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Asymmetrical Buyer-Supplier Relationships: The Role of Perceived Benevolence


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ASYMMETRICAL BUYER-SUPPLIER RELATIONSHIPS: THE ROLE OF PERCEIVED BENEVOLENCE By QIONG WANG A DISSERTATION PRESENTED TO THE GRADUATE SCHOOL OF THE UNIVERSITY OF FLOR IDA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY UNIVERSITY OF FLORIDA 2006

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Copyright 2006 by Qiong Wang

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This dissertation is dedicated to my pa rents (Ruixin Wang & Xiaoyuan Tao), and my advisor and his wife (Barton Weitz & Shirley Weitz), with deep gratitude.

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iv ACKNOWLEDGMENTS This dissertation is indebted to many, ma ny people. First of all, I would like to express my heartfelt thanks to my advisor a nd mentor Bart Weitz. If I were asked about who would be my best role model in life, it w ould have to be Bart, straight down the line. He has taught me not only how to become a dedicated researcher a nd teacher, but also, more importantly, how to become a ‘beautifu l’ person from within. All through the past five years, he has always been very patie nt and supportive. While giving me lots of freedom to handle situations and solve probl ems in my own way, he never abandons me or allows me to walk down roads with futility. Without Bart’s great mentoring, my graduate studies and my life would never be the same. I also wish to thank my committee memb ers (Richard Lutz, Debanjan Mitra, Jinhong Xie and Wei Shen) and other faculty memb ers at the Department of Marketing of the University of Florida for their incredible support and insightful comments. I also take this opportunity to thank my professors at the Department of International Economy and Trade of Wuhan University, P. R. China, fo r their inspirations in my early years. I am also very grateful to my friends in the Ph.D. program at the University of Florida. In particular, I want to express my deep affecti on to Elise Chandon, Qi Wang, Joey Hoegg, Yubo Chen and Wouter Vanhouche. I am also indebted to all my other friends in U.S. and China for their great friendships (especially Shirley Weitz, Anne Magi, Maddy Swinnen, Joe Yang, Huaizhang Deng, Huilian Ma, Rockey Luo, Shuman Li). All the love I have received from them makes my life so enjoyable.

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v I thank my family. I do not have enough words to fully express my gratitude to any one of them. I deeply thank my parents (Ruixin Wang and Xiaoyua n Tao) and brother (Yang Wang), who have been always a wonderful support throughout my graduate studies. I deeply thank Tseng-Tien Hu ang, who has been the most supportive, encouraging and sympathetic lover I could ev er imagine. Their love and patience have allowed me to pursue any dream I have ever entertained. I owe them my accomplishment.

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vi TABLE OF CONTENTS page ACKNOWLEDGMENTS.................................................................................................iv LIST OF TABLES.............................................................................................................ix LIST OF FIGURES.............................................................................................................x ABSTRACT....................................................................................................................... xi CHAPTER 1 INTRODUCTION........................................................................................................1 Objective...................................................................................................................... .3 Research Questions.......................................................................................................4 Contributions of the Study............................................................................................5 Overview of Research Methods....................................................................................6 Organization of the Dissertation...................................................................................7 2 REVIEW OF RELEVANT LITERATURE.................................................................9 Overview....................................................................................................................... 9 Current Marketing Research on Inter-Firm Relationships...........................................9 Characteristics of Successful Inter-Firm Relationships..............................................12 Prior Literature on Trust and Benevolence.........................................................12 Benevolence in Prior Literature...........................................................................14 Antecedents of Successful Inter-Firm Relationships..................................................15 Responsiveness....................................................................................................16 Making Concessions............................................................................................17 Knowledge Sharing.............................................................................................18 Relationship Specific Investments......................................................................19 Consequences of Successful Inter-Firm Relationships...............................................21 Summary.....................................................................................................................22 3 CONCEPTUAL FRAMEWORK...............................................................................23 Overview.....................................................................................................................23 The Three-Component Model of Inter-Firm Benevolence.........................................24 Definition of Benevolence...................................................................................24

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vii Affective Benevolence........................................................................................25 Calculative Benevolence.....................................................................................25 Normative Benevolence......................................................................................26 Sender’s Signals of Inter-Firm Bene volence and Receiver’s Interpretations.............26 Signals of Affective Benevolence.......................................................................28 Signals of Calculative Benevolence....................................................................31 Signals of Normative Benevolence.....................................................................32 Receivers’ Reactions to Per ceived Inter-Firm Benevolence......................................33 Overview.............................................................................................................33 Receiver’s Reactions to Signals of Benevolence in Asymmetrical Relationships....................................................................................................34 Summary.....................................................................................................................39 4 METHODOLOGY.....................................................................................................44 Overview.....................................................................................................................44 Unit of Analysis, Sample, and Data Collection..........................................................44 Measure Development................................................................................................47 Pretest..................................................................................................................47 Factor Analysis....................................................................................................48 Measurement Properties.............................................................................................49 Test of H1...................................................................................................................52 Hypothesis Testing Model Equations.........................................................................53 Relative Power Groupings of Buyers..................................................................53 Estimation Method..............................................................................................54 Summary.....................................................................................................................56 5 RESULTS...................................................................................................................73 Overview.....................................................................................................................73 Common Method Variance.........................................................................................73 Hypotheses Testing.....................................................................................................74 Signals of Perceived Affective Benevolence......................................................74 Signals of Perceived Calculative Benevolence...................................................77 Signals of Perceived Normative Benevolence....................................................78 Main Effects of Perceived Benevolence on Commitment..................................79 Moderating Effects of Power on th e Relationship between Perceived Benevolence and Commitment........................................................................79 Behaviors Resulted from Commitment...............................................................81 Summary.....................................................................................................................84 6 DISCUSSION...........................................................................................................101 Overview...................................................................................................................101 Contributions to Theory and Practice.......................................................................101 Discussion of Results................................................................................................103 Antecedents.......................................................................................................103

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viii Consequences....................................................................................................105 Limitations................................................................................................................106 Future Research........................................................................................................107 Summary...................................................................................................................109 APPENDIX A LOW POWER BUYER SURVEY...........................................................................110 B HIGH POWER BUYER SURVEY..........................................................................121 LIST OF REFERENCES.................................................................................................132 BIOGRAPHICAL SKETCH...........................................................................................148

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ix LIST OF TABLES Table page 3-1 Primary Behaviors Associated with Signaling Benevolence in Buyer-Supplier Relationships............................................................................................................41 4-1 Item Descriptions and Measurement Model Results for Latent Constructs................58 4-2 Measurement Model Results for Perceived Benevolence Measures...........................65 4-3 Measurement Model Results for Behaviors Measures................................................68 4-4 Model Comparison of the Structure of Benevolence..................................................71 4-5 Expected Signs and Relationships of Co efficients in Asymmetrical Buyer-Supplier Relationships............................................................................................................72 5-1 Correlation Matrix of All Constructs...........................................................................85 5-2 Common Method Variance Analysis..........................................................................87 5-3 Structural Model Summaries – An tecedents of Perceived Benevolence....................89 5-4 Structural Model Summaries – Pe rceived Benevolence and Commitment.................91 5-5 Structural Model Summaries – Percei ved Benevolence, Commitment and Power....92 5-6 Structural Model Summaries – Commitment, Power and Concession.......................94 5-7 Structural Model Summaries – Co mmitment, Power and Responsiveness.................95 5-8 Structural Model Summaries – Comm itment, Power and Knowledge Sharing..........96 5-9 Structural Model Summaries – Comm itment, Power and Relationship Specific Investment................................................................................................................97

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x LIST OF FIGURES Figure page 3-1 The Simple Loop of B uyer-Supplier Interactions.......................................................42 3-2 Interpretations of and Reactions to Signals for Organizational Benevolence in Asymmetrical Buyer-Supplier's Relationships.........................................................43 4-1 Estimation of Interpretation and Reac tions in Asymmetrical Buyer-Supplier's Relationships............................................................................................................57 5-1 Antecedents of Perceived Inter-Firm Benevolence Structure Model Summary.........98 5-2 Perceived Benevolence, Commitment and Power Structural Model Summary..........99 5-3 Commitment, Power, Reciprocit y and Benevolence Behaviors Summary...............100

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xi Abstract of Dissertation Pres ented to the Graduate School of the University of Florida in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy ASYMMETRICAL BUYER-SUPPLIER RELATIONSHIPS: THE ROLE OF PERCEIVED BENEVOLENCE By Qiong Wang August 2006 Chair: Barton A. Weitz Major Department: Marketing Characteristics of mutually beneficial, long-term buyer-s upplier relationships are well documented; however, little research has studied how to develop such relationships, especially when buyer-supplier relationships ar e of asymmetrical pow er. This dissertation introduces a three-component model of inter-f irm benevolence, and argues that inter-firm benevolence is the key element of building st able, mutually beneficial asymmetrical buyer-supplier relationships in the long term. A conceptual framework involving the antecedents as well as the consequences of inter-firm benevolence is proposed in the buyer-supplier context. Structural equation modeling and regr essions were used to estimate the measurements and test the nomol ogical validity of the model with data from a survey of 516 purchasing managers across industries. Empi rical results point to the importance of the three-component benevolence model in buyer-supplier relationships, and show that perceived affective, normative and calculativ e benevolence are measurable independent

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xii dimensions of a benevolence construct. Pe rceived supplier’s aff ective benevolence and perceived normative benevolence are found to be positively rela ted to the buyer’s commitment. Further, perceived supplier’s aff ective benevolence is shown to play a more important role for a buyer’s commitment while the buyer is of high power than for the buyer who is of low power, while perceived ca lculative benevolence tends to be effective to obtain commitment from a low power buyer than from a high power buyer. Perceptions of supplier’s responsiveness, con cessions, relationship-specific investments, and reputation are found to be the anteceden ts of perceived supplier’s affective, normative, and calculative benevolence. Finall y, a buyer’s commitment determines this buyer’s responsiveness, conce ssions, relationship-specific investments, and knowledge sharing in the relationship.

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1 CHAPTER 1 INTRODUCTION Considerable research in marketing has reported that relationships between buyers and suppliers with asymmetrical power are characterized by low cooperation, low trust, and high conflict (Anderson and Weitz 1989 ; Bleeke and Ernst 1991; Buchanan 1992; Dwyer et al. 1987; Frazier et al 1989; Stern and Reve 1980). Th is prior research suggests that asymmetrical relationships are inhere ntly unstable because the high power firm, acting in its self-interest, ta kes advantage of the low power firm; and in response, the low power firm, searching for ways to protect its elf from this potential abuse, often must either resign itself to earning sub-normal profits or to abandon ing the relationship. According to this research, asymmetrical inter-firm relationships are transitory phenomena doomed to naturally dissolve. However, one of the most consistent and striking phenomena is the persistence of a wide distribution of firms composed of differe nt sizes and capabilities (Audretsch et al. 1999; Tommaso and Dubbini 2000). For example, in the United States, the ten largest retailers now account for 80% of the average manufactur er’s business (Boyle 2003). Asymmetrical, rather than symmetrical, buye r-supplier relationshi ps prevail in the marketplace, suggesting asymmetrical rela tionships are common and not transitory (Dwyer and Walker 1981; Johnston and Bonoma 1984; Michman 1974). Furthermore, the sustainability of many asymmetrical relationships suggests that asymmetrical relationships can be stable over time.

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2 For example, Bloom and Perry (2001) ha ve analyzed the data from 1988 to 1994 and, contrary to conventional wisdom, find that “there are opportuni ties for suppliers to become beneficiaries of Wal-Mart's power, not just be victim of this power. Indeed, small-share suppliers may find it an attractive strategy to partner with Wal-Mart, to trade off initial financial suffering for the enjoyment of the fruits of the partnership later.” In addition, Corsten and Kumar (2005) confirm that small suppliers do benefit from collaborative relationships with large retailers. Anand and Stern (1985) start from a so ciopsychological pers pective and propose that under certain circumstances channel memb ers would like to relinquish their control. James Moore (1993) argues that both high power firms and low power firms are now evolving into business ecosystems which refer to the business systems formed by the interactions of firms and thei r environment. According to Moore, firms, regardless of their powers, now need to co-evolve with others in the ecosystem because firms share fates with each other in the ecosystem. Finall y, researchers have demonstrated that trust and commitment, the two linchpins of mutually beneficial, partneri ng relationship, can be developed even in highly asymmetrical relati onships if the vulnerab le party is treated fairly by its more powerful pa rtner (Kumar and Stern 1993). In addition to the lack of research atte ntion focusing on asymmetrical relationships, research has not focused on the process through which asymmetrical, as well as, symmetrical relationship develops. Research is needed to identify the actions undertaken by both high power firms and low power firms to develop trusting and committed relationships in the presence of power asymmetries.

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3 Despite the importance of understanding th e development of stable asymmetrical buyer-supplier relationships, the primary resear ch on inter-firm relationships to date has examined the characteristics of long-term rela tionships and compared such characteristics to the characteristics of tran sactional relationships. In a ddition, prior research has not considered the factors leading to the development of long-term relationships, particularly stable asymmetric long-term relationsh ips. For example, the only recommendation provided in the current literature for the vulnerable firms is that they should find alternative relationships to balance the pow er in the current relationship (Anderson and Weitz 1989; Dutta et al. 1994; Emerson 1974; Galaskiewicz 1979; Heide and John 1988; Pfeffer and Salancik 1978). Although increasing alte rnatives create opportunities for vulnerable firms to “balance” the focal dyadic relationship, vulnerabl e firms are left with little insight for dealing with persistent unba lanced relationships. For exam ple, little advice has been provided to low power firms on how to effectiv ely interact with high power firms to build up long term, partnering relations hips, and how to sustain such inter-firm relationships to outperform other competing inte r-firm relationships to gain the leadership in the marketplace (Moore 1993). Search ing for balanced relationships with alternative partners can be cost prohibitive, because of high risk s involved with market uncertainty and high switching costs due to transaction-specif ic investments made in the previous relationships. Objective The objective of this dissertation is to build a foundation of both theory and evidence on how the high power firm and the lo w power firm interact to sustain mutually

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4 beneficial, long-term rela tionships. As a first ste p, I propose that inter-firm benevolence which is one of the three key dimensions of inter-firm trust, is a critical construct involved in stabilizing asymme trical buyer-supplier relationshi ps. I suggest that inter-firm benevolence has three different components: (a) an affect (affective benevolence), (b) a duty (normative benevolence), and (c) a must (calculative benevolen ce). Measures of each of the three dimensions are developed in this dissertation and their psychometric properties are examined. My theoretical framework proposes that the perception of each component of benevolence develops as a function of different antecedents, different signals sent by the other parties, and has different implications for attitudinal and subsequent behavioral outcomes for firms in asymmetrical relationshi ps. Specifically, one firm’s characteristics and actions signal its benevol ence to the other firm. Th e power structure of the relationship moderates the effects of one fi rm’s benevolence signals on the other firm’s attitudes and subsequent beha viors. Although clearly not exha ustive in its consideration of all potential antecedents and consequen ces, the framework highlights key constructs identified from past research in economi cs, management, marketing, law, and social psychology literatures. Research Questions As indicated above, the present study fo cuses on inter-firm benevolence that is involved but somehow neglected in stable asymmetrical buy er-supplier relationships. The related research questions that frame the study are listed below: 1. What is inter-firm benevolence? What is the theoretical importance of introducing inter-firm benevolen ce? What are the components of inter-firm benevolence?

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5 2. What are the impacts of asymmetrical power in buyer-supplier relationships on perceived inter-firm benevolence, especia lly on different com ponents of perceived inter-firm benevolence? 3. What are the antecedents influencing the perceptions of inter-firm benevolence in buyer-supplier relationships characterized with asymmetrical power? 4. What are the consequences of inte r-firm benevolence in buyer-supplier relationships characterized with asymmetrical power? 5. What are the managerial implicati ons for buyers and suppliers with asymmetrical power to stabilize thei r mutually beneficial relationships? Contributions of the Study To my knowledge, this study is one of th e first studies to offer insights into building stable buyer-supplier relationships ch aracterized with asym metrical powers. A conceptual framework involving inter-firm benevolence and potential antecedents and consequences of developing asymmetrical buyer-supplier relations hips is presented. Parting with economic literature, this study shows that firms do display benevolence, concern for other firms, in the buyer-s upplier relationship. Such benevolence is particularly important when buyer and supp lier are of asymmetr ical power in the relationship. For example, the three-co mponent conceptualiz ation of inter-firm benevolence (affective, normative, and calculative) captures different aspects of interfirm benevolence valued by the high and lo w power firms differently. In addition, the perceptions of the other part y’s benevolence have significant impacts on the focal firm’s commitment level in the relationship. New measures on the three components of inter-firm benevolence and antecedents as well as the consequences of inter-firm relationship development are developed and examined – measures that have good psychomet ric properties can be used in subsequent research. Through survey studies, our understand ing of the interaction processes between

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6 the firms in relationships characterized with asymmetrical powers is deepened, which helps obtaining constructive clues on buildi ng up trust and commitment in asymmetrical buyer-supplier relationships. Lastly, the findings of this study suggest th at inter-firm benevolence should be an important consideration of managerial decisions about inter-firm stra tegies, particularly about asymmetrical inter-firm relationship de velopments. For example, managers in the low power firms should choose certain strategies such as being responsive and flexible to get the high power firm to be more committed to the relationships, while the managers in high power firms should choose such strategies such as relationship specific investments to obtain a high level of commitment from the low power firms. Overview of Research Methods After a conceptual framework involving pot ential antecedents and consequences of inter-firm benevolence was presented, a pret est among industrial buyers was conducted to examine the validity and reliability of the measurements for new constructs. Then, after refining the measurements for new construc ts, the main study was accomplished by using survey questionnaires sent to business-to-b usiness buyers, who have served as the key informants. The complete response sample for the main study consists of 516 industrial buyers. The selection of the samples for pretest and main study comes from both theoretical and pragmatic concerns. Theoretically, I am interested in buyer-supplier relationships between financially independent firms (e.g., th e supplier of products and services and the buyer in a business-to-business relationship). Th ese firms do not rely on or create unified financial systems or other forms of bureaucr atic control to over see the relationships.

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7 Hence, joint ventures, horizont al relationships, and vertically integrated relationships are not considered in this study. Pr agmatically, the samples ensure the availability of the data needed to test the theory and hypotheses ge nerated. Data was collected from surveying the purchasing managers in bus iness-to-business markets. The unit of analysis in this study is a buyer-seller relationship as viewed from the buyer’s perspective. Hypotheses are tested by using structur al equation modeling and regression to estimate and compare the coefficients of models for the high and low power parties’ perceptions of the nature of their counterparts’ benevolence and the antecedents and consequences of these perceptions in the inter-firm relationships. Organization of the Dissertation The remainder of the dissertation is orga nized as follows. Chapter 2 provides a review of the research rela ted to building up trust and commitment in inter-firm relationships. While providi ng a sketch of current mark eting research on inter-firm relationships, it focuses on the three sub-area s of inter-firm benevolence: (a) the concept of inter-firm trust and benevolence which char acterize successful inter-firm relationships, (b) various firm behaviors discussed in prior literature as the ant ecedence of successful inter-firm relationships, and (c) the critic al consequence of successful inter-firm relationships commitment. Chapter 2 offers a background on the c ontributions as well as the limitations of current research, and se ts the stage for the conceptual framework developed in this study. Chapter 3 describes the conceptual fram ework of this dissertation – definition, formation and consequences of inter-firm benevolence. It first defines inter-firm benevolence, followed by an introduction of the three component model of inter-firm

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8 benevolence. Then antecedents of perceived inter-firm benevolence, such as perceived responsiveness, perceived concession, perceived knowle dge sharing, reputation, and idiosyncratic investment of the partner are defined and reviewed. The hypothesized relationship between these antecedents of in ter-firm benevolence and perceived inter-firm benevolence is articulated. Subsequently, this chapter discusses the consequences of perceived inter-firm benevolence – a receiv ing firm’s commitment and subsequent behaviors. Finally, the model of perceived inter-firm benevolence model is developed and hypotheses are presented. Chapter 4 describes the methodology used to empirically test the hypotheses generated in Chapter 3 in the dissertation. Th e data collection proce dure, characteristics of the samples, and information on the rese arch setting are specified in detail. The questionnaire and measure development proce ss are described, and statistical techniques are presented in this chapter. Chapter 5 presents the results of the empi rical tests for the hyp otheses generated in Chapter 3. It also provides a discussion of the results re garding the antecedents and consequences of inter-firm benevolence, a nd a summary of contributions of this dissertation. Chapter 6 presents conclusions, implications of research and pr actice, limitations of the study, and recommendations for future research.

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9 CHAPTER 2 REVIEW OF RELEVANT LITERATURE Overview The marketing literature is replete with th e perspectives on the characteristics of successful buyer-supplier relati onships, while the research on how to build successful buyer-supplier relationships is very limited. Nonetheless, prior research provides a theoretical basis for further exploration of th e determinants as well as the consequences of the successful, asymmetric buyer-supplier relationships. After a short review of the current market ing research related to successful interfirm relationships, this chapter review s both economic-based and behavior-based literature on three closely related topics in troduction of inter-firm trust and benevolence, antecedence of successful inter-firm relations hips, and consequence of successful interfirm relationships. It is thus organized into four sections The first section summarizes current marketing literature on the characteri stics of successful inter-firm relationship. The second section reviews the pr ior literature on the three dimensions of inter-firm trust, and reveals the importance of introducing in ter-firm benevolence in governing long term inter-firm relationships. The th ird section reviews theories and empirical evidence of the antecedents of successful inter-firm relationshi ps. The fourth section reviews theories and empirical evidence of organizational conseque nces of successful in ter-firm relationships. Current Marketing Research on Inter-Firm Relationships Basically, two streams of research in ma rketing have been drawn to explain the nature of cooperative inter-firm relationships : (1) the economic research stream draws on

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10 microeconomic theory and uses game theoretic models to develop insights into vertical inter-firm relationships; and (2) the behavioral research stream draws on research concerning interpersonal and inter-organizati onal behaviors to develop and empirically test theories describing beha viors in vertical relations hips (Weitz and Wang 2004). Initially, economics research focused on th e source of channel inefficiencies and the need for cooperation. Inefficiencies result from the double marginalization problem that arises when independent firms in a vert ical relationship each set prices to maximize their own profits (Spengler 1950). For exampl e, when a manufacturer sets a wholesale price that maximizes its profits and a retailer independently sets a re tail price to maximize its own profits, the resulting retail price is higher than the retail price that a profitmaximizing vertically integrated manufacturer would set. Thus, this stream of research suggests that vertical integrati on in the channel is superior to having independent firms to perform these activities. Given the reality that few channels are vertically integrated, the economic-based marketing research on vertical relationships has explored a variety of mechanisms that address the coordination problems and enable independent channel members to achieve efficiency. For example, the economic rese arch associated with Transaction Cost Analysis (Coase 1937; Williamson 1975; W illiamson 1983; Williamson 1985) identifies conditions under which market and vertical integration are a ppropriate governance mechanisms. Two modeling approaches have been used to examine channel coordination issues through the use of contracting mechanism, while one approach is based on noncooperative (or strategic) games and the ot her based on cooperative (or coalitional)

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11 games (Weitz and Wang 2004). The non-cooperative game theory research structures the manufacturer-retaile r relationship as a leader-followe r game (Choi 1991; Lee and Staelin 1997; McGuire and Staelin 1983), while co-opera tive game theory stresses that buyers and suppliers make simultaneous decisions and need to incorporate each other’s reactions to make appropria te decisions (Jeuland and Shugan 1983). However economicbased research on inter-firm relationships assu mes that firms only have self concerns and seek to maximize their own profits. On the other hand, behavioral research on the nature of relationship development and maintenance suggests that trust plays an important role in governing relationships (Atuahene-Gima and Li 2002; Mayer et al. 1995; Morgan and Hunt 1994). Adopting relational contract th eory (MacNeil 1980) a nd social exchange theory (Blau 1968; Ekech 1974; Homans 1961; Thibaut and Kelley 1959), re searchers highlight trust as a crucial concept in sustaining inter-firm relationships because formal contractual agreements can not effectively deal with the breadth of contingencies that can arise in relationships (Dwyer et al. 1987; Lusch and Brown 1996; La mbe et al. 2001). Recent behavior-based marketing research on vertical relationships further examines commitment and the use of relational norms to gove rn relationships. However, this behavioral stream of re search also suggests that when power asymmetry exists, the high power party tend to act opportunistically by taking advantage of the low power firm in order to gain a di sproportionate share of rewards from their exchange. Thus the high power party impede s the abilities of the low power party to achieve its goals and thus creates conflict in the relationship (Anderson and Narus 1990; Boyle and Dwyer 1992; Dant and Schul 1992; Frazier and Summers 1986; Kim 2000;

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12 Venkatesh, Kohli, and Zaltman 1995). In brie f, behavior-related marketing research adopts the assumption that trust is essentia l for firms to sustain long term inter-firm relationships, but does not provide an answer to how asymmetrical relationships could sustain successfully in the reality. Characteristics of Successful Inter-Firm Relationships Trust has been considered to play important roles in governing inter-firm relationships, and benevolence has been introduced as one important component of trust (Anderson and Narus 1990; Hosmer 1995; Ku mar 1996). Although substantial progress seems to have been made in assessing the role of trust, we are far from achieving a clear understanding of the components of trust (Mayer et al. 1995), especially what is meant by the benevolence aspect of trust. In this sect ion, I will first review trust, and benevolence in particular, from both the inter-personal and inter-organizational literature. Then I will review the literature that reveals the importance of studyi ng benevolence at inter-firm level. Prior Literature on Trust and Benevolence In the past decade, trust has become one of the most intensively studied themes in the social sciences. It has been discu ssed in psychology (Johnson-George and Swap 1982; Rotter 1967; Rotter 1980), philosophy (Bai er 1986; Luhmann 1979; Shapiro 1987), economics (Arrow 1974; Williamson 1975; Williamson 1996), marketing (Kumar 1996; Morgan and Hunt 1994; Moorman et al. 1992), and organization theory (Zand 1972; Zucker 1986). Trust is defined as a general be lief that trustor is concerned for trustee’s welfare (benevolence), is honest and reliable in fulfilling it s commitments (integrity), and has specific skills, competencies, and knowle dge to fulfill its commitments (expertise)

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13 (Atuahene-Gima and Li 2002; Geyskens et al 1999; Mayer et al. 1995; Morgan and Hunt 1994). Among the vast literature on trust, Johnson-George and Sw ap (1982) asserted that “willingness to take risks ma y be one of the few characte ristics common to all trust situations.” Mayer and his coll eagues (1995) argue that trust can be viewed as an attribute of risk-taking behavior. Other researchers also argue that only under conditions of risk is trust needed (Boon and Holmes 1991; Deutsc h 1960). For example, Currall and Judge (1995) define trust as “an individual’s be havioral reliance on another person under a condition of risk”. Furthermore, some theo rists have pointed out that trust itself represents trustors’ perceptions of outcome probabil ities. Kee and Knox (1970) suggest that in order to appropriately study trust ther e must be some meaningful incentives at stake and that trustor must be cognizant of the risk involved. The characteristics of asymme trical inter-firm relationshi ps involve a higher level of risks than those of symmetr ical inter-firm relationships in that high power firms, as prior theories suggest, would take advantage of the low power firm when situations arise. In order to clarify the concep t of trust in asymmetrical buyer-supplier relationships, we need to examine the relationships between ri sk and trust in asym metrical buyer-supplier relationships, and the proce ss how high power firm and low power firm interact to develop trust in the long term. All the three components of trust (bene volence, integrity, and expertise) help reduce the perceptions of risks and uncertainti es when situations arise (Mayer et al. 1995). However, among these three components of trust, integrity and expertise are relatively stable firm attributes that are inte rnal to firms’ culture and capabilities and not

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14 greatly influenced by other firms’ integrity or expertise. On the other hand, benevolence can vary greatly across inter-firm relationships because one firm’s decision on benevolence is associated with other firms’ benevolence. In addition, integrity and expertise he lp reduce performance risks (i.e., the probability and consequences that allian ce objectives are not achieved, despite satisfactory cooperation among partner firms) while benevolence deals with relational risks (i.e., the probabi lity and consequences of not having satisfactory cooperation because of the potential for opportunistic beha vior on the part of both firms) (Das and Teng 1996; Das and Teng 2001). The high ri sks embedded in asymmetrical buyersupplier relationships are mainly associated w ith relational risks, and hence are affected mainly by the benevolence component of trust. Benevolence in Prior Literature Benevolence, which reflects one party’s concerns for the outcomes received by another party in the relationship, has been disc ussed at both inter-perso nal level in social psychology literature and inter-f irm level in management a nd marketing literature. The prior literature on benevolence at inter-personal level in social psychology involves cooperation theory (Deustch 1949; Deustch 1973; Messick and McClintock 1968; Tjosvold 1984; Tjosvold 1998) and dual c oncern theory (Blake and Mouton 1964; Pruitt and Rubin 1986). Generally, this res earch finds that negotiators are less contentious, engage in more problem-solvi ng, and achieve higher jo int outcomes when they have positive rather than negative concerns for others. In this research, the factors influencing the levels of concerns for othe rs at inter-personal levels are individual

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15 differences (Deutsch 1982; De Dreu and Van Lange 1995) or the natu re of the situation (De Dreu et al. 2000). In management literature, O liver (1990) mentions that firms have mutual concerns, which help firms to form stable inter-or ganizational relationships. However, Oliver (1990) also argues that mutual interests only arise in symm etric relationships (Oliver 1990). Similarly, marketing researchers find th at buyer-seller firms need to consider mutual interests when they are trying to resolve conflicts or when they want to maintain a long term relationship, but it is impossible for mutual interests to exist between asymmetrical power parties: only symmetri cal inter-firm relationships can develop mutual interests in the long term (Clopt on 1984; Gassenheimer and Ramsey 1994; Hallen et al. 1991). In economics literature, altruism, a rela ted but different concept, has been discussed. Altruism refers to self-destructi ve behaviors performe d for the benefit of others. More generally, altruist ic behaviors benefit the focal party less than the recipient (Piliavin and Charng 1990; Kollock 1998; Hu and Liu 2003). However, benevolence, i.e., concern for others, does not necessarily a ffect its own utility negatively. Thus many researchers suggest that the c oncept of benevolence, as oppose d to altruism, can increase the utility of both parties (De Dreu a nd Boles 1998; De Dreu and McCusker 1997; Liebrand et al. 1992). Antecedents of Successful Inter-Firm Relationships Although prior literature has left unanswered the questi on of what strategies firms can use to develop successful inter-firm rela tionships, some importa nt constructs that might signal perceived benevolence, such as relationship specific investments,

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16 knowledge sharing, being responsiveness, maki ng concession, and reputation have been discussed in the literature (Dyer and Singh 1998; Heide and Miner 1992; Jap 1999; Jap 2001b; Kumar and Dissel 1996; Rokkan et al. 2003). This section focuses on reviewing some important strategies. Responsiveness Responsiveness has been invest igated from two different perspectives in the prior literature. The first stream of research on responsiveness examines the effectiveness of firms’ strategies in maintaining customers. For example, Kohli and his colleagues (1993) define responsiveness as the action taken in response to the relevant information generated and subsequently filtered between buyers and suppliers. They propose that a firm’s responses need to be alig ned with its customers’ needs. The second stream of research on res ponsiveness focuses on firms’ optimal marketing decisions on pricing (promotion) and advertising between firms and their competitors (Ailawadi et al. 2005; Besanko et al. 2005; Chintagunta and Desiraju 2005; Dube and Manchanda 2005; Moorthy 2005; Naik et al. 2005; Reibstein and Wittink 2005; Sudhir et al. 2005). The purpose of this rese arch is to advice th e firms how to best enter the market and best defend the market given the potential competition in the market (Montgomery et al. 2005; Roberts et al. 2005). Generally speaking, research on resp onsiveness focuses on the speed and coordination with which actions are implemented and periodically re viewed. In contrast to flexibility or adaptability, responsivene ss requires a firm’s timely responses when situations arise.

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17 Making Concessions A concession is “a change of offer in th e supposed direction of the other party’s interests that reduces the level of benef it sought” (Pruitt 1981). Concessions are a key element of any negotiation or interacti on, which is embedded in the process of relationship development. And concessions affect the process and outcome of relationship development (Klimoski and Breaugh 1977; Yukl 1974). Parties make concessions because they believe such behavi ors will foster agreement, prevent the other party from leaving the relationship, and enc ourage the other party to make reciprocal concessions (Bartos 1965; Hamner 1 974; Komorita and Esser 1975; Osgood 1959). Researchers have distinguished the timing of concessions (when to concede) from the content of concession (h ow much to concede) (Allen et al. 1990; Druckman et al. 1972; Kwon and Weingart 2004). Generally speaking, three types of concession strategies ha ve been discussed in the prior literature: competitive, coordinate and cooperative concessions strategies. Competitive concession can be characterized as the one in which the negotiator maintains the high levels of aspiration and high limits for negotiation outcomes, and uses very inflexible behavior aimed at forcing concessi ons from the other part y. The use of forceful concessions, such as threats, persuasive arguments, positi onal commitments, and the like is considered competitive concession strategy (Pruitt and Lewis 1977). Coordinate concession refers to the two parties’ adopting a problem-solving orientation in the relationship, and show ing a relatively high degree of trust and cooperation to resolve the conf licts or disagreement in the relationships. Two forms of coordinate concessions have been discussed in prior literature. One form is open and

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18 accurate exchange of information by the partie s about priorities and utilities associated with the issues to be settle d (Pruitt 1981). By sharing information about priorities and utilities, both parties are better able to iden tify issues on which both of them can make concessions at a relatively low cost to r ealize greater utility for both other parties (Clopton 1984). Another form of coordinative concession is related to what Kelley and Schenitzki (1972) mean by “heuristic trial and error.” This concession form arises when a party explores all possible settlements at a gi ven level of utility before conceding to a lower level. Moreover, the party concedes very gradually, typically by conceding on the issue(s) of lowest priority. Both types of coor dinate concessions appear to result from an “intelligent stubbornness” base d on an individualistic orient ation of obtaining the best possible outcome for the party itself. However, such concession behaviors might lead to an integrative agreement in situations wh ere tradeoffs based on issue priorities are possible. The third type of concessi on strategies is called c ooperative concession strategy. Different with the previous two types of concession behaviors, cooperative concession strategy involves unilateral concession on the part of one party (P ruitt 1981). Although this type of concession is normally performe d in the hope of eliciting concessions or benevolence from the other party, it does not require or request re ciprocation from the other party. Knowledge Sharing Dyer and Singh (1998) propose that inter-o rganizational knowledge sharing is critical for firms to build up competitive advantages, noting that firms often learn by collaborating with other firms (Levin son and Asahi 1996; March and Simon 1958;

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19 Powell et al. 1996). For example, Von Hippel (1 988) found that in scientific instruments industries, more than two-thirds of the innova tions could be traced back to a customer’s initial suggestions or ideas. In wire termin ation equipment industries, the majority of innovations could be traced back to suppliers. Due to the importance of knowledge sharing between firms, some researchers have investigated how firms create knowledge-shari ng routines that result in competitive advantages (Dyer and Singh 1998). For exam ple, Cohen and Levinthal (1990) have discussed the importance of cultivating absorpti ve capacity as “the ability of a firm to recognize the value of new, external informati on, assimilate it, and a pply it to commercial ends.” Absorptive capacity has been discussed as a function of (1) the extent to which partners have developed overlapping knowle dge bases and (2) the extent to which partners have developed interactions routin es that maximize the frequency and intensity of interactions (Mowery et al. 1996; Szulanski 1996). T hus, researchers propose that through building inter-firm interaction rou tines, the investing firm will cultivate absorptive capacity and hence the capabi lity for knowledge sharing of both firms. Relationship Specific Investments Relationship-specific investments are i nvestments specific to the buyer-supplier relationship that are difficult or impossible to be redeploye d to any other relationships (Anderson and Weitz 1992; Jap and Ande rson 2003; Subramani and Venkatraman 2003; Williamson 1983). The characteristic of rela tionship specific investment is that relationship specific investments lose subs tantial value unless the focal relationship persists. These investments can be physical or non-physical. For example, specialized physical investments in durable assets such as a new plant next to the other firm,

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20 specialized warehouses, products tailored to the buyers’ needs are essential for the efficient functioning of the buyer and supplie r. On the other hand, the time and effort spent acquiring the non-marketable skills, tailoring operating processes to the other firm, or developing the inter-personal relations hip, etc. can be viewed as non-physical relationship specific investment. Prior research suggests that if buyers a nd suppliers have bilateral relationshipspecific investments, buyers and suppliers wi ll be more likely to develop overlapping roles, engage in considerable coordinated ac tions, negotiate changes to the terms of the exchanges on an ongoing basis, and rely on internal enforcement by establishing a mutuality of interest between parties (Subr amani and Venkatraman 2003). If the bilateral relationship-specific investments are sufficien t, inter-firm roles can become so closely intertwined that firms' boundaries approach complete interpenetra tion (Rindfleisch and Heide 1997). However, researchers also poi nt out that relationship-spec ific investments give the rise of opportunism because such investme nts are only partially redeployable and therefore are valuable only in the context of a given exchange (Stump and Heide 1996). Prior research has identified a variety of governance mechanisms that protect a firm making relationship-specific investments fr om opportunistic beha vior by its partner (Rindfleisch and Heide 1997) These include formal cont racts (Joskow 1988), pledges (Anderson and Weitz 1992), information sh aring (Noordwier et al. 1990), supplier verification (Heide and John 1990), joint pl anning (Heide and John 1990), monitoring (Stump and Heide 1996), and quasi integr ation (Zaheer and Venkatraman 1994).

