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Industrial Marketing Management 36 (2007) 219 – 229




                 Power and interdependence in buyer supplier relationships:
                             A purchasing portfolio approach
                                           Marjolein C.J. Caniels *, Cees J. Gelderman 1
                                                              ¨
           Faculty of Management Sciences (MW), Open University of the Netherlands (OUNL), P.O. Box 2960, 6401 DL Heerlen, The Netherlands

                                 Received 27 September 2004; received in revised form 4 July 2005; accepted 3 August 2005
                                                          Available online 23 September 2005



Abstract

    Power and interdependence are generally considered to be important concepts for understanding buyer – supplier relationships. Yet, empirical
research on power and interdependence in buyer – supplier relationships is still limited. Power and interdependence issues also play an important
role in Kraljic’s portfolio approach, which is increasingly used by purchasing practitioners for managing different supplier relations and
developing appropriate purchasing strategies. In this paper, the concepts of power and interdependence have been quantified for each quadrant of
the Kraljic portfolio matrix, using data from a comprehensive survey among Dutch purchasing professionals. Several hypotheses have been tested
and the findings largely confirm the theoretical expectations. The observed supplier dominance in the strategic quadrant of the Kraljic matrix is a
notable finding, which indicates that even satisfactory partnerships are dominated by the supplier. Therefore, the presumed power symmetry of
buyer – supplier relationships in the strategic quadrant seems no longer valid.
D 2005 Elsevier Inc. All rights reserved.

Keywords: Buyer – supplier relationships; Power and interdependence; Purchasing portfolio approach; Kraljic matrix; Purchasing strategies



1. Introduction                                                                   models using other classification dimensions (e.g. Bensaou,
                                                                                  1999; Olsen & Ellram, 1997; Van Stekelenborg & Kornelius,
   Purchasing portfolio models have received much attention                       1994). However, the fundamental assumption of all portfolio
in recent literature about professional purchasing. Not only did                  models seems to be the occurrence of differences in power and
Kraljic’s seminal paper in the Harvard Business Review in                         dependence between buyers and suppliers (Dubois & Pedersen,
1983 have a broad influence on professional purchasing (see                       2002). Kraljic (1983) does not explicitly deal with issues of
the evidence of Gelderman, 2003; Kamann & Bakker, 2004), it                       power and dependence. However, some of his recommendations
has also inspired many academic writers to undertake further                      obviously refer to the power structure (Fexploit power_). Others
research into portfolio models (e.g. Bensaou, 1999; Croom,                        are aimed at reducing the dependence on suppliers (Fdiversify_).
2000; Dubois & Pedersen, 2002; Dyer, Cho, & Chu, 1998;                            Moreover, Kraljic (1983: 112) stated that the general idea of the
Gelderman & Van Weele, 2002, 2003; Lilliecreutz & Ydres-                          portfolio approach is to ‘‘minimize supply vulnerability and
kog, 1999; Nellore & Soderquist, 2000; Olsen & Ellram, 1997;                      make the most of potential buying power’’. Therefore, power
Wagner & Johnson, 2004; Wynstra & ten Pierick, 2000;                              and dependence play a significant part in the Kraljic approach.
Zolkiewski & Turnbull, 2002).                                                        Although power and dependence are generally considered
   Kraljic’s model classifies a firm’s purchased intermediate                     important for the understanding of buyer –supplier relation-
goods into four categories on the basis of two dimensions: (1)                    ships (e.g. Cox, 2001; Frazier & Antia, 1995), it seems that
profit impact and (2) supply risk. Recent adaptations and                         they are still often overlooked factors in conceptual and
refinements of Kraljic’s model have led to alternative portfolio                  empirical studies (e.g. Cox, 2001; Maloni & Benton, 2000).
                                                                                  Little is known about the exact way in which power and
                                                                                  dependence in buyer – supplier relationships enter the Kraljic
 * Corresponding author. Tel.: +31 45 5762724; fax: +31 45 5762103.
   E-mail addresses: marjolein.caniels@ou.nl (M.C.J. Caniels),
                                                         ¨
                                                                                  matrix (Dubois & Pedersen, 2002; Gelderman & Van Weele,
kees.gelderman@ou.nl (C.J. Gelderman).                                            2003). Moreover, the few portfolio models that do discuss
 1
   Tel.: +31 45 5762590; fax: +31 45 5762103.                                     power and dependence issues in relation to portfolio matrices
0019-8501/$ - see front matter D 2005 Elsevier Inc. All rights reserved.
doi:10.1016/j.indmarman.2005.08.012
220                            M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229
                                          ¨


