the previously

inconclusive effects of reward and coercive powers.

THEORETICAL BACKGROUND

Power and Relationship Commitment in Buyer–

Supplier Relationships

First introduced more than 50 years ago, French and

Raven’s (1959) classification of power bases—reward,

coercive, legitimate, referent, and expert—has been

widely used in general management and supply chain

Competence-enhancing factor

Buyer H1:+

H5:+

H2:-

H3:+

reward power

Buyer

Supplier

relationship

commitment

coercive power

Autonomy/competence-destroying factor

Autonomy-supporting factor

Intrinsic motivation

Buyer

nonmediated power

H4:-

FIGURE 1

Conceptual Model Based on CET [Color figure can be viewed at wileyonlinelibrary.com]

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Journal of Supply Chain Management

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