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21 From a different yet related perspectiv e, placing these relationship-specific investments unilaterally enables the investing party to signal a higher magnitude of the value to the other firm in the buyer-supp lier relationship, although makes the investing party more vulnerable before the other fi rm (Doney and Cannon 1997; Doney et al. 1998; Subramani and Venkatraman 2003). Consequences of Successful Inter-Firm Relationships Achieving stable, win-win inter-firm relati onship is an important outcome of this dissertation research. Prior re search has found that a high level of mutual commitment manifests such relationships (Blau 1964; Thibaut and Kelley 1959). Cook and Emerson (1978) characterize commitment as “a variable we believe to be centr al in distinguishing social from economic exchange.” Typically co mmitment is considered as the outcome of trust, fairness, and interdependence (Mor gan and Hunt 1994; Geyskens and etc. 1996; Kumar et al. 1998). By definition, commitment refers to “an exchange partner believing that an ongoing relationship with another is so impor tant as to warrant maximum efforts at maintaining it; that is, the committed party be lieves the relationship is worthy working on to ensure that it endures indefinite ly” (Morgan and Hunt 1994), which draws conceptualizations from social excha nge (Cook and Emerson 1978), marriage (Thompson and Spanier 1983), and organizations (Meyer and Allen 1984). Similarly, Mooreman and her colleagues (1992) define commitment as “an enduring desire to main a valued relationship.” In general, comm itment is a critical conseque nce of successful inter-firm relationship, and entails a will ingness to make short-term sacrifices to maintain the relationship, and a confidence in the stabil ity of the relationshi p (Anderson and Weitz

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22 1992; Dwyer et al. 1987; Gundlach et al. 1995). Summary In this chapter, three paradigms for unde rstanding stable and mutually beneficial inter-firm relationships have been presented. Trust has been identified as an important role in governing stable partnering inter-fir m relationships. Three components of trust have been introduced. Benevol ence is particular component of trust in stabilizing asymmetrical buyer-supplier rela tionships because it deals wi th relational risks between buyers and suppliers. Antecedents of successful inter-firm relationships raised in prior literature, such as knowledge sharing, concession making, responsiveness and relationships specific investments, have been explored. Commitment, which is considered as a critical consequence of trust character izing partnering relations hips, has also been discussed. In sum, this Chapter offers a b ackground on the contribu tions as well as the limitations of current research, and sets the stage for the c onceptual framework developed in this study.

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23 CHAPTER 3 CONCEPTUAL FRAMEWORK Overview In this chapter, the conceptual framewor k for the dissertation is presented. An overview of the conceptual framework is de picted in Figure 3-1. My framework suggests that the extent to which one firm perceives the other firm as benevolent determines its commitment as well as subsequent benevolen ce-signaling behaviors in the relationship. The perceptions of benevolence are based on be havioral signals sent by the other firm such as concessions, knowledge sharing, and relationship speci fic investments. The impact of perceived benevolence on receiver’s commitment is moderated by the relative power of the sender. I propos e a three component model of perceived benevolence to explain the diffe ring moderating effects of pow er, as shown in Figure 3-2. Each of these components is differentially aff ected by the nature of the signal and relative power of the signal sender. For example, my framework proposes that a high power firm would perceive a low power firm with more affective benevolence as more benevolent, and consequently would become more committe d in the relationship. In contrast, a low power firm would perceive a high power firm that has more calcula tive benevolence as more benevolent and hence become more committed. In the following three sections, I first de velop the three-compone nt model of interfirm benevolence, and then I discuss the hypot heses regarding the antecedents as well as

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24 the consequences of the inter-firm be nevolence in asymmetrical buyer-supplier relationships. The Three-Component Model of Inter-Firm Benevolence To understand how inter-firm benevolence evolves and functions, it is important to understand the meaning and nature of inter-firm benevolence. Definition of Benevolence Ganesan (1994) defines benevol ence as “the extent to wh ich a party believes that the benevolent party has inte ntions and motives beneficial to the party.” Similarly, Johnson et al. (1996) define benevolence as “the extent to which a firm in the relationship believes that its partner has intentions of goodwill and will behave in a fashion beneficial to both.” And Doney and Cannon (1997) define be nevolence as “the degree to which one party is genuinely interested in the other’s well being and seeks joint gain.” Thus, at the center of benevolence is a firm’s positive concern for the other firms. It involves giving party’s showing c onsideration and sensitivity to the needs and interests of the receiving party, acting in a way that protec ts the interests of th e receiving party, and refraining from exploiting it (Atuahene-Gima and Li 2002). In this research, I define inter-firm benevolence as the degree to which one firm is concerned about the other firm’s welfare in an inter-firm relations hip. Furthermore, I propose three distinct components of benevolence – affective, calculative, and normative benevolence – each having different antecedents arising from the other firm’s behaviors and having different impacts on attitudes towards the other firm. The categorization of benevolence into three components arises from distinct reasons for benevolence. Benevolence may be based on emotions, cognitive evaluations, or institutions (Hosmer 1995; Lewis and Weigert 1985).

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25 Affective Benevolence Affective benevolence reflects one firm’s benevolence based on positive feelings leading to care about the other firm’s welfare. Prior research has examined this dimension of benevolence, and argues that the affectiv e aspect of benevolence consists of the emotional bonds between the two parties (L ewis and Wiegert 1985; McAllister 1995). Affective benevolence involves one party ha ving an emotional investment in the relationship (Doney and Cannon 1997; Johnson et al. 1996; McAllister 1995; Pennings and Woiceshyn 1987; Rempel et al., 1985). Calculative Benevolence Calculative benevolence reflects one firm’s benevolen ce that is largely based on cognitions considerations of the costs and benefits experienced by the parties in the relationships. In other words, a firm has calculative benevolence towards the other firm when it is costly for this firm not to be benevolent, or because it is rewarding to be benevolent. This aspect of benevolence is consistent with Doney and his colleagues’ suggestions that trust building is a calculative process invo lving one party calculating the costs and rewards of the othe r party’s cheating or cooperatin g in the relationship (Doney and Cannon 1997; Doney, Cannon, and Mullen 1998). Similarly, Ganesan (1994) conceptualizes benevolence as “the extent to which a party believes that the benevolent party has intentions and motiv es beneficial to the party.” Lee and his co lleagues (2004) also contend that that the expected gain fr om the other firm in the relationship can stimulate benevolence.

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26 Normative Benevolence A third component of benevolence is called normative benevolence which reflects one firm’s benevolence based on perceive d obligation in an impersonal economic environment. It reflects a sense of moral ob ligation or duty on the part of one firm to support the relationship with the other firm In a buyer-supplier relationship, normative benevolence results in the firm staying with th e other firm because it feels that it should. The characteristics and the impacts of nor mative benevolence are largely under-explored in the extant literature. H1: Affective, calculative, and normativ e benevolence are measurable independent dimensions of a benevolence construct. Together, the three com ponents of inter-firm benevolence comprise the inter-firm benevolence profile. Because these three components of benevolence are not mutually exclusive, a firm can simulta neously experience a ll three forms of be nevolence to varying degrees. One firm, for example, might have both a strong affect and a strong sense of obligation to care about the other firm, but receive limited benefits from doing so. Another firm might have a weak affect, a m oderate level of duty, and a strong need, and so on. An important implication of viewing be nevolence from these three aspects is that the various forms of the perceived benevolen ce of another firm might have different impacts on the firm’s attitudes and subsequent behaviors, which I propose are moderated by relative power. Sender’s Signals of Inter-Firm Benevol ence and Receiver’s Interpretations The perceptions of one firm’s benevolence depend on how the other firm interprets this firm’s benevolence-related signals. A signal is a behavior and/or feature of a firm

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27 that conveys information about this firm’s in tentions, characteristic s and abilities (cf. Porter 1980). Prior literature has left unanswered the question of what strategies firms can use or through what features firms signal it s benevolence or trustwor thiness. The signals of inter-firm benevolence examined in this research are chosen primarily because they arose during interviews I had with purchasing agents1 and illustrate the differential effects of the three dimensions of perceived in ter-firm benevolence. A lthough not exhaustive, the antecedents chosen for this study repr esent a first step in understanding how one firm’s strategies could change the other fi rm’s perceptions of this firm’s inter-firm benevolence, as briefed in Table 1. In addi tion, borrowing the insights from competitive market signaling theory (Heil and Roberts on 1991) and attribution theory (Jones and Nisbett 1971; Kelly 1971), we argue that the receiver’s interpretations of signals, which are the inferences about the sender’s inten tions and abilities as outlined in Table 1, determine the receiver’s beliefs about the sender’s benevolence (c.f., Prabhu and Stewart 2001). I suggest five key signals affect th e perception of bene volence: (1) being responsive, (2) making concessions, (3) sh aring knowledge, (4) making relationship specific investments, and (5 ) establishing reputation for benevolence. These signals reflect different aspects of buyer-supplier relationships – the relational aspect (responsiveness, concession and knowledge sharing), the cost/b enefit aspect (relationship specific investments), and the social aspect (re putation) – that are li kely to impinge on the dyad’s decision to develop affective (emoti on-based), calculative (cognition-based), and 1 Through March and April 2005, I telephone interviewe d more than 30 purchasing managers in retailing and manufacturing industries across the states. All the targeted managers had stayed in the position of buyers for more than 5 years. I mainly asked them to describe how they manage the relationships with one of their key suppliers, as well as with one of their small suppliers.

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28 normative (institution-based) benevolence towards each other. Signals of Affective Benevolence Prior research has not explicitly proposed what types of behaviors signal affective benevolence in inter-firm relationships, i.e ., the types of behaviors that promote perceptions of benevolence and relate these perceptions of benevolence to the positive feelings existing betw een sender and receiver. To unde rstand how a party communicates positive concerns for the other through behaviors, I draw on attachment theory in interpersonal relationships. Att achment theory suggests that behaviors promoting security are essential to generating the belief that the sender party has em otional bonds with the receiving party (Bowlby 1969/1982; Bowl by, 1973; Bowlby 1980; Feeney and Noller 1990; Kobak and Hazan 1991). In addition, Moti vation/Hygiene theory as developed by Fredrick Herzberg (1966) suggests that th ere are two categories of behaviors could promote security feeling in inter-persona l relationships: behaviors satisfying the receiver’s need to feel respected, and those contributing to the receiver’s feelings of comfort in the work. Similarly, the organi zational commitment theory developed by Meyer and Allen (1991) suggest s that the creation of a comfortable environment might lead to the perception of the company’s affective commitment. In this study, I propose that three types of behaviors can be used by a firm to signal its affective benevolence towards the other firm: (1) concessions by which the sender makes sacrifices to reduce the receiving firm’s anxiety; (2) responsiveness that shows the sending firm’s respect for the receiving firm by being ava ilable when needed; and (3) knowledge sharing behaviors that develop familia rity with the other firm. Therefore, all three behaviors signal sender firm’s positive affects by promoting receiver’s security in

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29 the relationship, paying resp ects to the receiver, a nd creating a comfortable communication environment in the relationship. Making concessions. Making concessions refers to one firm’s act of sacrificing benefits for the good of the other firm. Exam ples of making concession involve a buyer adjusting product requirements, or a supplier reducing its prices and etc. to meet the other firm’s requirements (Carnevale and Pruitt 1992). Concessions can take on different forms, such as on prices, contracts, serv ices, quality and etc. (Good 2001; Madhavan et al. 2004). Generally speaking, making concessions si gnals good-faith adjustments to deal with changing circumstances in relation to th e other firm. These signals are particularly important when specific contra ctual obligations or stipula tions become nonviable or cumbersome owing to unanticipated con tingencies (Surbranmani and Venkatraman 2003). Through the act of sacrif icing its own benefits for the good of the other firm, sender helps ease receiver’s “anxiety” or worry that this firm might not be supportive in times of need, and ultimately promote a high degree of comfortableness and security in the relationship (Herzberg 1966; Bo wlby 1969/1982; Bowlby, 1973; Bowlby 1980; Feeney and Noller 1990; Kobak and Hazan 1991). Hence, we argue that H2 (a): Receiver’s perception of sender’ s affective benevolence is positively affected by receiver’s perception of sender’s making concessions. Responsiveness. Responsiveness is defined as a prompt and appropriate action taken by one firm in response to the ot her firm’s requests (Kohli et al. 1993). Responsiveness is signaled both by the speed and degree of coopera tion with which the

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30 responsive actions are taken. To be responsive, the signaling firm needs to take actions that fit the other firm’s re quirements (Kohli et al. 1993). Responsiveness would lead to a high leve l of presence and security (Kobak 1999) because being responsive enables the sender to convey its positive feeling by adapting to the receiver’s requirements in a timely manner. Through responsiveness, the sender demonstrates its respect for the receiver’s value and its interest in maintaining a close relationship with the receiver (Brennan et al. 1998). Such positive experience of being respected will lead the receive r to perceive that the se nder has emotional bond to the relationship (Bowlby 1969/1982; Bowlby, 1973; Bowlby 1980; Feeney and Noller 1990; Kobak and Hazan 1991). Thus, H2 (b): Receiver’s perception of sende r’s affective benevolence is positively affected by receiver’s percepti on of sender’s responsiveness. Knowledge sharing. Knowledge sharing behaviors ar e defined as the frequent transfer, recombination, or creation of specialized know ledge in the relationship. Knowledge is viewed as a mix of framed experience, values, contextual information and expert insight that provides a framewor k for evaluation and incorporating new experiences and information (Nonaka 1994; Grant 1996a; Grant 1996b; Devenport and Prusak 1997). By engaging in knowledge sharin g, the sender interacts with the receiver extensively and constantly “t o share everything from risk, responsibility, information, to decision making, and to acquire breadth of knowledge and skills” (Imai et al. 1985). According to attachment theory, a party in creases the comfort of the other party by exchanging information to help the other part y familiarize itself with the relationship. This sharing of knowledge demonstrates the sender’s affective bond in an inter-personal

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31 relationship (Bowlby 1969; Bowlby 1972). A sende r firm’s consistent knowledge sharing behaviors comforts the recei ver firm. Three functions of the sending firm’s knowledge sharing behaviors signal its a ffective benevolence in buyer-su pplier relationships. First, knowledge sharing demonstrates that the sende r wants to understand the receiver better and promote cooperation (Dougherty 1992; Dougherty 1994). Second, it shows the sender’s interest in coping with unexpected situations for the sake of maintaining the relationship with the receiver (Grant 1996; Grant 2004). Further, knowledge sharing facilitates cross-fertilization between the two parties, and reduces the tendency of the parties to become confined by their ow n thought-worlds, which results in more understandings between th e parties (c.f., Mohr and Nevin 1990). Therefore, H2 (c): Receiver’s perception of sender’ s affective benevolence is positively affected by receiver’s perception of sender’s efforts to share knowledge. Signals of Calculative Benevolence Calculative benevolence reflects the cons ideration of costs associated with perceived benevolent. This aspect of benevol ence results from a firm’s concern for the other party based on a cognitive analysis of cost and benefits in a relationship. The most frequently studied cost/benefit related construct in the marketing literature is relationship specific investments. Relationship specific investments. Relationship specific in vestments are defined as investments specific to the buyer-supplier relationship that are difficult or impossible to be redeployed to any other relationships. Relationship specific i nvestments would lose substantial value unless the relationship pers ists. These investments can be physical or non-physical. Examples of specialized physic al investments are a new manufacturing

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32 plant located next to the retailer, specia lized warehouses, and pr oducts designed to the buyer’s needs. On the other hand, the time and effort spent acquiring non-marketable skills, tailoring the operation processes to the other firm, or devel oping the inte rpersonal relationship are examples of non-physical relationship specific investments. By making these relationship specific investments unilaterally, one firm signals its desire to tailor its offering to benefit the other firm, and also make s itself more vulnerable to the other firm (Doney and Cannon 1997; Doney et al. 1998; Subramani and Venkatraman 2003). For example, a supplier devotes some resources to training its salespeople to promote its products to a speci fic buyer. Some part of the investment may be redeployable, because some knowledge acqui red can be used to sell products to other buyers. However, other inputs are useful onl y for this specific buyer, and will be worthless if this relationship ends. In this wa y, the supplier fits its offerings to the buyer’s needs. Thus, relationship specifi c investments are perceived by the receiver as a signal of the sender’s commitment in the relationship ba sed on its higher switc hing costs. Hence, H3: Receiver’s perception of sender’s calc ulative benevolence is positively affected by the degree to which receiver perc eives that sender makes relationship specific investments. Signals of Normative Benevolence Normative benevolence is a firm’s obliga tion to be benevolent to the other firm. This feeling of obligation results from the internalization of norms prior to entry into the relationship (i.e., reputation), and/or following entry (i.e., in ter-firm socialization). To date, the literature related to the developm ent of normative benevolence is very limited.

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33 Reputation might be an important influen ce on the signal receiver’s perception of benevolence. Sender’s reputation. Reputation is defined as a func tion of the past actions of a firm, which build high credibility of this firm over time (Milgrom and Roberts 1982; Weigelt and Camerer 1988). In other words, sender’s reputation is based on sender’s activities across all of its relationships over time (Herbig and Milewicz 1997), which informs receiver of its behavioral norm towards others (c.f., Gulati, 1995). A good reputation from sender lowers the variance in receiver’s estimation of sender’s future benevolent actions, which provides a credible reference for the rece iver to recognize the sender’s normative benevolence. Thus H4: Receiver’s perception of sender’s normative benevolence is positively affected by the degree to which rece iver perceives that sender has a good reputation. Receivers’ Reactions to Perceived Inter-Firm Benevolence Overview In this section, the conceptual framework depicted in Figure 3.1 is advanced. First, I argue that when a high power firm signals its inter-firm benevolence to the low power firm (SIGNALHL), the low power firm’s perceptions of the high power firm’s benevolence (BENEVOLENCELH) will be affected.2 Consequently, the low power firm’s 2 Throughout this dissertation, the subscript L stands for low power party, H stands for high power party. For example, SIGNALLH is the low power party’s signals for its benevolence to the high power party, and SIGNALHL is the high power party’s signals for its benevolence to the low power party. Similarly, COMMITMENTLH is the low power party’s willingness to stay in the relationship and COMMITMENTHL is the high power party’s willingness to stay in the re lationship. When a firm reports its perception of the other party, there are two subscripts and the subscripts do not match. For example, BENEVOLENCELH is the low power party’s perception of the high power party’s benevolence and BENEVOLENCEHL is the high power party’s perception of the low power party’s benevolence.

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34 commitment (COMMITMENTLH) and subsequent behaviors will be changed accordingly. The low power firm’s beha viors signal its benevolence (SIGNALLH), which will have an impact on the high pow er firm’s benevolence (BENEVOLENCEHL) and subsequent behaviors. Thus, SIGNALHL BENEVOLENCELH COMMITMENTLH SIGNALLH BENEVOLENCEHL COMMITMENTHL SIGNALHL as depicted in Figure 3.1. This reinforcing nature of the positive feedback cycle creates stability in the relationship of thei r power structures. The focus of this dissertation is on the r eceivers’ perceptions and reactions to the senders’ behaviors, specifically purchasi ng managers’ perceptions of supplier’s behaviors. The major contribution of this di ssertation is the proposition that the high and the low power parties react to the signals of perceived benevolence differently. These differential perceptions of bene volence in turn affect subseque nt attitudes and behaviors. Receiver’s Reactions to Signals of Bene volence in Asymmetrical Relationships Although there has been extens ive research discussing tr ust or benevolence in the buyer-supplier relationship, this research has largely ignored the signals the sender uses to demonstrate its trust or benevolence (Atuah ene-Gima and Li 2002). In this section, my framework outlines how the perception of benevolence changes one firm’s attitudes (commitment) and subsequent behaviors in an asymmetrical buyer-s upplier relationship (Heil and Robertson 1991). Receiver’s commitment. Commitment entails a desi re to develop a stable relationship, a willingness to make short-term sacrifices to mainta in the relationship, and a confidence in the stability of the re lationship (Anderson and Weitz 1992). Based on prior research, I propose that r eceiver’s commitment to the relationship will be positively

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35 influenced by the nature of sender’s benevolence (Morgan and Hunt 1994). When receiver perceives that the sende r is benevolent, the receiver w ould feel that its welfare is being considered, and hence is more committed to the relationships. However, the effects of the three co mponents of perceived benevolence on receiver’s commitment vary depending upon the relative power of sender over receiver. According to attribution theory (Jones and Nisbett 1971; Kelly 1971), discounting principles (Ross and Anderson 1982) and the pr inciple of correspondent inference (Jones and Davis 1965), when the focus of the be nevolence signal is inte rnal rather than external, the receiver is more likely to interpret the sender’s behaviors as due to characteristics of the sender. In a signaling context, “internally focused signals are more likely to result in internal attributions ” (Prabhu and Stewart 20 01). Thus, the more internally focused the sender’s signals are, the more likely these signals are to contribute to the development of the receiver’s intern al attitudes changes. Therefore, a firm perceived to affectively care about the ot her firm in the re lationship (affective benevolence) might be more likely to induce th e other firm to commit to the relationship. On the other hand, a firm that is perceived to feel obligated to car e about the other firm (normative benevolence), or must care the ot her firm because of cost and benefits (calculative benevolence) is less inclined to induce commitment in the other firm. Thus, H5: The positive relationship between the perception of sender’s affective benevolence and receiver’s commitment is the greatest, followed by the relationship between the perception of sender’s normative benevolence and receiver’s commitment, and then by the relationship between the perceptions of sender’s calculative benevolence and receiver’s commitment.

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36 However, I propose that the power relations hips between sender and receiver can moderate the impacts of the different aspect s of perceived benevolence on receiver’s commitment. When I interviewed the pur chasing managers in manufacturing and retailing industries, I found that the high and low power firms have di fferent expectations for the other firms. For example, high power buyers are more interested in working with the low power suppliers who are flexible and willing to make concessions when situations arise. A high power retailer in Ca lifornia would like its low power suppliers to make concession by granting the market excl usivity for promoting products. Another high power retailer in Florid a would request its small pow er suppliers to be more responsive when the hurricane seasons come On the other hand, the low power buyers are more interested in doing business with the high power parties who invest more time and efforts to show respects to the lo w power parties in the relationship. After interviewing the managers, I have the impression that, despite the good wills from both high power and low power parties, th e high power firm is more interested in obtaining more benefits and c ontrols in the rela tionship. For example, the high power firm would mention that it wishes to work with the low power firm that is willing to sacrifice some freedom autonomy and even profits when uncertainty occurs. On the other hand, the low power firm places more emphasis on gaining security in the relationship. For example, the low power firm wishes to deal with the high power firm that has made tangible investment on a long term base. What I uncovered through these interviews is in consistent with what has been discussed in social psychology (e.g., Mo lm 1990; Molm et al.1999). Theoretically, compared to high parties, low power parties care more about whethe r high power parties

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37 will terminate the relationships. High power pa rties care less about th e security of staying in the relationships because hi gh power parties normally have more alternatives than low power parties. Hence, tangible investments (s uch as investing significant amount of time, effort or even money) made by high power fi rms signal increased sw itching costs to low power firms, and are particularly effective in convincing the low power firms about the potential for a long term stable inter-firm relationship. Therefore: H6: The positive relationship between receiv er’s perception of sender’s calculative benevolence and receiver’s commitment is moderated by the relative power between sender and receiver. The relations hip is stronger when receiver is low power and sender is high power, and is weaker when receiver is high power and sender is low power. On the other hand, the high power firms have different concerns while being engaged in asymmetrical relationships. Their biggest concern is the size of profits they could get in the relationship. Such concern mainly stems from the opportunity costs of not working with other potential alternativ e partners who might bring the high power party more profits. In other words, the high power firm’s biggest concern is whether the size of profits or its “slice” of the pie is maximal for it if working with the low power firm. In this case, if the low power firm can signal the high power firm that it genuinely cares about the high power firm’s welfare ( its “slice” of pie) by being responsive and making unilateral concessions in the relationships, the high power party will be more likely to stay in the relationship due to an in creased probability of gaining more benefits with the low power party’s “sacrifice”. In addition, by signaling more affective

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38 benevolence, the low power party gives up a certain degree of freedom and autonomy in exchange for the high power party’s more control in the interactions. This leads the low power firms to have the confid ence that the high power firm is interested in maintaining the relationship (Jacobs 1971; Thibaut and Ke lley 1959). Such confidence might also keep the high power firm to be more likel y to stay in the relationship. Therefore, H7: The relationship between the receiver’s perception of the sender’s affective benevolence and commitment is modera ted by the relative power between the sender and the receiver. The relationship is stronger when the receiver is high power and the sender is low power, and is weaker when the receiver is low power and the sender is high power. Receiver’s pledges. Pledges are defined as the specifi c behaviors that receiver uses to manifest its commitment in the relations hip. Such specific behaviors are undertaken by the firm to demonstrate good faith and bind th e firm to the relationship (cf., Anderson and Weitz 1992). Receiver’s pledges involve the receiver’s willingness to establish a long-term relationship with the sender. For ex ample, a high level of commitment can be evidenced in all types of be haviors that show good faith a nd efforts in maintaining the relationship. Thus, H8: There are positive relationships between one firm’s commitment and its (1) concessions making, (2) responsivene ss, (3) knowledge sharing, and (4) relationship specific investments. Although both high and low power firms will make pledges to the relationships once committed to the relationships, asymmetr ies of power in the relationship will have influence on the degree or th e probability that high and low power firms make pledges.

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39 According to Molm (1999), the asymmetry in the relationship corresponds with the form of exclusion. One important form of exclus ion is the withholding of rewards from one partner while pursuing exchange with another (Molm 1990). Withholding rewards benefits the high power partie s not only by driving up low power party’s offers, but also by lowering the high power parties’ costs. High power parties who can maintain its relationship with the low power party with only intermittent reciprocity have more opportunity to pursue other exchange rela tions. And because the benefits flow unilaterally, they can receive benefits from multiple partners at the same time. High power partners benefit from both their low reciprocity and their consequent greater opportunity to pursue other exchanges. For example, high power firms not making specific investment in the relationship not onl y take less responsibility, but also have more resources to devote to other relations hips. The low power party must give more frequently to maintain their powerful partne r’s intermittent reciprocity, must forgo more of the potential rewards from these alterna tive activities because their opportunity costs are higher. Thus, we expect that: H9: The low power party is more likely to (1) make concessions, (2) be responsive, (3) have knowledge sharing, and (4) make relationship specific investments. Summary In this chapter, the conceptual model fo r the dissertation was presented. The threecomponent model of inter-firm benevolence (affective, calculative and normative benevolence) was introduced. The anteceden ts of the three-component model of benevolence (responsiveness, making conce ssion, sharing knowledge, establishing reputation, and relationship spec ific investment) are discusse d. Different antecedents are

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40 argued to be positively related to different components of perceived benevolence. The three components of perceived benevolence ar e also thought to be positively associated with the receiving firm’s commitment. A nd the effects of these components of benevolence are likely to be moderated by th e asymmetries of power between the buyer and supplier in the relationship. The imp act of commitment on different types of behaviors is also discussed. Finally, the role of the as ymmetries of power on making pledges is discussed.

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41Table 3-1 Primary Behaviors Associated with Si gnaling Benevolence in Buyer-Supplier Relationships One Firm’s Behaviors towards the Other Firm Signaling Affective Benevolence Signaling Calculative Benevolence Signaling Normative Benevolence Primary Impacts of the Behaviors on the Other Firm Exhibiting Responsiveness + Reacting promptly and appropriately to make the other firm feel comfortable and being respected in the relationship. Making Concessions + Refraining from using power to make the other firm feel comfortable and being respected in the relationship. Knowledge Sharing + Familiarizing with the other firm to make the other firm feel comfortable and being respected in the relationship. Increasing the availability of the rewards the other firm can access in the relationship. Also granting more controls and demonstrating confidence in the other firm. Relationship Specific Investment + The cost of leaving the relationship is increased. Increasing the magnitude of benefits the other firm can get from the relationship Reputation + To assure the receiver of its sense of obligation Increasing the feeling of security of dealing with the firm who has a high reputation

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42 Low Power Firm's Perceptions of Benevolence of High Power Firm (BENEVOLENCELH) Low Power Firm's Behaviors Signaling Benevolence to High Power Firm (SIGNALLH) High Power Firm's Perceptions of Benevolence of Low Power Firm (BENEVOLENCEHL) + + + High Power Firm's Behaviors Signaling Benevolence to Low Power Firm (SIGNALHL) + Low Power Firm's Commitment to the Relationship (COMMITMENTLH) + High Power Firm's Commitment to the Relationship (COMMITMENTHL) +PERCEPTIONS OF HIGH POWER FIRM'S SIGNALS LOW POWER FIRM'S INTERPRETATION OF SIGNAL LOW POWER FIRM'S SIGNAL REACTION ATTITUDES LOW POWER FIRM'S SIGNAL REACTION BEHAVIORSPERCEPTIONS OF LOW POWER FIRM'S SIGNALS HIGH POWER FIRM'S INTERPRETAION OF SIGNAL HIGH POWER FIRM'S SIGNAL REACTION ATTITUDES HIGH POWER FIRM'S SIGNAL REACTION BEHAVIORS Figure 3-1 The Simple Loop of Buyer-Supplier Interactions

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43 Receiver's Perceptions of Sender's Affective Benevolence Sender's Knowledge Sharing Sender's Concessions Sender's Responsiveness Sender's Idiosyncratic Investment Receiver's Perceptions of Sender's Calculative Benevolence Receiver's Perceptions of Sender's Normative Benevolence SENDER'S SIGNALS RECEIVER'S SIGNAL INTERPRETATIONS Receiver's Knowledge Sharing Receiver's Making Concessions Receiver's Being Responsive Receiver's Idiosyncratic Investment RECEIVER'S PLEDGES + + + + Sender's Reputation Power Receiver's Commitment + + + + + + +RECEIVER'S REACTIONS TO SIGNALS RECEIVER'S ATTITUDES + Figure 3-2 Interpretations of and Reacti ons to Signals for Organi zational Benevolence in As ymmetrical Buyer-Supplier's Relationships

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44 CHAPTER 4 METHODOLOGY Overview This chapter explicates the survey methodology, procedures, and initial measurement issues. It consists of five sect ions. The first section discusses the research setting, sampling frame, and respective industr y characteristics. In the second section, data collection procedure is described. Th e third section introduces measure and questionnaire development, such as pretest re sults and exploratory fa ctor analysis. In the fourth section, evidence of th e constructs’ initial convergen t and discriminant validity was reported. Lastly, hypotheses testing mode l equations are presented in the fifth section. Unit of Analysis, Sample, and Data Collection The unit of analysis is th e buyer-supplier dyad. Ideally m easures of the buyer-seller dyad would be assessed by colle cting data from both dyadic partners. However, there are significant problems in collecting a large sa mple of matched pairs. Therefore, the hypotheses are tested by treati ng industrial buyers as the key informants and using their responses to a questionnaire re porting their perceptions of th e suppliers’ behaviors, buyer companies’ attitudes toward the suppliers, a nd buyers companies’ behaviors toward the suppliers. The purchasing managers are in a good position to know the requirements of the buyer firm for a particular product category. They have control over a product category

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45 and are fully responsible for the profitable performance of that product or product line. Thus, the responses on the questionnaire captu re the attitudes and perceptions of key decision makers in buyer-supplier relationshi ps concerning a particular product or product category. The sample examined in this disserta tion includes buyer firms in business-tobusiness markets from both SIC codes 2023 (Manufacturing), 24-34 (Material), 35-39 (Equipment), and 52-59 (Retail Trade). Access to the contact information for the buyers was provided by Institute of Supply Manageme nt (ISM). Each participating firm was offered an executive summary, presentation of re sults, and customized analyses in return for their participation. In responding to the questi onnaire, all buyers were aske d to consider a specific supplier with which they had a relationship for over a year. In addition, to insure variance in the nature of the power asymmetry in the relationship, half of th e purchasing managers were randomly selected to re port the relationship with one supplier with considerably higher power than the buyer; while anothe r half of the purchasing managers were randomly selected to report the relationship that involves a supplier who has considerably lower power compared to the buyer. Specifi cally, each buyer was asked to think of one high power supplier which is best described as “It would be ea sy for this supplier to find other customers to replace our company, but it’s difficult for your company to replace this supplier with another suppl ier in the particular product cat egory”, or as to think of one low power suppliers which is best descri bed as “It would be easy for our company to find other suppliers to replace th is supplier, but it’s difficult for this supplier to replace our company with another buyer in the pa rticular product category.” Two similar

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46 questionnaires, one for high power buyer a nd the other for the low power buyer, were used. Requests to participate in the research were sent to 4,000 purchasing managers who were randomly selected from the business-to -business purchasing managers in the United States. For the 2000 buyers who were asked to report on their relationships with low power suppliers, 345 buyers res ponses were collected with 2 63 complete responses. I also get 212 emails with incorrect addresses, 109 rejection emails, and 181 emails indicating that the managers could not receiving or ch ecking email while they were out of office during the time of the survey, which resu lt in a meaningful sample frame of 1498 potential respondents. The response rate is 23.03 %. For the 2000 buyers who were requested to report on their re lationships with high power suppliers, 314 responses were obtained with 253 complete responses. And 149 emails with incorrect addresses, 142 rejection emails, and 232 emails indicating that the managers c ould not receiving or checking email while they were out of office re sult in a meaningful sample frame of 1477 potential respondents. The response rate is 21.26 %. The average response rate for the whole sample is 22.15%. These purchasing managers were also asked to supply the names and addresses of the supplier firms whom they referred to wh en answering the questionnaires, as well as the representatives in these supplier firms with whom they have frequently interacted for at least one year. Then, similar questionna ires were sent to the named supplier representatives, seeking their appraiseme nts of the relationships. However, only 45 buyers reported their high power suppliers’ contact information, and 30 buyers reported their low power suppliers’ c ontact information, which render 33 complete suppliers’

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47 responses in total with respons e rate 44%. Because the sample size is too small to provide credible reports of the functionality of inte r-firm benevolence at th e suppliers’ side, we exclude analysis of suppliers’ responses in the current study. Measure Development The three components of inter-firm benevolence, re sponsiveness, concession, knowledge sharing, reputation and power are the new measures designed by the author. Relationship specific investme nt and reputation were measured by adapting the scales used by Ganesan (1994) and Joshi and Stum p (1999). For commitment, I modified measures used in studies by Jap and Ga nesan (2000), Anderson and Weitz (1992), Morgan and Hunt (1994), and Kumar et al. ( 1995)’s studies. The items were identically worded for both the high power and low power buyer. The list of measures can be found in Appendix A. Pretest To develop the measures, I first telep hone interviewed a number of purchasing managers in the buyer firms across manufactur ing and retailing industries, and asked them to review the actions they had taken towards two types of th eir suppliers: powerful and not powerful. For example, I asked them to think of how they interacted with these two types of suppliers on a daily base, how they assess the relationship qualities with these suppliers, and what criteria they use to value these relationshi ps. Then I asked these purchasing managers to review the potentia l measurement items we designed, and made changes based on their suggestions. The questio nnaires were also sent to a panel of academic experts to evaluate for clarit y, specificity, and representativeness.