generally focus on the strategic quadrant only (Wagner &                      Kraljic’s approach includes the construction of two portfolio
Johnson, 2004). Buyer –supplier relationships in this quadrant             matrices. The first matrix classifies a firm’s purchased products
can be characterized as strategic partnerships. However, many              on the basis of two dimensions: profit impact and supply risk.
studies have acknowledged that not all supplier relationships              Each dimension has two possible values: Flow_ and Fhigh_. The
can or should be strategic partnerships (e.g. Gadde & Snehota,             resulting 2 Â 2 matrix consists of four quadrants (see Table 1).
2000; Wagner & Johnson, 2004). In fact, firms are found to                 Depending on the category, Kraljic identifies certain Fmain
benefit from entering into a variety of relationships with                 tasks_ for the firm in the interaction with its supplier. He also
different suppliers (e.g. Bensaou, 1999; Lilliecreutz & Ydres-             identifies the required information and the decision level in
kog, 1999). Therefore, undertaking research into power and                 organizations per category.
dependence in all four quadrants of the matrix for all                        The main purpose of Kraljic’s approach is to identify
relationship types is critically important.                                strategic items. The second Kraljic matrix focuses on this
    The aim of this paper is to empirically test hypotheses that can       category. This matrix shows the relative power position of the
be deduced from the literature on power and dependence with                company in the corresponding supply markets. Three general
respect to all quadrants of the Kraljic purchasing portfolio               purchasing strategies are distinguished, depending on the
matrix. In order to do this we have defined the concepts of power          balance of power in the buyer – supplier relationship: exploit
and dependence in terms of buyer’s and supplier’s dependence.              (in case of buyer dominance), balance (in case of a balanced
Subsequently, we have developed constructs for buyer’s                     relationship), and diversify (in case of supplier dominance).
dependence as well as supplier’s dependence. The empirical                    Note that Kraljic does not pay much attention to strategic
analysis is founded on a survey among 250 purchasing                       aspects of product categories other than the strategic items.
professionals. On the basis of the survey data we have assessed            Other scholars have filled this gap (e.g. Bensaou, 1999; Elliott-
power and interdependence in buyer –supplier relationships for             Shircore & Steele, 1985; Lilliecreutz & Ydreskog, 1999; Olsen
all quadrants of the Kraljic matrix. In general terms this study           & Ellram, 1997; Syson, 1992; Van Weele, 2000). They refined
contributes to a better understanding of the (perceived) power             the original matrix and elaborated on the Fmain tasks_ for
and interdependence in buyer – supplier relationships.                     bottleneck, non-critical and leverage items. In addition, they
    The organization of the paper is as follows. In Section 2 a            formulated strategic recommendations, resulting in one overall
brief overview of the Kraljic approach is given and, on the basis          purchasing strategy for each cell/category.
of recent literature, we will identify hypotheses with respect to             Although power and interdependence issues underpin these
power and dependence for each quadrant. In Section 3 the survey            purchasing strategies, they are not explicitly discussed in any
design and the constructs for the key variables are presented. The         of the studies referred to above. Yet, the purchasing strategies
results of the survey are shown in Section 4. Section 5 will               for each of the Kraljic quadrants give rise to hypotheses on the
conclude and give suggestions for further research.                        importance of power and dependence in the Kraljic matrix. In
                                                                           Section 2.3 we will revisit these strategies and connect them to
2. Conceptual background                                                   the power and interdependence balance.

2.1. The Kraljic matrix                                                    2.2. Power and interdependence

    Kraljic (1977, 1983) introduced a comprehensive portfolio                 Firms always depend, to varying extents, on their trading
approach as a tool for professional purchasers. With the help of           partner. Early studies on dependence focused on the effects for
the portfolio matrix, professional purchasers could optimize the           the buyer of its dependence on the supplier, without taking into
use of capabilities of different suppliers (Nellore & Soderquist,          account the supplier’s dependence (e.g., El-Ansary & Stern,
2000) and thereby effectively manage suppliers. Currently,                 1972). More recent studies have incorporated dependence from
Kraljic’s matrix is widely used by purchasing professionals.               the perspective of the buyer as well as the supplier (Buchanan,
Especially in Western Europe the Kraljic approach has received             1992; Geyskens, Steenkamp, Sheer, & Kumar, 1996; Kumar,
large-scale recognition and has attained an increasing degree of           Sheer, & Steenkamp, 1995). In other words, dependence is
adoption. Lamming and Harrison (2001) stated that Kraljic’s                mutual.
matrix remains the foundation for purchasing strategies of many               Mutual dependence and power are closely related concepts.
organizations across sectors. In a survey of Dutch companies               The buyer’s dependence on the supplier is a source of power for
Boodie (1997) found that 44% of the responding purchasing
managers used the Kraljic matrix for formulating purchasing
strategies. No less than 80% of industrial companies that operate          Table 1
on a mass production basis use it. Several years later, Bos, Van           The Kraljic purchasing portfolio model (modified from Kraljic, 1983: 111)
der Heijden, Goedhart, and Notermans (2005) reported in a                  Profit impact Supply risk
similar study that portfolio usage was increased to 61%. In the                         Low                               High
course of time the Kraljic approach has entered many textbooks             High         Leverage items                   Strategic items
on purchasing and supply management. Gradually Kraljic has                              Exploitation of purchasing power Diversify, balance, or exploit
gained acceptance in other countries, notably in the USA,                  Low          Non-critical items               Bottleneck items
Canada and Northern Europe.                                                             Efficient processing             Volume assurance
M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229
                                         ¨                                                                                                               221


