Resource Dependence and Performance Implication in the Supplier Network between System Suppliers and their Component suppliers: A study of the Automobile Industry

Abstract:

In complex product industries such as the automotive, firms are challenged to develop
competitive advantages based not only on internal capabilities but also on upstream relationships
with suppliers. The resource dependence theory provides important insights on how supply
relationships interact and allow firms to achieve such competitive advantages in the industry.
From this perspective, we analyze how first tier automotive suppliers develop their relationships
of resource dependence and bargaining power with lower tier suppliers in order to increase
performance. The results indicate that first tier suppliers benefit from relationships of trust
dependency and financial dependency with suppliers while relational dependence was found to
have a positive but non-significant impact on firm performance.