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48 Factor Analysis Fourteen constructs, each measured with multiple items, 7-point Likert Scales in simple terms using the language commonly em ployed by the informants, were used in this study. The new measure development wa s based on the procedure recommended by Nunnally (1978). The critical step in the construct validation of these constructs involves the assessment of internal cons istency and unidimensionality. First, an exploratory factor analysis was performed. If the exploratory factor analysis indicated a single fact or, all items whose factor scor es were greater than 0.5 were retained. However, if multiple factors were obtained from exploratory factor analysis, the factors were rotated using Vari max procedure to obtain the be st factor pattern. All items either loading on more than one dimension or having a fact or loading of less than 0.4 were eliminated from subsequent analysis. The items obtained from the exploratory fact or analysis were further subjected to a confirmatory factor anal ysis (CFA) using LISREL 8.52 (Jreskog and Srbom 2002), because CFA allows for a statistical test of the degree of correspondence between observed measures and concepts. A single-fact or representation was used for each set of congeneric items. The items with adequate f it with the construct were used for further analysis. Maximum likelihood estimations were employed for the model assessment. This method was essential to assess and finaliz e and bring the measurement model to satisfactory levels of validity and reliability before structural model was tested (Segars and Grover 1993). All of the measurement m odel estimation in this dissertation was conducted using this method and statistical p ackage. All the items remaining from the

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49 CFA procedure were checked for overall reliabi lity by calculating a reliability coefficient such as coefficient alpha. Measurement Properties There are two important aspects of the measurement model that should be evaluated: convergent validity and discrimina nt validity (Gefen et al. 2000). Convergent validity examines the degree to which the ope rationalization is similar to (converges on) other operationalizations that it theoretically s hould be similar to, and can be assessed by the examination of indicator reliability, construct reliability, and average variance extracted (Fornell 1982). Table 4-1 contains the scale items, factor loadings, indicator reliabilities, construct reliabi lities, and average variance extracted for the latent constructs for purchasing managers. All th e factor loadings are found to be above 0.6, suggesting good indicator reliabilities greater than 0.4 (Fornell a nd Larker 1981). Construct reliabilities were computed using the reliab ility formula of Jreskog (1971), and are all greater than 0.7 (Table 4-1). AVE measures the shared or common variance in a Latent Variable (LV), which is captured by the LV in relation to the amount of variance due to its measurement error (Dillon and Goldstein 1984). The fourteen constructs’ average variances extracted range from 51% to 82% all exceeding the 50% as recommended by Fornell and Larcker (1981). All these demonstrate eviden ce of convergent validity. Table 4-2 and 4-3 contain the summary information on the measurement models, completely standardized correlation matrix between constructs, and means for each construct for buyers. Because this dissertati on is interested in studying the attitudinal perceptions of benevolence and behavioral consequences of the perceived benevolence, I run two confirmatory factor analyses (CFA) to assess the measurement properties of the

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50 reflective latent constructs. The first confirmatory factor analysis investigates the perceptions of suppliers’ beha viors, attitudes and relative power. Thus, it involves the constructs such as perceived concessi on, perceived knowledge sharing, perceived responsiveness, perceived reput ation, perceived relationship investment of the supplier, perceived benevolence, and perceived power of the supplier. The results are shown in Table 4-2. The second measurement model exam ines the self repor ted commitment level and self reported behaviors such as con cession, knowledge shari ng, responsiveness, and relationship investment, and is contained in Table 4-3. The two measurement model summarized in Table 4-2 and Tabl e 4-3 indicate that the chi-square statistics are significant. The overall chi-square is a likelihood ratio statistic testing a hypothesized model against the alternative that the c ovariance matrix is unconstrained. However, as chi-square test is well known for its sensitivity to sample size, other statistic criteria shall be cons idered for the validity of the models. The Comparative Fit Index (CFI) served as an exemplar fit to assess the fit of a model to data. This index ranges in possibl e values between zero and one, indicating a lack of fit and perfect fit between the theoretical model’ s covariance matrix to the observed covariance matrix, respectively. In Table 4-2 and 4-3, both CFIs are of 0.98 indicating perfect fits of the two models. As suggested by Diamantopoulos and Sigua w (2000), I further check root mean square error of approximati on (RMSEA), standardized root mean square residual ( RMR), normed fit index (NFI), Non-nor med fit index (NNFI), and Critical N (CN) to assess the measurement model fits.

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51 RMSEA shows how well would the model, with unknown but optimally chosen parameter values, fit the population covariance ma trix if it were available. It values 0.057 and 0.063 respectively for the two measuremen t models, indicating reasonable fit. Standardized RMR is a summary measure of standardized residuals, which is 0.05 and 0.046, respectively, in the two measurements mo dels. Both standardized RMR indicate acceptable fit. Both the two measurement m odels have NFIs at 0.98, indicating good fits of the measurement models. As expected fo r good fits, NNFIs have been found to be no greater than CFIs in both measurement models and both NNFIs and CFIs are expected to be greater than 0.90. In addition, CN shows the size that a samp le must reach in order to accept the fit of a given model on a statistical basis, and has found to be greater than 200 in both measurement models. All these criter ia further indicate th at both models are adequate representations of the respective data. Discriminant validity is the degree to which operationalization is not similar to (diverges from) other operationa lizations that it theoretically should be not similar to. As suggested by Bollen (1989), I examined factor loadings as well as the squared multiple correlations between the items and the variable s to assess the validity of the measures to assess the disriminant validity. AVE can also be used to gauge discriminant validity (Fornell and Larker 1981). If the squared corre lation between two LV's is less than either of their individual AVE's, this suggests the LV's each have more internal (extracted) variance than variance shared between the LV's. If this is true for the target LV and all the other LV's, this suggests the discriminant validity of the target LV. Table 4-2 and Table 4-3 show that all constr ucts are more strongly correl ated with their own measures than with any other of the constructs, suggesting good convergent and discriminant

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52 validity. Cross-loadings are calc ulated and all indicators show higher loadings with their respective construct than with any other constructs, as shown in Table 4-2 and Table 4-3. Test of H1 To assess the psychometric pr operties of the proposed three-component benevolent model (H1), three measurement models exclus ively with the items indicating the three components of perceived benevolence were estimated and compared. The first model estimates a three-dimensional structure for benevolence composed of three types of benevolence (affective, normative, and calculative). The second model estimates a twodimensional structure of benevolence compos ed of two factors (affective and normative composite, calculative), and the third model estimates a unidimensional structure of benevolence and consists of one factor only (benevolence). The results of chi-square analyses, as re ported in Table 4-4, s uggest that the threecomponent model of benevolence provides the best fit to the data. In addition, the pairwise comparison of differences in chi-s quare between the mode ls provides evidence for discriminant validity (Bienstock et al. 1997) among the three components of benevolence. Overall, the model fit for thre e-component model of benevolence is good (Minimum Fit Function Chi-Square 2 = 195.06, degrees of freedom [d.f.] = 41, goodness-of-fit index [GFI] = 0.94, normed fit index [NFI] = 0.97, non-normed fit index [NNFI] = 0.97, comparative fit index [CFI] = 0.98). Consequently, the three components of benevolence will be used as distinct concepts for all further analyses. Thus, H1 is supported.

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53 Hypothesis Testing Model Equations I differentiate the sample into three groups (high power, equal power, and low power buyers). Relative Power Groupings of Buyers In analyzing the data, I discovered that th e self-reported measur e of relative power was not highly correlated with the measure of relative power base d on the questionnaire instructions. I decided to use the multiple it em measured power to group buyers because I felt the responses to the items were more indi cative to perceived re lative power than the potentially unread instructions. I used me dian split analysis by recoding the power measures higher than 4 into perceived high power dummy variable, the power measures lower than 4 into perceived low power dummy variable, and power measures equal to 4 into perceived equal power dummy variable. I used regression rather than LISREL to estimate the interactions of power and perceived benevolence because LISREL involves a more complic ated interact ion fitting function and explicit solutions are not al ways found. Regression provides efficient, consistent, robust estimates compared with LISREL regarding interaction effects between the constructs. Further, for chi-square to be us ed as a valid test statistic, the sample size should be large. However, when sample si ze decreases to small number into high power and low power, the statistical significance of individual parameters tends to decrease (Long 1983). Thus, this makes regression a more desirable estimation method.

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54 Estimation Method Then, I use regression to test the interac tions of these power dummy variables with different components of perceived benevolence. Coefficients were estimated for the following system of equations: (1) 1 (Perceptions of Sender’s Affective Benevolence) =1 + RV 111 (Sender’s Responsiveness) + CN 112 (Sender’s Concessions) + KS 113 (Sender’s Knowledge Sharing) + RI 21 (Sender’s Relationship Specific Investments) + RP 31 (Sender’s Reputation) +1 (2) 2 (Perceptions of Sender’s Calculative Benevolence) =2 + RV 121 (Sender’s Responsiveness) + CN 122 (Sender’s Concessions) + KS 123 (Sender’s Knowledge Sharing) + RI 22 (Sender’s Relationship Specific Investments) + RP 32 (Sender’s Reputation) +2 (3) 3 (Perceptions of Sender’s Normative Benevolence) = 3 + RV 131 (Sender’s Responsiveness) + CN 132 (Sender’s Concessions) + KS 133 (Sender’s Knowledge Sharing) + RI 23 (Sender’s Relationship Specific Investments) + RP 33 (Sender’s Reputation) + 3 (4-a) 4 (Receiver’s Commitment) = 4 + 1 4 a(Perceptions of Sender’s Affective Benevolence) + 2 4 c(Perceptions of Sender’s Calculative Benevolence) + 3 4 n(Perceptions of Sender’s Normative Benevolence) + 5 4 h(Dummy Perceived Sender’s High Power) + 5 4 l(Dummy Perceived Sender’s Low Power) +4

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55 (4-b) 4 (Receiver’s Commitment) = 41 + 1 41 (Perceptions of Sender’s Affective Benevolence) + 2 42 (Perceptions of Sender’s Calculative Benevolence) + 3 43 (Perceptions of Sender’s Normative Benevolence) + 5 45 (Dummy Perceived Sender’s High Power) + 5 45 (Dummy Perceived Sender’s Low Power) + 6 46 (Interaction of Dummy Perceived Sender’s High Power and Perceived Affective Benevolence) + 6 46 (Interaction of Dummy Perceived Sender’s Low Power and Perceived Affective Benevolence) + 7 47 (Interaction of Dummy Perceived Sender’s High Power and Perceived Normative Benevolence) + 7 47 (Interaction of Dummy Perceived Sender’s Low Power and Perceived Normative Benevolence) + 8 48 (Interaction of Dummy Perceived Sender’s High Power and Perceived Calculative Benevolence) + 8 48 (Interaction of Dummy Perceived Sender’s Low Power and Perceived Calculative Benevolence) +41 (5) 9 (Receiver’s Responsiveness) = 5 + 4 54 (Receiver’s Commitment) + RV 51 (Perceived Sender’s Responsiveness) + 5 52 (Dummy Perceived Sender’s High Power) + 5 52 (Dummy Perceived Sender’s Low Power) + 5 (6) 10 (Receiver’s Concessions) = 6 + 4 64 (Receiver’s Commitment) + CN 62 (Perceived Sender’s Concessions) + 5 62 (Dummy Perceived Sender’s High Power) + 5 62 (Dummy Perceived Sender’s Low Power) + 6

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56 (7) 11 (Receiver’s Knowledge Sharing) =7 + 4 74 (Receiver’s Commitment) + KS 73 (Perceived Sender’s Knowledge Sharing) + + 5 72 (Dummy Perceived Sender’s High Power) + 5 72 (Dummy Perceived Sender’s Low Power) + 7 (8) 12 (Receiver’s Relationship Specific Investment) = 8 + 4 84 (Receiver’s Commitment) + RI 84 (Perceived Sender’s Relationship Specific Investments) + 5 82 (Dummy Perceived Sender’s High Power) + 5 82 (Dummy Perceived Sender’s Low Power) + 8 Where refers to endogenous variables, and represents disturbance terms. The and indicate coefficients for the influe nce of exogenous and endogenous variables, respectively. The constructs a nd coefficients with apostrophes indicate that the tests are done from a low power receiver’s perspective. Otherwise, the tests are done from a high power receiver’s perspective. The structure relationships ar e depicted in Figure 4-1. In accordance with our conceptual framework, the expected signs of the coefficients are described in Table 4-5. Summary The purpose of this chapter was to describe the methodology, measurement development, and preliminary construct validity results. Data were initially collected via online survey to a sampling of 4000 buyer-supp lier relationships across manufacturing and retailer trade industries. Evaluation of the measurement models indicates adequate convergent and discriminant validity among fourteen constructs for buyers.

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57 Low Power Receiver's Perceptions of High Power Sender's Affective Benevolenc High Power Sender's Perceived Knowledge Sharing (KS) High Power Sender's Perceived Concessions (CN) High Power Sender's Perceived Responsiveness (RV) High Power Sender's Perceived Relationship Specific Investment (RI) Low Power Receiver's Perceptions of High Power Sender's Calculative Benevolence Low Power Receiver's Perceptions of High Power Sender's Normative BenevolencePERCEPTIONS OF SENDER'S BEHAVIORS RECEIVER'S INTERPRETATIONS Low Power Receiver's Knowledge Sharing Low Power Receiver's Making Concessions Low Power Receiver's Being Responsive Low Power Receiver's Idiosyncratic InvestmentRECEIVER'S PLEDGES High Power Sender's Perceived Reputation (RP) Low Power Receiver's Commitment RECEIVER'S REACTIONS RECEIVER'S ATTITUDES 1111121132233 ) (1) (2) (3) (4a 4 5464 c 4 n 4 7484) (9 ) (10) (11) (12Power Figure 4-1 Estimation of Interpretation and Reacti ons in Asymmetrical Buyer-Supplier's Relationships

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58 Table 4-1 Item Descriptions and Measurem ent Model Results for Latent Constructs Item Descriptions Lamdba Loading Indicator Reliability Construct Reliability Average Variance Extracted Perceived Affective Benevolence 0.850.66 This supplier has an emotional attachment to our company, that’s one of the major reasons it cares about our welfare. 0.680.47 The success of our relationship has a great deal of personal meaning to this supplier. 0.870.76 This supplier’s positive feelings towards our company are a strong force that motivates it to care about our company. 0.860.75 Perceived Calculative Benevolence 0.780.55 This supplier cares about our company ma inly because our company increases this supplier’s profits. 0.680.47 Because it is in its own interests, this supplier wants our company to do well. 0.740.55 This supplier can turn a profit for itself from this relationship – that is one of the main reasons why this supplier car es about our company’s welfare. 0.800.63

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59Table 4-1. Continued. Item Descriptions Lamdba Loading Indicator Reliability Construct Reliability Average Variance Extracted Perceived Normative Benevolence 0.960.82 This supplier has a sense of moral oblig ation to care about its customers. 0.860.73 This supplier thinks that it is unethical to neglect its customers’ well being. 0.890.80 This supplier undertakes the responsibility of caring about its customers’ welfare. 0.910.83 This supplier would feel that it is wrong to overlook the welfare of its customers. 0.920.85 This supplier feels that it is essential for firms to care about the welfare of its customers. 0.940.87 Perceived Responsiveness 0.960.80 If an unexpected situation arises, this supplier always responds rapidly. 0.880.78 This supplier generally makes timely changes to meet our company’s requests. 0.890.79 This supplier generally responds to our requests promptly. 0.930.87 This supplier is always accessible whenever we need its help. 0.890.79 When we ask this supplier to consider some changes, this supplier always responds quickly. 0.880.78

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60 Table 4-1. Continued. Item Descriptions Lamdba Loading Indicator Reliability Construct Reliability Average Variance Extracted This supplier does not hesitate to respond to our requests right away. 0.900.82 Perceived Supplier's Concession 0.880.66 This supplier is open to makes con cessions when doing business with us. 0.740.54 This supplier is willing to change its pos ition on issues in this relationship. 0.720.52 When disagreements arise between the two companies, this supplier makes compromises. 0.870.75 When our two companies have conflicts this supplier is fine to make accommodations to resolve them. 0.900.81 Perceived Supplier's Knowledge Sharing 0.870.69 This supplier has an organized procedure to share its know-how with us. 0.900.81 This supplier has set up a system to facilitate information sharing with our company. 0.890.80

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61Table 4-1. Continued. Item Descriptions Lamdba Loading Indicator Reliability Construct Reliability Average Variance Extracted This supplier regularly organizes meetin gs, workshops or seminars to share information with us. 0.670.45 Perceived Supplier's Relationship Investment 0.900.65 This supplier has invested substantially in personnel dedicated to our company. 0.820.68 This supplier has made significant inv estments dedicated to our relationship. 0.860.74 This supplier’s operating processes have been tailored to meet the requirements of our company. 0.820.66 Training people in both companies has i nvolved substantial commitments of time and money for this supplier. 0.730.54 This supplier has made extensive adaptations to deal with our company’s standards and procedures. 0.800.64 Perceived Supplier's Reputation 0.860.67 This supplier has a reputation for be ing concerned about its’ customers. 0.900.81 This supplier has a bad reputation with its customers in the industry. (R) 0.720.52 Most buyers appreciate the way this supplier behaves in the market. 0.820.68

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62Table 4-1. Continued. Item Descriptions Lamdba Loading Indicator Reliability Construct Reliability Average Variance Extracted Perceived Supplier's Power 0.810.68 It would be difficult for us to replace th e sales and the profits generated from this product line. 0.680.46 The relationship with this supplier is critical to the achievement of our future goals. 0.950.91 Buyer's Commitment 0.850.58 Our company is willing to dedicate whatever people and resources that are necessary to sustain this relationship. 0.660.43 This relationship deserves our company’s maximum efforts to maintain it. 0.680.47 We are willing to make all the effort requi red to maintain this relationship over the long term. 0.870.75 We are committed to this supplier. 0.830.68 Buyer's Responsiveness 0.910.78 If an unexpected situation arises, our company always responds rapidly. 0.830.69

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63Table 4-1. Continued. Item Descriptions Lamdba Loading Indicator Reliability Construct Reliability Average Variance Extracted When this supplier suggests our company to consider some changes, we always respond quickly. 0.880.78 We do not hesitate to respond to this supplier’s requests right away. 0.930.87 Buyer's Concession 0.790.55 Our company is open to makes conces sions when doing business with this supplier. 0.750.56 Our company has made compromises when d ealing with issues that arise in this relationship. 0.740.54 Our company is willing to change our pos itions on issues in this relationship. 0.740.55 Buyer's Knowledge Sharing 0.860.51 Our company frequently shares information with this supplier. 0.760.58 Our company has an organized procedure to share our know-how with this supplier. 0.730.54 Our company has set up a system to faci litate information sharing with this supplier. 0.780.60

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64Table 4-1. Continued. Item Descriptions Lamdba Loading Indicator Reliability Construct Reliability Average Variance Extracted Our company regularly organizes meetings, workshops or seminars to share information with this supplier. 0.640.41 Our company is open to sharing proprietary information to help this supplier to understand the market. 0.650.43 Our company provides this supplier with va luable expertise when this supplier asks for it. 0.700.49 Buyer's Relationship Specific Investment 0.890.73 If the relationship between our company a nd this supplier were to end, our company would waste a lot of knowledge that's tailored specifically to this relationship. 0.770.59 Our company has invested substantially in personnel dedicated to this supplier. 0.890.80 Our company has made significant investments dedicated to this relationship. 0.890.79

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65 Table 4-2 Measurement Model Results for Perceived Benevolence Measures Goodness of Fit Statistics Degrees of Freedom = 491 Minimum Fit Function Chi-Square = 1291.36 (P = 0.0) Normal Theory Weighted Least Squares Chi-Square = 1322.28 (P = 0.0) Estimated Non-centrality Parameter (NCP) = 831.28 90 Percent Confidence Interv al for NCP = (727.11 ; 943.08) Minimum Fit Function Value = 2.51 Population Discrepancy F unction Value (F0) = 1.61 90 Percent Confidence Interv al for F0 = (1.41 ; 1.83) Root Mean Square Error of Approximation (RMSEA) = 0.057 90 Percent Confidence Interv al for RMSEA = (0.054 ; 0.061) P-Value for Test of Close Fit (RMSEA < 0.05) = 0.00065 Expected Cross-Validation Index (ECVI) = 2.97 90 Percent Confidence Interv al for ECVI = (2.77 ; 3.19) ECVI for Saturated Model = 2.31 ECVI for Independence Model = 98.64 Chi-Square for Independence Model with 561 Degrees of Freedom = 50733.11 Independence AIC = 50801.11 Model AIC = 1530.28 Saturated AIC = 1190.00 Independence CAIC = 50979.47 Model CAIC = 2075.87 Saturated CAIC = 4311.43 Normed Fit Index (NFI) = 0.97 Non-Normed Fit Index (NNFI) = 0.98

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66 Table 4-2. Continued. Parsimony Normed Fit Index (PNFI) = 0.85 Comparative Fit Index (CFI) = 0.98 Incremental Fit Index (IFI) = 0.98 Relative Fit Index (RFI) = 0.97 Critical N (CN) = 227.06 Root Mean Square Residual (RMR) = 0.12 Standardized RMR = 0.050 Goodness of Fit Index (GFI) = 0.87 Adjusted Goodness of Fit Index (AGFI) = 0.84 Parsimony Goodness of Fit Index (PGFI) = 0.72

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67Table 4-2. Continued. Correlation Matrix (Com pletely Standardized) Mean Std Dev. 1 2 3 4 5 6 7 8 9 1 perceived affective benevolence 4.05 1 .38 1 2 perceived calculative benevolence 5.20 1.09 -.01 1 3 perceived normative benevolence 4.72 1.28 .56** .01 1 4 perceived responsiveness 5.06 1.42 .52** .11* .71** 1 5 perceived concession 4.71 1.22 .54** .09* .64** .75** 1 6 perceived knowledge sharing 3.97 1.43 .37** .04 .42** .46** .43** 1 7 perceived relationships investment 3.99 1.42 .46** .14** .42** .45** .47** .47** 1 8 perceived reputation 5.26 1.37 .46** .06 .65** .68** .69** .37** .32** 1 9 perceived power of suppliers 4.34 1.60 .15** .09 .13** .04 .02 .21** .22** .05 1 ** Correlation is significant at the 0. 01 level (2-tailed). Correlation is significant at the 0.05 level (2-tailed).

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68 Table 4-3 Measurement Model Results for Behaviors Measures Goodness of Fit Statistics Degrees of Freedom (df) = 142 Minimum Fit Function Chi-Square (2) = 411.06 (P = 0.0) Normal Theory Weighted Least Squares Chi-Square = 429.40 (P = 0.0) Estimated Non-centrality Parameter (NCP) = 287.40 90 Percent Confidence Interv al for NCP = (228.89 ; 353.53) Minimum Fit Function Value = 0.80 Population Discrepancy F unction Value (F0) = 0.56 90 Percent Confidence Interv al for F0 = (0.44 ; 0.69) Root Mean Square Error of Approximation (RMSEA) = 0.063 90 Percent Confidence Interv al for RMSEA = (0.056 ; 0.070) P-Value for Test of Close Fit (RMSEA < 0.05) = 0.0012 Expected Cross-Validation Index (ECVI) = 1.02 90 Percent Confidence Interv al for ECVI = (0.91 ; 1.15) ECVI for Saturated Model = 0.74 ECVI for Independence Model = 22.41 Chi-Square for Independence Model with 171 Degrees of Freedom = 11503.38 Independence AIC = 11541.38 Model AIC = 525.40 Saturated AIC = 380.00 Independence CAIC = 11641.06 Model CAIC = 777.21 Saturated CAIC = 1376.76

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69 Table 4-3. Continued. Normed Fit Index (NFI) = 0.96 Non-Normed Fit Index (NNFI) = 0.97 Parsimony Normed Fit Index (PNFI) = 0.80 Comparative Fit Index (CFI) = 0.98 Incremental Fit Index (IFI) = 0.98 Relative Fit Index (RFI) = 0.96 Critical N (CN) = 231.68 Root Mean Square Residual (RMR) = 0.11 Standardized RMR = 0.046 Goodness of Fit Index (GFI) = 0.92 Adjusted Goodness of Fit Index (AGFI) = 0.89 Parsimony Goodness of Fit Index (PGFI) = 0.69

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70Table 4-3. Continued. Correlation Matrix (Com pletely Standardized) Mean Std Dev. 1 2 3 4 5 1 Buyer's Commitment 4.52 1.23 1 2 Buyer's Responsiveness 4.72 1.18 0.50** 1 3 Buyer's Concession 4.35 1.13 0.43** 0.32** 1 4 Buyer's Knowledge Sharing 4.23 1.30 0.52** 0.30** 0.38** 1 5 Buyer's Relationship Investment 3.83 1.54 0.50** 0.11** 0.35** 0.45** 1 ** Correlation is significant at the 0.01 level (2-tailed). Correlation is significant at the 0.05 level (2-tailed).

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71 Table 4-4 Model Comparison of the Structure of Benevolence Model Minimum Fit Function Chi-Square df RMSEA Standardized RMR NNFI CFI GFI NFI 2 difference test with Base Model (p<0.001) 3 factors 195.06 41.00 .09 .50 .97 .98 .94 .97 857.67 with 3 degrees of freedom 2 factors 619.61 43.00 .17 .60 .88 .91 .81 .90 433.12 with 1 degree of freedom 1 factor 1052.73 44.00 .22 .65 .80 .84 .72 .83 df = Degree of Freedom RMSEA = Root mean square error of approximation RMR = Root mean square residual NNFI = Non-normed fit index CFI = Comparative fit index GFI = The Goodness-of-fit index NFI = Normed fit index

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72 Table 4-5 Expected Signs and Relationships of Coefficients in Asymmetrical BuyerSupplier Relationships Hypotheses Expected sign and expected relationships of coefficients under asymmetrical power contexts H2 (a) 0111 H2 (b) 0112 H2 (c) 0113 H3 022 H4 033 H5 c n a4 4 4 H6 48 48 H7 46 46 H8 0 0 0 084 74 64 54 H9 0 0 0 0' 82 72 62 52

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73 CHAPTER 5 RESULTS Overview This Chapter starts with a discussion of the procedure I used for assessing common method variance. Then, the tests of the hypotheses are presented. Corresponding to the structure of the conceptual framework, I w ill first discuss the hypotheses related to the antecedents of the benevolence components. Then the effects of inter-firm benevolence on commitment, and lastly behaviors resulted from commitment. The further exploration of three-component benevolence model will be address at the end of this chapter. Common Method Variance Common method variance coul d bias the findings when both independent and dependent measures are obtained from the sa me source, as is the case in this study. I assess common method bias using the pro cedure that Lindell and Whitney (2001) recommended. According to their procedure, I first generate a co rrelation matrix among the fourteen constructs (Table 5-1), and then eliminate artificial negative correlations by reflecting any variables that have a preponde rance of negative corr elations with other variables. Afterwards, a marker variable or a scale that has the smallest correlation with the dependent construct is selected (we us e commitment construct as the dependent construct in this anal ysis). The correlation of this scale with the endogenous construct scale is considered indicative of method varian ce. Therefore, after the marker variable is identified, its correlation with the endogenous co nstruct is used to pa rtial out its effect from other correlations to assess the extent of method variance. In addition, Lindell and

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74 Whitney (2001) suggest a sensi tivity analysis of 95% confiden t interval is constructed for the correlations of the marker scal e, and the procedure is repeated. I used perceived calculative benevolence as a marker variable, which has a nonsignificant correlation of 0.09 with buyer’s commitment. Table 5-2 gives the results of the procedure and presents the partial correlations between all the variables are high and significant. This provides support to the conclusion that these correlations are not merely due to common method bias. Furthe rmore, common method variance is unlikely to influence correlations because the inter action of power and inter-firm benevolence in the model should have minimal method bias. Hypotheses Testing The focus of the discussion now turns to a ssessing the structural model depicted in Figure 4-1. The structural model specifies the ca usal relationships of the constructs to one another, in addition to the speci fication of the observed indicators to their latent variables. I estimated the equations using least squa res regression to test hypotheses H2 – H9. Signals of Perceived Affective Benevolence According to my model shown in Figure 4-1, buyer’s percepti ons of supplier’s responsiveness, concession making, and knowledge sharing have positive impacts on buyer’s perceptions of supplie r’s affective benevolence. Making concession. Concession is defined as “a cha nge of offer in the supposed direction of the other party’s interests that reduces the level of benefit sought” (Pruitt 1981). Supporting H2 (a), making concession is positively related to positive perceived affective benevolence (112 = 0.22, p < .01). Perceived concession is not related to

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75 perceived calculative benevolence, but slightly positively corresponds with perceived normative benevolence (132 = 0.09, p < .10). The findings are listed in Table 5-3. This result shows that the efforts of ma king concession by the signaling firm help build a stronger emotional bond in the relatio nship. In addition to the prior negotiation literature on concession, where concession ac ts as a key element affecting both the process and outcome because concession is posi tively associated with the fairness felt by both negotiating parties (Clopton 1984; Or dover and Rubinstein 1986; Kwon 2004), this dissertation further proposes that concessi on provides a high degree of comfortableness and security, hence affective cares, to the receiving firm in the relationship. Responsiveness. As expected in H2 (b), there is a positive relationship between buyer’s perception of supplie r’s responsiveness and buyer’s perception of supplier’s affective benevolence (111 = 0.15, p < .05). Perceived respons iveness is also found be to positively related to receivers’ perception of the senders’ normative benevolence (131 = 0.40, p < .001). However, perceived supplier’s re sponsiveness was not found to be related to perception of the sender’s calculative bene volence either. The results are reported in Table 5-3. It is reasonable to find that percepti on of responsiveness has more influence on perception of normative benevolence than on perception of affective benevolence, because responsiveness, defined as prompt a nd appropriate actions taken by one firm in response to the other firm’s requests (Kohli et al. 1993), is more easily observed on a regularly base rather than on a case by case le vel. This result may also be due to how responsiveness was measured in this dissert ation. I used the terms such as “If an

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76 unexpected situation arises, this supplier always responds rapidly” and “This supplier is always accessible whenever we need its help.” It is possible that by measuring how frequently the other firm responds timely and appropriately, the purchasing managers might be misled to answer the questions base d on a more normative base rather than on an affective base. Knowledge sharing. Contrary to prediction of H2 (c), buyer’s perception of supplier’s knowledge shar ing is not related to its percep tion of supplier’s affective or calculative benevolence as illustrated in Table 5-3. However, buyer’s perception of supplier’s knowledge sharing is positively related percep tion of normative benevolence (133 = 0.06, p < .10). In this dissertation, knowledge sharing is defined as the frequent transfer, recombination, or creation of specialized knowledge in the relati onship (Devenport and Prusak 1997; Grant 1996; Nonaka 1994). Althoug h the prior literature on inter-firm level (Dyer and Nobeoka 2000; Dyer and Singh 1998) has suggested that knowledge sharing promotes trust in the management literature, no research has talked about how knowledge sharing promotes trust and what aspect of tr ust (benevolence, competence or integrity) at inter-firm level. At the interpersonal leve l, Abrams and et. al. (2003) suggest that knowledge sharing promotes both benevolence and competence as perceived by the other person “people are more willing to trust so meone who shows a willingness to listen and share; i.e., to get involved and talk things through. In contrast, people are wary of someone who seems closed and will only answer clear-cut questions or discuss complete solutions.”

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77 This study tries to investigate wh ether knowledge sharing does promote benevolence between the firms. However, we haven’t found any support for this contention. One possible explanation for know ledge sharing not promoting benevolence between the firms, but influencing tr ust and commitment in the buyer-supplier relationships, is that knowle dge sharing might mainly promote the competence, rather than benevolence or integrity, component of trust in buyer-supplie r relationships. For example, firms often learn and gain compe titive advantage by collaborating with other firms (Dyer and Singh 1998; Levinson and Asahi 1996; March and Simon 1958; Powell et al. 1996). Von Hippel (1988) also argues that a producti on network with superior knowledge-transfer mechanisms among users, suppliers, and manufact urers will be able to "out innovate" production networks with less effective knowledge sharing mechanisms. Signals of Perceived Calculative Benevolence Relationship specific investments. H3 is confirmed. Since buyers’ perceptions of suppliers’ making relationship specific investment is significantly related to their perceptions of the suppl iers’ positive perceived calculative benevolence (22 = 0.13, p < .05). Interestingly, perceived rela tionship specific investment is also positively related to perceived affective benevolence and perceived normative benevolence (21 = 0.23, p < .001 and 23 = 0.08, p < .05 respectively). The results are reported in Table 5-3. Relationship specific investments refer to the investments specific to the buyersupplier relationship that are difficult or impossible to be redeployed to any other relationships. Particularly, relationship spec ific investments have more influence on perceived affective benevolence than on perc eived calculative benevolence. One possible

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78 explanation is that relationshi p specific investment can creat e the feeling of security to the other firm rather than revealing this firm’s cognitive evaluations of inter-firm relationships. In other words, increased rela tionship specific investments generate a high level of “attachment” between the firms in th e relationship, which in turn influences the receiving firm to perceive the investing firm as affective benevolence in the relationship. It would be interesting to examine the circumstances in which relationship specific investments affect the three types of inte r-firm benevolence may vary in the future research. Signals of Perceived Normative Benevolence Perceived reputation. Reputation is a function of the past actions of a firm, which build high credibility of this firm over time (Milgrom and Roberts 1982; Weigelt and Camerer 1988). H4 is confirmed for all th e buyers. In our study, purchasing managers’ perceptions of their s uppliers’ reputation is a significant pr edictor of their perceptions of suppliers’ normative benevolence (33 = 0.26, p < .001). In addition, perceptions of suppliers’ high reputation is pos itively affect the buyers’ perc eptions of th eir suppliers’ affective benevolence (31 = 0.11, p < .05). But, the high level of the buyers’ perceptions of suppliers’ reputation has little impact on buyers’ perceptions of suppliers’ calculative benevolence. Results are reported in Table 5-3. The possible explanation is that consis tent past behaviors not only build high credibility of the firm over time, but also creates a high level of stability in the perceptions of the other firm According to attachment th eory, this stability brought by good reputation will make the receiving part y to observe affective benevolence the

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79 sending party (ref. Bowlby 1969/1982; Bowl by 1973; Bowlby 1980; Feeney and Noller 1990; Kobak and Hazan 1991). Main Effects of Perceived Benevolence on Commitment Contrary to H5, the positive relationship between buyers’ perceptions of suppliers’ affective benevolence and buyers’ commitment (a4 = 0.15, p < .001) is smaller than the relationship between the buyer’s perception of the sender’ s normative benevolence and the receiver’s commitment (n4 = 0.29, p < .001). The relationship between buyer’s perceptions of supplier’s calculative benevolence and buyer’s commitment is not significant. The findings are summarized in Table 5-4. It is interesting to find th at not all types of percepti ons of benevolence would lead to the other firm’s commitment. This challenges the generalizibility of traditional view of Trust-Commitment Theory (Morgan and H unt 1994; Garbarino and Johnson 1999). Thus, from the evidence got in this dissertation, ge nerally speaking, it is al ways more effective for the signaling firm to exert normative and affective benevolence, rather than calculative benevolence, to the receiving firm in order to ge t the other firm to be more committed in the relationship. Moderating Effects of Power on the Re lationship between Perceived Benevolence and Commitment When I test the interaction effects of re lative power in the re lationship, I find that for the low power buyers, the relationship be tween their percepti on of its high power supplier’s calculative benevol ence and the low power buyer’s commitment are positive and significant (48 = 0.10, p < .05). However, the rela tionship between the high power

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80 buyer’s perceptions of its low power supplie r’s calculative benevol ence and commitment was not found to be significant. Thus, H6 is supported. The results confirm that it is more ef fective for a high power firm to make relationship specific investments than a low power firm to do so. One explanation is that when the low power firm perceives the high po wer firm “locking” itse lf intentionally in the relationship, such “contributi on” from the high power firm is associated with larger magnitudes of low costs or high rewards for the low power firm. As a consequence, the low power firm would be more likely to co mmit to the high power firm. On the other hand, when the low power party makes relations hip specific investments, it would be less likely to affect the high power party’s commitment level in the relationship, because such relationship specific investme nt plays less important role to the high power firm’s evaluation of the cost/benefits that it can obtain from the relationships. I also find that perceive d supplier’s affective bene volence influences buyer’s commitment regardless of whether supplier’s be ing high power or low power. This is an interesting finding, although it is not consistent with H 7. Although the directions of coefficients in both samples are positive as e xpected, there is little difference between the relationship between when the receiver is high power and the sender is low power (' 46= 0.16, p < .05), and when the receiver is low power and the sender is high power (46= 0.13, p < .05), as shown in Table 5-6. The F test of these two samples can not reject that hypothesis that perceived supp liers’ affective benevolence affect both high and low buyers equally. The finding shows that it is always eff ective for the signaling firm to show affective benevolence to the receiving firm when the buye r-supplier relationships are

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81 asymmetric than when the buyer-supplier relationships are symmetric. One possible explanation is that, when the two firms are of unequal power, firms mi ght perceive that it would be more costly or risky for the other firms to have affective benevolence on them than the case when the two firms are of e qual power. Moreover, with slight difference across all the asymmetrical relationships, it is a bit more effective to demonstrate affective benevolence (' 46 = 0.16, p < .05) when the firm is of low power rather than high power (46 = 0.13, p < .05). In order fully understand power’s impact on perception of affective benevolence, more in -depth research is needed. In addition, the results sugge st that when buyer perceive s supplier as high power, it is less likely that perceived supplier’s normative benevolence will increase buyer’s commitment (47 = 0.11, p < .10). This finding suggests that although normative benevolence is important to get the other part y to be more committed to the relationship, it might be less important when the signaling party is of high power. Thus, when a low power firm perceives that the high powe r firm has normative benevolence, the less powerful firm might interpret that this nor mative benevolence signal as insufficient to generate commitment. The equations used to estimate the model and the estimated standardized coefficients are given in Table 5-5. Behaviors Resulted from Commitment The relationships between the receiving firm’s commitment level in the relationship and the receiving firm’s own beha viors, H8, are all supported Specifically, positive relationships were found between buyers’ commitment and buyers’ concession making (62= 0.33, p < .001), responsiveness (51= 0.46, p < .001), knowledge sharing

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82 (73= 0.34, p < .001), and relationship specific investments (84= 0.25, p < .001). The results are listed in Table 5-6, Table 5-7, Tabl e 5-8, and Table 5-9, as depicted in Figure 5-2. Making concessions. The receiving firm’s concession behaviors are only positively associated with the receiving firm’s commitment level in the relationship (64 = 0.33, p < .001), while the signaling firm’s own concession behaviors have little influence on the receiving party’s concession behaviors. The possible explanation is that concession behaviors are costly and risky for th e firms to engage. Even the other firm has made concessions in the relationship; the firm does not necessarily ha ve to reciprocate by making concessions. The low power firm is also found to be more likely to make concessions (62 = 0.12, p < .05) comparing to the high power firm, as shown in Table 56. Thus, H9 (1) is supported. It might be due to the reason that the low power firm has to give up part of its freedom, authority or even profits in exchange of the stay of the high power firm in the relationship. Responsiveness. As reported in Table 5-7, the re ceiving firm’s responsiveness is highly correlated with the rece iving firm’s own commitment level in the relationship (54 = 0.46, p < .001) and the receiving firm’s per ception of the other firm’s responsiveness (51 = 0.15, p < .001). Interestingly, receiving firm ’s responsiveness is not influenced by the perceptions of the sending firm’s power. Thus, H9 (2) is not supported. This means that, regardless of power relationship, both high and low power firms can positively influence each other’s responsiveness in the relationship. Another way for one firm to get the other firm to be more responsive is to make itself more committed to the relationship.