the supplier, and vice versa. A well-known definition is that the         possesses much power, it is not likely that either side is going
relative power of an organization over another is the result of the       to use it. The risk of retaliation is often considered as being too
net dependence of the one on the other. If A depends on B more            high (Ramsay, 1996). In addition, when total interdependence
than B depends on A, then B has power over A (Pfeffer, 1981).             is high, both partners are faced with high exit barriers
Similarly, Bacharach and Lawler define relative power as ‘‘the            (Geyskens et al., 1996).
dependence of one party compared to the dependence of the                     From the above can be concluded that the literature makes a
other party’’ (1981: 65). Likewise, Dickson (1983) states that            clear difference between the concepts of (1) relative power,
the power of one party over another is a function of relative             which is the result of interdependence asymmetry; and (2) total
dependence. Anderson and Narus (1990) also use the term                   power, which is the result of full interdependence of both parties
relative dependence to refer to the difference between a firm’s           on each other and which is commonly referred to as total
dependence on its partner and its partner’s dependence on the             interdependence. However, empirical research on the impact of
firm. The primary consequence of relative dependence is                   relative power and total interdependence on buyer – supplier
indicated as power.                                                       relationships is scarce. To be able to fill this void, both concepts
    Buchanan (1992) conceptualized power-dependence imba-                 were defined in terms of buyer’s and supplier’s dependence (cf.
lances in buyer –supplier relationships as the difference in              Bacharach & Lawler, 1981; Pfeffer, 1981). In this study, the
value that buyers and sellers attach to the relationship. In              buyer’s relative power will be measured as the difference
asymmetric relationships, the most independent partner dom-               between supplier’s dependence and buyer’s dependence. Sim-
inates the exchange. Balanced relationships refer to domination           ilarly, the supplier’s relative power will be measured as the
of neither party (Buchanan, 1992). Kumar et al. (1995) use the            difference between buyer’s dependence and supplier’s depen-
term interdependence asymmetry in this respect, which is                  dence. This conforms Pfeffer’s (1981: 99) viewpoint that the
defined as the difference between the two partner’s levels of             relative power of one social actor over another is the result of the
dependence. Symmetrical interdependence exists when parties               net dependence of the one on the other. In accordance with
are equally dependent on each other.                                      Bacharach and Lawler (1981: 61), total interdependence in a
    Buyer – supplier relationships that are characterized by              relationship will be measured by ‘‘the sum of the parties’
asymmetric interdependence are believed to be deficient because           dependence on one another’’.
the independent partner experiences high power and might be
attempted to exploit it (Anderson & Weitz, 1989; Frazier &                2.3. Hypotheses on relative power and total interdependence in
Rody, 1991; Geyskens et al., 1996). McDonald (1999) states in             the Kraljic matrix
this respect that power imbalances within a buyer –supplier
relationship can lead to unproductive partnerships. In the long              In Section 2.1 we referred to purchasing strategies for each
term the position of the weaker party will be eroded too much             of the four Kraljic quadrants. These strategies will be used to
and the partnership will be destroyed. Anderson and Weitz point           characterize the relation between the Kraljic quadrants and the
out that ‘‘imbalanced channel relationships are characterized by          power-dependence balance in buyer – supplier relationships
less cooperation and greater conflict’’ (1989: 312). However,             (see also Van Weele, 2000).
note that an unbalanced relationship does not automatically                  Strategic products 2 represent a considerable value to the
involve actual misuse of power (Provan & Gassenheimer, 1994).             organization in terms of a large impact on profit and a high
Power can provide an effective coordination of exchange                   supply risk. Examples are engines and gearboxes for automo-
relationships, as the distribution of power has become legitimate         bile manufacturers, turbines for the chemical industry and
over time (Frazier & Antia, 1995). Maloni and Benton (2000)               bottling equipment for breweries. Often strategic products can
found empirical evidence, which indicates that power asymme-              only be purchased from one supplier (single source), causing a
try can be used as a tool to promote supply chain integration and         significant supply risk. In order to counterbalance this risk,
to induce high levels of performance.                                     firms will aim at building a partnership relationship with its
    Various researchers have argued that a comprehensive view             supplier (Elliott-Shircore & Steele, 1985). The mutual trust and
of the interdependence of a dyadic relationship should include            commitment that comes with the intensified relationship is
not only interdependence asymmetry (or relative power), but               likely to reduce the supply risk to a minimum. A close and
also total interdependence (or total power), for example                  lasting cooperation with suppliers will lead to improvements in
Bacharach and Lawler (1981), Frazier and Antia (1995),                    product quality, delivery reliability, lead times, product devel-
Gundlach and Cadotte (1994), Geyskens et al. (1996), Kumar                opment, product design, and it will lead to cost reduction
et al. (1995). Total interdependence refers to the intensity of a         (Hadeler & Evans, 1994; Tuten & Urban, 2001). This situation
relationship. A high level of total interdependence is an                 can be characterized as one with balanced power. Buyers and
indicator for a strong, cooperative long-term relationship in             suppliers are both heavily involved in the partnership, therefore
which both parties have invested. Mutual trust and mutual
commitment will characterize those relationships (Geyskens et               2
al., 1996). Besides this loyalty towards the other partner and                Although Kraljic (1983) identified three strategies for this quadrant (exploit,
                                                                          balance and diversify), our discussion will be limited to the balance strategy,
the accompanying desire to continue the relationship, there is            which is in accordance with the approach adopted by many others, e.g. Elliott-
an alternative motivation for both firms to keep the partnership          Shircore and Steele (1985), Hadeler and Evans (1994), Olsen and Ellram
intact. In the case that both parties know that the other party           (1997), and Van Weele (2000).
222                           M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229
                                         ¨


mutual dependence is expected to be high. Total interdepen-               Table 2
dence is high as well, since the relationship is very intense.            Expectations on basis of the literature with respect to relative power and total
                                                                          interdependence in the Kraljic matrix
Hypothesis 1a. The strategic quadrant of the Kraljic matrix is            Profit   Supply risk
characterized by balanced power.                                          impact   Low                                    High