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83 Knowledge sharing. Similar to responsiveness, the receiving party’s knowledge sharing behaviors are determined by the r eceiving party’s commitment level in the relationship (74 = 0.34, p < .001), and the sending party’s knowledge sharing behaviors (73 = 0.37, p < .001). Also, the low power firm tends to initiate knowledge sharing with the high power firms (72 = 0.09, p < .10) rather the high power firm likes to share knowledge with the low power firm. The result is reported in Table 5-8. Hence, H9 (3) is confirmed. It demonstrates that knowledge sh aring acts as results of a commitment to stay in the relationship as we ll as the other firm’s knowledge sharing behaviors. The low power firm likes to initiate knowledge sharing shows that low power firm might value knowledge sharing more than the high power fi rm for the sake of building a stable longterm relationships. Relationship specific investment. The receiving party’s relationship specific investment behaviors are affected by the receiving party’s commitment level in the relationship (84 = 0.25, p < .001), the sending party’s re lationship specific investment behaviors (84 = 0.26, p < .001), and the sending part y’s power as perceived by the receiving firm (82 = 0.11, p < .05, and 82 = -0.24, p < .001), as shown in Table 5-9. Therefore, H9 (4) is supported. Th ese are interesting findings. It illustrates that one firm’s relationship specific investment behaviors result from both a high level of its own commitment, the observation of the other firm’s relationship specific investment behaviors, and a perception of the other firm’s high power in the relationship. It also shows that although high power firm is le ss likely to make relationship specific investments in general, when the low power firm makes relationship specific investments, the high power firm will be more likely to make such investments. Also, if

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84 the low power firm could get the high power firm more committed to the relationship, high power firm will be more likely to make relationship specific investments. In sum, responsiveness, knowledge shari ng and relationship sp ecific investment behaviors executed by one firm could influen ce the other firm in the relationship to reciprocate. We also find th at making concession is unique in that firms take great cautions to initiate this type of behavior. A possible explanation is that concession might involve a higher level of risk to the sending fi rm, comparing to the risks of other types of behaviors such as responsiveness, know ledge sharing and relationship specific investment. Power is found to play a role in influencing a firm’s behaviors as well. Results show that the low power firm might be more likely to make concession, share knowledge with the other firm, and maki ng relationship specific investment. Summary The purpose of this chapter was to describe the analysis strategy used to assess the test the structural model of interest. The re sults show that different signals influence different components of benevolence in as ymmetrical buyer-supp lier relationships. A median split analysis of power was conducte d to estimate the inte raction impacts of the buyers’ perceptions of three components of benevolence and power on the buyers’ commitment. The behaviors resulted fr om commitment are also reported.

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85 Table 5-1 Correlation Matrix of All Constructs a, b PSAF PSCL PSNR PSNN PSRI PSPU PSAF 1.00 PSCL -0.01 1.00 PSNR 0.64**** 0.01 1.00 PSNN 0.63**** 0.09* 0.69**** 1.00 PSRI 0.53**** 0.14*** 0.44**** 0.54**** 1.00 PSPU 0.57**** 0.06 0.71**** 0.75**** 0.38**** 1.00 SPOW 0.19**** 0.09* 0.18**** 0.06 0.27**** 0.07 PSKS 0.44**** 0.04 0.47**** 0.51**** 0.49**** 0.46**** PSRV 0.60**** 0.12** 0.74**** 0.81**** 0.49**** 0.75**** BRI 0.13*** 0.15*** 0.01 -0.01 0.42**** -0.05 BNN 0.26**** 0.03 0.11** 0.17**** 0.17**** 0.02 BRV 0.32**** 0.02 0.38**** 0.28**** 0.10** 0.33**** BKS 0.40**** 0.14*** 0.28**** 0.31**** 0.52**** 0.24**** BCMT 0.45**** 0.09* 0.46**** 0.36**** 0.35**** 0.35**** Table 5-1. Continued. SPOW PSKS PSRV BRI BNN BRV SPOW 1.00 PSKS 0.27**** 1.00 PSRV 0.07 0.51**** 1.00 BRI 0.65**** 0.30**** -0.06 1.00 BNN 0.46**** 0.21**** 0.05 0.41**** 1.00 BRV 0.31**** 0.21**** 0.32**** 0.12*** 0.38**** 1.00 BKS 0.40**** 0.57**** 0.24**** 0.51**** 0.45**** 0.33**** BCMT 0.73**** 0.48**** 0.35**** 0.56**** 0.52**** 0.54**** Table 5-1. Continued. BKS BCMT BKS 1.00 BCMT 0.58**** 1.00 aAll estimates are completed standardized. bNote that, PSAF = perceived affective be nevolence; PSCL = perceived calculative benevolence; PSNR = perceived normative be nevolence; PSNN = perceived supplier’s concession; PSRI = perceived supplier’s relationship sp ecific investment; PSPU = perceived supplier’s reputation; SPOW = pe rceived supplier’s power; PSKS = perceived supplier’s knowledge sharin g; PSRV = perceived supplie r’s responsiveness; BRI =

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86 buyer’s relationship specific investment; BNN = buyer’s concession; BRV = buyer’s responsiveness; BKS = buyer’s knowledge sharing; BCMT = buyer’s commitment. p< .10 ** p < .05 *** p< .01 **** p < .001

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87Table 5-2 Common Method Variance Analysis PSAF PSCL PSNR PSNN PSRI PSPU SPOW PSKS PSRV BRI BNN BRV BKS BCMT PSAF 1.00 PSCL 0.01 1.00 -0.09**** -0.22**** PSNR 0.64**** 0.01 1.00 0.60**** -0.09**** 0.56**** -0.22**** PSNN 0.63**** 0.09 0.69 1.00 0.59**** 0.00 0.66**** 0.54**** -0.12**** 0.62**** PSRI 0.53**** 0.14** 0.44**** 0.54**** 1.00 0.48**** 0.05** 0.38**** 0.49**** 0.42**** -0.06** 0.31**** 0.43**** PSPU 0.57**** 0.06 0.71**** 0.75**** 0.38**** 1.00 0.53**** -0.03 0.68**** 0.73**** 0.32**** 0.47**** -0.16**** 0.64**** 0.69**** 0.24**** SPOW 0.19**** 0.09* 0.18*** 0.06 0.27**** 0.07 1.00 0.11**** 0.00 0.10**** -0.03 0.20**** -0.02 0.00 -0.12**** -0.01 -0.16**** 0.10**** -0.15**** PSKS 0.44**** 0.04 0.47**** 0.51**** 0.49**** 0.46**** 0.27**** 1.00 0.38**** -0.05 0.42**** 0.46**** 0.44**** 0.41**** 0.20**** 0.31**** -0.18**** 0.35**** 0.40**** 0.37**** 0.33**** 0.10**** PSRV 0.6**** 0.12** 0.74**** 0.81**** 0.49**** 0.75**** 0.07 0.51**** 1.00 0.56**** 0.03 0.71**** 0.79**** 0.44**** 0.73**** -0.02 0.46**** 0.51**** -0.08*** 0.68**** 0.77**** 0.37**** 0.69**** -0.15**** 0.40**** BRI 0.13*** 0.15*** 0.01 -0.01 0.42**** -0.05 0.65**** 0.3**** 0.06 1.00 0.04 0.07*** -0.09**** -0.11**** 0.36**** -0.15**** 0.62**** 0.23**** -0.03**** -0.07*** -0.05 -0.22**** -0.24**** 0.29**** -0.30**** 0.57**** 0.14**** -0.31****

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88Table 5-2. Continued. PSAF PSCL PSNR PSNN PSRI PSPU SPOW PSKS PSRV BRI BNN BRV BKS BCMT BNN 0.26**** 0.03 0.11** 0.17*** 0.17*** 0.02 0.46**** 0.21**** 0.05 0.41**** 1.00 0.19**** -0.07** 0.02 0.09*** 0.09*** -0.08*** 0.41**** 0.13**** -0.04 0.35**** 0.09*** -0.19**** -0.10*** -0.02 -0.02 -0.21**** 0.33**** 0.03 -0.17**** 0.27**** BRV 0.32**** 0.02 0.38**** 0.28**** 0.1** 0.33**** 0.31**** 0.21**** 0.32**** 0.12*** 0.38**** 1.00 0.25**** -0.08** 0.32**** 0.21**** 0.01 0.26**** 0.24**** 0.13**** 0.25**** 0.03 0.32**** 0.16**** -0.21**** 0.24**** 0.11**** -0.11**** 0.17**** 0.15**** 0.03 0.16**** -0.08*** 0.24**** BKS 0.4**** 0.14*** 0.28**** 0.31**** 0.52**** 0.24**** 0.4**** 0.57**** 0.24**** 0.51**** 0.45**** 0.33**** 1.00 0.34**** 0.05* 0.21**** 0.24**** 0.47**** 0.16**** 0.34**** 0.53**** 0.16**** 0.46**** 0.40**** 0.26**** 0.26**** -0.06** 0.11**** 0.15**** 0.41**** 0.06** 0.26**** 0.47**** 0.06** 0.40**** 0.32**** 0.17**** BCMT 0.45**** 0.09a 0.46**** 0.36**** 0.35**** 0.35**** 0.73**** 0.48**** 0.35**** 0.56**** 0.52**** 0.54**** 0.58**** 1.00 0.40**** 0.41**** 0.30**** 0.29**** 0.29**** 0.70**** 0.43**** 0.29**** 0.52**** 0.47**** 0.49**** 0.54**** 0.32**** 0.33**** 0.21**** 0.20**** 0.20**** 0.67**** 0.36**** 0.20**** 0.46**** 0.41**** 0.43**** 0.48**** p< .10 ** p < .05 *** p< .01 **** p < .001 a This is a marker correlation. Notes: The first value in the cell is the absolute value of correlation. The second va lue in the cell is th e correlation correl ated for method bias. The third value in the cell is 95% sensitivity anal ysis. PSAF = perceived affective benevolence, PSCL = perceived calculative benevolence, PSNR = perceived normative benevolence, PSNN = percei ved supplier’s concession, PSRI = perceived supplier’s relationship specific investment, PSPU = perceived supplier’s reputation, SPOW = perceive d supplier’s power, PSKS = perceived supplier’s knowledge sh aring, PSRV = perceived supplier’s responsiveness, BRI = buyer’s relationship specific investm ent, BNN = buyer’s concession, BRV = buyer’s responsiveness, BKS = buyer’s knowledge sharing, BCMT = buyer’s commitment.

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89 Table 5-3 Structural Model Summaries – Antecedents of Perceived Benevolence Regression Equations and Estimated Standard ized Coefficients for Antecedents of Perceived Benevolence a nd Perceived Benevolence (1) 1 (Perceptions of Sender’s Affective Benevolence) =1 + RV111 (Sender’s Responsiveness) + CN 112 (Sender’s Concessions) + KS113 (Sender’s Knowledge Sharing) + RI 21 (Sender’s Relationship Specific Investments) + RP31 (Sender’s Reputation) +1 (2) 2 (Perceptions of Sender’s Calculative Benevolence) =2 + RV121 (Sender’s Responsiveness) + CN 122 (Sender’s Concessions) + KS123 (Sender’s Knowledge Sharing) + RI 22 (Sender’s Relationship Specific Investments) + RP32 (Sender’s Reputation) +2 (3) 3 (Perceptions of Sender’s Normative Benevolence) = 3 + RV131 (Sender’s Responsiveness) + CN 132 (Sender’s Concessions) + KS133 (Sender’s Knowledge Sharing) + RI 23 (Sender’s Relationship Specific Investments) + RP33 (Sender’s Reputation) + 3 Effect Perceived affective benevolence Perceived calculative benevolence Perceived normative benevolence Perceived responsiveness 111 = 0.15** 121 = 0.10 131 = 0.40**** Perceived Concession 112 = 0.22**** 122 = 0.08 132 = 0.09* Perceived knowledge sharing 113 = 0.06123 = 0.06 133 = 0.06* Perceived relationship investment 21 = 0.23**** 22 = 0.13** 23 = 0.08** Perceived reputation 31 = 0.11**32 = 0.02 33 = 0.26****

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90 Table 5-3. Continued. Effect Perceived affective benevolence Perceived calculative benevolence Perceived normative benevolence Adjusted R2 0.370.02 0.57 F statistic(d.f.) 60.14(5,510)**** 2.60(5,510)** 137.41(5,510)**** a All estimates are completed standardized. p< .10 ** p < .05 *** p< .01 **** p < .001

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91 Table 5-4 Structural Model Summaries – Perceived Benevolence and Commitment Regression Equation and Estimated Standa rdized Coefficients for Perceived Benevolence and Commitment (4-a) 4 (Receiver’s Commitment) = 4 + 1 4 a(Perceptions of Sender’s Affective Benevolence) + 2 4 c(Perceptions of Se nder’s Calculative Benevolence) + 3 4 n(Perceptions of Sender’s Normative Benevolence) + 5 4 h(Dummy Perceived Sender’s High Power) + 5 4 l(Dummy Perceived Sender’s Low Power) +4 Adjusted R2 = 0.408 F (5, 510) = 72.06**** Effect Buyers’ Commitment a T-Value Perceived affective benevolence a4 = 0.15**** 3.61 Perceived normative benevolence n4 = 0.29**** 7.10 Perceived calculative benevolence c4 = 0.05 1.34 dummy perceived high power h 4= 0.24**** 4.64 dummy perceived low power 4l = 0.25**** -4.97 a All estimates are completed standardized. p< .10 ** p < .05 *** p< .01 **** p < .001

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92 Table 5-5 Structural Model Summaries – Perceived Benevolence, Commitment and Power Regression Equation and Estimated Standa rdized Coefficients for Perceived Benevolence, Commitment and Power (4-b) 4 (Receiver’s Commitment) = 41 + 1 41 (Perceptions of Sender’s Affective Benevolence) + 2 42 (Perceptions of Se nder’s Calculative Benevolence) + 3 43 (Perceptions of Sender’s Normative Benevolence) + 5 45 (Dummy Perceived Sender’s High Power) + 5 45 (Dummy Perceived Sender’s Low Power) + 6 46 (Interaction of Dummy Perceived Sender’s High Power and Percei ved Affective Benevolence) + 6 46 (Interaction of Dummy Percei ved Sender’s Low Power and Perceived Affective Benevolence) + 7 47 (Interaction of Dummy Perceived Sender’s High Power and Perceived Normative Benevolence) + 7 47 (Interaction of Dummy Percei ved Sender’s Low Power and Perceived Normative Benevolence) + 8 48 (Interaction of Dummy Perceived Sender’s High Power and Pe rceived Calculative Benevolence) + 8 48 (Interaction of Dummy Percei ved Sender’s Low Power and Perceived Calculative Benevolence) +41 Adjusted R2 = 0.422 F (11, 504) = 35.13**** Effect Buyers’ Commitment a T-Value mean centered affective benevolence 41 = 0.15**** 3.75 mean centered normative benevolence 43 = 0.28**** 6.80

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93 Table 5-5. Continued. Effect Buyers’ Commitment a T-Value mean centered calculative benevolence 42 = 0.06* 1.69 dummy perceived high power 45= 0.25**** 4.88 dummy perceived low power 45 = 0.23**** -4.42 mean centered dummy perceived high power PSAF 46 = 0.13** 2.06 mean centered dummy perceived low power PSAF 46 = 0.16** 2.54 mean centered dummy perceived high power PSNR 47 = 0.11* -1.85 mean centered dummy perceived low power PSNR 47 = 0.034 -0.56 mean centered dummy perceived high power PSCL 48 = 0.10** 1.98 mean centered dummy perceived low power PSCL 48 = 0.041 0.85 a All estimates are completed standardized. p< .10 ** p < .05 *** p< .01 **** p < .001

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94 Table 5-6 Structural Model Summarie s – Commitment, Power and Concession Regression Equation and Estimated Standa rdized Coefficients for Commitment, Power and Concession (6) 10 (Receiver’s Concessions) = 6 + 4 64 (Receiver’s Commitment) + CN 62 (Perceived Sender’s Concessions) + 5 62 (Dummy Perceived Sender’s High Power) + 5 62 (Dummy Perceived Sender’s Low Power) + 6 Adjusted R2 = 0.20 F (4, 510) = 33.81**** Effect Buyers’ Concession a T-Value Perceived Suppliers’ Concession 62 = 0.02 0.40 Buyers' commitment 64 = 0.33**** 6.77 Perceived high power of suppliers (Dummy Variable) 62 = 0.12** 2.06 Perceived low power of suppliers (Dummy Variable) 62 = 0.07 -1.19 a All estimates are completed standardized. p< .10 ** p < .05 *** p< .01 **** p < .001

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95 Table 5-7 Structural Model Summaries – Commitment, Power and Responsiveness Regression Equation and Estimated Standa rdized Coefficients for Commitment, Power and Responsiveness (5) 9 (Receiver’s Responsiveness) = 5 + 4 54 (Receiver’s Commitment) + RV 51 (Perceived Sender’s Responsiveness) + 5 52 (Dummy Perceived Sender’s High Power) + 5 52 (Dummy Perceived Sender’s Low Power) + 5 Adjusted R2 = 0.27 F (4, 510) = 47.45**** Effect Buyers’ Responsiveness a T-Value Perceived Suppliers’ Responsiveness 51 = 0.15**** 3.57 Buyers' commitment 54 = 0.46**** 9.86 Perceived high power of suppliers (Dummy Variable) 52 = 0.06 1.03 Perceived low power of suppliers (Dummy Variable) 52 = 0.09 1.55 a All estimates are completed standardized. p< .10 ** p < .05 *** p< .01 **** p < .001

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96 Table 5-8 Structural Model Summaries – Commitment, Power and Knowledge Sharing Regression Equation and Estimated Standa rdized Coefficients for Commitment, Power and Knowledge Sharing (7) 11 (Receiver’s Knowledge Sharing) =7 + 4 74 (Receiver’s Commitment) + KS 73 (Perceived Sender’s Knowledge Sharing) + + 5 72 (Dummy Perceived Sender’s High Power) + 5 72 (Dummy Perceived Sender’s Low Power) + 7 Adjusted R2 = 0.38 F (4, 510) = 78.54**** Effect Buyers’ Knowledge Sharing a T-Value Perceived Suppliers’ Knowledge Sharing 73 = 0.37**** 9.53 Buyers' commitment 74 = 0.34**** 7.66 Perceived high power of suppliers (Dummy Variable) 72 = 0.09* 1.78 Perceived low power of suppliers (Dummy Variable) 72 = 0.04 0.67 a All estimates are completed standardized. p< .10 ** p < .05 *** p< .01 **** p < .001

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97 Table 5-9 Structural Model Summaries – Co mmitment, Power and Relationship Specific Investment Regression Equation and Estimated Standa rdized Coefficients for Commitment, Power and Relationship Specific Investment (8) 12 (Receiver’s Relationship Specific Investment) = 8 + 4 84 (Receiver’s Commitment) + RI 84 (Perceived Sender’s Relationship Specific Investments) + 5 82 (Dummy Perceived Sender’s High Power) + 5 82 (Dummy Perceived Sender’s Low Power) + 8 Adjusted R2 = 0.39 F (4, 510) = 82.73**** Effect Buyers’ Relationship Specific Investment a T-Value Perceived Suppliers’ Relationship Specific Investment 84 = 0.26**** 7.21 Buyers' commitment 84 = 0.25**** 5.84 Perceived high power of suppliers (Dummy Variable) 82 = 0.11** 2.17 Perceived low power of suppliers (Dummy Variable) 82 = -0.24**** -4.58 a All estimates are completed standardized. p< .10 ** p < .05 *** p< .01 **** p < .001

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98 Buyer's Perceptions of Supplier's Affective Benevolenc Perceived Supplier's Knowledge Sharing (KS) Perceived Supplier's Concessions (CN) Perceived Supplier's Responsiveness (RV) Perceived Supplier's Relationship Specific Investment (RI) Buyer's Perceptions of Supplier's Calculative Benevolence Buyer's Perceptions of Supplier's Normative BenevolencePERCEPTIONS OF SENDERS' (SUPPLIERS') BEHAVIORS RECEIVERS' (BUYERS') INTERPRETATIONS Perceived Supplier's Reputation (RP) * * 22 0112 * * 24 021 * 23 022* * 26 033) (1) (2) (3 * * 40 0131 08 023 * 11 031 * 15 0111 09 0132 06 0133 p< .10 ** p < .05 *** p< .01 **** p < .001 Figure 5-1 Antecedents of Perceived In ter-Firm Benevolence Structure Model Summary

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99 Buyer's Perceptions of Supplier's Affective Benevolenc Buyer's Perceptions of Supplier's Calculative Benevolence Buyer's Perceptions of Supplier's Normative BenevolenceRECEIVER'S INTERPRETATIONS Buyer's Commitment RECEIVER'S ATTITUDES) (1 ) (2 ) (3) (4 * * 15 04 a 05 04c* * 29 04nPerceived high powerPerceived High Power +0.10** +0.13** -0.11* Perceived Low Power +0.16** -0.23**** +0.25**** p< .10 ** p < .05 *** p< .01 **** p < .001 Figure 5-2 Perceived Bene volence, Commitment and Power Structural Model Summary

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100 Buyer's Knowledge Sharing Buyer's Perceived Concessions Buyer's Responsiveness Buyer's Relationship Specific InvestmentRECEIVERS' (BUYERS') ATTITUDES, PERCEIVED POWER AND RECIPROCITY RECEIVERS' (BUYERS') BEHAVIORS Buyer's Commitment) (12) (11) (10) (9) (4 51 = 0.15**** Buyer's Commitment) (4 Buyer's Commitment) (4 Buyer's Commitment) (4 Buyer's Perception of Supplier's Responsiveness (RV) Buyer's Perception of Supplier's Concession (CN) n.s. Buyer's Perception of Supplier's Knowledge Sharing (KS) Buyer's Perception of Supplier's Relationship Specific Investment (RI) Buyer's Perception of Supplier's Power (SPOW) n.s. Buyer's Perception of Supplier's Power (SPOW) Buyer's Perception of Supplier's Power (SPOW) Buyer's Perception of Supplier's Power (SPOW) 54 = 0.46****64 = 0.33**** High Powe r :62 = 0.12** High Powe r :72 = 0.09* 74 = 0.34**** 73 = 0.37**** 84 = 0.25**** 84 = 0.26**** High Power:82 = 0.11* Low power:' 82 = 0.24**** Figure 5-3 Commitment, Power, Reciproc ity and Benevolence Behaviors Summary p< .10 ** p < .05 *** p< .01 **** p < .001

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101 CHAPTER 6 DISCUSSION Overview Managing asymmetrical inter-firm relations hips and trust-buil ding processes in inter-firm relationships are important and largely under-researched issues in B-to-B markets. In this dissertation, I develop and test a theoretical model to explore the role of power in trust development between buyer and supplier in an asymmetrical power relationship. This concluding chapter su mmarizes both theoretical and managerial contributions of this dissertation, discusses it s limitations, and presents the directions for future research. Contributions to Theory and Practice The major factors leading to the instability in any asym metrical power relationship are the high power party’s high probabilities to terminate the relationship, and withhold the low power party’s rewards unilaterally (Molm et al. 1999). This condition arises because that the high power party normally ha s more alternative pa rtners than the low power party does. Thus, the high power party is more likely to use the threat of going after an alternative partner to extract conce ssions from the extant less powerful party, and shirk on its responsibilities. Indeed, a f undamental assumption about asymmetrical relationships in the prior literature is that high power firm, who has a goal to maximize its own benefits, may minimize the costs of being involved in the asymmetrical relationship by acting opportunistically. In doing so, th e high power firm may, intentionally or otherwise, reduce the benef its of the low power firm.

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102 In this research, I argue that it is important to introduce the construct of perceived benevolence into the study of asymmetrical power buyer-supplier re lationships, and perceived benevolence solves the instability problems in asymmetrical relationships. This is an alternative view to th e economics view. I argue that firms, who are seeking longterm relationships with the other firms, wh ile concerning for their own interests, also benevolently concern for the other firms’ welfare in the relati onship. And benevolent concerns for the other firms may be essentia l for trust development in asymmetric buyersupplier relationships. If a firm doesn’t have benevolent concerns for the other firm, the firm will tend to avoid making idiosyncratic investments in the relationship or exhibit flexibility when uncertainty comes. Besides, one firm’s attitudes and behaviors may be affected by the other firm’s attitudes and behaviors in the relationship th rough the norm of recipr ocity as evidenced in the results of this study. In other words, the norm of reciprocity between the firms constitutes the rules that firms shall follow in the interactions, and the content of the norm of the reciprocity in asymmetrical buye r-supplier relationships is benevolence. This research examines the construct be nevolence in more depth than previous research. I propose and examine three components of inter-firm benevolence, and examine the antecedents and consequences of these components. Specifically, I examine the impacts of behavioral si gnals on receiver’s interpreta tion of sender’s benevolence, sender’s three components of benevolence on receiver’s commitment, and receiver’s commitment on receiver’s subsequent rela tionship performance in asymmetrical buyersupplier relationships. Hence, th is research takes a step to answer the call by Prabhu and Stewart (2001) that the marke ting researchers need to study the issue of how “receivers

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103 first form beliefs about senders and then use these beliefs in making decisions”. Finally, this study could advise manage rs on how to assess and understand asymmetrical buyer-supplier re lationships. For too long, managerial practice has been informed to focus on symmetric relationships, an d to use simple strategies to deal with business partners characterized by asymmetri cal powers. With this study, managers will understand the importance of asymme tries, as well as th e values of differe nt strategies for achieving mutual benefits in as ymmetrical power situations. Discussion of Results In this section, the results of the previous chapter will be discussed in greater detail. Given the characteristics of trust as a belief or attitude of one firm with respect to the actions of the other firm, it is natural to thi nk of trust (as with any “psychological” state) as being subjected to the framing effects of the other firm and the decision environment in which one firm finds itself. Benevolence is introduced as a key co mponent of trust in asymmetrical buyer-supp lier relationships in this dissertation. And buyer’s perception of supplier’s benevolence is formed under the influence of supplier’s behaviors and the power relationship between buyer and supplier. Antecedents The effect of concession makings on per ceptions of affective benevolence is the strongest among all the antecedents’ eff ects (concession making, responsiveness and knowledge sharing) on perceptions of affectiv e benevolence. It appe ars that concession making acts as an important predictor of se nder’s affective benevol ence in buyer-supplier relationships. It could be that concession making best satisfies receiver’s need to feel respected, and the receiver’s quenching fo r comfort in the work among all the

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104 antecedents that I have studied in this disse rtation. This might correspond with the high risks of concession making for the sending firm in the buyer-supplier relationships compared with the behaviors such as responsiveness and knowledge sharing. Interestingly, one firm’s relationship sp ecific investment has significant effects on all the components of perceptions of benevolen ce. This suggests that relationship specific investments increase the per ceptions of benevolence through various “channels”. On the one hand, such relationship specific invest ment does signal the sending firm’s (moneywise) willingness to tailor its offering to be nefit the receiving firm, and also makes the sending firm itself more vulnerabl e in front of the receiving firm. On the other hand, such vulnerability may act as an important assura nce and bring about the comfort feelings in the receiving firm. Relationshi p specific investment may also increase buyer’s perception of supplier’s normative benevolence if th e firm also makes relationship specific investment across in the other buyer-supp lier relationships it involves in. Although reputation is found to be positiv ely related to buyer’s perception of supplier’s normative benevolence, other antecedents also seem to be positively associated with buyer’s perception of supplier’s norma tive benevolence. In particular, buyer’s perception of supplier’s responsiveness is strongly related to perception of normative benevolence. Due to the measurement confound of responsiveness discussed in Chapter 5, I suspect that a high frequency of contact s between buyer and supplier will positively influence buyer’s perception of supplier’s normative benevolence. In sum, I suspect that the antecedents of the three components of perceived benevolence might arise from three different conceptual dimensions: the behavioral antecedents of perceived affective benevolen ce is associated with high risk of the

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105 behavior for the sending firm; antecedents of perceived calculative benevolence is linked with possible gains of the behaviors for the receiving firm; and antecedents of perceived normative benevolence corresponds with the st ability of the beha viors across time and across buyer-supplier relationships. Another interesting finding in this dissertation is th at I do not find evidence supporting that power interacts with anteceden ts of the three components of perceived benevolence. It appears that the relations hips between supplier’s behaviors signaling benevolence and buyers’ perception of supplier’ s benevolence are hardly influenced by power between buyer and supplier. Consequences As discussed in Chapter 5, buyer’s pe rception of affec tive benevolence and normative benevolence are positively rela ted to buyer’s commitment. However, perception of normative benevolence is a str onger predictor compared with perceived affective benevolence. This might be partly due to the difficulty of collecting and analyzing the information of buyer’s percep tion of supplier’s affective benevolence compared with buyer’s perception of nor mative benevolence from only one key informant from buyer firm. Although I do not get the main effect be tween perceived calculative benevolence and commitment, I find that power interacts with perceived calcula tive benevolence on commitment. In other words, buyer’s percep tion of supplier’s calculative benevolence has greater impacts on buyer’s own commit ment when buyer is of low power and supplier is of high power. It shows that the perception of high power firm’s calculative benevolence could get the low power firm to be more committed in the relationship, while perception of the low power firm’s cal culative benevolence does not. In contrast,

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106 the perceptions of low power firm’s affective and normative benevolence will increase high power’s commitment in the relationship, but the perceptions of high power firm’s affective or normative benevolence will not. While most of the hypotheses regarding be havioral consequences and commitment are supported, I further carry a test for the nor m of reciprocity as re ported in Chapter 5. Interestingly, I find that except conce ssion making, all the other behaviors (being responsive, sharing knowledge, and making re lationship specific inve stment) follows the norm of reciprocity in buyer-s upplier relationships. When supp lier is responsive, shares knowledge, or makes relationship specific inve stment in the buyer-supplier relationship, buyer reciprocates well. Conce ssion making appears to be hard to be reciprocated in asymmetrical buyer-supplier re lationship, which might be due to its high risk for the sending firm. Limitations There are several limitations in the pr esent study. First, because purchasing managers are from manufacturing industries and retail trade industries, further research is needed to establish the generalizabilit y of these findings to the buyer-supplier relationships in other industries such as c onstruction industry, servic e industry and etc. Second, an attempt was made also to ga in access to the purchasing managers’ suppliers, which would have allowed sampling the perceptions of the suppliers, but most of the requests were rejected. In light of this, one should be cautious about generalizing the results to sides of supp liers; especially buyers have been gaining more and more power in the past twenty years. However, this study is still informative, in that both low power and high power buyers have been c ontacted and fulfilled the questionnaires.

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107 Third, it would have been desirable to have the sample with variable length of the relationships. Current study only requests the purchasing managers to report the relationship that lasts more th an one year. It would have b een better to ask the managers to report the length of the relationship, which has been suspected to affect the functions of three components of benevolence in the relationships with asymmetrical power. Lastly, we used self report data for all study variables, which may result in possible common method biases though Lindell and Whitney ’s (2001) procedure shows that this influence is likely to be minimal. An atte mpt was made to also gain access to the participating buyers’ suppliers – this would have allowe d me to sample buyer-supplier dyads – but the reques ts were rejected. Future Research Future research could begin by addressi ng the moderating variables that could affect the high power and low power firms sel ecting different strategies. For example, it would be interesting to test whether the e xpectations of the high power and low power firms have different impacts on the performan ce of the asymmetrical power relationships. Two types of expectations in interest could be “risk-reductio n” expectation as suggested by Molm (1999) and “value-maximizing” view where the high power firms and the low power firms care more about increasing the “pie ” rather than dividi ng the “pie” (cf. Jap 1999; Jap 2001). Second, this study has focused primarily on the buyers. Another useful study would be to better understand the per ceptions of their s uppliers. In other wo rds, how the causal relationships between buyer and supplier can be empirically te sted would be fascinating. It’s possible that the structur al difference between buyer and s upplier will also play a role in interpreting the strategies th at can be used by the firms in the relationships. Thus it is

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108 interesting to see what this structural diffe rence is and how it functions in asymmetrical relationships. Third, a new research would be conduc ted to examine the relationship of benevolence, competence, and integrity (the th ree components of trust) in asymmetrical buyer-supplier relationships. It is possible that comparing to symmetrical buyer-supplier relationships, certain component of trust su ch as benevolence plays a more importance role. It would also be interesting to id entify different antecedents to benevolence, competence and integrity in inter-firm relationships. Fourth, more research is needed to be tter understand the percep tions of the other firms’ behaviors. This requires methodological work, i.e., how to better design the survey instrument so as to insure that the inform ants from both buyer and supplier sides use the same point of reference, time span, and events in formulating their responses, and theoretical work on how the buye rs and suppliers perceive th eir joint relationships. It’s possible that different informants attend to di fferent factors in the relationships but weigh these factors differently in assessing the level of perceived benevolence. Finally, a brand new avenue for future re search would be to use experiments to examine the asymmetrical power relationships. One of the limitations of this dissertation is that the cross-sectional su rvey can only examine relationships and perceptions at one point in time. Undertaking experiment s can help examine the development of benevolence over time and the causality associ ated with the hypothesi zed relationships. These experiments can borrow from the in sights and methodologies from extant experimental economics and experimental soci al psychology literature, where researchers

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109 have used to study power and social excha nge over the past 20 years (Axelrod 1984; Molm et al. 2001). Summary In this concluding chapter, the significan ce of the dissertation is discussed, and limitations and future research are outlined. Th is dissertation represents a first step in better understanding how buyers an d suppliers with asymmetri cal relationships interact with each other to develop long-term mutual beneficial relationships. The perception approach undertaken here provide s insight into the roles and e ffects of critical factors in the relationship that affect important inte r-firm outcomes – commitment and consequent behaviors. The results suggest that factor s such as perceptions of responsiveness, concession making, reputation and relationshi p specific investment exert differential effects on perceived affective, calculative and normative benevolence, which vary in importance of affecting commitment for high and low power firms. Furthermore, the level of commitment and the structure of power will affect whether the firm would like to reciprocate the other firm’s benevolent behavi ors or not. We hope that this dissertation provides the catalyst for future research on th e theory and practice of trust development in asymmetrical buyer -supplier relationships.

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110 APPENDIX A LOW POWER BUYER SURVEY University of Florida Supplier Research Invitation Letter (UFIRB #2005-U-356) Dear (LAST NAME) We would like to kindly ask you to particip ate in Ms. Qiong Wang's dissertation study on the nature of relationships between buyers and sellers. This study has been approved and sponsored by the Institute for Supply Management (ISM) ( http://www.ism.ws/ ) and the Warrington College of Business Sch ool at University of Florida ( http://www.cba.ufl.edu/ ). Our sample is limited and therefore your responses are extremely important for Ms. Wang to complete her doctoral studies. You can access the survey at http://www.surveyz.com/TakeSurvey?id=35456&_respondentXXXX and the password is seller This study is simply asking for your opinions an d feelings about your relationships with a supplier, and there are no right or wrong answers. Pretests ha ve indicated that you should be able to complete the study in 20 minutes. In return for your assistance, we will send you an executive summary of our study. You can also check the progresses and the results of this study at http://bear.cba.ufl.edu/wang2/buyerdissertation.html Your respondent ID for this study is XXXX. This study is completely voluntary and conf idential! Information reported shall be averaged across the responses of many other company buyers so that no one individual answers can be determined. If you have any que stions or concerns, please feel free to contact us at relationship@cba.ufl.edu or call Qiong (pronounced as "Chong") at 352392-0161-1273#. Dr. Barton A. Weitz Chair American Marketing Associati on, JC Penney Professor of Marketing University of Florida Qiong Wang Doctoral Candidate Department of Marketing University of Florida Phone: 352-392-0161-1333#

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111 Please bear in mind that this study is co mpletely voluntary and confidential! All of your responses shall not be revealed to your suppliers, employer, or competitors. In buyer-supplier relationships, buyers and supp liers can be different in terms of their dependency upon each other. Please think of one supplier who you have been responsible for more than 1 year, and is best described as: “It would be easy for this supplier to find other customers to replace our company, but it’s difficult for our company to replace this supp lier with another supplier in the particular product category .” (For example: Such a supplier might be a sole source supplier or a large national-wide (international-wide) supplier dominating a particular product category In other words, this supplier is so important to your company that yo ur company is more dependant on this supplier than this supplier depends on your company.) Please keep in mind that there is no right or wrong answers. Please do not be concerned about giving different answers to questions that seem similar. There is some redundancy built into the statements to account for the f act that some people may read and interpret the statements differently. A) MOTIVATIONS FOR YO UR COMPANY TO WORK WITH THIS SUPPLIER In this section, we are in terested in knowing what motivates your company to work with this supplier. Indicate the extent to which you agree/disagree with the following statements. All these questions shou ld be answered with respect to the particular supplier you selected initially. Strongly Strongly Disagree Agree This supplier has a reputa tion for being honest and trustworthy. 1 2 3 4 5 6 7 Please briefly describe the products that you buy from this supplier: ___________ Based on the types of products/servi ces your company buys from this supplier, please indicate the relative power of your company and this supp lier in the relationshi p. (circle the number) Our company is much Equal This supplier is much more powerful than power more powerful than this supplier our co mpany 1 2 3 4 5 6 7

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112 Strongly Strongly Disagree Agree This supplier has a reputati on for being concerned about its’ customers. 1 2 3 4 5 6 7 This supplier has a bad reputati on with its customers in the industry. 1 2 3 4 5 6 7 Most buyers think that this supplier has a reputation for being difficult. 1 2 3 4 5 6 7 This supplier has a good image in the market. 1 2 3 4 5 6 7 Most buyers appreciate the wa y this supplier behaves in the market. 1 2 3 4 5 6 7 It would be difficult for our company to recoup our investment in this supplier if we switched to another supplier. 1 2 3 4 5 6 7 This supplier NEVER makes demands that could be damaging to our company. 1 2 3 4 5 6 7 This supplier is open to makes concessions when doing business with us. 1 2 3 4 5 6 7 This supplier has made compromises when dealing with issues that arise in this relationship. 1 2 3 4 5 6 7 This supplier is willing to ch ange its position on issues in this relationship. 1 2 3 4 5 6 7 If our relationship was discontinued, we would have difficulty replacing this supplier. 1 2 3 4 5 6 7 We rely heavily on this supplier. 1 2 3 4 5 6 7 It’s extremely easy for us to get other suppliers who can provide us with the compar able product/service lines. 1 2 3 4 5 6 7 This supplier is very important for our company. 1 2 3 4 5 6 7 We are dependent on this supp lier’s products and services. 1 2 3 4 5 6 7 This supplier cares about our company’s welfare as much as it cares about its own. 1 2 3 4 5 6 7

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113 Strongly Strongly Disagree Agree This supplier truly ca res about our company. 1 2 3 4 5 6 7 This supplier is genuinely c oncerned about our company’s welfare. 1 2 3 4 5 6 7 B) YOUR COMPANY’S PERFORM ANCE IN THIS RELATIONSHIP In this section, we ar e interested in knowing the how your company performs in the relationship with this particular supplier Please indicate the extent to which you ag ree/disagree with the following statements. Strongly Strongly Disagree Agree Our company’s operating proce sses have been tailored to meet the requirements of this supplier. 1 2 3 4 5 6 7 Training people in both companies has involved substantial commitments of time and money for our company. 1 2 3 4 5 6 7 Our company has made extensive adaptations to deal with this supplier’s standards and procedures. 1 2 3 4 5 6 7 We have gone out of our way to link our business with this supplier. 1 2 3 4 5 6 7 Our company frequently shares information with this supplier. 1 2 3 4 5 6 7 Our company has an organized procedure to share our know-how with this supplier. 1 2 3 4 5 6 7 Our company has set up a system to facilitate information sharing with this supplier. 1 2 3 4 5 6 7 Our company periodically info rms this supplier about its products and services. 1 2 3 4 5 6 7 Our company regularly organizes meetings, workshops or seminars to share information with this supplier. 1 2 3 4 5 6 7 Our company is open to shari ng proprietary information to help this supplier to understand the market. 1 2 3 4 5 6 7

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114 Strongly Strongly Disagree Agree Our company provides this supplier with valuable expertise when this supplier asks for it. 1 2 3 4 5 6 7 When unexpected events o ccur, our company would appropriately adapt our procedur es to meet this supplier’s requirements. 1 2 3 4 5 6 7 Our company normally makes timely changes to meet this supplier’s requests. 1 2 3 4 5 6 7 Our company always responds to this supplier’s requests promptly. 1 2 3 4 5 6 7 Our company constantly revi ews our performances to ensure that we are in line w ith what this supplier wants. 1 2 3 4 5 6 7 In the following sections, we would focus on how this supplier performs according to your observations. C) WHAT MOTIVATES THIS SUPPL IER TO PURCHASE FROM YOUR COMPANY In this section, we would like to know what factors motivate this supplier to work with your company Again, please indicate the exte nt to which you agree/disagree with the following statements. Strongly Strongly Disagree Agree One of the major reasons that this supplier wants us to do well in business is that it likes being associated with our company. 1 2 3 4 5 6 7 This supplier has an emo tional attachment to our company, that’s one of the major reasons it cares about our welfare. 1 2 3 4 5 6 7 Because this supplier like s doing business with our company, it cares about our company’s success. 1 2 3 4 5 6 7 The success of our relations hip has a great deal of personal meaning to this supplier. 1 2 3 4 5 6 7

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115 Strongly Strongly Disagree Agree This supplier’s positive feelings towards our company are a strong force that motivates it to care about our company. 1 2 3 4 5 6 7 Our company is open to makes concessions when doing business with this supplier. 1 2 3 4 5 6 7 Our company has made compromises when dealing with issues that arise in this relationship. 1 2 3 4 5 6 7 Our company is willing to change our positions on issues in this relationship. 1 2 3 4 5 6 7 Our company NEVER makes demands that could be damaging to this supplier. 1 2 3 4 5 6 7 Our company would yield to this supplier’s requests if necessary situations were to arise. 1 2 3 4 5 6 7 When disagreements arise between the two companies, our company makes compromises. 1 2 3 4 5 6 7 When the two companies have conflicts, our company is fine to make accommodations to revolve them. 1 2 3 4 5 6 7 We defer to this supplier when a conflict arises. 1 2 3 4 5 6 7 This supplier cares about our company mainly because our company increases this supplier’s profits. 1 2 3 4 5 6 7 This supplier is nice to our company because it would take too much time, energy, and expense to switch to another buyers. 1 2 3 4 5 6 7 This supplier is nice to our company because it’s hard for it to find another company to match the overall benefits we offer in business. 1 2 3 4 5 6 7 Although this supplier cares a bout our company’s welfare, it does so mainly for its own purpose. 1 2 3 4 5 6 7 Because it is in its own inte rests, this supplier wants our company to do well. 1 2 3 4 5 6 7

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116 D) PERFORMANCE OF THIS SUPPLIER In this section, we wish to know what your opinions about the performance of this supplier Please indicate the extent to which you ag ree/disagree with the following statements. Strongly Strongly Disagree Agree This supplier can turn a pr ofit for itself from this relationship – that is one of the main reasons why this supplier cares about our company’s welfare. 1 2 3 4 5 6 7 This supplier treats our company well because our company is valuable for the development of its own business. 1 2 3 4 5 6 7 This supplier cares about our company’s welfare for its own sake. 1 2 3 4 5 6 7 This supplier frequently sh ares information with our company. 1 2 3 4 5 6 7 This supplier has an organized procedure to share its know-how with us. 1 2 3 4 5 6 7 This supplier has set up a system to facilitate information sharing with our company. 1 2 3 4 5 6 7 This supplier periodically informs our company about its products and services. 1 2 3 4 5 6 7 This supplier keeps our company at distance, restricting us from sharing knowledge. 1 2 3 4 5 6 7 This supplier regularly organizes meetings, workshops or seminars to share information with us. 1 2 3 4 5 6 7 If an unexpected situation ar ises, this supplier always responds rapidly. 1 2 3 4 5 6 7 This supplier generally makes timely changes to meet our company’s requests. 1 2 3 4 5 6 7 This supplier generally responds to our requests promptly. 1 2 3 4 5 6 7 This supplier is always accessible whenever we need its help. 1 2 3 4 5 6 7

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117 Strongly Strongly Disagree Agree This supplier constantly re views its performances to ensure that it is in line with what we want. 1 2 3 4 5 6 7 When we ask this supplier to consider some changes, this supplier always responds quickly. 1 2 3 4 5 6 7 This supplier believes that it should care about its customers. 1 2 3 4 5 6 7 This supplier feels that it is its duty to be concerned about its customers’ welfare. 1 2 3 4 5 6 7 This supplier would not feel right ignoring its customers’ well-being. 1 2 3 4 5 6 7 It would be difficult for th is supplier to recoup its investment in us if it switched to another buyer. 1 2 3 4 5 6 7 If the relationship between this supplier and our company were to end, this supplier would waste a lot of knowledge that's tailored specifically to this relationship. 1 2 3 4 5 6 7 This supplier has invested substantially in personnel dedicated to our company. 1 2 3 4 5 6 7 This supplier has made signi ficant investments dedicated to our relationship. 1 2 3 4 5 6 7 This supplier’s operating proce sses have been tailored to meet the requirements of our company. 1 2 3 4 5 6 7 Training people in both companies has involved substantial commitments of time and money for this supplier. 1 2 3 4 5 6 7 This supplier has made extensiv e adaptations to deal with our company’s standards and procedures. 1 2 3 4 5 6 7 This supplier has gone out of its way to link its business with ours. 1 2 3 4 5 6 7 E) WHEN A PROBLEM ARISES, WHAT THE COMPANIES DO? In this section, we wish to know what the two companies do when a problem arises Please indicate the extent to which you ag ree/disagree with the following statements.

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118 Strongly Strongly Disagree Agree This supplier is open to shari ng proprietary information to help our company understand the market. 1 2 3 4 5 6 7 This supplier provides us with valuable expertise when we ask for it. 1 2 3 4 5 6 7 We keep this supplier at di stance, restricting it from sharing knowledge. 1 2 3 4 5 6 7 When unexpected events o ccur, this supplier would appropriately adapt itself to meet our company’s requirements. 1 2 3 4 5 6 7 This supplier does not hesitate to respond to our requests right away. 1 2 3 4 5 6 7 This supplier would yield to our company’s requests if necessary situations were to arise. 1 2 3 4 5 6 7 When disagreements arise between the two companies, this supplier makes compromises. 1 2 3 4 5 6 7 When our two companies have conflicts, this supplier is fine to make accommodations to resolve them. 1 2 3 4 5 6 7 This supplier defers to ou r company when a conflict arises. 1 2 3 4 5 6 7 Our company is willing to dedicate whatever people and resources that are necessary to sustain this relationship. 1 2 3 4 5 6 7 We are willing to do whatever it takes to support this relationship. 1 2 3 4 5 6 7 This relationship deserves our company’s maximum efforts to maintain it. 1 2 3 4 5 6 7 This supplier has a sense of mo ral obligation to care about its customers. 1 2 3 4 5 6 7 This supplier thinks that it is unethical to neglect its customers’ well being. 1 2 3 4 5 6 7 This supplier undertakes the re sponsibility of caring about its customers’ welfare. 1 2 3 4 5 6 7

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119 Strongly Strongly Disagree Agree This supplier would feel that it is wrong to overlook the welfare of its customers. 1 2 3 4 5 6 7 This supplier feels that it is essential for firms to care about the welfare of its customers. 1 2 3 4 5 6 7 Our company is always accessible whenever this supplier needs our help. 1 2 3 4 5 6 7 When this supplier suggests our company to consider some changes, we always respond quickly. 1 2 3 4 5 6 7 We do not hesitate to respond to this supplier’s requests right away. 1 2 3 4 5 6 7 If an unexpected situation arises, our company always responds rapidly. 1 2 3 4 5 6 7 F) PLEASE ASSESS THE RELA TIONSHIP QUALITY BETWEEN YOUR COMPANY AND THIS SUPPLIER The last section assesses the relati onship outcome your company has with this particular supplier Strongly Strongly Disagree Agree If the relationship between our company and this supplier were to end, our company would waste a lot of knowledge that's tailored specifically to this relationship. 1 2 3 4 5 6 7 Our company has invested substantially in personnel dedicated to this supplier. 1 2 3 4 5 6 7 Our company has made significant investments dedicated to this relationship. 1 2 3 4 5 6 7 We are willing to make all th e effort required to maintain this relationship over the long term. 1 2 3 4 5 6 7 We are committed to this supplier. 1 2 3 4 5 6 7 We trust that this relationsh ip is worthy of our continuing investments. 1 2 3 4 5 6 7

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120 Strongly Strongly Disagree Agree We expect that our relationship with this supplier to last a very long time. 1 2 3 4 5 6 7 It would be difficult for us to replace the sales and the profits generated from this product line. 1 2 3 4 5 6 7 The relationship with this s upplier is critical to the achievement of our future goals. 1 2 3 4 5 6 7 Our total costs of switching to another competing supplier’s product line would be prohibitive. 1 2 3 4 5 6 7 BACKGROUND INFORMATION Finally, we need assess this supplier’s pers pective on this relationship to complete the study. We will send a questionnaire to the s upplier but not indicate where we get this supplier’s contact information or your invol vement in the study. Your identity and involvement will be kept completely confiden tial. However, we will ask the supplier to comment on his/her relationship with your company. Your company’s Name: ______________ Supplier Contact/Representative Name: _____________________ Email: Phone: Fax: (All the information you provide here will onl y be revealed to the university researchers conducting this survey, and will not be reve aled to the supplier, your employer, or competitors.) THANK YOU FOR YOUR PARTICIPATION IN THIS SURVEY!

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121 APPENDIX B HIGH POWER BUYER SURVEY University of Florida Supplier Research Invitation Letter (UFIRB #2005-U-356) Dear (LAST NAME) We would like to kindly ask you to particip ate in Ms. Qiong Wang's dissertation study on the nature of relationships between buyers and sellers. This study has been approved and sponsored by the Institute for Supply Management (ISM) ( http://www.ism.ws/ ) and the Warrington College of Business Sch ool at University of Florida ( http://www.cba.ufl.edu/ ). Our sample is limited and therefore your responses are extremely important for Ms. Wang to complete her doctoral studies. You can access the survey at http://www.surveyz.com/TakeSurvey?id=35456&_respondentXXXX and the password is seller This study is simply asking for your opinions an d feelings about your relationships with a supplier, and there are no right or wrong answers. Pretests ha ve indicated that you should be able to complete the study in 20 minutes. In return for your assistance, we will send you an executive summary of our study. You can also check the progresses and the results of this study at http://bear.cba.ufl.edu/wang2/buyerdissertation.html Your respondent ID for this study is XXXX. This study is completely voluntary and conf idential! Information reported shall be averaged across the responses of many other company buyers so that no one individual answers can be determined. If you have any que stions or concerns, please feel free to contact us at relationship@cba.ufl.edu or call Qiong (pronounced as "Chong") at 352392-0161-1273#. Dr. Barton A. Weitz Chair American Marketing Associati on, JC Penney Professor of Marketing University of Florida Qiong Wang Doctoral Candidate Department of Marketing University of Florida Phone: 352-392-0161-1333#

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122 Please bear in mind that this study is co mpletely voluntary and confidential! All of your responses shall not be revealed to your suppliers, employer, or competitors. In buyer-supplier relationships, buyers and supp liers can be different in terms of their dependency upon each other. Please think of one supplier who you have been responsible for more than 1 year, and is best described as: “It would be easy for your company to find other suppliers to replace this supplier, but it's difficult for this supplier to replace your company with another customer in the particular product category." (For example: such a supplier might be a small, unimportant supplier with many satisfctory competitors. In other words, your company is much more important to this supplier. Thus, this supplier is more dependant on your company than your company depends on this supplier.) Please keep in mind that there is no right or wrong answers. Please do not be concerned about giving different answers to questions that seem similar. There is some redundancy built into the statements to account for the f act that some people may read and interpret the statements differently. A) MOTIVATIONS FOR YO UR COMPANY TO WORK WITH THIS SUPPLIER In this section, we are in terested in knowing what motivates your company to work with this supplier. Indicate the extent to which you agree/disagree with the following statements. All these questions shou ld be answered with respect to the particular supplier you selected initially. Strongly Strongly Disagree Agree This supplier has a reputa tion for being honest and trustworthy. 1 2 3 4 5 6 7 Please briefly describe the products that you buy from this supplier: ___________ Based on the types of products/servi ces your company buys from this supplier, please indicate the relative power of your company and this supp lier in the relationshi p. (circle the number) Our company is much Equal This supplier is much more powerful than power more powerful than this supplier our co mpany 1 2 3 4 5 6 7

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123 Strongly Strongly Disagree Agree This supplier has a reputati on for being concerned about its’ customers. 1 2 3 4 5 6 7 This supplier has a bad reputati on with its customers in the industry. 1 2 3 4 5 6 7 Most buyers think that this supplier has a reputation for being difficult. 1 2 3 4 5 6 7 This supplier has a good image in the market. 1 2 3 4 5 6 7 Most buyers appreciate the wa y this supplier behaves in the market. 1 2 3 4 5 6 7 It would be difficult for our company to recoup our investment in this supplier if we switched to another supplier. 1 2 3 4 5 6 7 This supplier NEVER makes demands that could be damaging to our company. 1 2 3 4 5 6 7 This supplier is open to makes concessions when doing business with us. 1 2 3 4 5 6 7 This supplier has made compromises when dealing with issues that arise in this relationship. 1 2 3 4 5 6 7 This supplier is willing to ch ange its position on issues in this relationship. 1 2 3 4 5 6 7 If our relationship was discontinued, we would have difficulty replacing this supplier. 1 2 3 4 5 6 7 We rely heavily on this supplier. 1 2 3 4 5 6 7 It’s extremely easy for us to get other suppliers who can provide us with the compar able product/service lines. 1 2 3 4 5 6 7 This supplier is very important for our company. 1 2 3 4 5 6 7 We are dependent on this supp lier’s products and services. 1 2 3 4 5 6 7 This supplier cares about our company’s welfare as much as it cares about its own. 1 2 3 4 5 6 7

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124 Strongly Strongly Disagree Agree This supplier truly ca res about our company. 1 2 3 4 5 6 7 This supplier is genuinely c oncerned about our company’s welfare. 1 2 3 4 5 6 7 B) YOUR COMPANY’S PERFORM ANCE IN THIS RELATIONSHIP In this section, we ar e interested in knowing the how your company performs in the relationship with this particular supplier Please indicate the extent to which you ag ree/disagree with the following statements. Strongly Strongly Disagree Agree Our company’s operating proce sses have been tailored to meet the requirements of this supplier. 1 2 3 4 5 6 7 Training people in both companies has involved substantial commitments of time and money for our company. 1 2 3 4 5 6 7 Our company has made extensive adaptations to deal with this supplier’s standards and procedures. 1 2 3 4 5 6 7 We have gone out of our way to link our business with this supplier. 1 2 3 4 5 6 7 Our company frequently shares information with this supplier. 1 2 3 4 5 6 7 Our company has an organized procedure to share our know-how with this supplier. 1 2 3 4 5 6 7 Our company has set up a system to facilitate information sharing with this supplier. 1 2 3 4 5 6 7 Our company periodically info rms this supplier about its products and services. 1 2 3 4 5 6 7 Our company regularly organizes meetings, workshops or seminars to share information with this supplier. 1 2 3 4 5 6 7 Our company is open to shari ng proprietary information to help this supplier to understand the market. 1 2 3 4 5 6 7

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125 Strongly Strongly Disagree Agree Our company provides this supplier with valuable expertise when this supplier asks for it. 1 2 3 4 5 6 7 When unexpected events o ccur, our company would appropriately adapt our procedur es to meet this supplier’s requirements. 1 2 3 4 5 6 7 Our company normally makes timely changes to meet this supplier’s requests. 1 2 3 4 5 6 7 Our company always responds to this supplier’s requests promptly. 1 2 3 4 5 6 7 Our company constantly revi ews our performances to ensure that we are in line w ith what this supplier wants. 1 2 3 4 5 6 7 In the following sections, we would focus on how this supplier performs according to your observations. C) WHAT MOTIVATES THIS SUPPL IER TO PURCHASE FROM YOUR COMPANY In this section, we would like to know what factors motivate this supplier to work with your company Again, please indicate the exte nt to which you agree/disagree with the following statements. Strongly Strongly Disagree Agree One of the major reasons that this supplier wants us to do well in business is that it likes being associated with our company. 1 2 3 4 5 6 7 This supplier has an emo tional attachment to our company, that’s one of the major reasons it cares about our welfare. 1 2 3 4 5 6 7 Because this supplier like s doing business with our company, it cares about our company’s success. 1 2 3 4 5 6 7 The success of our relations hip has a great deal of personal meaning to this supplier. 1 2 3 4 5 6 7

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126 Strongly Strongly Disagree Agree This supplier’s positive feelings towards our company are a strong force that motivates it to care about our company. 1 2 3 4 5 6 7 Our company is open to makes concessions when doing business with this supplier. 1 2 3 4 5 6 7 Our company has made compromises when dealing with issues that arise in this relationship. 1 2 3 4 5 6 7 Our company is willing to change our positions on issues in this relationship. 1 2 3 4 5 6 7 Our company NEVER makes demands that could be damaging to this supplier. 1 2 3 4 5 6 7 Our company would yield to this supplier’s requests if necessary situations were to arise. 1 2 3 4 5 6 7 When disagreements arise between the two companies, our company makes compromises. 1 2 3 4 5 6 7 When the two companies have conflicts, our company is fine to make accommodations to revolve them. 1 2 3 4 5 6 7 We defer to this supplier when a conflict arises. 1 2 3 4 5 6 7 This supplier cares about our company mainly because our company increases this supplier’s profits. 1 2 3 4 5 6 7 This supplier is nice to our company because it would take too much time, energy, and expense to switch to another buyers. 1 2 3 4 5 6 7 This supplier is nice to our company because it’s hard for it to find another company to match the overall benefits we offer in business. 1 2 3 4 5 6 7 Although this supplier cares a bout our company’s welfare, it does so mainly for its own purpose. 1 2 3 4 5 6 7 Because it is in its own inte rests, this supplier wants our company to do well. 1 2 3 4 5 6 7

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127 D) PERFORMANCE OF THIS SUPPLIER In this section, we wish to know what your opinions about the performance of this supplier Please indicate the extent to which you ag ree/disagree with the following statements. Strongly Strongly Disagree Agree This supplier can turn a pr ofit for itself from this relationship – that is one of the main reasons why this supplier cares about our company’s welfare. 1 2 3 4 5 6 7 This supplier treats our company well because our company is valuable for the development of its own business. 1 2 3 4 5 6 7 This supplier cares about our company’s welfare for its own sake. 1 2 3 4 5 6 7 This supplier frequently sh ares information with our company. 1 2 3 4 5 6 7 This supplier has an organized procedure to share its know-how with us. 1 2 3 4 5 6 7 This supplier has set up a system to facilitate information sharing with our company. 1 2 3 4 5 6 7 This supplier periodically informs our company about its products and services. 1 2 3 4 5 6 7 This supplier keeps our company at distance, restricting us from sharing knowledge. 1 2 3 4 5 6 7 This supplier regularly organizes meetings, workshops or seminars to share information with us. 1 2 3 4 5 6 7 If an unexpected situation ar ises, this supplier always responds rapidly. 1 2 3 4 5 6 7 This supplier generally makes timely changes to meet our company’s requests. 1 2 3 4 5 6 7 This supplier generally responds to our requests promptly. 1 2 3 4 5 6 7 This supplier is always accessible whenever we need its help. 1 2 3 4 5 6 7

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128 Strongly Strongly Disagree Agree This supplier constantly re views its performances to ensure that it is in line with what we want. 1 2 3 4 5 6 7 When we ask this supplier to consider some changes, this supplier always responds quickly. 1 2 3 4 5 6 7 This supplier believes that it should care about its customers. 1 2 3 4 5 6 7 This supplier feels that it is its duty to be concerned about its customers’ welfare. 1 2 3 4 5 6 7 This supplier would not feel right ignoring its customers’ well-being. 1 2 3 4 5 6 7 It would be difficult for th is supplier to recoup its investment in us if it switched to another buyer. 1 2 3 4 5 6 7 If the relationship between this supplier and our company were to end, this supplier would waste a lot of knowledge that's tailored specifically to this relationship. 1 2 3 4 5 6 7 This supplier has invested substantially in personnel dedicated to our company. 1 2 3 4 5 6 7 This supplier has made signi ficant investments dedicated to our relationship. 1 2 3 4 5 6 7 This supplier’s operating proce sses have been tailored to meet the requirements of our company. 1 2 3 4 5 6 7 Training people in both companies has involved substantial commitments of time and money for this supplier. 1 2 3 4 5 6 7 This supplier has made extensiv e adaptations to deal with our company’s standards and procedures. 1 2 3 4 5 6 7 This supplier has gone out of its way to link its business with ours. 1 2 3 4 5 6 7 E) WHEN A PROBLEM ARISES, WHAT THE COMPANIES DO? In this section, we wish to know what the two companies do when a problem arises Please indicate the extent to which you ag ree/disagree with the following statements.

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129 Strongly Strongly Disagree Agree This supplier is open to shari ng proprietary information to help our company understand the market. 1 2 3 4 5 6 7 This supplier provides us with valuable expertise when we ask for it. 1 2 3 4 5 6 7 We keep this supplier at di stance, restricting it from sharing knowledge. 1 2 3 4 5 6 7 When unexpected events o ccur, this supplier would appropriately adapt itself to meet our company’s requirements. 1 2 3 4 5 6 7 This supplier does not hesitate to respond to our requests right away. 1 2 3 4 5 6 7 This supplier would yield to our company’s requests if necessary situations were to arise. 1 2 3 4 5 6 7 When disagreements arise between the two companies, this supplier makes compromises. 1 2 3 4 5 6 7 When our two companies have conflicts, this supplier is fine to make accommodations to resolve them. 1 2 3 4 5 6 7 This supplier defers to ou r company when a conflict arises. 1 2 3 4 5 6 7 Our company is willing to dedicate whatever people and resources that are necessary to sustain this relationship. 1 2 3 4 5 6 7 We are willing to do whatever it takes to support this relationship. 1 2 3 4 5 6 7 This relationship deserves our company’s maximum efforts to maintain it. 1 2 3 4 5 6 7 This supplier has a sense of mo ral obligation to care about its customers. 1 2 3 4 5 6 7 This supplier thinks that it is unethical to neglect its customers’ well being. 1 2 3 4 5 6 7 This supplier undertakes the re sponsibility of caring about its customers’ welfare. 1 2 3 4 5 6 7

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130 Strongly Strongly Disagree Agree This supplier would feel that it is wrong to overlook the welfare of its customers. 1 2 3 4 5 6 7 This supplier feels that it is essential for firms to care about the welfare of its customers. 1 2 3 4 5 6 7 Our company is always accessible whenever this supplier needs our help. 1 2 3 4 5 6 7 When this supplier suggests our company to consider some changes, we always respond quickly. 1 2 3 4 5 6 7 We do not hesitate to respond to this supplier’s requests right away. 1 2 3 4 5 6 7 If an unexpected situation arises, our company always responds rapidly. 1 2 3 4 5 6 7 F) PLEASE ASSESS THE RELA TIONSHIP QUALITY BETWEEN YOUR COMPANY AND THIS SUPPLIER The last section assesses the relati onship outcome your company has with this particular supplier Strongly Strongly Disagree Agree If the relationship between our company and this supplier were to end, our company would waste a lot of knowledge that's tailored specifically to this relationship. 1 2 3 4 5 6 7 Our company has invested substantially in personnel dedicated to this supplier. 1 2 3 4 5 6 7 Our company has made significant investments dedicated to this relationship. 1 2 3 4 5 6 7 We are willing to make all th e effort required to maintain this relationship over the long term. 1 2 3 4 5 6 7 We are committed to this supplier. 1 2 3 4 5 6 7 We trust that this relationsh ip is worthy of our continuing investments. 1 2 3 4 5 6 7

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131 Strongly Strongly Disagree Agree We expect that our relationship with this supplier to last a very long time. 1 2 3 4 5 6 7 It would be difficult for us to replace the sales and the profits generated from this product line. 1 2 3 4 5 6 7 The relationship with this s upplier is critical to the achievement of our future goals. 1 2 3 4 5 6 7 Our total costs of switching to another competing supplier’s product line would be prohibitive. 1 2 3 4 5 6 7 BACKGROUND INFORMATION Finally, we need assess this supplier’s pers pective on this relationship to complete the study. We will send a questionnaire to the s upplier but not indicate where we get this supplier’s contact information or your invol vement in the study. Your identity and involvement will be kept completely confiden tial. However, we will ask the supplier to comment on his/her relationship with your company. Your company’s Name: ______________ Supplier Contact/Representative Name: _____________________ Email: Phone: Fax: (All the information you provide here will onl y be revealed to the university researchers conducting this survey, and will not be reve aled to the supplier, your employer, or competitors.) THANK YOU FOR YOUR PARTICIPATION IN THIS SURVEY!

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PAGE 160

148 BIOGRAPHICAL SKETCH Qiong Wang was born in Nanchang, the capital city of Jiangxi Pr ovince in P. R. China. She earned a Bachelor of Arts degr ee in international econom y and trade with the highest honors from Wuhan University in P. R. China in 1996. She also holds a Master of Arts degree in international economy and trade with the high est honors from Wuhan University in P. R. China in 1999. She completed her second graduate studies from the Institute of European Studies of Macau (IEEM ) at the University of Macau in 1999. From 1999 to 2001, she worked as a project manager at the International Ma rketing Division in Huawei Technologies. Her working experience in marketing from marketing strategy to direct sales reinforced her decision to pursu e an academic career. In 2001, she joined the Ph.D. program in marketing at the University of Florida. Her research focuses on the development and management of inter-organizat ional relationships. She is joining Penn State University as an assistant professor of marketing in August 2006.


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ASYMMETRICAL BUYER-SUPPLIER RELATIONSHIPS: THE ROLE OF
PERCEIVED BENEVOLENCE















By

QIONG WANG


A DISSERTATION PRESENTED TO THE GRADUATE SCHOOL
OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR THE DEGREE OF
DOCTOR OF PHILOSOPHY

UNIVERSITY OF FLORIDA


2006

































Copyright 2006

by

Qiong Wang
































This dissertation is dedicated to my parents (Ruixin Wang & Xiaoyuan Tao), and my
advisor and his wife (Barton Weitz & Shirley Weitz), with deep gratitude.















ACKNOWLEDGMENTS

This dissertation is indebted to many, many people. First of all, I would like to

express my heartfelt thanks to my advisor and mentor Bart Weitz. If I were asked about

who would be my best role model in life, it would have to be Bart, straight down the line.

He has taught me not only how to become a dedicated researcher and teacher, but also,

more importantly, how to become a 'beautiful' person from within. All through the past

five years, he has always been very patient and supportive. While giving me lots of

freedom to handle situations and solve problems in my own way, he never abandons me

or allows me to walk down roads with futility. Without Bart's great mentoring, my

graduate studies and my life would never be the same.

I also wish to thank my committee members (Richard Lutz, Debanjan Mitra,

Jinhong Xie and Wei Shen) and other faculty members at the Department of Marketing of

the University of Florida for their incredible support and insightful comments. I also take

this opportunity to thank my professors at the Department of International Economy and

Trade of Wuhan University, P. R. China, for their inspirations in my early years.

I am also very grateful to my friends in the Ph.D. program at the University of

Florida. In particular, I want to express my deep affection to Elise Chandon, Qi Wang,

Joey Hoegg, Yubo Chen and Wouter Vanhouche. I am also indebted to all my other

friends in U.S. and China for their great friendships (especially Shirley Weitz, Anne

Magi, Maddy Swinnen, Joe Yang, Huaizhang Deng, Huilian Ma, Rockey Luo, Shuman

Li). All the love I have received from them makes my life so enjoyable.









I thank my family. I do not have enough words to fully express my gratitude to any

one of them. I deeply thank my parents (Ruixin Wang and Xiaoyuan Tao) and brother

(Yang Wang), who have been always a wonderful support throughout my graduate

studies. I deeply thank Tseng-Tien Huang, who has been the most supportive,

encouraging and sympathetic lover I could ever imagine. Their love and patience have

allowed me to pursue any dream I have ever entertained. I owe them my accomplishment.
















TABLE OF CONTENTS

page

A C K N O W L E D G M E N T S ................................................................................................. iv

LIST OF TABLES ......... .... ........ .... .... ...... ........... ..... ..... ix

LIST OF FIGURES ............................... ... ...... ... ................. .x

ABSTRACT ........ .............. ............. ...... .......... .......... xi

CHAPTER

1 IN TR OD U CTION ............................................... .. ......................... ..

O bj ectiv e ...................................... ................................... .................... 3
R research Q uestions............ .................................................................. ........ .. .. ...
C contributions of the Study ........................................................... .............5
O verview of R research M ethods...................................................................... ........6
O organization of the D issertation........................................................ ............... 7

2 REVIEW OF RELEVANT LITERATURE ..... .........................9

O v erv iew .................. ............ ............... ............................. ................ .. 9
Current Marketing Research on Inter-Firm Relationships ........................................9
Characteristics of Successful Inter-Firm Relationships................... ..............12
Prior Literature on Trust and Benevolence ............................... ................12
B enevolence in Prior Literature..................................... ................................... 14
Antecedents of Successful Inter-Firm Relationships ............................................... 15
R responsiveness ................................................................ .. ......... 16
M making C oncessions......... ...................................................... .. ........ ... ..17
Knowledge Sharing .................. .......................... .. ..... .... .............. 18
Relationship Specific Investm ents ............................ ...... ...................... 19
Consequences of Successful Inter-Firm Relationships.................... .....................21
Sum m ary ...................................... ................. ................. .......... 22

3 CONCEPTUAL FRAMEWORK ................................................................... 23

O v erv iew ..................................... ..................... ................... .. 2 3
The Three-Component Model of Inter-Firm Benevolence.......................................24
D definition of B enevolence.............................................................................. ...24









A ffectiv e B enev olence ............................................................. .....................2 5
Calculative B enevolence .............................................................................. 25
N orm ative B enevolence ........................................ ............................................26
Sender's Signals of Inter-Firm Benevolence and Receiver's Interpretations............26
Signals of A effective B enevolence ........... ................. ............. ...... ...............28
Signals of Calculative Benevolence ....................................... ..............31
Signals of Normative Benevolence .........................................32
Receivers' Reactions to Perceived Inter-Firm Benevolence ....................................33
O v erview .............. ... .. ....... .......................................... .............. 33
Receiver's Reactions to Signals of Benevolence in Asymmetrical
R relationships ........... ......... .................................. .... ......... .. 34
S u m m a ry ...................... .. ............. .. .....................................................3 9

4 M E T H O D O L O G Y ............................................................................ ................... 44

O overview ................................................ .. ................... .. ...... ............................44
Unit of Analysis, Sample, and Data Collection .................. ................................44
M measure D evelopm ent ...................... .. .. ......... .. .. ........................ ............... 47
P re te st ................................................................4 7
Factor Analysis .............. .............. ............... ............. .. ....... 48
M easurem ent P properties ...................................................................... ..................49
T e st o f H ............................ ..................... .................................. 5 2
Hypothesis Testing Model Equations................................. ...............53
Relative Power Groupings of Buyers.................................................... 53
E stim ation M ethod ...................... .... ...................... .... ....... .... ..... ...... 54
S u m m a ry ...................... .. ............. .. .....................................................5 6

5 R E S U L T S .............................................................................7 3

O v e rv iew ......... .... ......... .. ............. .. ....................................................7 3
C om m on M ethod V ariance................................................................................... 73
Hypotheses Testing................................... .......... 74
Signals of Perceived Affective Benevolence .......... ...................................74
Signals of Perceived Calculative Benevolence ...................... ...... .............77
Signals of Perceived Normative Benevolence ........ ...........................78
Main Effects of Perceived Benevolence on Commitment ...............................79
Moderating Effects of Power on the Relationship between Perceived
Benevolence and Commitment ........................ .........................................79
Behaviors Resulted from Commitment ........................................................81
S u m m a ry ............................................................................................................... 8 4

6 D ISC U S SIO N ...................................................... 10 1

Overview ................................ ..................................... 101
Contributions to Theory and Practice ................................................101
D discussion of Results............................................. 103
A n teced en ts ...............................................................10 3









C consequences ................................... .................... ..... 105
L im itatio n s .................................................................................................... 1 0 6
F future R research ............................................................ ................... .... 107
S u m m ary .................................................................................................. . 10 9

APPENDIX

A LOW POWER BUYER SURVEY...................................... ....................... 110

B HIGH POW ER BUYER SURVEY ..................................... ................................... 121

L IST O F R E FE R E N C E S ......................................................................... ................... 132

BIOGRAPH ICAL SKETCH .............................................................. ............... 148
















LIST OF TABLES


Table pge

3-1 Primary Behaviors Associated with Signaling Benevolence in Buyer-Supplier
R elation ship s .........................................................................4 1

4-1 Item Descriptions and Measurement Model Results for Latent Constructs ..............58

4-2 Measurement Model Results for Perceived Benevolence Measures.........................65

4-3 Measurement Model Results for Behaviors Measures..............................................68

4-4 Model Comparison of the Structure of Benevolence ........... ..................................71

4-5 Expected Signs and Relationships of Coefficients in Asymmetrical Buyer-Supplier
R elation ship s .........................................................................72

5-1 Correlation M atrix of All Constructs.............. .................................. ..................85

5-2 Comm on M ethod Variance Analysis ............................................... ............... 87

5-3 Structural Model Summaries Antecedents of Perceived Benevolence ..................89

5-4 Structural Model Summaries -Perceived Benevolence and Commitment.................91

5-5 Structural Model Summaries Perceived Benevolence, Commitment and Power ....92

5-6 Structural Model Summaries Commitment, Power and Concession .....................94

5-7 Structural Model Summaries Commitment, Power and Responsiveness.................95

5-8 Structural Model Summaries Commitment, Power and Knowledge Sharing..........96

5-9 Structural Model Summaries Commitment, Power and Relationship Specific
Investm ent ............................................................... .... ..... ........ 97
















LIST OF FIGURES


Figure pge

3-1 The Simple Loop of Buyer-Supplier Interactions .................................. ............... 42

3-2 Interpretations of and Reactions to Signals for Organizational Benevolence in
Asymmetrical Buyer-Supplier's Relationships...................... ...............43

4-1 Estimation of Interpretation and Reactions in Asymmetrical Buyer-Supplier's
R elation ship s .........................................................................57

5-1 Antecedents of Perceived Inter-Firm Benevolence Structure Model Summary .........98

5-2 Perceived Benevolence, Commitment and Power Structural Model Summary ..........99

5-3 Commitment, Power, Reciprocity and Benevolence Behaviors Summary .............100















Abstract of Dissertation Presented to the Graduate School
of the University of Florida in Partial Fulfillment of the
Requirements for the Degree of Doctor of Philosophy

ASYMMETRICAL BUYER-SUPPLIER RELATIONSHIPS: THE ROLE OF
PERCEIVED BENEVOLENCE

By

Qiong Wang

August 2006

Chair: Barton A. Weitz
Major Department: Marketing

Characteristics of mutually beneficial, long-term buyer-supplier relationships are

well documented; however, little research has studied how to develop such relationships,

especially when buyer-supplier relationships are of asymmetrical power. This dissertation

introduces a three-component model of inter-firm benevolence, and argues that inter-firm

benevolence is the key element of building stable, mutually beneficial asymmetrical

buyer-supplier relationships in the long term. A conceptual framework involving the

antecedents as well as the consequences of inter-firm benevolence is proposed in the

buyer-supplier context.