Hypothesis 1b. In the strategic quadrant of the Kraljic matrix            High     Leverage items                         Strategic items
                                                                                   Buyer dominated: BD < SD               Balanced power: BD = SD
total interdependence is higher than in each of the other
                                                                                   Moderate level of                      High level of interdependence:
quadrants.                                                                         interdependence: (BD + SD) in          (BD + SD) in the strategic
                                                                                   the leverage quadrant < (BD + SD)      quadrant > (BD + SD) in each
    Bottleneck products have a moderate influence on the
                                                                                   in the strategic quadrant and          of the other quadrants
financial results of a firm, however, they are vulnerable with                     (BD + SD) in the leverage
regard to their supply. Suppliers have a dominant power position                   quadrant > (BD + SD) in the
for these products (Kempeners & van Weele, 1997). The                              non-critical quadrant
purchasing strategy is therefore primarily focused on assurance           Low      Non-critical items                     Bottleneck items
                                                                                   Balanced power: BD = SD                Supplier dominated: BD > SD
of supply, if necessary even at additional cost. Keeping extra
                                                                                   Low level of interdependence:          Moderate level of
stocks of the materials concerned or developing consigned stock                    (BD + SD) in the non-critical          interdependence: (BD + SD)
agreements with suppliers are examples of this strategy. Firms                     quadrant < (BD + SD) in each           in the bottleneck
can make a risk analysis to determine the most important                           of the other quadrants                 quadrant < (BD + SD) in the
bottleneck products and the consequences hereof. Contingency                                                              strategic quadrant and
                                                                                                                          (BD + SD) in the bottleneck
planning might be a possibility for dealing with unexpected bad
                                                                                                                          quadrant > (BD + SD) in the
situations. Since the buyers and suppliers are not highly involved                                                        non-critical quadrant
in the relationship, total interdependence in this quadrant is            Note that BD refers to buyer’s dependence and SD denotes supplier’s
expected to be lower than in the strategic quadrant.                      dependence.

Hypothesis 2a. The bottleneck quadrant of the Kraljic matrix is
characterized by supplier dominance.                                      From a purchasing point of view, these items cause only few
                                                                          technical or commercial problems. As a rule of thumb routine
Hypothesis 2b. In the bottleneck quadrant of the Kraljic matrix           products require 80% of the purchasing department’s time, while
total interdependence is higher than in the non-critical                  they often represent less than 20% of the purchasing turnover.
quadrant.                                                                 The handling of these products requires a purchasing strategy
   In general leverage products can be obtained from various              aimed at reducing the logistic and administrative complexity
suppliers. These products represent a relatively large share of the       (Olsen & Ellram, 1997). Systems contracting is generally
end product’s cost price in combination with a relatively low             advised as the way of doing business with suppliers of routine
supply risk. As a consequence, this segment is buyer dominated            products (Elliott-Shircore & Steele, 1985; Kempeners & van
(Kempeners & van Weele, 1997). The buyer has many possibilities           Weele, 1997). The main idea is to enhance purchasing power by
and incentives for negotiation, since small percentages of cost           standardization and bundling of purchasing requirements. The
savings usually involve large sums of money (Olsen & Ellram,              routine character of the transaction implies that the mutual
1997). At the same time the supply risk is minimal. These                 dependence between buyers and suppliers is balanced. Total
characteristics justify an aggressive approach to the supply market       interdependence is low, since the buyer’s dependence and the
(e.g. Van Weele, 2000). Frequently, a purchasing strategy on the          supplier’s dependence will both be quite low.
basis of principles of competitive bidding is pursued. Since              Hypothesis 4a. The non-critical quadrant of the Kraljic matrix
suppliers and products are interchangeable, there is no need for          is characterized by balanced power.
long-term supply contracts. In general, a coordinated purchasing
approach is adopted that has the form of a centrally negotiated              Note that it is not necessary to propose a separate hypothesis
umbrella agreement with preferred suppliers. Call-off orders are          about total interdependence in the non-critical quadrant. The
then placed as an administrative formality. The buying power is           combination of hypotheses 1b, 2b and 3b makes a separate
actively used to get better deals with interchangeable suppliers.         hypothesis redundant.
Total interdependence is expected to be moderate. Although the               In sum, the quadrants in the Kraljic matrix correspond to four
supplier’s dependence is expected to be high, the buyer’s                 basic power-and-dependence positions. Table 2 gives an
dependence is expected to be quite low.                                   overview of our expectations for the balance of power and the
                                                                          level of total interdependence in each of the four quadrants.
Hypothesis 3a. The leverage quadrant of the Kraljic matrix is
characterized by buyer dominance.                                         3. Methodology
Hypothesis 3b. In the leverage quadrant of the Kraljic matrix
                                                                          3.1. Survey design, sample and response
total interdependence is higher than in the non-critical quadrant.
  Non-critical products usually have a small value per unit.                 The hypotheses were tested in a survey among 250
Many alternative suppliers can be found for these products.               purchasing professionals. For this purpose we translated each
M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229
                                                ¨                                                                                                                 223


of the purchasing strategies discussed in Section 2.3 into                        (NEVI) in three stages. Purchasing professionals were speci-
comprehensive descriptions of real-life situations (scenarios).                   fically targeted with this survey. Purchasing professionals
The description of the four scenarios is given in Table 3.                        undertake negotiations with suppliers on a daily basis. There-
    The survey adopts a repeated measures design, i.e. respon-                    fore, they have vast experience, expertise and insight into the
dents had to evaluate a series of identical questions for each of                 power and dependency issues in the relationship with their
the four scenarios from their own perspective, i.e. the                           suppliers. In the first two stages, the questionnaires were sent out
perspective of the buyer. The distinct advantage of using a                       by postal mail. The last stage consisted of an electronic mailing.
repeated measures design instead of other experimental designs                    In each round only those respondents were addressed that had
is that the potential bias caused by individual differences among                 not responded to an earlier mailing. Tests on the likelihood of a
groups of respondents is taken away. Each of the respondents has                  non-response bias indicated no statistical significant differences
to answer all questions in each of the four scenarios. Therefore,                 between the first wave and the second wave of respondents.
specific characteristics of the respondents, such as I.Q.,                           A total number of 248 responses were received, resulting in a
education and motivation, do not differ across the four groups                    response rate of 21.5% (248 / 1153). Questionnaires that were
that reply to the questions in each scenario. In sum, by adopting a               completed for less than 90% were declared invalid. Hence, a
repeated measures design, variability among groups of respon-                     total of 10 reactions were discarded due to incomplete
dents is removed from the error term, which makes the design                      information. In addition, all responses were removed that scored
more powerful than randomized designs (Stevens, 2001).                            on average less than 3 for recognition on a 5-point Likert scale.
    A potential drawback of the adopted research method is that                   In this way, another 22 responses were omitted, resulting in an
respondents might not be able to fully visualize themselves in the                effective response rate of 18.7% (216 / 1153). This can be
proposed descriptions, resulting in unreliable answers. This                      considered as quite satisfactory for an industrial mail survey in
shortcoming was countered by including an entry for recognition                   Europe (Erdogan & Baker, 2002; Frohlich, 2002), especially
of the scenario, i.e. respondents were asked to assess the degree                 when we take into account that the questionnaire was very long.
in which they recognize the described situation. In the analysis of               Whereas Yu and Cooper (1983) have shown that an optimal
the data, we removed the survey results for respondents with low                  response is received on questionnaires that contain 40 to 50
scores on Frecognition_ from the database. In this way we                         items, the questionnaire contained 8 pages with 175 items in
ensured the validity of the results.                                              total.
    The survey procedure included a pilot study aimed at
enhancing the reliability and the validity of the questionnaire.                  3.2. Developing constructs for buyer’s and supplier’s
The pilot study entailed discussions with six purchasing                          dependence
professionals in four manufacturing companies in the Nether-
lands. Several issues were discussed during these interviews,                        In Section 2.2 we have explained that relative power and
such as the clarity of the questionnaire items, the recognizability               total interdependence were defined in terms of buyer’s and
of the scenarios, the time needed to fill in the questionnaire and                supplier’s dependence (cf. Bacharach & Lawler, 1981; Pfeffer,
issues for further improvement of the items. On account of the                    1981). There is no general consensus in the literature on how
pilot study several improvements have been made in the                            these two concepts should be operationalised. We have
description and layout of the questionnaire items, response                       examined relevant academic contributions to the literature to
options and scenarios.                                                            derive several aspects of organizational dependence that could
    The final questionnaire has been administered to 1153                         be used to operationalise buyer’s dependence and supplier’s
members of the Dutch Association of Purchasing Management                         dependence.

Table 3
Description of the scenarios corresponding to the Kraljic quadrants
Scenario   Characterization            Corresponding Kraljic quadrant   Scenario description
1          Maintain partnership        Strategic quadrant               Consider a product with a high purchasing risk and a high financial value. You consider
                                                                        the supplier as an important partner with whom a satisfactory strategic relationship exists.
                                                                        The performance of the supplier is excellent. Both parties have an interest in continuing
                                                                        the relationship and the parties have a good mutual understanding.
2          Keep safety stocks          Bottleneck quadrant              Consider a product with a relative low financial value, but a high purchasing risk. Your
                                                                        firm is vulnerable regarding the supply of one supplier. You try to ensure a constant
                                                                        supply by keeping high stocks.
3          Partner of convenience      Leverage quadrant                You have a very favorable negotiating position with this product. The purchasing risk is
                                                                        low, while the product has a relatively high financial value. Negotiations are fierce. You
                                                                        let those suppliers prevail that offer the lowest price while guaranteeing quality and
                                                                        prompt delivery. Competitive bidding is one of your tactics. You only allow short-term
                                                                        contracts.
4          Pooling of requirements     Non-critical quadrant            Consider a product that has a relative low financial value and a low purchasing risk. The
                                                                        product is not very critical for your company, but still it has to be purchased. You choose
                                                                        to buy the product as a part of a package of similar products from a certain supplier. In this
                                                                        way it is possible to have only one supplier for several products.
224                           M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229
                                         ¨