Structural equation modeling and regressions were used to estimate the

measurements and test the nomological validity of the model with data from a survey of

516 purchasing managers across industries. Empirical results point to the importance of

the three-component benevolence model in buyer-supplier relationships, and show that

perceived affective, normative and calculative benevolence are measurable independent









dimensions of a benevolence construct. Perceived supplier's affective benevolence and

perceived normative benevolence are found to be positively related to the buyer's

commitment. Further, perceived supplier's affective benevolence is shown to play a more

important role for a buyer's commitment while the buyer is of high power than for the

buyer who is of low power, while perceived calculative benevolence tends to be effective

to obtain commitment from a low power buyer than from a high power buyer.

Perceptions of supplier's responsiveness, concessions, relationship-specific investments,

and reputation are found to be the antecedents of perceived supplier's affective,

normative, and calculative benevolence. Finally, a buyer's commitment determines this

buyer's responsiveness, concessions, relationship-specific investments, and knowledge

sharing in the relationship.














CHAPTER 1
INTRODUCTION

Considerable research in marketing has reported that relationships between buyers

and suppliers with asymmetrical power are characterized by low cooperation, low trust,

and high conflict (Anderson and Weitz 1989; Bleeke and Ernst 1991; Buchanan 1992;

Dwyer et al. 1987; Frazier et al. 1989; Ster and Reve 1980). This prior research suggests

that asymmetrical relationships are inherently unstable because the high power firm,

acting in its self-interest, takes advantage of the low power firm; and in response, the low

power firm, searching for ways to protect itself from this potential abuse, often must

either resign itself to earning sub-normal profits or to abandoning the relationship.

According to this research, asymmetrical inter-firm relationships are transitory

phenomena doomed to naturally dissolve.

However, one of the most consistent and striking phenomena is the persistence of a

wide distribution of firms composed of different sizes and capabilities (Audretsch et al.

1999; Tommaso and Dubbini 2000). For example, in the United States, the ten largest

retailers now account for 80% of the average manufacturer's business (Boyle 2003).

Asymmetrical, rather than symmetrical, buyer-supplier relationships prevail in the

marketplace, suggesting asymmetrical relationships are common and not transitory

(Dwyer and Walker 1981; Johnston and Bonoma 1984; Michman 1974). Furthermore,

the sustainability of many asymmetrical relationships suggests that asymmetrical

relationships can be stable over time.









For example, Bloom and Perry (2001) have analyzed the data from 1988 to 1994

and, contrary to conventional wisdom, find that "there are opportunities for suppliers to

become beneficiaries of Wal-Mart's power, not just be victim of this power. Indeed,

small-share suppliers may find it an attractive strategy to partner with Wal-Mart, to trade

off initial financial suffering for the enjoyment of the fruits of the partnership later." In

addition, Corsten and Kumar (2005) confirm that small suppliers do benefit from

collaborative relationships with large retailers.

Anand and Stem (1985) start from a sociopsychological perspective and propose

that under certain circumstances channel members would like to relinquish their control.

James Moore (1993) argues that both high power firms and low power firms are now

evolving into business ecosystems, which refer to the business systems formed by the

interactions of firms and their environment. According to Moore, firms, regardless of

their powers, now need to co-evolve with others in the ecosystem because firms share

fates with each other in the ecosystem. Finally, researchers have demonstrated that trust

and commitment, the two linchpins of mutually beneficial, partnering relationship, can be

developed even in highly asymmetrical relationships if the vulnerable party is treated

fairly by its more powerful partner (Kumar and Stern 1993).

In addition to the lack of research attention focusing on asymmetrical relationships,

research has not focused on the process through which asymmetrical, as well as,

symmetrical relationship develops. Research is needed to identify the actions undertaken

by both high power firms and low power firms to develop trusting and committed

relationships in the presence of power asymmetries.









Despite the importance of understanding the development of stable asymmetrical

buyer-supplier relationships, the primary research on inter-firm relationships to date has

examined the characteristics of long-term relationships and compared such characteristics

to the characteristics of transactional relationships. In addition, prior research has not

considered the factors leading to the development of long-term relationships, particularly

stable asymmetric long-term relationships. For example, the only recommendation

provided in the current literature for the vulnerable firms is that they should find

alternative relationships to balance the power in the current relationship (Anderson and

Weitz 1989; Dutta et al. 1994; Emerson 1974; Galaskiewicz 1979; Heide and John 1988;

Pfeffer and Salancik 1978).

Although increasing alternatives create opportunities for vulnerable firms to

"balance" the focal dyadic relationship, vulnerable firms are left with little insight for

dealing with persistent unbalanced relationships. For example, little advice has been

provided to low power firms on how to effectively interact with high power firms to build

up long term, partnering relationships, and how to sustain such inter-firm relationships to

outperform other competing inter-firm relationships to gain the leadership in the

marketplace (Moore 1993). Searching for balanced relationships with alternative partners

can be cost prohibitive, because of high risks involved with market uncertainty and high

switching costs due to transaction-specific investments made in the previous

relationships.

Objective

The objective of this dissertation is to build a foundation of both theory and

evidence on how the high power firm and the low power firm interact to sustain mutually









beneficial, long-term relationships. As a first step, I propose that inter-firm benevolence,

which is one of the three key dimensions of inter-firm trust, is a critical construct

involved in stabilizing asymmetrical buyer-supplier relationships. I suggest that inter-firm

benevolence has three different components: (a) an affect (affective benevolence), (b) a

duty (normative benevolence), and (c) a must calculativee benevolence). Measures of

each of the three dimensions are developed in this dissertation and their psychometric

properties are examined.

My theoretical framework proposes that the perception of each component of

benevolence develops as a function of different antecedents, different signals sent by the

other parties, and has different implications for attitudinal and subsequent behavioral

outcomes for firms in asymmetrical relationships. Specifically, one firm's characteristics

and actions signal its benevolence to the other firm. The power structure of the

relationship moderates the effects of one firm's benevolence signals on the other firm's

attitudes and subsequent behaviors. Although clearly not exhaustive in its consideration

of all potential antecedents and consequences, the framework highlights key constructs

identified from past research in economics, management, marketing, law, and social

psychology literatures.

Research Questions

As indicated above, the present study focuses on inter-firm benevolence that is

involved but somehow neglected in stable asymmetrical buyer-supplier relationships. The

related research questions that frame the study are listed below:

1. What is inter-firm benevolence? What is the theoretical importance of
introducing inter-firm benevolence? What are the components of inter-firm benevolence?









2. What are the impacts of asymmetrical power in buyer-supplier relationships
on perceived inter-firm benevolence, especially on different components of perceived
inter-firm benevolence?

3. What are the antecedents influencing the perceptions of inter-firm
benevolence in buyer-supplier relationships characterized with asymmetrical power?

4. What are the consequences of inter-firm benevolence in buyer-supplier
relationships characterized with asymmetrical power?

5. What are the managerial implications for buyers and suppliers with
asymmetrical power to stabilize their mutually beneficial relationships?

Contributions of the Study

To my knowledge, this study is one of the first studies to offer insights into

building stable buyer-supplier relationships characterized with asymmetrical powers. A

conceptual framework involving inter-firm benevolence and potential antecedents and

consequences of developing asymmetrical buyer-supplier relationships is presented.

Parting with economic literature, this study shows that firms do display benevolence,

concern for other firms, in the buyer-supplier relationship. Such benevolence is

particularly important when buyer and supplier are of asymmetrical power in the

relationship. For example, the three-component conceptualization of inter-firm

benevolence (affective, normative, and calculative) captures different aspects of inter-

firm benevolence valued by the high and low power firms differently. In addition, the

perceptions of the other party's benevolence have significant impacts on the focal firm's

commitment level in the relationship.

New measures on the three components of inter-firm benevolence and antecedents

as well as the consequences of inter-firm relationship development are developed and

examined measures that have good psychometric properties can be used in subsequent

research. Through survey studies, our understanding of the interaction processes between









the firms in relationships characterized with asymmetrical powers is deepened, which

helps obtaining constructive clues on building up trust and commitment in asymmetrical

buyer-supplier relationships.

Lastly, the findings of this study suggest that inter-firm benevolence should be an

important consideration of managerial decisions about inter-firm strategies, particularly

about asymmetrical inter-firm relationship developments. For example, managers in the

low power firms should choose certain strategies such as being responsive and flexible to

get the high power firm to be more committed to the relationships, while the managers in

high power firms should choose such strategies such as relationship specific investments

to obtain a high level of commitment from the low power firms.

Overview of Research Methods

After a conceptual framework involving potential antecedents and consequences of

inter-firm benevolence was presented, a pretest among industrial buyers was conducted to

examine the validity and reliability of the measurements for new constructs. Then, after

refining the measurements for new constructs, the main study was accomplished by using

survey questionnaires sent to business-to-business buyers, who have served as the key

informants. The complete response sample for the main study consists of 516 industrial

buyers.

The selection of the samples for pretest and main study comes from both theoretical

and pragmatic concerns. Theoretically, I am interested in buyer-supplier relationships

between financially independent firms (e.g., the supplier of products and services and the

buyer in a business-to-business relationship). These firms do not rely on or create unified

financial systems or other forms of bureaucratic control to oversee the relationships.









Hence, joint ventures, horizontal relationships, and vertically integrated relationships are

not considered in this study. Pragmatically, the samples ensure the availability of the data

needed to test the theory and hypotheses generated. Data was collected from surveying

the purchasing managers in business-to-business markets. The unit of analysis in this

study is a buyer-seller relationship as viewed from the buyer's perspective.

Hypotheses are tested by using structural equation modeling and regression to

estimate and compare the coefficients of models for the high and low power parties'

perceptions of the nature of their counterparts' benevolence and the antecedents and

consequences of these perceptions in the inter-firm relationships.

Organization of the Dissertation

The remainder of the dissertation is organized as follows. Chapter 2 provides a

review of the research related to building up trust and commitment in inter-firm

relationships. While providing a sketch of current marketing research on inter-firm

relationships, it focuses on the three sub-areas of inter-firm benevolence: (a) the concept

of inter-firm trust and benevolence which characterize successful inter-firm relationships,

(b) various firm behaviors discussed in prior literature as the antecedence of successful

inter-firm relationships, and (c) the critical consequence of successful inter-firm

relationships commitment. Chapter 2 offers a background on the contributions as well

as the limitations of current research, and sets the stage for the conceptual framework

developed in this study.

Chapter 3 describes the conceptual framework of this dissertation definition,

formation and consequences of inter-firm benevolence. It first defines inter-firm

benevolence, followed by an introduction of the three component model of inter-firm









benevolence. Then antecedents of perceived inter-firm benevolence, such as perceived

responsiveness, perceived concession, perceived knowledge sharing, reputation, and

idiosyncratic investment of the partner are defined and reviewed. The hypothesized

relationship between these antecedents of inter-firm benevolence and perceived inter-firm

benevolence is articulated. Subsequently, this chapter discusses the consequences of

perceived inter-firm benevolence a receiving firm's commitment and subsequent

behaviors. Finally, the model of perceived inter-firm benevolence model is developed

and hypotheses are presented.

Chapter 4 describes the methodology used to empirically test the hypotheses

generated in Chapter 3 in the dissertation. The data collection procedure, characteristics

of the samples, and information on the research setting are specified in detail. The

questionnaire and measure development process are described, and statistical techniques

are presented in this chapter.

Chapter 5 presents the results of the empirical tests for the hypotheses generated in

Chapter 3. It also provides a discussion of the results regarding the antecedents and

consequences of inter-firm benevolence, and a summary of contributions of this

dissertation.

Chapter 6 presents conclusions, implications of research and practice, limitations of

the study, and recommendations for future research.














CHAPTER 2
REVIEW OF RELEVANT LITERATURE

Overview

The marketing literature is replete with the perspectives on the characteristics of

successful buyer-supplier relationships, while the research on how to build successful

buyer-supplier relationships is very limited. Nonetheless, prior research provides a

theoretical basis for further exploration of the determinants as well as the consequences

of the successful, asymmetric buyer-supplier relationships.

After a short review of the current marketing research related to successful inter-

firm relationships, this chapter reviews both economic-based and behavior-based

literature on three closely related topics introduction of inter-firm trust and benevolence,

antecedence of successful inter-firm relationships, and consequence of successful inter-

firm relationships. It is thus organized into four sections. The first section summarizes

current marketing literature on the characteristics of successful inter-firm relationship.

The second section reviews the prior literature on the three dimensions of inter-firm trust,

and reveals the importance of introducing inter-firm benevolence in governing long term

inter-firm relationships. The third section reviews theories and empirical evidence of the

antecedents of successful inter-firm relationships. The fourth section reviews theories and

empirical evidence of organizational consequences of successful inter-firm relationships.

Current Marketing Research on Inter-Firm Relationships

Basically, two streams of research in marketing have been drawn to explain the

nature of cooperative inter-firm relationships: (1) the economic research stream draws on









microeconomic theory and uses game theoretic models to develop insights into vertical

inter-firm relationships; and (2) the behavioral research stream draws on research

concerning interpersonal and inter-organizational behaviors to develop and empirically

test theories describing behaviors in vertical relationships (Weitz and Wang 2004).

Initially, economics research focused on the source of channel inefficiencies and

the need for cooperation. Inefficiencies result from the double marginalization problem

that arises when independent firms in a vertical relationship each set prices to maximize

their own profits (Spengler 1950). For example, when a manufacturer sets a wholesale

price that maximizes its profits and a retailer independently sets a retail price to maximize

its own profits, the resulting retail price is higher than the retail price that a profit-

maximizing vertically integrated manufacturer would set. Thus, this stream of research

suggests that vertical integration in the channel is superior to having independent firms to

perform these activities.

Given the reality that few channels are vertically integrated, the economic-based

marketing research on vertical relationships has explored a variety of mechanisms that

address the coordination problems and enable independent channel members to achieve

efficiency. For example, the economic research associated with Transaction Cost

Analysis (Coase 1937; Williamson 1975; Williamson 1983; Williamson 1985) identifies

conditions under which market and vertical integration are appropriate governance

mechanisms.

Two modeling approaches have been used to examine channel coordination issues

through the use of contracting mechanism, while one approach is based on non-

cooperative (or strategic) games and the other based on cooperative (or coalitional)









games (Weitz and Wang 2004). The non-cooperative game theory research structures the

manufacturer-retailer relationship as a leader-follower game (Choi 1991; Lee and Staelin

1997; McGuire and Staelin 1983), while co-operative game theory stresses that buyers

and suppliers make simultaneous decisions, and need to incorporate each other's

reactions to make appropriate decisions (Jeuland and Shugan 1983). However economic-

based research on inter-firm relationships assumes that firms only have self concerns and

seek to maximize their own profits.

On the other hand, behavioral research on the nature of relationship development

and maintenance suggests that trust plays an important role in governing relationships

(Atuahene-Gima and Li 2002; Mayer et al. 1995; Morgan and Hunt 1994). Adopting

relational contract theory (MacNeil 1980) and social exchange theory (Blau 1968; Ekech

1974; Homans 1961; Thibaut and Kelley 1959), researchers highlight trust as a crucial

concept in sustaining inter-firm relationships because formal contractual agreements can

not effectively deal with the breadth of contingencies that can arise in relationships

(Dwyer et al. 1987; Lusch and Brown 1996; Lambe et al. 2001). Recent behavior-based

marketing research on vertical relationships further examines commitment and the use of

relational norms to govern relationships.

However, this behavioral stream of research also suggests that when power

asymmetry exists, the high power party tend to act opportunistically by taking advantage

of the low power firm in order to gain a disproportionate share of rewards from their

exchange. Thus the high power party impedes the abilities of the low power party to

achieve its goals and thus creates conflict in the relationship (Anderson and Narus 1990;

Boyle and Dwyer 1992; Dant and Schul 1992; Frazier and Summers 1986; Kim 2000;









Venkatesh, Kohli, and Zaltman 1995). In brief, behavior-related marketing research

adopts the assumption that trust is essential for firms to sustain long term inter-firm

relationships, but does not provide an answer to how asymmetrical relationships could

sustain successfully in the reality.

Characteristics of Successful Inter-Firm Relationships

Trust has been considered to play important roles in governing inter-firm

relationships, and benevolence has been introduced as one important component of trust

(Anderson and Narus 1990; Hosmer 1995; Kumar 1996). Although substantial progress

seems to have been made in assessing the role of trust, we are far from achieving a clear

understanding of the components of trust (Mayer et al. 1995), especially what is meant by

the benevolence aspect of trust. In this section, I will first review trust, and benevolence

in particular, from both the inter-personal and inter-organizational literature. Then I will

review the literature that reveals the importance of studying benevolence at inter-firm

level.

Prior Literature on Trust and Benevolence

In the past decade, trust has become one of the most intensively studied themes in

the social sciences. It has been discussed in psychology (Johnson-George and Swap

1982; Rotter 1967; Rotter 1980), philosophy (Baier 1986; Luhmann 1979; Shapiro 1987),

economics (Arrow 1974; Williamson 1975; Williamson 1996), marketing (Kumar 1996;

Morgan and Hunt 1994; Moorman et al. 1992), and organization theory (Zand 1972;

Zucker 1986). Trust is defined as a general belief that trustor is concerned for trustee's

welfare (benevolence), is honest and reliable in fulfilling its commitments (integrity), and

has specific skills, competencies, and knowledge to fulfill its commitments (expertise)









(Atuahene-Gima and Li 2002; Geyskens et al. 1999; Mayer et al. 1995; Morgan and Hunt

1994).

Among the vast literature on trust, Johnson-George and Swap (1982) asserted that

"willingness to take risks may be one of the few characteristics common to all trust

situations." Mayer and his colleagues (1995) argue that trust can be viewed as an attribute

of risk-taking behavior. Other researchers also argue that only under conditions of risk is

trust needed (Boon and Holmes 1991; Deutsch 1960). For example, Currall and Judge

(1995) define trust as "an individual's behavioral reliance on another person under a

condition of risk". Furthermore, some theorists have pointed out that trust itself

represents trustors' perceptions of outcome probabilities. Kee and Knox (1970) suggest

that in order to appropriately study trust there must be some meaningful incentives at

stake and that trustor must be cognizant of the risk involved.

The characteristics of asymmetrical inter-firm relationships involve a higher level

of risks than those of symmetrical inter-firm relationships in that high power firms, as

prior theories suggest, would take advantage of the low power firm when situations arise.

In order to clarify the concept of trust in asymmetrical buyer-supplier relationships, we

need to examine the relationships between risk and trust in asymmetrical buyer-supplier

relationships, and the process how high power firm and low power firm interact to

develop trust in the long term.

All the three components of trust (benevolence, integrity, and expertise) help

reduce the perceptions of risks and uncertainties when situations arise (Mayer et al.

1995). However, among these three components of trust, integrity and expertise are

relatively stable firm attributes that are internal to firms' culture and capabilities and not









greatly influenced by other firms' integrity or expertise. On the other hand, benevolence

can vary greatly across inter-firm relationships because one firm's decision on

benevolence is associated with other firms' benevolence.

In addition, integrity and expertise help reduce performance risks (i.e., the

probability and consequences that alliance objectives are not achieved, despite

satisfactory cooperation among partner firms), while benevolence deals with relational

risks (i.e., the probability and consequences of not having satisfactory cooperation

because of the potential for opportunistic behavior on the part of both firms) (Das and

Teng 1996; Das and Teng 2001). The high risks embedded in asymmetrical buyer-

supplier relationships are mainly associated with relational risks, and hence are affected

mainly by the benevolence component of trust.

Benevolence in Prior Literature

Benevolence, which reflects one party's concerns for the outcomes received by

another party in the relationship, has been discussed at both inter-personal level in social

psychology literature and inter-firm level in management and marketing literature.

The prior literature on benevolence at inter-personal level in social psychology

involves cooperation theory (Deustch 1949; Deustch 1973; Messick and McClintock

1968; Tjosvold 1984; Tjosvold 1998) and dual concern theory (Blake and Mouton 1964;

Pruitt and Rubin 1986). Generally, this research finds that negotiators are less

contentious, engage in more problem-solving, and achieve higher joint outcomes when

they have positive rather than negative concerns for others. In this research, the factors

influencing the levels of concerns for others at inter-personal levels are individual









differences (Deutsch 1982; De Dreu and Van Lange 1995) or the nature of the situation

(De Dreu et al. 2000).

In management literature, Oliver (1990) mentions that firms have mutual concerns,

which help firms to form stable inter-organizational relationships. However, Oliver

(1990) also argues that mutual interests only arise in symmetric relationships (Oliver

1990). Similarly, marketing researchers find that buyer-seller firms need to consider

mutual interests when they are trying to resolve conflicts or when they want to maintain a

long term relationship, but it is impossible for mutual interests to exist between

asymmetrical power parties: only symmetrical inter-firm relationships can develop

mutual interests in the long term (Clopton 1984; Gassenheimer and Ramsey 1994; Hallen

et al. 1991).

In economics literature, altruism, a related but different concept, has been

discussed. Altruism refers to self-destructive behaviors performed for the benefit of

others. More generally, altruistic behaviors benefit the focal party less than the recipient

(Piliavin and Charng 1990; Kollock 1998; Hu and Liu 2003). However, benevolence, i.e.,

concern for others, does not necessarily affect its own utility negatively. Thus many

researchers suggest that the concept of benevolence, as opposed to altruism, can increase

the utility of both parties (De Dreu and Boles 1998; De Dreu and McCusker 1997;

Liebrand et al. 1992).

Antecedents of Successful Inter-Firm Relationships

Although prior literature has left unanswered the question of what strategies firms

can use to develop successful inter-firm relationships, some important constructs that

might signal perceived benevolence, such as relationship specific investments,









knowledge sharing, being responsiveness, making concession, and reputation have been

discussed in the literature (Dyer and Singh 1998; Heide and Miner 1992; Jap 1999; Jap

2001b; Kumar and Dissel 1996; Rokkan et al. 2003). This section focuses on reviewing

some important strategies.

Responsiveness

Responsiveness has been investigated from two different perspectives in the prior

literature. The first stream of research on responsiveness examines the effectiveness of

firms' strategies in maintaining customers. For example, Kohli and his colleagues (1993)

define responsiveness as the action taken in response to the relevant information

generated and subsequently filtered between buyers and suppliers. They propose that a

firm's responses need to be aligned with its customers' needs.

The second stream of research on responsiveness focuses on firms' optimal

marketing decisions on pricing (promotion) and advertising between firms and their

competitors (Ailawadi et al. 2005; Besanko et al. 2005; Chintagunta and Desiraju 2005;

Dube and Manchanda 2005; Moorthy 2005; Naik et al. 2005; Reibstein and Wittink

2005; Sudhir et al. 2005). The purpose of this research is to advice the firms how to best

enter the market and best defend the market given the potential competition in the market

(Montgomery et al. 2005; Roberts et al. 2005).

Generally speaking, research on responsiveness focuses on the speed and

coordination with which actions are implemented and periodically reviewed. In contrast

to flexibility or adaptability, responsiveness requires a firm's timely responses when

situations arise.









Making Concessions

A concession is "a change of offer in the supposed direction of the other party's

interests that reduces the level of benefit sought" (Pruitt 1981). Concessions are a key

element of any negotiation or interaction, which is embedded in the process of

relationship development. And concessions affect the process and outcome of

relationship development (Klimoski and Breaugh 1977; Yukl 1974). Parties make

concessions because they believe such behaviors will foster agreement, prevent the other

party from leaving the relationship, and encourage the other party to make reciprocal

concessions (Bartos 1965; Hamner 1974; Komorita and Esser 1975; Osgood 1959).

Researchers have distinguished the timing of concessions (when to concede) from the

content of concession (how much to concede) (Allen et al. 1990; Druckman et al. 1972;

Kwon and Weingart 2004).

Generally speaking, three types of concession strategies have been discussed in the

prior literature: competitive, coordinate, and cooperative concessions strategies.

Competitive concession can be characterized as the one in which the negotiator maintains

the high levels of aspiration and high limits for negotiation outcomes, and uses very

inflexible behavior aimed at forcing concessions from the other party. The use of forceful

concessions, such as threats, persuasive arguments, positional commitments, and the like

is considered competitive concession strategy (Pruitt and Lewis 1977).

Coordinate concession refers to the two parties' adopting a problem-solving

orientation in the relationship, and showing a relatively high degree of trust and

cooperation to resolve the conflicts or disagreement in the relationships. Two forms of

coordinate concessions have been discussed in prior literature. One form is open and









accurate exchange of information by the parties about priorities and utilities associated

with the issues to be settled (Pruitt 1981). By sharing information about priorities and

utilities, both parties are better able to identify issues on which both of them can make

concessions at a relatively low cost to realize greater utility for both other parties

(Clopton 1984). Another form of coordinative concession is related to what Kelley and

Schenitzki (1972) mean by "heuristic trial and error." This concession form arises when a

party explores all possible settlements at a given level of utility before conceding to a

lower level. Moreover, the party concedes very gradually, typically by conceding on the

issues) of lowest priority. Both types of coordinate concessions appear to result from an

"intelligent stubbornness" based on an individualistic orientation of obtaining the best

possible outcome for the party itself. However, such concession behaviors might lead to

an integrative agreement in situations where tradeoffs based on issue priorities are

possible.

The third type of concession strategies is called cooperative concession strategy.

Different with the previous two types of concession behaviors, cooperative concession

strategy involves unilateral concession on the part of one party (Pruitt 1981). Although

this type of concession is normally performed in the hope of eliciting concessions or

benevolence from the other party, it does not require or request reciprocation from the

other party.

Knowledge Sharing

Dyer and Singh (1998) propose that inter-organizational knowledge sharing is

critical for firms to build up competitive advantages, noting that firms often learn by

collaborating with other firms (Levinson and Asahi 1996; March and Simon 1958;









Powell et al. 1996). For example, Von Hippel (1988) found that in scientific instruments

industries, more than two-thirds of the innovations could be traced back to a customer's

initial suggestions or ideas. In wire termination equipment industries, the majority of

innovations could be traced back to suppliers.

Due to the importance of knowledge sharing between firms, some researchers have

investigated how firms create knowledge-sharing routines that result in competitive

advantages (Dyer and Singh 1998). For example, Cohen and Levinthal (1990) have

discussed the importance of cultivating absorptive capacity as "the ability of a firm to

recognize the value of new, external information, assimilate it, and apply it to commercial

ends." Absorptive capacity has been discussed as a function of (1) the extent to which

partners have developed overlapping knowledge bases and (2) the extent to which

partners have developed interactions routines that maximize the frequency and intensity

of interactions (Mowery et al. 1996; Szulanski 1996). Thus, researchers propose that

through building inter-firm interaction routines, the investing firm will cultivate

absorptive capacity and hence the capability for knowledge sharing of both firms.

Relationship Specific Investments

Relationship-specific investments are investments specific to the buyer-supplier

relationship that are difficult or impossible to be redeployed to any other relationships

(Anderson and Weitz 1992; Jap and Anderson 2003; Subramani and Venkatraman 2003;

Williamson 1983). The characteristic of relationship specific investment is that

relationship specific investments lose substantial value unless the focal relationship

persists. These investments can be physical or non-physical. For example, specialized

physical investments in durable assets such as a new plant next to the other firm,









specialized warehouses, products tailored to the buyers' needs are essential for the

efficient functioning of the buyer and supplier. On the other hand, the time and effort

spent acquiring the non-marketable skills, tailoring operating processes to the other firm,

or developing the inter-personal relationship, etc. can be viewed as non-physical

relationship specific investment.

Prior research suggests that if buyers and suppliers have bilateral relationship-

specific investments, buyers and suppliers will be more likely to develop overlapping

roles, engage in considerable coordinated actions, negotiate changes to the terms of the

exchanges on an ongoing basis, and rely on internal enforcement by establishing a

mutuality of interest between parties (Subramani and Venkatraman 2003). If the bilateral

relationship-specific investments are sufficient, inter-firm roles can become so closely

intertwined that firms' boundaries approach complete interpenetration (Rindfleisch and

Heide 1997).

However, researchers also point out that relationship-specific investments give the

rise of opportunism because such investments are only partially redeployable and

therefore are valuable only in the context of a given exchange (Stump and Heide 1996).

Prior research has identified a variety of governance mechanisms that protect a firm

making relationship-specific investments from opportunistic behavior by its partner

(Rindfleisch and Heide 1997). These include formal contracts (Joskow 1988), pledges

(Anderson and Weitz 1992), information sharing (Noordwier et al. 1990), supplier

verification (Heide and John 1990), joint planning (Heide and John 1990), monitoring

(Stump and Heide 1996), and quasi integration (Zaheer and Venkatraman 1994).









From a different yet related perspective, placing these relationship-specific

investments unilaterally enables the investing party to signal a higher magnitude of the

value to the other firm in the buyer-supplier relationship, although makes the investing

party more vulnerable before the other firm (Doney and Cannon 1997; Doney et al. 1998;

Subramani and Venkatraman 2003).

Consequences of Successful Inter-Firm Relationships

Achieving stable, win-win inter-firm relationship is an important outcome of this

dissertation research. Prior research has found that a high level of mutual commitment

manifests such relationships (Blau 1964; Thibaut and Kelley 1959). Cook and Emerson

(1978) characterize commitment as "a variable we believe to be central in distinguishing

social from economic exchange." Typically commitment is considered as the outcome of

trust, fairness, and interdependence (Morgan and Hunt 1994; Geyskens and etc. 1996;

Kumar et al. 1998).

By definition, commitment refers to "an exchange partner believing that an

ongoing relationship with another is so important as to warrant maximum efforts at

maintaining it; that is, the committed party believes the relationship is worthy working on

to ensure that it endures indefinitely" (Morgan and Hunt 1994), which draws

conceptualizations from social exchange (Cook and Emerson 1978), marriage (Thompson

and Spanier 1983), and organizations (Meyer and Allen 1984). Similarly, Mooreman and

her colleagues (1992) define commitment as "an enduring desire to main a valued

relationship." In general, commitment is a critical consequence of successful inter-firm

relationship, and entails a willingness to make short-term sacrifices to maintain the

relationship, and a confidence in the stability of the relationship (Anderson and Weitz









1992; Dwyer et al. 1987; Gundlach et al. 1995).

Summary

In this chapter, three paradigms for understanding stable and mutually beneficial

inter-firm relationships have been presented. Trust has been identified as an important

role in governing stable partnering inter-firm relationships. Three components of trust

have been introduced. Benevolence is particular component of trust in stabilizing

asymmetrical buyer-supplier relationships because it deals with relational risks between

buyers and suppliers. Antecedents of successful inter-firm relationships raised in prior

literature, such as knowledge sharing, concession making, responsiveness and

relationships specific investments, have been explored. Commitment, which is considered

as a critical consequence of trust characterizing partnering relationships, has also been

discussed. In sum, this Chapter offers a background on the contributions as well as the

limitations of current research, and sets the stage for the conceptual framework developed

in this study.














CHAPTER 3
CONCEPTUAL FRAMEWORK

Overview

In this chapter, the conceptual framework for the dissertation is presented. An

overview of the conceptual framework is depicted in Figure 3-1. My framework suggests

that the extent to which one firm perceives the other firm as benevolent determines its

commitment as well as subsequent benevolence-signaling behaviors in the relationship.

The perceptions of benevolence are based on behavioral signals sent by the other firm

such as concessions, knowledge sharing, and relationship specific investments.

The impact of perceived benevolence on receiver's commitment is moderated by

the relative power of the sender. I propose a three component model of perceived

benevolence to explain the differing moderating effects of power, as shown in Figure 3-2.

Each of these components is differentially affected by the nature of the signal and relative

power of the signal sender. For example, my framework proposes that a high power firm

would perceive a low power firm with more affective benevolence as more benevolent,

and consequently would become more committed in the relationship. In contrast, a low

power firm would perceive a high power firm that has more calculative benevolence as

more benevolent and hence become more committed.

In the following three sections, I first develop the three-component model of inter-

firm benevolence, and then I discuss the hypotheses regarding the antecedents as well as









the consequences of the inter-firm benevolence in asymmetrical buyer-supplier

relationships.

The Three-Component Model of Inter-Firm Benevolence

To understand how inter-firm benevolence evolves and functions, it is important to

understand the meaning and nature of inter-firm benevolence.

Definition of Benevolence

Ganesan (1994) defines benevolence as "the extent to which a party believes that

the benevolent party has intentions and motives beneficial to the party." Similarly,

Johnson et al. (1996) define benevolence as "the extent to which a firm in the relationship

believes that its partner has intentions of goodwill and will behave in a fashion beneficial

to both." And Doney and Cannon (1997) define benevolence as "the degree to which one

party is genuinely interested in the other's well being and seeks joint gain."

Thus, at the center of benevolence is a firm's positive concern for the other firms. It

involves giving party's showing consideration and sensitivity to the needs and interests of

the receiving party, acting in a way that protects the interests of the receiving party, and

refraining from exploiting it (Atuahene-Gima and Li 2002). In this research, I define

inter-firm benevolence as the degree to which one firm is concerned about the other

firm's welfare in an inter-firm relationship. Furthermore, I propose three distinct

components of benevolence affective, calculative, and normative benevolence each

having different antecedents arising from the other firm's behaviors and having different

impacts on attitudes towards the other firm. The categorization of benevolence into three

components arises from distinct reasons for benevolence. Benevolence may be based on

emotions, cognitive evaluations, or institutions (Hosmer 1995; Lewis and Weigert 1985).









Affective Benevolence

Affective benevolence reflects one firm's benevolence based on positive feelings

leading to care about the other firm's welfare. Prior research has examined this dimension

of benevolence, and argues that the affective aspect of benevolence consists of the

emotional bonds between the two parties (Lewis and Wiegert 1985; McAllister 1995).

Affective benevolence involves one party having an emotional investment in the

relationship (Doney and Cannon 1997; Johnson et al. 1996; McAllister 1995; Pennings

and Woiceshyn 1987; Rempel et al., 1985).

Calculative Benevolence

Calculative benevolence reflects one firm's benevolence that is largely based on

cognitions considerations of the costs and benefits experienced by the parties in the

relationships. In other words, a firm has calculative benevolence towards the other firm

when it is costly for this firm not to be benevolent, or because it is rewarding to be

benevolent. This aspect of benevolence is consistent with Doney and his colleagues'

suggestions that trust building is a calculative process involving one party calculating the

costs and rewards of the other party's cheating or cooperating in the relationship (Doney

and Cannon 1997; Doney, Cannon, and Mullen 1998). Similarly, Ganesan (1994)

conceptualizes benevolence as "the extent to which a party believes that the benevolent

party has intentions and motives beneficial to the party." Lee and his colleagues (2004)

also contend that that the expected gain from the other firm in the relationship can

stimulate benevolence.









Normative Benevolence

A third component of benevolence is called normative benevolence, which reflects

one firm's benevolence based on perceived obligation in an impersonal economic

environment. It reflects a sense of moral obligation or duty on the part of one firm to

support the relationship with the other firm. In a buyer-supplier relationship, normative

benevolence results in the firm staying with the other firm because it feels that it should.

The characteristics and the impacts of normative benevolence are largely under-explored

in the extant literature.

HI: Affective, calculative, and normative benevolence are measurable independent

dimensions of a benevolence construct.

Together, the three components of inter-firm benevolence comprise the inter-firm

benevolence profile. Because these three components of benevolence are not mutually

exclusive, a firm can simultaneously experience all three forms of benevolence to varying

degrees. One firm, for example, might have both a strong affect and a strong sense of

obligation to care about the other firm, but receive limited benefits from doing so.

Another firm might have a weak affect, a moderate level of duty, and a strong need, and

so on. An important implication of viewing benevolence from these three aspects is that

the various forms of the perceived benevolence of another firm might have different

impacts on the firm's attitudes and subsequent behaviors, which I propose are moderated

by relative power.