    Jacobs (1974) introduces two concepts from economic                   alternative suppliers and low switching costs between suppliers
theory to describe dependence, namely Fessentiality_ and                  are much more important to the buyer than the relative amount of
Fsubstitutability_. He points out that it is of primary importance        money that is involved. Hence, we have excluded Ffinancial
to the concept of dependence whether A can do without B                   magnitude_ from the construct of buyer’s dependence and
(essentiality of a resource) or whether other sources are                 included it in the supplier’s dependence construct.
available (substitutability of the resource). Scholars in Re-                 There is a difference in the perspective of buyers and
source Dependence Theory refer to Fessentiality_ as Fthe                  suppliers with regard to the second component of dependence
importance of a resource_, which is said to be determined by              as well. The criticality of a resource refers to the degree in which
(1) the relative financial magnitude of the resource and (2) the          the organization is able to continue its business processes in the
criticality of the resource (Pfeffer & Salancik, 1978). On the            absence of the resource. In essence, however, the concept is two-
other hand, substitutability can be subdivided into (1) the               fold in nature. On the one hand it refers to a need for
availability of alternative sources and (2) the level of relation         technological expertise of the partner, on the other hand it
specific investments (i.e. the costs involved with switching              points to issues of logistical indispensability (Cagliano, Caniato,
between suppliers) (e.g. Bourantas, 1989).                                & Spina, 2002). The need for technological expertise is critical
    In addition to these conceptual studies, several empirical            for both parties, buyer and supplier. In an industrial context,
studies pay attention to the concept of organizational depen-             companies rely more and more on technologically advanced
dence. Most of these studies regard organizational dependence             (key) suppliers. From the supplier’s perspective a similar
as an explanatory variable instead of trying to find the factors          argument holds. Companies increasingly need the critical
that have an influence on it. The few studies that try to explain         expertise and specialized knowledge of their (industrial)
the factors that influence organizational dependence (e.g.                customers. Logistics-based dependence, on the other hand, is
Nooteboom, de Jong, Vossen, Helper, & Sako, 2000; Sriram,                 less an issue to the supplier than it is to the buyer. The buyer is
Krapfel, & Spekman, 1992) find similar factors as indicated by            mainly interested in receiving the goods in a way that is
the conceptual studies above. In all empirical studies                    logistically compatible with its own production system. In
Fimportance_ and Fsubstitutability_ determine dependence,                 contrast, the supplier will deliver the goods in any logistic way
whereby importance is found to have a positive relationship               that is required, as long as the buyer will pay for it. The buyer’s
with dependence and substitutability is found to have a negative          main concern is the correct delivery of the goods, whereas the
relationship. The empirical studies do not provide decisive               supplier’s main concern is of a financial nature. On the basis of
answers concerning the statistical significance of the dimensions         these considerations we have redefined the concept of resource
of dependence. Only some tentative empirical evidence can be              criticality in the construct of supplier’s dependence to solely
found that importance and substitutability are significantly              include the need for the buyer’s technological expertise. The
related to dependence.                                                    construct for buyer’s dependence includes the logistical
    In summary, the analysis of conceptual and empirical studies          indispensability of the supplier, in addition to the need for a
shows that organizational dependence contains four key                    supplier’s technological expertise.
characteristics:                                                              With respect to the availability of alternative sources and
                                                                          switching costs the dependence positions of buyers and suppliers
  (1)   the financial magnitude of the exchanged resources;               are symmetrical. The buyer depends as much on the supplier as
  (2)   the criticality of the resources;                                 the other way around. Both buying and supplying organizations
  (3)   the availability of alternative sources;                          invest in the relationship with their trading partner. When the
  (4)   switching costs, incurred when replacing a trading                supplier develops and uses dedicated equipment assigned
        partner.                                                          exclusively to one customer this will result in high switching
                                                                          costs if the relationship deteriorates. On the other hand, buying
    With these characteristics in mind we have set up                     organizations also face relation specific investments, making
constructs for buyer’s dependence and supplier’s dependence               significant investments in suppliers.
as follows.                                                                   For obvious reasons the overall dependency on the other
    The Resource Dependence Theory posits a positive re-                  party is also included in both variables, the construct of buyer’s
lationship between the (financial) magnitude of a resource and            dependence and the construct of supplier’s dependence. Table 4
the mutual dependence of the trading partners. It is reasonable to
assume that the first characteristic of organizational dependence,
                                                                          Table 4
the relative financial magnitude of transactions, particularly            Aspects that compose buyer’s dependence and supplier’s dependence
relates to supplier’s dependence. In the view of the supplier, a
                                                                          Construct     Buyer’s dependence            Supplier’s dependence
relatively important buyer (in terms of financial magnitude of the
transaction) will have a very powerful position in negotiations,          Aspects       Logistical indispensability   Financial magnitude
                                                                            (items)     Need for supplier’s           Need for buyer’s
causing the supplier to be dependent on the buyer. For the buyer                        technological expertise       technological expertise
the financial magnitude of the transaction with a certain supplier                      Availability of alternative   Availability of
is much less crucial for it’s dependence position. If switching                         suppliers                     alternative buyers
costs are low, the buyer will not experience any dependence on                          Switching costs buyer         Switching costs supplier
the supplier. Therefore, factors such as the availability of                            Overall buyer’s dependence    Overall supplier’s dependence
M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229
                                               ¨                                                                                                  225


Table 5                                                                          4. Results
Reliability analysis: Cronbach’s alphas
                                 Construct                                           A comprehensive view of the dyadic nature of buyer –
Category in the Kraljic matrix   Buyer’s dependence     Supplier’s dependence    supplier relationships should include the assessment of (1) the
Strategic quadrant               0.64                   0.74                     difference between buyer’s and supplier’s dependence (net
Bottleneck quadrant              0.61                   0.76                     dependence) which corresponds to the relative power of each
Leverage quadrant                0.64                   0.69                     party; and (2) the sum of buyer’s and supplier’s dependence
Non-critical quadrant            0.67                   0.72
                                                                                 (total interdependence) which indicates the intensity and
                                                                                 development phase of the relationship between parties.
summarizes the aspects of buyer – supplier relationships that                        Note that the repeated measure design of the survey was
pertain to buyer’s dependence and supplier’s dependence. Note                    accounted for when analyzing the data. We used Estimated
that each aspect was measured by a corresponding item in the                     Marginal Means (EMMEANS) in SPSS (General Linear
questionnaire, using a 5-point Likert scale.                                     Model-repeated measures) for the comparisons of the means
                                                                                 in different scenarios. Bonferroni adjustments were made to
3.3. Validity analysis                                                           control for Type I errors (Tabachnick & Fidell, 2001).
                                                                                     Table 6 shows the average score for the construct variables
    A reliability analysis using Cronbach’s alpha was performed                  supplier’s dependence and buyer’s dependence in the four
to ensure the internal consistency of the items that constitute                  scenarios. The last two columns in Table 6 show the resulting
each construct as shown in Table 4 (Cronbach, 1951). Table 5                     findings for the power balance and total interdependence. Note
presents the results of the reliability analysis. The table shows                that column 3 indicates the relative power position of the buyer,
the values of Cronbach’s alpha for each of the four Kraljic                      i.e. the difference between supplier’s dependence and buyer’s
quadrants. The coefficients of Cronbach’s alpha are all higher                   dependence. Therefore, a negative sign for the power balance
than 0.60, indicating an acceptable internal consistency and                     shows that the supplier dominates the relationship, whereas a
reliability of the constructs.                                                   positive sign points to buyer dominance. Total interdependence
    Additional correlation analysis in each quadrant showed that                 (last column in Table 6) is measured by the sum of buyer’s
items that should be related, are strongly correlated, indicating                dependence and supplier’s dependence. On a scale that runs
convergent validity. In addition it was found that items that                    from +2 (minimal interdependence) to +10 (maximum interde-
theoretically should not be related, did not correlate (discri-                  pendence) we consider values below 5 as low, between 5 and 7 as
minant validity).                                                                moderate and above 7 as high.
    Furthermore, we used explanatory factor analysis (principal                      Several points emerge from Table 6. Column 1 in Table 6
components analysis with varimax rotation) to identify a                         shows a relatively high buyer’s dependence on the right hand
possible underlying factor structure (see the table in the                       side of the Kraljic matrix (bottleneck and strategic quadrant),
Appendix for the detailed results of the factor analysis). For                   and a relatively low buyer’s dependence on the left hand side of
each quadrant of the Kraljic matrix a separate factor analysis has               the matrix (non-critical and leverage). These findings are in
been executed. The factor solutions confirmed our expectations,                  accordance with our prior expectations. Column 2 in Table 6
i.e. in each quadrant two components were found: one contain-                    indicates that the findings for supplier’s dependence are not
ing the items that were expected to indicate buyer’s dependence                  clear-cut. Remarkably, the supplier’s dependence in the leverage
and the other containing the items that were expected to point to                quadrant is lower than we might have expected in advance (2.68
supplier’s dependence. Almost all items had factor loadings that                 on a 5-point scale). The same holds for the strategic quadrant,
exceeded the recommended level of 0.50 (Hair, Anderson,                          where the supplier’s dependence is medium (3.31 on a 5-point
Tatham, & Black, 1998). Note that none of the items cross-                       scale). However, the relatively low supplier’s dependence in the
loaded on both factors. In other words, the items that should not                bottleneck and the non-critical quadrant confirm our expecta-
be related were indeed not related. We can safely conclude that                  tions on the basis of the literature.
buyer’s dependence and supplier’s dependence in each of the                          These findings have notable implications for the hypoth-
four quadrants are dissimilar constructs.                                        eses. With respect to the power balance (column 3) it was

Table 6
Power and interdependence in the Kraljic matrix (n = 216)
                              Scenario                         Buyer’s              Supplier’s               Relative            Total interdependence
                                                               dependence (1)*      dependence (2)*          power (2) À (1)**   (1) + (2)***
Strategic quadrant            Maintain partnership             4.03                 3.31                     À0.72a              7.34
Bottleneck quadrant           Keep safety stocks               3.66                 2.32                     À1.34a              5.97
Leverage quadrant             Partner of convenience           2.41                 2.68                     +0.27a              5.09
Non-critical quadrant         Pooling of requirements          1.90                 1.97                     +0.07               3.87
a
 Difference between supplier’s dependence and buyer’s dependence is significant at p < 0.05.
*Supplier’s and buyer’s dependence are measured by taking the average score on the items of each construct respectively.
**Power is measured on a scale from À4 (maximum supplier’s dominance) to +4 (maximum buyer’s dominance).
***Total interdependence is measured on a scale from +2 (minimum interdependence) to +10 (maximum interdependence).
226                                  M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229
                                                ¨