Sender's Signals of Inter-Firm Benevolence and Receiver's Interpretations

The perceptions of one firm's benevolence depend on how the other firm interprets

this firm's benevolence-related signals. A signal is a behavior and/or feature of a firm









that conveys information about this firm's intentions, characteristics and abilities (cf.

Porter 1980). Prior literature has left unanswered the question of what strategies firms can

use or through what features firms signal its benevolence or trustworthiness. The signals

of inter-firm benevolence examined in this research are chosen primarily because they

arose during interviews I had with purchasing agents1 and illustrate the differential effects

of the three dimensions of perceived inter-firm benevolence. Although not exhaustive,

the antecedents chosen for this study represent a first step in understanding how one

firm's strategies could change the other firm's perceptions of this firm's inter-firm

benevolence, as briefed in Table 1. In addition, borrowing the insights from competitive

market signaling theory (Heil and Robertson 1991) and attribution theory (Jones and

Nisbett 1971; Kelly 1971), we argue that the receiver's interpretations of signals, which

are the inferences about the sender's intentions and abilities as outlined in Table 1,

determine the receiver's beliefs about the sender's benevolence (c.f, Prabhu and Stewart

2001).

I suggest five key signals affect the perception of benevolence: (1) being

responsive, (2) making concessions, (3) sharing knowledge, (4) making relationship

specific investments, and (5) establishing reputation for benevolence. These signals

reflect different aspects of buyer-supplier relationships the relational aspect

(responsiveness, concession and knowledge sharing), the cost/benefit aspect (relationship

specific investments), and the social aspect (reputation) that are likely to impinge on the

dyad's decision to develop affective (emotion-based), calculative (cognition-based), and

1 Through March and April 2005, I telephone interviewed more than 30 purchasing managers in retailing
and manufacturing industries across the states. All the targeted managers had stayed in the position of
buyers for more than 5 years. I mainly asked them to describe how they manage the relationships with one
of their key suppliers, as well as with one of their small suppliers.









normative (institution-based) benevolence towards each other.

Signals of Affective Benevolence

Prior research has not explicitly proposed what types of behaviors signal affective

benevolence in inter-firm relationships, i.e., the types of behaviors that promote

perceptions of benevolence and relate these perceptions of benevolence to the positive

feelings existing between sender and receiver. To understand how a party communicates

positive concerns for the other through behaviors, I draw on attachment theory in

interpersonal relationships. Attachment theory suggests that behaviors promoting security

are essential to generating the belief that the sender party has emotional bonds with the

receiving party (Bowlby 1969/1982; Bowlby, 1973; Bowlby 1980; Feeney and Noller

1990; Kobak and Hazan 1991). In addition, Motivation/Hygiene theory as developed by

Fredrick Herzberg (1966) suggests that there are two categories of behaviors could

promote security feeling in inter-personal relationships: behaviors satisfying the

receiver's need to feel respected, and those contributing to the receiver's feelings of

comfort in the work. Similarly, the organizational commitment theory developed by

Meyer and Allen (1991) suggests that the creation of a comfortable environment might

lead to the perception of the company's affective commitment.

In this study, I propose that three types of behaviors can be used by a firm to signal

its affective benevolence towards the other firm: (1) concessions by which the sender

makes sacrifices to reduce the receiving firm's anxiety; (2) responsiveness that shows the

sending firm's respect for the receiving firm by being available when needed; and (3)

knowledge sharing behaviors that develop familiarity with the other firm. Therefore, all

three behaviors signal sender firm's positive affects by promoting receiver's security in









the relationship, paying respects to the receiver, and creating a comfortable

communication environment in the relationship.

Making concessions. Making concessions refers to one firm's act of sacrificing

benefits for the good of the other firm. Examples of making concession involve a buyer

adjusting product requirements, or a supplier reducing its prices and etc. to meet the other

firm's requirements (Carnevale and Pruitt 1992). Concessions can take on different

forms, such as on prices, contracts, services, quality and etc. (Good 2001; Madhavan et

al. 2004).

Generally speaking, making concessions signals good-faith adjustments to deal

with changing circumstances in relation to the other firm. These signals are particularly

important when specific contractual obligations or stipulations become nonviable or

cumbersome owing to unanticipated contingencies (Surbranmani and Venkatraman

2003). Through the act of sacrificing its own benefits for the good of the other firm,

sender helps ease receiver's "anxiety" or worry that this firm might not be supportive in

times of need, and ultimately promote a high degree of comfortableness and security in

the relationship (Herzberg 1966; Bowlby 1969/1982; Bowlby, 1973; Bowlby 1980;

Feeney and Noller 1990; Kobak and Hazan 1991). Hence, we argue that

H2 (a): Receiver's perception of sender's affective benevolence is positively

affected by receiver's perception of sender's making concessions.

Responsiveness. Responsiveness is defined as a prompt and appropriate action

taken by one firm in response to the other firm's requests (Kohli et al. 1993).

Responsiveness is signaled both by the speed and degree of cooperation with which the









responsive actions are taken. To be responsive, the signaling firm needs to take actions

that fit the other firm's requirements (Kohli et al. 1993).

Responsiveness would lead to a high level of presence and security (Kobak 1999)

because being responsive enables the sender to convey its positive feeling by adapting to

the receiver's requirements in a timely manner. Through responsiveness, the sender

demonstrates its respect for the receiver's value and its interest in maintaining a close

relationship with the receiver (Brennan et al. 1998). Such positive experience of being

respected will lead the receiver to perceive that the sender has emotional bond to the

relationship (Bowlby 1969/1982; Bowlby, 1973; Bowlby 1980; Feeney and Noller 1990;

Kobak and Hazan 1991). Thus,

H2 (b): Receiver's perception of sender's affective benevolence is positively

affected by receiver's perception of sender's responsiveness.

Knowledge sharing. Knowledge sharing behaviors are defined as the frequent

transfer, recombination, or creation of specialized knowledge in the relationship.

Knowledge is viewed as a mix of framed experience, values, contextual information and

expert insight that provides a framework for evaluation and incorporating new

experiences and information (Nonaka 1994; Grant 1996a; Grant 1996b; Devenport and

Prusak 1997). By engaging in knowledge sharing, the sender interacts with the receiver

extensively and constantly "to share everything from risk, responsibility, information, to

decision making, and to acquire breadth of knowledge and skills" (Imai et al. 1985).

According to attachment theory, a party increases the comfort of the other party by

exchanging information to help the other party familiarize itself with the relationship.

This sharing of knowledge demonstrates the sender's affective bond in an inter-personal









relationship (Bowlby 1969; Bowlby 1972). A sender firm's consistent knowledge sharing

behaviors comforts the receiver firm. Three functions of the sending firm's knowledge

sharing behaviors signal its affective benevolence in buyer-supplier relationships. First,

knowledge sharing demonstrates that the sender wants to understand the receiver better

and promote cooperation (Dougherty 1992; Dougherty 1994). Second, it shows the

sender's interest in coping with unexpected situations for the sake of maintaining the

relationship with the receiver (Grant 1996; Grant 2004). Further, knowledge sharing

facilitates cross-fertilization between the two parties, and reduces the tendency of the

parties to become confined by their own thought-worlds, which results in more

understandings between the parties (c.f., Mohr and Nevin 1990). Therefore,

H2 (c): Receiver's perception of sender's affective benevolence is positively

affected by receiver's perception of sender's efforts to share knowledge.

Signals of Calculative Benevolence

Calculative benevolence reflects the consideration of costs associated with

perceived benevolent. This aspect of benevolence results from a firm's concern for the

other party based on a cognitive analysis of cost and benefits in a relationship. The most

frequently studied cost/benefit related construct in the marketing literature is relationship

specific investments.

Relationship specific investments. Relationship specific investments are defined

as investments specific to the buyer-supplier relationship that are difficult or impossible

to be redeployed to any other relationships. Relationship specific investments would lose

substantial value unless the relationship persists. These investments can be physical or

non-physical. Examples of specialized physical investments are a new manufacturing









plant located next to the retailer, specialized warehouses, and products designed to the

buyer's needs. On the other hand, the time and effort spent acquiring non-marketable

skills, tailoring the operation processes to the other firm, or developing the interpersonal

relationship are examples of non-physical relationship specific investments.

By making these relationship specific investments unilaterally, one firm signals its

desire to tailor its offering to benefit the other firm, and also makes itself more vulnerable

to the other firm (Doney and Cannon 1997; Doney et al. 1998; Subramani and

Venkatraman 2003). For example, a supplier devotes some resources to training its

salespeople to promote its products to a specific buyer. Some part of the investment may

be redeployable, because some knowledge acquired can be used to sell products to other

buyers. However, other inputs are useful only for this specific buyer, and will be

worthless if this relationship ends. In this way, the supplier fits its offerings to the buyer's

needs. Thus, relationship specific investments are perceived by the receiver as a signal of

the sender's commitment in the relationship based on its higher switching costs. Hence,

H3: Receiver's perception of sender's calculative benevolence is positively affected

by the degree to which receiver perceives that sender makes relationship

specific investments.

Signals of Normative Benevolence

Normative benevolence is a firm's obligation to be benevolent to the other firm.

This feeling of obligation results from the internalization of norms prior to entry into the

relationship (i.e., reputation), and/or following entry (i.e., inter-firm socialization). To

date, the literature related to the development of normative benevolence is very limited.









Reputation might be an important influence on the signal receiver's perception of

benevolence.


Sender's reputation. Reputation is defined as a function of the past actions of a

firm, which build high credibility of this firm over time (Milgrom and Roberts 1982;

Weigelt and Camerer 1988). In other words, sender's reputation is based on sender's

activities across all of its relationships over time (Herbig and Milewicz 1997), which

informs receiver of its behavioral norm towards others (c.f, Gulati, 1995). A good

reputation from sender lowers the variance in receiver's estimation of sender's future

benevolent actions, which provides a credible reference for the receiver to recognize the

sender's normative benevolence. Thus


H4: Receiver's perception of sender's normative benevolence is positively

affected by the degree to which receiver perceives that sender has a good

reputation.


Receivers' Reactions to Perceived Inter-Firm Benevolence

Overview

In this section, the conceptual framework depicted in Figure 3.1 is advanced. First,

I argue that when a high power firm signals its inter-firm benevolence to the low power

firm (SIGNALHL), the low power firm's perceptions of the high power firm's

benevolence (BENEVOLENCELH) will be affected.2 Consequently, the low power firm's


2 Throughout this dissertation, the subscript L stands for low power party, H stands for high power party.
For example, SIGNALLH is the low power party's signals for its benevolence to the high power party, and
SIGNALHL is the high power party's signals for its benevolence to the low power party. Similarly,
COMMITMENTLH is the low power party's willingness to stay in the relationship and COMMITMENTHL
is the high power party's willingness to stay in the relationship. When a firm reports its perception of the
other party, there are two subscripts and the subscripts do not match. For example, BENEVOLENCELH is
the low power party's perception of the high power party's benevolence and BENEVOLENCEHL is the
high power party's perception of the low power party's benevolence.









commitment (COMMITMENTLH) and subsequent behaviors will be changed

accordingly. The low power firm's behaviors signal its benevolence (SIGNALLH), which

will have an impact on the high power firm's benevolence (BENEVOLENCEHL) and

subsequent behaviors. Thus, SIGNALHL BENEVOLENCELH COMMITMENTLH

-- SIGNALLH BENEVOLENCEHL -- COMMITMENTHL -- SIGNALHL as depicted

in Figure 3.1. This reinforcing nature of the positive feedback cycle creates stability in

the relationship of their power structures.

The focus of this dissertation is on the receivers' perceptions and reactions to the

senders' behaviors, specifically purchasing managers' perceptions of supplier's

behaviors. The major contribution of this dissertation is the proposition that the high and

the low power parties react to the signals of perceived benevolence differently. These

differential perceptions of benevolence in turn affect subsequent attitudes and behaviors.

Receiver's Reactions to Signals of Benevolence in Asymmetrical Relationships

Although there has been extensive research discussing trust or benevolence in the

buyer-supplier relationship, this research has largely ignored the signals the sender uses

to demonstrate its trust or benevolence (Atuahene-Gima and Li 2002). In this section, my

framework outlines how the perception of benevolence changes one firm's attitudes

(commitment) and subsequent behaviors in an asymmetrical buyer-supplier relationship

(Heil and Robertson 1991).

Receiver's commitment. Commitment entails a desire to develop a stable

relationship, a willingness to make short-term sacrifices to maintain the relationship, and

a confidence in the stability of the relationship (Anderson and Weitz 1992). Based on

prior research, I propose that receiver's commitment to the relationship will be positively









influenced by the nature of sender's benevolence (Morgan and Hunt 1994). When

receiver perceives that the sender is benevolent, the receiver would feel that its welfare is

being considered, and hence is more committed to the relationships.

However, the effects of the three components of perceived benevolence on

receiver's commitment vary depending upon the relative power of sender over receiver.

According to attribution theory (Jones and Nisbett 1971; Kelly 1971), discounting

principles (Ross and Anderson 1982) and the principle of correspondent inference (Jones

and Davis 1965), when the focus of the benevolence signal is internal rather than

external, the receiver is more likely to interpret the sender's behaviors as due to

characteristics of the sender. In a signaling context, "internally focused signals are more

likely to result in internal attributions" (Prabhu and Stewart 2001). Thus, the more

internally focused the sender's signals are, the more likely these signals are to contribute

to the development of the receiver's internal attitudes changes. Therefore, a firm

perceived to effectively care about the other firm in the relationship (affective

benevolence) might be more likely to induce the other firm to commit to the relationship.

On the other hand, a firm that is perceived to feel obligated to care about the other firm

(normative benevolence), or must care the other firm because of cost and benefits

calculativee benevolence) is less inclined to induce commitment in the other firm. Thus,

H5: The positive relationship between the perception of sender's affective

benevolence and receiver's commitment is the greatest, followed by the

relationship between the perception of sender's normative benevolence and

receiver's commitment, and then by the relationship between the perceptions of

sender's calculative benevolence and receiver's commitment.









However, I propose that the power relationships between sender and receiver can

moderate the impacts of the different aspects of perceived benevolence on receiver's

commitment. When I interviewed the purchasing managers in manufacturing and

retailing industries, I found that the high and low power firms have different expectations

for the other firms. For example, high power buyers are more interested in working with

the low power suppliers who are flexible and willing to make concessions when

situations arise. A high power retailer in California would like its low power suppliers to

make concession by granting the market exclusivity for promoting products. Another

high power retailer in Florida would request its small power suppliers to be more

responsive when the hurricane seasons come. On the other hand, the low power buyers

are more interested in doing business with the high power parties who invest more time

and efforts to show respects to the low power parties in the relationship.

After interviewing the managers, I have the impression that, despite the good wills

from both high power and low power parties, the high power firm is more interested in

obtaining more benefits and controls in the relationship. For example, the high power

firm would mention that it wishes to work with the low power firm that is willing to

sacrifice some freedom, autonomy and even profits when uncertainty occurs. On the

other hand, the low power firm places more emphasis on gaining security in the

relationship. For example, the low power firm wishes to deal with the high power firm

that has made tangible investment on a long term base.

What I uncovered through these interviews is in consistent with what has been

discussed in social psychology (e.g., Molm 1990; Molm et al.1999). Theoretically,

compared to high parties, low power parties care more about whether high power parties









will terminate the relationships. High power parties care less about the security of staying

in the relationships because high power parties normally have more alternatives than low

power parties. Hence, tangible investments (such as investing significant amount of time,

effort or even money) made by high power firms signal increased switching costs to low

power firms, and are particularly effective in convincing the low power firms about the

potential for a long term stable inter-firm relationship. Therefore:

H6: The positive relationship between receiver's perception of sender's calculative

benevolence and receiver's commitment is moderated by the relative power

between sender and receiver. The relationship is stronger when receiver is low

power and sender is high power, and is weaker when receiver is high power

and sender is low power.

On the other hand, the high power firms have different concerns while being

engaged in asymmetrical relationships. Their biggest concern is the size of profits they

could get in the relationship. Such concern mainly stems from the opportunity costs of

not working with other potential alternative partners who might bring the high power

party more profits. In other words, the high power firm's biggest concern is whether the

size of profits or its "slice" of the pie is maximal for it if working with the low power

firm.

In this case, if the low power firm can signal the high power firm that it genuinely

cares about the high power firm's welfare (its "slice" of pie) by being responsive and

making unilateral concessions in the relationships, the high power party will be more

likely to stay in the relationship due to an increased probability of gaining more benefits

with the low power party's "sacrifice". In addition, by signaling more affective









benevolence, the low power party gives up a certain degree of freedom and autonomy in

exchange for the high power party's more control in the interactions. This leads the low

power firms to have the confidence that the high power firm is interested in maintaining

the relationship (Jacobs 1971; Thibaut and Kelley 1959). Such confidence might also

keep the high power firm to be more likely to stay in the relationship. Therefore,

H7: The relationship between the receiver's perception of the sender's affective

benevolence and commitment is moderated by the relative power between the

sender and the receiver. The relationship is stronger when the receiver is high

power and the sender is low power, and is weaker when the receiver is low

power and the sender is high power.

Receiver's pledges. Pledges are defined as the specific behaviors that receiver uses

to manifest its commitment in the relationship. Such specific behaviors are undertaken by

the firm to demonstrate good faith and bind the firm to the relationship (cf., Anderson

and Weitz 1992). Receiver's pledges involve the receiver's willingness to establish a

long-term relationship with the sender. For example, a high level of commitment can be

evidenced in all types of behaviors that show good faith and efforts in maintaining the

relationship. Thus,

H8: There are positive relationships between one firm's commitment and its (1)

concessions making, (2) responsiveness, (3) knowledge sharing, and (4)

relationship specific investments.

Although both high and low power firms will make pledges to the relationships

once committed to the relationships, asymmetries of power in the relationship will have

influence on the degree or the probability that high and low power firms make pledges.









According to Molm (1999), the asymmetry in the relationship corresponds with the form

of exclusion. One important form of exclusion is the withholding of rewards from one

partner while pursuing exchange with another (Molm 1990). Withholding rewards

benefits the high power parties not only by driving up low power party's offers, but also

by lowering the high power parties' costs. High power parties who can maintain its

relationship with the low power party with only intermittent reciprocity have more

opportunity to pursue other exchange relations. And because the benefits flow

unilaterally, they can receive benefits from multiple partners at the same time. High

power partners benefit from both their low reciprocity and their consequent greater

opportunity to pursue other exchanges. For example, high power firms not making

specific investment in the relationship not only take less responsibility, but also have

more resources to devote to other relationships. The low power party must give more

frequently to maintain their powerful partner's intermittent reciprocity, must forgo more

of the potential rewards from these alternative activities because their opportunity costs

are higher. Thus, we expect that:

H9: The low power party is more likely to (1) make concessions, (2) be responsive,

(3) have knowledge sharing, and (4) make relationship specific investments.

Summary

In this chapter, the conceptual model for the dissertation was presented. The three-

component model of inter-firm benevolence (affective, calculative and normative

benevolence) was introduced. The antecedents of the three-component model of

benevolence (responsiveness, making concession, sharing knowledge, establishing

reputation, and relationship specific investment) are discussed. Different antecedents are






40


argued to be positively related to different components of perceived benevolence. The

three components of perceived benevolence are also thought to be positively associated

with the receiving firm's commitment. And the effects of these components of

benevolence are likely to be moderated by the asymmetries of power between the buyer

and supplier in the relationship. The impact of commitment on different types of

behaviors is also discussed. Finally, the role of the asymmetries of power on making

pledges is discussed.












Table 3-1 Primary Behaviors Associated with Signaling Benevolence in Buyer-Supplier Relationships
One Firm's Signaling Affective Signaling Calculative Signaling Primary Impacts
Behaviors towards Benevolence Benevolence Normative of the Behaviors on the
the Other Firm Benevolence Other Firm
Exhibiting + Increasing the
Responsiveness Reacting promptly and availability of the
appropriately to make the other rewards the other firm
firm feel comfortable and being can access in the
respected in the relationship. relationship. Also
Making + granting more controls
Concessions Refraining from using and demonstrating
confidence in the other
power to make the other firm cfide
feel comfortable and being firm
respected in the relationship.
Knowledge +
Sharing Familiarizing with the
other firm to make the other
firm feel comfortable and being
respected in the relationship.
Relationship + Increasing the
Specific Investment The cost of leaving the magnitude of benefits
relationship is increased, the other firm can get
from the relationship
Reputation + Increasing the
To assure the feeling of security of
receiver of its sense of dealing with the firm
obligation who has a high
reputation
















PERCEPTIONS OF HIGH POWER LOW POWER FIRM'S LOW POWER FIRM'S SIGNAL REACTION -
FIRM'S SIGNALS INTERPRETATION OF SIGNAL ATTITUDES

High Power Firm's Behaviors
iig P enevolene o o Low Power Firm's Perceptions o Low Power Firm's Commitment
Signaling Be to Lw Benevolence of High Power Firm + to the Relationship
Po IGAm) BENEVOLENCEE) COMMITMENTT)


HIGH POWER FIRM'S
SIGNAL REACTION -
BEHAVIORS


High Power Firm's Commitment
to the Relationship +
COMMITMENTT)


LOW POWER FIRM'S
SIGNAL REACTION -
BEHAVIORS

Low Power Firm's Behaviors
igh Power Firm's Perceptions o / .. .
' -- t nw. [ Signaling Benevolence to High
Benevolence of Low Power Firm P+-o eneoee to
P / B power Firm
BENEVOLENCEE) (SIGNALmH)
1" 11L~


HIGH POWER FIRM'S SIGNAL
REACTION ATTITUDES


HIGH POWER FIRM'S
INTERPRETATION OF SIGNAL


PERCEPTIONS OF LOW POWER
FIRM'S SIGNALS


Figure 3-1 The Simple Loop of Buyer-Supplier Interactions













SENDER'S SIGNALS

Sender's Responsiveness


RECEIVER'S PLEDGES


Figure 3-2 Interpretations of and Reactions to Signals for Organizational Benevolence in Asymmetrical Buyer-Supplier's
Relationships















CHAPTER 4
METHODOLOGY

Overview

This chapter explicates the survey methodology, procedures, and initial

measurement issues. It consists of five sections. The first section discusses the research

setting, sampling frame, and respective industry characteristics. In the second section,

data collection procedure is described. The third section introduces measure and

questionnaire development, such as pretest results and exploratory factor analysis. In the

fourth section, evidence of the constructs' initial convergent and discriminant validity

was reported. Lastly, hypotheses testing model equations are presented in the fifth

section.


Unit of Analysis, Sample, and Data Collection

The unit of analysis is the buyer-supplier dyad. Ideally measures of the buyer-seller

dyad would be assessed by collecting data from both dyadic partners. However, there are

significant problems in collecting a large sample of matched pairs. Therefore, the

hypotheses are tested by treating industrial buyers as the key informants and using their

responses to a questionnaire reporting their perceptions of the suppliers' behaviors, buyer

companies' attitudes toward the suppliers, and buyers companies' behaviors toward the

suppliers.

The purchasing managers are in a good position to know the requirements of the

buyer firm for a particular product category. They have control over a product category









and are fully responsible for the profitable performance of that product or product line.

Thus, the responses on the questionnaire capture the attitudes and perceptions of key

decision makers in buyer-supplier relationships concerning a particular product or

product category.

The sample examined in this dissertation includes buyer firms in business-to-

business markets from both SIC codes 20-23 (Manufacturing), 24-34 (Material), 35-39

(Equipment), and 52-59 (Retail Trade). Access to the contact information for the buyers

was provided by Institute of Supply Management (ISM). Each participating firm was

offered an executive summary, presentation of results, and customized analyses in return

for their participation.

In responding to the questionnaire, all buyers were asked to consider a specific

supplier with which they had a relationship for over a year. In addition, to insure variance

in the nature of the power asymmetry in the relationship, half of the purchasing managers

were randomly selected to report the relationship with one supplier with considerably

higher power than the buyer; while another half of the purchasing managers were

randomly selected to report the relationship that involves a supplier who has considerably

lower power compared to the buyer. Specifically, each buyer was asked to think of one

high power supplier which is best described as "It would be easy for this supplier to find

other customers to replace our company, but it's difficult for your company to replace

this supplier with another supplier in the particular product category", or as to think of

one low power suppliers which is best described as "It would be easy for our company to

find other suppliers to replace this supplier, but it's difficult for this supplier to replace

our company with another buyer in the particular product category." Two similar









questionnaires, one for high power buyer and the other for the low power buyer, were

used.

Requests to participate in the research were sent to 4,000 purchasing managers who

were randomly selected from the business-to-business purchasing managers in the United

States. For the 2000 buyers who were asked to report on their relationships with low

power suppliers, 345 buyers responses were collected with 263 complete responses. I also

get 212 emails with incorrect addresses, 109 rejection emails, and 181 emails indicating

that the managers could not receiving or checking email while they were out of office

during the time of the survey, which result in a meaningful sample frame of 1498

potential respondents. The response rate is 23.03 %. For the 2000 buyers who were

requested to report on their relationships with high power suppliers, 314 responses were

obtained with 253 complete responses. And 149 emails with incorrect addresses, 142

rejection emails, and 232 emails indicating that the managers could not receiving or

checking email while they were out of office result in a meaningful sample frame of 1477

potential respondents. The response rate is 21.26 %. The average response rate for the

whole sample is 22.15%.

These purchasing managers were also asked to supply the names and addresses of

the supplier firms whom they referred to when answering the questionnaires, as well as

the representatives in these supplier firms with whom they have frequently interacted for

at least one year. Then, similar questionnaires were sent to the named supplier

representatives, seeking their appraisements of the relationships. However, only 45

buyers reported their high power suppliers' contact information, and 30 buyers reported

their low power suppliers' contact information, which render 33 complete suppliers'









responses in total with response rate 44%. Because the sample size is too small to provide

credible reports of the functionality of inter-firm benevolence at the suppliers' side, we

exclude analysis of suppliers' responses in the current study.

Measure Development

The three components of inter-firm benevolence, responsiveness, concession,

knowledge sharing, reputation and power are the new measures designed by the author.

Relationship specific investment and reputation were measured by adapting the scales

used by Ganesan (1994) and Joshi and Stump (1999). For commitment, I modified

measures used in studies by Jap and Ganesan (2000), Anderson and Weitz (1992),

Morgan and Hunt (1994), and Kumar et al. (1995)'s studies. The items were identically

worded for both the high power and low power buyer. The list of measures can be found

in Appendix A.

Pretest

To develop the measures, I first telephone interviewed a number of purchasing

managers in the buyer firms across manufacturing and retailing industries, and asked

them to review the actions they had taken towards two types of their suppliers: powerful

and not powerful. For example, I asked them to think of how they interacted with these

two types of suppliers on a daily base, how they assess the relationship qualities with

these suppliers, and what criteria they use to value these relationships. Then I asked these

purchasing managers to review the potential measurement items we designed, and made

changes based on their suggestions. The questionnaires were also sent to a panel of

academic experts to evaluate for clarity, specificity, and representativeness.









Factor Analysis

Fourteen constructs, each measured with multiple items, 7-point Likert Scales in

simple terms using the language commonly employed by the informants, were used in

this study. The new measure development was based on the procedure recommended by

Nunnally (1978). The critical step in the construct validation of these constructs involves

the assessment of internal consistency and unidimensionality.

First, an exploratory factor analysis was performed. If the exploratory factor

analysis indicated a single factor, all items whose factor scores were greater than 0.5 were

retained. However, if multiple factors were obtained from exploratory factor analysis, the

factors were rotated using Varimax procedure to obtain the best factor pattern. All items

either loading on more than one dimension or having a factor loading of less than 0.4

were eliminated from subsequent analysis.

The items obtained from the exploratory factor analysis were further subjected to a

confirmatory factor analysis (CFA) using LISREL 8.52 (Joreskog and Sorbom 2002),

because CFA allows for a statistical test of the degree of correspondence between

observed measures and concepts. A single-factor representation was used for each set of

congeneric items. The items with adequate fit with the construct were used for further

analysis. Maximum likelihood estimations were employed for the model assessment. This

method was essential to assess and finalize and bring the measurement model to

satisfactory levels of validity and reliability before structural model was tested (Segars

and Grover 1993). All of the measurement model estimation in this dissertation was

conducted using this method and statistical package. All the items remaining from the









CFA procedure were checked for overall reliability by calculating a reliability coefficient

such as coefficient alpha.

Measurement Properties

There are two important aspects of the measurement model that should be

evaluated: convergent validity and discriminant validity (Gefen et al. 2000). Convergent

validity examines the degree to which the operationalization is similar to (converges on)

other operationalizations that it theoretically should be similar to, and can be assessed by

the examination of indicator reliability, construct reliability, and average variance

extracted (Fornell 1982). Table 4-1 contains the scale items, factor loadings, indicator

reliabilities, construct reliabilities, and average variance extracted for the latent constructs

for purchasing managers. All the factor loadings are found to be above 0.6, suggesting

good indicator reliabilities greater than 0.4 (Fomell and Larker 1981). Construct

reliabilities were computed using the reliability formula of Joreskog (1971), and are all

greater than 0.7 (Table 4-1). AVE measures the shared or common variance in a Latent

Variable (LV), which is captured by the LV in relation to the amount of variance due to

its measurement error (Dillon and Goldstein 1984). The fourteen constructs' average

variances extracted range from 51% to 82%, all exceeding the 50% as recommended by

Fornell and Larcker (1981). All these demonstrate evidence of convergent validity.

Table 4-2 and 4-3 contain the summary information on the measurement models,

completely standardized correlation matrix between constructs, and means for each

construct for buyers. Because this dissertation is interested in studying the attitudinal

perceptions of benevolence and behavioral consequences of the perceived benevolence, I

run two confirmatory factor analyses (CFA) to assess the measurement properties of the









reflective latent constructs. The first confirmatory factor analysis investigates the

perceptions of suppliers' behaviors, attitudes and relative power. Thus, it involves the

constructs such as perceived concession, perceived knowledge sharing, perceived

responsiveness, perceived reputation, perceived relationship investment of the supplier,

perceived benevolence, and perceived power of the supplier. The results are shown in

Table 4-2. The second measurement model examines the self reported commitment level

and self reported behaviors such as concession, knowledge sharing, responsiveness, and

relationship investment, and is contained in Table 4-3.

The two measurement model summarized in Table 4-2 and Table 4-3 indicate that

the chi-square statistics are significant. The overall chi-square is a likelihood ratio

statistic testing a hypothesized model against the alternative that the covariance matrix is

unconstrained. However, as chi-square test is well known for its sensitivity to sample

size, other statistic criteria shall be considered for the validity of the models.

The Comparative Fit Index (CFI) served as an exemplar fit to assess the fit of a

model to data. This index ranges in possible values between zero and one, indicating a

lack of fit and perfect fit between the theoretical model's covariance matrix to the

observed covariance matrix, respectively. In Table 4-2 and 4-3, both CFIs are of 0.98

indicating perfect fits of the two models.

As suggested by Diamantopoulos and Siguaw (2000), I further check root mean

square error of approximation (RMSEA), standardized root mean square residual (RMR),

normed fit index (NFI), Non-normed fit index (NNFI), and Critical N (CN) to assess the

measurement model fits.









RMSEA shows how well would the model, with unknown but optimally chosen

parameter values, fit the population covariance matrix if it were available. It values 0.057

and 0.063 respectively for the two measurement models, indicating reasonable fit.

Standardized RMR is a summary measure of standardized residuals, which is 0.05 and

0.046, respectively, in the two measurements models. Both standardized RMR indicate

acceptable fit. Both the two measurement models have NFIs at 0.98, indicating good fits

of the measurement models. As expected for good fits, NNFIs have been found to be no

greater than CFIs in both measurement models, and both NNFIs and CFIs are expected to

be greater than 0.90. In addition, CN shows the size that a sample must reach in order to

accept the fit of a given model on a statistical basis, and has found to be greater than 200

in both measurement models. All these criteria further indicate that both models are

adequate representations of the respective data.

Discriminant validity is the degree to which operationalization is not similar to

(diverges from) other operationalizations that it theoretically should be not similar to. As

suggested by Bollen (1989), I examined factor loadings as well as the squared multiple

correlations between the items and the variables to assess the validity of the measures to

assess the disriminant validity. AVE can also be used to gauge discriminant validity

(Fornell and Larker 1981). If the squared correlation between two LV's is less than either

of their individual AVE's, this suggests the LV's each have more internal (extracted)

variance than variance shared between the LV's. If this is true for the target LV and all

the other LV's, this suggests the discriminant validity of the target LV. Table 4-2 and

Table 4-3 show that all constructs are more strongly correlated with their own measures

than with any other of the constructs, suggesting good convergent and discriminant









validity. Cross-loadings are calculated and all indicators show higher loadings with their

respective construct than with any other constructs, as shown in Table 4-2 and Table 4-3.

Test of H1

To assess the psychometric properties of the proposed three-component benevolent

model (H1), three measurement models exclusively with the items indicating the three

components of perceived benevolence were estimated and compared. The first model

estimates a three-dimensional structure for benevolence composed of three types of

benevolence (affective, normative, and calculative). The second model estimates a two-

dimensional structure of benevolence composed of two factors (affective and normative

composite, calculative), and the third model estimates a unidimensional structure of

benevolence and consists of one factor only (benevolence).

The results of chi-square analyses, as reported in Table 4-4, suggest that the three-

component model of benevolence provides the best fit to the data. In addition, the

pairwise comparison of differences in chi-square between the models provides evidence

for discriminant validity (Bienstock et al. 1997) among the three components of

benevolence. Overall, the model fit for three-component model of benevolence is good

(Minimum Fit Function Chi-Square Z2 = 195.06, degrees of freedom [d.f] = 41,

goodness-of-fit index [GFI] = 0.94, normed fit index [NFI] = 0.97, non-normed fit index

[NNFI] = 0.97, comparative fit index [CFI] = 0.98). Consequently, the three components

of benevolence will be used as distinct concepts for all further analyses. Thus, H1 is

supported.









Hypothesis Testing Model Equations

I differentiate the sample into three groups (high power, equal power, and low

power buyers).

Relative Power Groupings of Buyers

In analyzing the data, I discovered that the self-reported measure of relative power

was not highly correlated with the measure of relative power based on the questionnaire

instructions. I decided to use the multiple item measured power to group buyers because I

felt the responses to the items were more indicative to perceived relative power than the

potentially unread instructions. I used median split analysis by recoding the power

measures higher than 4 into perceived high power dummy variable, the power measures

lower than 4 into perceived low power dummy variable, and power measures equal to 4

into perceived equal power dummy variable.

I used regression rather than LISREL to estimate the interactions of power and

perceived benevolence because LISREL involves a more complicated interaction fitting

function and explicit solutions are not always found. Regression provides efficient,

consistent, robust estimates compared with LISREL regarding interaction effects between

the constructs. Further, for chi-square to be used as a valid test statistic, the sample size

should be large. However, when sample size decreases to small number into high power

and low power, the statistical significance of individual parameters tends to decrease

(Long 1983). Thus, this makes regression a more desirable estimation method.









Estimation Method

Then, I use regression to test the interactions of these power dummy variables with

different components of perceived benevolence. Coefficients were estimated for the

following system of equations:


(1) r7 (Perceptions of Sender's Affective Benevolence) =a1 + 7Ym -RV (Sender's

Responsiveness) + ,112 CN (Sender's Concessions) + ,113 KS (Sender's Knowledge

Sharing) + Y,21 RI (Sender's Relationship Specific Investments) + 731 -RP (Sender's

Reputation) + r


(2) r2 (Perceptions of Sender's Calculative Benevolence) = a + Y121 RV (Sender's

Responsiveness) + 7122 -CN (Sender's Concessions) + 7123 -KS (Sender's Knowledge

Sharing) + r22 -RI (Sender's Relationship Specific Investments) + 732 -RP (Sender's

Reputation) + 42


(3) r3 (Perceptions of Sender's Normative Benevolence) = a3 + 7131 -RV (Sender's

Responsiveness) + Y132 CN (Sender's Concessions) + 7133 -KS (Sender's Knowledge

Sharing) + 723 -RI (Sender's Relationship Specific Investments) + 733 -RP (Sender's

Reputation) + 3


(4-a) 74 (Receiver's Commitment) = a4 + p8a .7r (Perceptions of Sender's Affective

Benevolence) + p84c r2 (Perceptions of Sender's Calculative Benevolence) +

/4n '7r3 (Perceptions of Sender's Normative Benevolence) + p/4h r77 (Dummy Perceived

Sender's High Power) + p, .r (Dummy Perceived Sender's Low Power) + 4









(4-b) 74 (Receiver's Commitment) = a41 + 41 71 (Perceptions of Sender's Affective

Benevolence) + /42. 72 (Perceptions of Sender's Calculative Benevolence) +

p 143 (Perceptions of Sender's Normative Benevolence) + p45 77 (Dummy Perceived

Sender's High Power) + p,4 .77 (Dummy Perceived Sender's Low Power) +

p46 .r7 (Interaction of Dummy Perceived Sender's High Power and Perceived Affective

Benevolence) + p'4 .6, (Interaction of Dummy Perceived Sender's Low Power and Perceived

Affective Benevolence) + p47 .77 (Interaction of Dummy Perceived Sender's High Power and

Perceived Normative Benevolence) + p'47 7, (Interaction of Dummy Perceived Sender's

Low Power and Perceived Normative Benevolence) + p48 .77 (Interaction of Dummy

Perceived Sender's High Power and Perceived Calculative Benevolence) +

p'48 7 (Interaction of Dummy Perceived Sender's Low Power and Perceived Calculative

Benevolence) + (41


(5) r7 (Receiver's Responsiveness) = a5 + 54 .774 (Receiver's Commitment) +

7, RV (Perceived Sender's Responsiveness) + p52 "7r (Dummy Perceived Sender's High

Power) + p 7 (Dummy Perceived Sender's Low Power) + C


(6) r10 (Receiver's Concessions) = a6 + 764 4 (Receiver's Commitment) +

762 CN (Perceived Sender's Concessions) + p62 775 (Dummy Perceived Sender's High

Power) + p'2 '75 (Dummy Perceived Sender's Low Power) + 6









(7) r, (Receiver's Knowledge Sharing) = a7 + fi74 .74 (Receiver's Commitment) +

773 KS (Perceived Sender's Knowledge Sharing) + + p72 .r5 (Dummy Perceived Sender's

High Power) + p'2 '5 (Dummy Perceived Sender's Low Power) + C7


(8) r12 (Receiver's Relationship Specific Investment) = a, + P84 .4 (Receiver's

Commitment) + 784 RI (Perceived Sender's Relationship Specific Investments) +


p82 .r (Dummy Perceived Sender's High Power) + p82 '7 (Dummy Perceived Sender's Low

Power) + C8


Where 7 refers to endogenous variables, and 4 represents disturbance terms. The

y and p indicate coefficients for the influence of exogenous and endogenous variables,

respectively. The constructs and coefficients with apostrophes indicate that the tests are

done from a low power receiver's perspective. Otherwise, the tests are done from a high

power receiver's perspective. The structure relationships are depicted in Figure 4-1. In

accordance with our conceptual framework, the expected signs of the coefficients are

described in Table 4-5.

Summary

The purpose of this chapter was to describe the methodology, measurement

development, and preliminary construct validity results. Data were initially collected via

online survey to a sampling of 4000 buyer-supplier relationships across manufacturing

and retailer trade industries. Evaluation of the measurement models indicates adequate

convergent and discriminant validity among fourteen constructs for buyers.















PERCEPTIONS OF SENDER'S
BEHAVIORS
( High Power Sender's
Perceived Responsiveness


RECEIVER'S
RECEIVER'S PLEDGES
REACTIONS


Figure 4-1 Estimation of Interpretation and Reactions in Asymmetrical Buyer-Supplier's Relationships















Table 4-1 Item Descriptions and Measurement Model Results for Latent Constructs
Average
Lamdba Indicator Construct Variance
Item Descriptions Loading Reliability Reliability Extracted



Perceived Affective Benevolence 0.85 0.66

This supplier has an emotional attachment to our company, that's one of the major
reasons it cares about our welfare. 0.68 0.47
0.68 0.47
The success of our relationship has a great deal of personal meaning to this
supplier. 0.87 0.76

This supplier's positive feelings towards our company are a strong force that
motivates it to care about our company. 0.86 0.75



Perceived Calculative Benevolence 0.78 0.55

This supplier cares about our company mainly because our company increases this
supplier's profits. 0.68 0.47

Because it is in its own interests, this supplier wants our company to do well. 0.74 0.55

This supplier can turn a profit for itself from this relationship that is one of the
main reasons why this supplier cares about our company's welfare. 0.80 0.63













Table 4-1. Continued.
Average
Lamdba Indicator Construct Variance
Item Descriptions Loading Reliability Reliability Extracted

Perceived Normative Benevolence 0.96 0.82

This supplier has a sense of moral obligation to care about its customers. 0.86 0.73

This supplier thinks that it is unethical to neglect its customers' well being. 0.89 0.80

This supplier undertakes the responsibility of caring about its customers' welfare. 0.91 0.83
0.91 0.83
This supplier would feel that it is wrong to overlook the welfare of its customers. 0. .
0.92 0.85

This supplier feels that it is essential for firms to care about the welfare of its
customers..94 0.87
0.94 0.87



Perceived Responsiveness 0.96 0.80

If an unexpected situation arises, this supplier always responds rapidly. 0.88 0.78

This supplier generally makes timely changes to meet our company's requests. 0.89 0.79

This supplier generally responds to our requests promptly. 0.93 0.87

This supplier is always accessible whenever we need its help. 0.89 0.79

When we ask this supplier to consider some changes, this supplier always responds
quickly. 0.88 0.78















Table 4-1. Continued.
Average
Lamdba Indicator Construct Variance
Item Descriptions Loading Reliability Reliability Extracted

This supplier does not hesitate to respond to our requests right away. 0.90 0.82



Perceived Supplier's Concession 0.88 0.66

This supplier is open to makes concessions when doing business with us. 0.74 0.54

This supplier is willing to change its position on issues in this relationship. 0.72 0.52

When disagreements arise between the two companies, this supplier makes
compromises. 0.87 0.75

When our two companies have conflicts, this supplier is fine to make
accommodations to resolve them. 0.90 0.81



Perceived Supplier's Knowledge Sharing 0.87 0.69

This supplier has an organized procedure to share its know-how with us. 0.90 0.81

This supplier has set up a system to facilitate information sharing with our
company. 0.89 0.80













Table 4-1. Continued.
Average
Lamdba Indicator Construct Variance
Item Descriptions Loading Reliability Reliability Extracted
This supplier regularly organizes meetings, workshops or seminars to share
information with us. 0.67 0.45



Perceived Supplier's Relationship Investment 0.90 0.65

This supplier has invested substantially in personnel dedicated to our company. 0.82 0.68

This supplier has made significant investments dedicated to our relationship. 0.86 0.74

This supplier's operating processes have been tailored to meet the requirements of
our company. 0.82 0.66

Training people in both companies has involved substantial commitments of time
and money for this supplier. 0.73 0.54

This supplier has made extensive adaptations to deal with our company's standards
and procedures. 0.80 0.64



Perceived Supplier's Reputation 0.86 0.67

This supplier has a reputation for being concerned about its' customers. 0.90 0.81

This supplier has a bad reputation with its customers in the industry. (R) 0.72 0.52

Most buyers appreciate the way this supplier behaves in the market. 0.82 0.68













Table 4-1. Continued.
Average
Lamdba Indicator Construct Variance
Item Descriptions Loading Reliability Reliability Extracted
Perceived Supplier's Power 0.81 0.68

It would be difficult for us to replace the sales and the profits generated from this
product line. 0.68 0.46

The relationship with this supplier is critical to the achievement of our future goals. 0.95 0.91



Buyer's Commitment 0.85 0.58

Our company is willing to dedicate whatever people and resources that are
necessary to sustain this relationship. 0.66 0.43

This relationship deserves our company's maximum efforts to maintain it.
0.68 0.47
We are willing to make all the effort required to maintain this relationship over the
long term. 0.87 0.75

We are committed to this supplier. 0.83 0.68



Buyer's Responsiveness 0.91 0.78

If an unexpected situation arises, our company always responds rapidly. 0.83 0.69













Table 4-1. Continued.
Average
Lamdba Indicator Construct Variance
Item Descriptions Loading Reliability Reliability Extracted
When this supplier suggests our company to consider some changes, we always
respond quickly. 0.88 0.78

We do not hesitate to respond to this supplier's requests right away. 0.93 0.87



Buyer's Concession 0.79 0.55

Our company is open to makes concessions when doing business with this
supplier. 0.75 0.56

Our company has made compromises when dealing with issues that arise in this
relationship. 0.74 0.54

Our company is willing to change our positions on issues in this relationship. 0.74 0.55



Buyer's Knowledge Sharing 0.86 0.51

Our company frequently shares information with this supplier. 0.76 0.58

Our company has an organized procedure to share our know-how with this
supplier. 0.73 0.54

Our company has set up a system to facilitate information sharing with this
supplier. 0.78 0.60













Table 4-1. Continued.
Average
Lamdba Indicator Construct Variance
Item Descriptions Loading Reliability Reliability Extracted
Our company regularly organizes meetings, workshops or seminars to share
information with this supplier. 0.64 0.41

Our company is open to sharing proprietary information to help this supplier to
understand the market. 0.65 0.43

Our company provides this supplier with valuable expertise when this supplier asks
for it. 0.70 0.49



Buyer's Relationship Specific Investment 0.89 0.73

If the relationship between our company and this supplier were to end, our
company would waste a lot of knowledge that's tailored specifically to this
relationship. 0.77 0.59

Our company has invested substantially in personnel dedicated to this supplier. 0.89 0.80

Our company has made significant investments dedicated to this relationship. 0.89 0.79









Table 4-2 Measurement Model Results for Perceived Benevolence Measures

Goodness of Fit Statistics


Degrees of Freedom = 491
Minimum Fit Function Chi-Square = 1291.36 (P = 0.0)
Normal Theory Weighted Least Squares Chi-Square = 1322.28 (P = 0.0)
Estimated Non-centrality Parameter (NCP) = 831.28
90 Percent Confidence Interval for NCP = (727.11 ; 943.08)


Minimum Fit Function Value = 2.51
Population Discrepancy Function Value (FO) = 1.61
90 Percent Confidence Interval for FO = (1.41 ; 1.83)
Root Mean Square Error of Approximation (RMSEA) = 0.057
90 Percent Confidence Interval for RMSEA = (0.054 ; 0.061)
P-Value for Test of Close Fit (RMSEA < 0.05) = 0.00065


Expected Cross-Validation Index (ECVI) = 2.97
90 Percent Confidence Interval for ECVI = (2.77 ; 3.19)
ECVI for Saturated Model = 2.31
ECVI for Independence Model = 98.64


Chi-Square for Independence Model with 561 Degrees of Freedom = 50733.11
Independence AIC = 50801.11
Model AIC = 1530.28
Saturated AIC = 1190.00
Independence CAIC = 50979.47
Model CAIC = 2075.87
Saturated CAIC = 4311.43


Normed Fit Index (NFI) = 0.97
Non-Normed Fit Index (NNFI) = 0.98









Table 4-2. Continued.


Parsimony Normed Fit Index (PNFI) = 0.85
Comparative Fit Index (CFI) = 0.98
Incremental Fit Index (IFI) = 0.98
Relative Fit Index (RFI) = 0.97


Critical N (CN) = 227.06


Root Mean Square Residual (RMR) = 0.12
Standardized RMR = 0.050
Goodness of Fit Index (GFI) = 0.87
Adjusted Goodness of Fit Index (AGFI) = 0.84
Parsimony Goodness of Fit Index (PGFI) = 0.72












Table 4-2. Continued.
Correlation Matrix (Completely Standardized)

Mean Std 1 2 3 4 5 6 7 8 9
Dev.

1 perceived affective 4.05 1 1
benevolence .38

2 perceived calculative 5.20 1.09 -.01 1
benevolence

3 perceived normative 4.72 1.28 .56** .01 1
benevolence

4 perceived 5.06 1.42 .52** .11* .71** 1
responsiveness

5 perceived concession 4.71 1.22 .54** .09* .64** .75** 1

6 perceived knowledge 3.97 1.43 .37** .04 .42** .46** .43** 1
sharing

7 perceived relationships 3.99 1.42 .46** .14** .42** .45** .47** .47** 1
investment

8 perceived reputation 5.26 1.37 .46** .06 .65** .68** .69** .37** .32** 1

9 perceived power of 4.34 1.60 .15** .09 .13** .04 .02 .21** .22** .05 1
suppliers
** Correlation is significant at the 0.01 level (2-tailed). Correlation is significant at the 0.05 level (2-tailed).













Table 4-3 Measurement Model Results for Behaviors Measures

Goodness of Fit Statistics


Degrees of Freedom (df) = 142

Minimum Fit Function Chi-Square ( ) = 411.06 (P = 0.0)
Normal Theory Weighted Least Squares Chi-Square = 429.40 (P = 0.0)
Estimated Non-centrality Parameter (NCP) = 287.40
90 Percent Confidence Interval for NCP = (228.89 ; 353.53)


Minimum Fit Function Value = 0.80
Population Discrepancy Function Value (FO) = 0.56
90 Percent Confidence Interval for FO = (0.44 ; 0.69)
Root Mean Square Error of Approximation (RMSEA) = 0.063
90 Percent Confidence Interval for RMSEA = (0.056 ; 0.070)
P-Value for Test of Close Fit (RMSEA < 0.05) = 0.0012


Expected Cross-Validation Index (ECVI) = 1.02
90 Percent Confidence Interval for ECVI = (0.91 ; 1.15)
ECVI for Saturated Model = 0.74
ECVI for Independence Model = 22.41


Chi-Square for Independence Model with 171 Degrees of Freedom = 11503.38
Independence AIC = 11541.38
Model AIC = 525.40
Saturated AIC = 380.00
Independence CAIC = 11641.06
Model CAIC = 777.21
Saturated CAIC = 1376.76









Table 4-3. Continued.


Normed Fit Index (NFI) = 0.96
Non-Normed Fit Index (NNFI) = 0.97
Parsimony Normed Fit Index (PNFI) = 0.80
Comparative Fit Index (CFI) = 0.98
Incremental Fit Index (IFI) = 0.98
Relative Fit Index (RFI) = 0.96


Critical N (CN) = 231.68


Root Mean Square Residual (RMR) = 0.11
Standardized RMR = 0.046
Goodness of Fit Index (GFI) = 0.92
Adjusted Goodness of Fit Index (AGFI) = 0.89
Parsimony Goodness of Fit Index (PGFI) = 0.69












Table 4-3. Continued.
Correlation Matrix (Completely Standardized)

Mean Std Dev. 1 2 3 4 5

1 Buyer's Commitment 4.52 1.23 1

2 Buyer's Responsiveness 4.72 1.18 0.50** 1

3 Buyer's Concession 4.35 1.13 0.43** 0.32** 1

4 Buyer's Knowledge Sharing 4.23 1.30 0.52** 0.30** 0.38** 1

5 Buyer's Relationship Investment 3.83 1.54 0.50** 0.11** 0.35** 0.45** 1


** Correlation is significant at the 0.01 level (2-tailed).
* Correlation is significant at the 0.05 level (2-tailed).













Table 4-4 Model Comparison of the Structure of Benevolence


df = Degree of Freedom
RMSEA = Root mean square error of approximation
RMR = Root mean square residual
NNFI = Non-normed fit index
CFI = Comparative fit index
GFI = The Goodness-of-fit index
NFI = Normed fit index


Minimum
Fit Function Standardized I difference test with Base
Model Chi-Square df RMSEA RMR NNFI CFI GFI NFI Model (p<0.001)

3 factors 195.06 41.00 .09 .50 .97 .98 .94 .97 857.67 with 3 degrees of freedom

2 factors 619.61 43.00 .17 .60 .88 .91 .81 .90 433.12 with 1 degree of freedom

1 factor 1052.73 44.00 .22 .65 .80 .84 .72 .83












Table 4-5 Expected Signs and Relationships of Coefficients in Asymmetrical Buyer-
Supplier Relationships
Hypotheses Expected sign and expected relationships of coefficients under
asymmetrical power contexts

H2 (a) 111 >0

H2 (b) 112 >0

H2 (c) 7113 >0

H3 722 >0

H4 733 >0

H5 P4a> P4n > P4c

H6 P48 > 48

H7 46 < 46

H8 654 > 0, /64 > 0, 174 > 0, /84 > 0

H9 P52 > 0, > 62 > 0, 872 > 0, 82 > 0














CHAPTER 5
RESULTS

Overview

This Chapter starts with a discussion of the procedure I used for assessing common

method variance. Then, the tests of the hypotheses are presented. Corresponding to the

structure of the conceptual framework, I will first discuss the hypotheses related to the

antecedents of the benevolence components. Then the effects of inter-firm benevolence

on commitment, and lastly behaviors resulted from commitment. The further exploration

of three-component benevolence model will be address at the end of this chapter.

Common Method Variance

Common method variance could bias the findings when both independent and

dependent measures are obtained from the same source, as is the case in this study. I

assess common method bias using the procedure that Lindell and Whitney (2001)

recommended. According to their procedure, I first generate a correlation matrix among

the fourteen constructs (Table 5-1), and then eliminate artificial negative correlations by

reflecting any variables that have a preponderance of negative correlations with other

variables. Afterwards, a marker variable or a scale that has the smallest correlation with

the dependent construct is selected (we use commitment construct as the dependent

construct in this analysis). The correlation of this scale with the endogenous construct

scale is considered indicative of method variance. Therefore, after the marker variable is

identified, its correlation with the endogenous construct is used to partial out its effect

from other correlations to assess the extent of method variance. In addition, Lindell and









Whitney (2001) suggest a sensitivity analysis of 95% confident interval is constructed for

the correlations of the marker scale, and the procedure is repeated.

I used perceived calculative benevolence as a marker variable, which has a

nonsignificant correlation of 0.09 with buyer's commitment. Table 5-2 gives the results

of the procedure and presents the partial correlations between all the variables are high

and significant. This provides support to the conclusion that these correlations are not

merely due to common method bias. Furthermore, common method variance is unlikely

to influence correlations because the interaction of power and inter-firm benevolence in

the model should have minimal method bias.

Hypotheses Testing

The focus of the discussion now turns to assessing the structural model depicted in

Figure 4-1. The structural model specifies the causal relationships of the constructs to one

another, in addition to the specification of the observed indicators to their latent variables.

I estimated the equations using least squares regression to test hypotheses H2 H9.

Signals of Perceived Affective Benevolence

According to my model shown in Figure 4-1, buyer's perceptions of supplier's

responsiveness, concession making, and knowledge sharing have positive impacts on

buyer's perceptions of supplier's affective benevolence.

Making concession. Concession is defined as "a change of offer in the supposed

direction of the other party's interests that reduces the level of benefit sought" (Pruitt

1981). Supporting H2 (a), making concession is positively related to positive perceived

affective benevolence (Y112 = 0.22, p < .01). Perceived concession is not related to









perceived calculative benevolence, but slightly positively corresponds with perceived

normative benevolence (7132 = 0.09, p < .10). The findings are listed in Table 5-3.


This result shows that the efforts of making concession by the signaling firm help

build a stronger emotional bond in the relationship. In addition to the prior negotiation

literature on concession, where concession acts as a key element affecting both the

process and outcome because concession is positively associated with the fairness felt by

both negotiating parties (Clopton 1984; Ordover and Rubinstein 1986; Kwon 2004), this

dissertation further proposes that concession provides a high degree of comfortableness

and security, hence affective cares, to the receiving firm in the relationship.

Responsiveness. As expected in H2 (b), there is a positive relationship between

buyer's perception of supplier's responsiveness and buyer's perception of supplier's

affective benevolence (111 = 0.15, p < .05). Perceived responsiveness is also found be to

positively related to receivers' perception of the senders' normative benevolence (7131 =

0.40, p < .001). However, perceived supplier's responsiveness was not found to be related

to perception of the sender's calculative benevolence either. The results are reported in

Table 5-3.

It is reasonable to find that perception of responsiveness has more influence on

perception of normative benevolence than on perception of affective benevolence,

because responsiveness, defined as prompt and appropriate actions taken by one firm in

response to the other firm's requests (Kohli et al. 1993), is more easily observed on a

regularly base rather than on a case by case level. This result may also be due to how

responsiveness was measured in this dissertation. I used the terms such as "If an









unexpected situation arises, this supplier always responds rapidly" and "This supplier is

always accessible whenever we need its help." It is possible that by measuring how

frequently the other firm responds timely and appropriately, the purchasing managers

might be misled to answer the questions based on a more normative base rather than on

an affective base.

Knowledge sharing. Contrary to prediction of H2 (c), buyer's perception of

supplier's knowledge sharing is not related to its perception of supplier's affective or

calculative benevolence as illustrated in Table 5-3. However, buyer's perception of

supplier's knowledge sharing is positively related perception of normative benevolence

(7133 = 0.06, p < .10).

In this dissertation, knowledge sharing is defined as the frequent transfer,

recombination, or creation of specialized knowledge in the relationship (Devenport and

Prusak 1997; Grant 1996; Nonaka 1994). Although the prior literature on inter-firm level

(Dyer and Nobeoka 2000; Dyer and Singh 1998) has suggested that knowledge sharing

promotes trust in the management literature, no research has talked about how knowledge

sharing promotes trust and what aspect of trust (benevolence, competence or integrity) at

inter-firm level. At the interpersonal level, Abrams and et. al. (2003) suggest that

knowledge sharing promotes both benevolence and competence as perceived by the other

person "people are more willing to trust someone who shows a willingness to listen and

share; i.e., to get involved and talk things through. In contrast, people are wary of

someone who seems closed and will only answer clear-cut questions or discuss complete

solutions."









This study tries to investigate whether knowledge sharing does promote

benevolence between the firms. However, we haven't found any support for this

contention. One possible explanation for knowledge sharing not promoting benevolence

between the firms, but influencing trust and commitment in the buyer-supplier

relationships, is that knowledge sharing might mainly promote the competence, rather

than benevolence or integrity, component of trust in buyer-supplier relationships. For

example, firms often learn and gain competitive advantage by collaborating with other

firms (Dyer and Singh 1998; Levinson and Asahi 1996; March and Simon 1958; Powell

et al. 1996). Von Hippel (1988) also argues that a production network with superior

knowledge-transfer mechanisms among users, suppliers, and manufacturers will be able

to "out innovate" production networks with less effective knowledge sharing

mechanisms.

Signals of Perceived Calculative Benevolence

Relationship specific investments. H3 is confirmed. Since buyers' perceptions of

suppliers' making relationship specific investment is significantly related to their

perceptions of the suppliers' positive perceived calculative benevolence (722 = 0.13, p <

.05). Interestingly, perceived relationship specific investment is also positively related to

perceived affective benevolence and perceived normative benevolence (Y21 = 0.23, p <

.001 and 723 = 0.08, p < .05 respectively). The results are reported in Table 5-3.


Relationship specific investments refer to the investments specific to the buyer-

supplier relationship that are difficult or impossible to be redeployed to any other

relationships. Particularly, relationship specific investments have more influence on

perceived affective benevolence than on perceived calculative benevolence. One possible









explanation is that relationship specific investment can create the feeling of security to

the other firm rather than revealing this firm's cognitive evaluations of inter-firm

relationships. In other words, increased relationship specific investments generate a high

level of "attachment" between the firms in the relationship, which in turn influences the

receiving firm to perceive the investing firm as affective benevolence in the relationship.

It would be interesting to examine the circumstances in which relationship specific

investments affect the three types of inter-firm benevolence may vary in the future

research.

Signals of Perceived Normative Benevolence

Perceived reputation. Reputation is a function of the past actions of a firm, which

build high credibility of this firm over time (Milgrom and Roberts 1982; Weigelt and

Camerer 1988). H4 is confirmed for all the buyers. In our study, purchasing managers'

perceptions of their suppliers' reputation is a significant predictor of their perceptions of

suppliers' normative benevolence (733 = 0.26, p < .001). In addition, perceptions of

suppliers' high reputation is positively affect the buyers' perceptions of their suppliers'

affective benevolence (731 = 0.11, p < .05). But, the high level of the buyers' perceptions

of suppliers' reputation has little impact on buyers' perceptions of suppliers' calculative

benevolence. Results are reported in Table 5-3.

The possible explanation is that consistent past behaviors not only build high

credibility of the firm over time, but also creates a high level of stability in the

perceptions of the other firm. According to attachment theory, this stability brought by

good reputation will make the receiving party to observe affective benevolence the









sending party (ref Bowlby 1969/1982; Bowlby 1973; Bowlby 1980; Feeney and Noller

1990; Kobak and Hazan 1991).

Main Effects of Perceived Benevolence on Commitment

Contrary to H5, the positive relationship between buyers' perceptions of suppliers'

affective benevolence and buyers' commitment (pa = 0.15, p < .001) is smaller than the

relationship between the buyer's perception of the sender's normative benevolence and

the receiver's commitment (pn = 0.29, p < .001). The relationship between buyer's

perceptions of supplier's calculative benevolence and buyer's commitment is not

significant. The findings are summarized in Table 5-4.

It is interesting to find that not all types of perceptions of benevolence would lead

to the other firm's commitment. This challenges the generalizibility of traditional view of

Trust-Commitment Theory (Morgan and Hunt 1994; Garbarino and Johnson 1999). Thus,

from the evidence got in this dissertation, generally speaking, it is always more effective

for the signaling firm to exert normative and affective benevolence, rather than

calculative benevolence, to the receiving firm in order to get the other firm to be more

committed in the relationship.

Moderating Effects of Power on the Relationship between Perceived Benevolence
and Commitment

When I test the interaction effects of relative power in the relationship, I find that

for the low power buyers, the relationship between their perception of its high power

supplier's calculative benevolence and the low power buyer's commitment are positive

and significant (48 = 0.10, p < .05). However, the relationship between the high power









buyer's perceptions of its low power supplier's calculative benevolence and commitment

was not found to be significant. Thus, H6 is supported.

The results confirm that it is more effective for a high power firm to make

relationship specific investments than a low power firm to do so. One explanation is that

when the low power firm perceives the high power firm "locking" itself intentionally in

the relationship, such "contribution" from the high power firm is associated with larger

magnitudes of low costs or high rewards for the low power firm. As a consequence, the

low power firm would be more likely to commit to the high power firm. On the other

hand, when the low power party makes relationship specific investments, it would be less

likely to affect the high power party's commitment level in the relationship, because such

relationship specific investment plays less important role to the high power firm's

evaluation of the cost/benefits that it can obtain from the relationships.

I also find that perceived supplier's affective benevolence influences buyer's

commitment regardless of whether supplier's being high power or low power. This is an

interesting finding, although it is not consistent with H7. Although the directions of

coefficients in both samples are positive as expected, there is little difference between the

relationship between when the receiver is high power and the sender is low power ( p 6

0.16, p < .05), and when the receiver is low power and the sender is high power ( 6 =

0.13, p < .05), as shown in Table 5-6. The F test of these two samples can not reject that

hypothesis that perceived suppliers' affective benevolence affect both high and low

buyers equally.

The finding shows that it is always effective for the signaling firm to show

affective benevolence to the receiving firm when the buyer-supplier relationships are









asymmetric than when the buyer-supplier relationships are symmetric. One possible

explanation is that, when the two firms are of unequal power, firms might perceive that it

would be more costly or risky for the other firms to have affective benevolence on them

than the case when the two firms are of equal power. Moreover, with slight difference

across all the asymmetrical relationships, it is a bit more effective to demonstrate

affective benevolence ( p' = 0.16, p < .05) when the firm is of low power rather than

high power (p46 = 0.13, p < .05). In order fully understand power's impact on perception

of affective benevolence, more in-depth research is needed.

In addition, the results suggest that when buyer perceives supplier as high power, it

is less likely that perceived supplier's normative benevolence will increase buyer's

commitment (P47 = 0.11, p < .10). This finding suggests that although normative

benevolence is important to get the other party to be more committed to the relationship,

it might be less important when the signaling party is of high power. Thus, when a low

power firm perceives that the high power firm has normative benevolence, the less

powerful firm might interpret that this normative benevolence signal as insufficient to

generate commitment. The equations used to estimate the model and the estimated

standardized coefficients are given in Table 5-5.

Behaviors Resulted from Commitment

The relationships between the receiving firm's commitment level in the

relationship and the receiving firm's own behaviors, H8, are all supported Specifically,

positive relationships were found between buyers' commitment and buyers' concession

making (Y62= 0.33, p < .001), responsiveness (51 = 0.46, p < .001), knowledge sharing









(73 = 0.34, p < .001), and relationship specific investments (Y84= 0.25, p < .001). The

results are listed in Table 5-6, Table 5-7, Table 5-8, and Table 5-9, as depicted in Figure

5-2.

Making concessions. The receiving firm's concession behaviors are only

positively associated with the receiving firm's commitment level in the relationship (i64

= 0.33, p < .001), while the signaling firm's own concession behaviors have little

influence on the receiving party's concession behaviors. The possible explanation is that

concession behaviors are costly and risky for the firms to engage. Even the other firm has

made concessions in the relationship; the firm does not necessarily have to reciprocate by

making concessions. The low power firm is also found to be more likely to make

concessions (f62 = 0.12, p < .05) comparing to the high power firm, as shown in Table 5-

6. Thus, H9 (1) is supported. It might be due to the reason that the low power firm has to

give up part of its freedom, authority or even profits in exchange of the stay of the high

power firm in the relationship.

Responsiveness. As reported in Table 5-7, the receiving firm's responsiveness is

highly correlated with the receiving firm's own commitment level in the relationship (854

= 0.46, p < .001) and the receiving firm's perception of the other firm's responsiveness

(y51 = 0.15, p < .001). Interestingly, receiving firm's responsiveness is not influenced by

the perceptions of the sending firm's power. Thus, H9 (2) is not supported. This means

that, regardless of power relationship, both high and low power firms can positively

influence each other's responsiveness in the relationship. Another way for one firm to get

the other firm to be more responsive is to make itself more committed to the relationship.









Knowledge sharing. Similar to responsiveness, the receiving party's knowledge

sharing behaviors are determined by the receiving party's commitment level in the

relationship (P74 = 0.34, p < .001), and the sending party's knowledge sharing behaviors

(773 = 0.37, p < .001). Also, the low power firm tends to initiate knowledge sharing with

the high power firms (P72 = 0.09, p < .10) rather the high power firm likes to share

knowledge with the low power firm. The result is reported in Table 5-8. Hence, H9 (3) is

confirmed. It demonstrates that knowledge sharing acts as results of a commitment to

stay in the relationship as well as the other firm's knowledge sharing behaviors. The low

power firm likes to initiate knowledge sharing shows that low power firm might value

knowledge sharing more than the high power firm for the sake of building a stable long-

term relationships.

Relationship specific investment. The receiving party's relationship specific

investment behaviors are affected by the receiving party's commitment level in the

relationship (P84 = 0.25, p < .001), the sending party's relationship specific investment

behaviors (84 = 0.26, p < .001), and the sending party's power as perceived by the

receiving firm (82 = 0.11, p < .05, and 82 = -0.24, p < .001), as shown in Table 5-9.

Therefore, H9 (4) is supported. These are interesting findings. It illustrates that one firm's

relationship specific investment behaviors result from both a high level of its own

commitment, the observation of the other firm's relationship specific investment

behaviors, and a perception of the other firm's high power in the relationship. It also

shows that although high power firm is less likely to make relationship specific

investments in general, when the low power firm makes relationship specific

investments, the high power firm will be more likely to make such investments. Also, if









the low power firm could get the high power firm more committed to the relationship,

high power firm will be more likely to make relationship specific investments.

In sum, responsiveness, knowledge sharing and relationship specific investment

behaviors executed by one firm could influence the other firm in the relationship to

reciprocate. We also find that making concession is unique in that firms take great

cautions to initiate this type of behavior. A possible explanation is that concession might

involve a higher level of risk to the sending firm, comparing to the risks of other types of

behaviors such as responsiveness, knowledge sharing and relationship specific

investment. Power is found to play a role in influencing a firm's behaviors as well.

Results show that the low power firm might be more likely to make concession, share

knowledge with the other firm, and making relationship specific investment.

Summary

The purpose of this chapter was to describe the analysis strategy used to assess the

test the structural model of interest. The results show that different signals influence

different components of benevolence in asymmetrical buyer-supplier relationships. A

median split analysis of power was conducted to estimate the interaction impacts of the

buyers' perceptions of three components of benevolence and power on the buyers'

commitment. The behaviors resulted from commitment are also reported.









Table 5-1 Correlation Matrix of All Constructs a, b


Table 5-1. Continued.


Table 5-1. Continued.

IBKS BCMT
BKS 1.00
BCMT 0.58**** 1.00


aAll estimates are completed standardized.

bNote that, PSAF = perceived affective benevolence; PSCL = perceived calculative
benevolence; PSNR = perceived normative benevolence; PSNN = perceived supplier's
concession; PSRI = perceived supplier's relationship specific investment; PSPU =
perceived supplier's reputation; SPOW = perceived supplier's power; PSKS = perceived
supplier's knowledge sharing; PSRV = perceived supplier's responsiveness; BRI =






86


buyer's relationship specific investment; BNN = buyer's concession; BRV = buyer's
responsiveness; BKS = buyer's knowledge sharing; BCMT = buyer's commitment.


*p<.10
**p <.05
*** p<.01
**** p < .001
















Table 5-2 Common Method Variance Analysis


PSAF PSCL PSNR PSNN PSRI PSPU SPOW PSKS PSRV BRI BNN BRV BKS BCMT
PSAF 1.oo
PSCL 0.01 1.00
-0.09****
-0.22****
PSNR 0.64**** 0.01 1.00
0.60**** -0.09****
0.56**** -0.22****
PSNN 0.63**** 0.09 0.69 1.00
0.59**** 0.00 0.66****
0.54**** -0.12**** 0.62****
PSRI 0.53**** 0.14** 0.44**** 0.54**** 1.00
0.48**** 0.05** 0.38**** 0.49****
0.42**** -0.06** 0.31*** 0.43****
PSPU 0.57**** 0.06 0.71** 0.75*""* 0.38**** 1.00
0.53**** -0.03 0.68**** 0.73**** 0.32****
0.47**** -0.16**** 0.64**** 0.69**** 0.24****
SPOW 0.19**** 0.09* 0.18**" 0.06 0.27**** 0.07 1.00
0.11** 0.00 0.10**** -0.03 0.20**** -0.02
0.00 -0.12**** -0.01 -0.16**** 0.10**** -0.15****
PSKS 0.44**** 0.04 0.47**** 0.51**** 0.49**** 0.46**** 0.27**** 1.00
0.38**** -0.05 0.42**** 0.46**** 0.44**** 0.41**** 0.20****
0.31**** -0.18**** 0.35**** 0.40**** 0.37**** 0.33**** 0.10****
PSRV 0.6**** 0.12** 0.74**** 0.81**** 0.49**** 0.75**** 0.07 0.51*** 1.00
0.56**** 0.03 0.71**** 0.79**** 0.44**** 0.73**** -0.02 0.46****
0.51**** -0.08*** 0.68**** 0.77**** 0.37**** 0.69**** -0.15**** 0.40****
BRI 0.13*** 0.15**" 0.01 -0.01 0.42**** -0.05 0.65**** 0.3**** 0.06 1.00
0.04 0.07*** -0.09**** -0.11**** 0.36**** -0.15**** 0.62**** 0.23**** -0.03****
-0.07*** -0.05 -0.22**** -0.24**** 0.29**** -0.30**** 0.57**** 0.14**** -0.31****














Table 5-2. Continued.

PSAF PSCL PSNR PSNN PSRI PSPU SPOW PSKS PSRV BRI BNN BRV BKS BCMT
BNN 0.26**** 0.03 0.11* 0.17** 0.17*** 0.02 0.46**** 0.21**** 0.05 0.41*** 1.00
0.19**** -0.07** 0.02 0.09*** 0.09*** -0.08*** 0.41**** 0.13**** -0.04 0.35****
0.09*** -0.19**** -0.10*** -0.02 -0.02 -0.21**** 0.33**** 0.03 -0.17**** 0.27****
BRV 0.32**** 0.02 0.38**** 0.28**** 0.1** 0.33**** 0.31**** 0.21*** 0.32**** 0.12*** 0.38**** 1.00
0.25**** -0.08** 0.32**** 0.21*** 0.01 0.26**** 0.24**** 0.13**** 0.25**** 0.03 0.32****
0.16**** -0.21**** 0.24**** 0.11*** -0.11*** 0.17**** 0.15**** 0.03 0.16**** -0.08*** 0.24****
BKS 0.4**** 0.14*** 0.28**** 0.31** 0.52**** 0.24**** 0.4**** 0.57**** 0.24**** 0.51**** 0.45**** 0.33**** 1.00
0.34**** 0.05* 0.21* 0.24**** 0.47**** 0.16**** 0.34**** 0.53**** 0.16**** 0.46**** 0.40**** 0.26****
0.26**** -0.06** 0.11*** 0.15**** 0.41**** 0.06** 0.26**** 0.47**** 0.06** 0.40**** 0.32**** 0.17****
BCMT 0.45**** 0.09a 0.46**** 0.36**** 0.35**** 0.35**** 0.73**** 0.48**** 0.35**** 0.56**** 0.52**** 0.54**** 0.58**** 1.00
0.40**** 0.41**** 0.30**** 0.29**** 0.29**** 0.70**** 0.43**** 0.29**** 0.52**** 0.47**** 0.49**** 0.54****
0.32**** 0.33**** 0.21*** 0.20**** 0.20**** 0.67**** 0.36**** 0.20**** 0.46**** 0.41*** 0.43**** 0.48****


*p<.10

** p <.05

*** p<.01
****p < .001

a This is a marker correlation.
Notes: The first value in the cell is the absolute value of correlation. The second value in the cell is the correlation correlated for
method bias. The third value in the cell is 95% sensitivity analysis. PSAF = perceived affective benevolence, PSCL = perceived
calculative benevolence, PSNR = perceived normative benevolence, PSNN = perceived supplier's concession, PSRI = perceived
supplier's relationship specific investment, PSPU = perceived supplier's reputation, SPOW = perceived supplier's power, PSKS =
perceived supplier's knowledge sharing, PSRV = perceived supplier's responsiveness, BRI = buyer's relationship specific investment,
BNN = buyer's concession, BRV = buyer's responsiveness, BKS = buyer's knowledge sharing, BCMT = buyer's commitment.