found that buyer – supplier relationships are dominated by the                    Table 8
supplier in the strategic quadrant, rejecting Hypothesis 1a. We                   Differences with respect to interdependence between quadrants of Kraljic
                                                                                  matrix
will come back to this unexpected result in the next
                                                                                                       Results with respect to interdependence
paragraph. The results in column 3 indicate that buyer –
supplier relationships are also dominated by the supplier in                      (1)                  INDEPstrat À INDEPbottle                    +1.37a
                                                                                  (2)                  INDEPstrat À INDEPnon                       +3.47a
the bottleneck quadrant, confirming Hypothesis 2a. In
                                                                                  (3)                  INDEPstrat À INDEPlev                       +2.25a
contrast, the buyer is dominant in the leverage quadrant,                         (4)                  INDEPnon À INDEPbottle                      À2.10a
supporting Hypothesis 3a. The t-tests showed that, with the                       (5)                  INDEPnon À INDEPlev                         À1.22a
exception of the non-critical quadrant, all quadrants presented                   a
                                                                                   Significantly different from zero at p < 0.05.
statistically significant differences between supplier’s and
buyer’s dependence. The insignificant difference between                          When we look at the underlying data of the supplier’s
supplier’s dependence and buyer’s dependence in the non-                          dependence construct (Table 7) we find that respondents
critical quadrant refers to a significant power balance in this                   reported that they:
quadrant, thereby confirming Hypothesis 4a.
    The results for the strategic quadrant lead to a rejection of                     - have more need for the supplier’s technological expertise
Hypothesis 1a that suggested a balanced power relationship                              than vice versa; and
for this quadrant. The literature puts a lot of emphasis on the                       - face higher switching costs than the suppliers; and
idea that buyer – supplier relationships in this quadrant are                         - have fewer alternative trading partners than the supplier
typically characterized as satisfactory relationships based on                          does.
trust, commitment and open communication (e.g. De Ruyter,
Moorman, & Lemmink, 2001; Morgan & Hunt, 1994).                                      The last column of Table 6 shows the level of total
However, the results suggest that such satisfactory relation-                     interdependence in the various quadrants.
ships in the strategic quadrant have an asymmetric power                             From the literature on the Kraljic matrix we are expecting:
balance. From the buyer’s perspective the supplier dominates
the relationship. When we examine the data in greater detail,                         - high levels of interdependence in the strategic quadrant
this result can be traced back to the medium level of                                   (Hypothesis 1b);
supplier’s dependence (3.31 on a 5-point scale) and the high                          - moderate levels of interdependence in the bottleneck and
level of buyer’s dependence (4.03 on a 5-point scale) that                              leverage quadrant (Hypotheses 2b and 3b respectively); and
was reported by the respondents in the survey. This deviates                            consequently
from what is expected from the literature, which indicates                            - low levels of interdependence in the non-critical quadrant.
that supplier’s dependence is high as well in the strategic
quadrant.                                                                            Several separate tests have been undertaken to determine
    Presumably, once a buyer has entered a partnership this                       whether total interdependence in one quadrant significantly
ensures a disproportionate raise in the dependence of the buyer                   differs from total interdependence in all other quadrants. The
on the supplying partner. Cox, Lonsdale, Watson, and Qiao                         results are reported in Table 8, where INDEPstrat, INDEPbottle,
(2003) give a possible explanation for this phenomenon. In                        INDEPlev and INDEPnon refer to total interdependence in the
their belief a pre-contractual situation of balanced power shifts                 strategic, bottleneck, leverage and non-critical quadrant
to a post-contractual situation of supplier dominance, when the                   respectively.
supplier refuses to offer balance in the relationship and locks                      The results largely confirm our prior expectations. Total
the buyer in. Other writers suggest that unbalanced relation-                     interdependence has its highest value in the strategic
ships may not always be troublesome: a known distribution of                      quadrant, confirming Hypothesis 1a. As expected, total
power between both partners could provide effective co-                           interdependence is moderate in the bottleneck and the
ordination of the exchange relationship (Frazier & Antia,                         leverage quadrant, thereby giving confirmation of Hypotheses
1995). A relative power position can be used to enhance the                       2b and 3b respectively. Consequently, the non-critical
nature of relational exchange between trading partners. It                        quadrant contains the lowest value of total interdependence.
seems that the distribution of power can become legitimated                       We conclude that the empirical findings confirm the hitherto
over time, so that both social actors expect and value a certain                  untested theoretical notions about total interdependence in
pattern of influence.                                                             buyer – supplier relationships.

Table 7
Item scores and standard deviations (between parentheses) for the buyer’s dependence and the supplier’s dependence construct in the strategic quadrant
Buyer’s dependence                                                                           Supplier’s dependence
Logistical indispensability                              4.63   (0.541)                      Financial magnitude                                   3.95   (0.761)
Supplier’s technological expertise                       4.08   (0.868)                      Buyer’s technological expertise                       3.32   (1.038)
Alternative suppliers                                    2.81   (1.168)                      Alternative buyers                                    3.27   (1.079)
Switching costs buyer                                    4.08   (1.074)                      Switching costs supplier                              3.36   (1.131)
Overall buyer’s dependence                               4.22   (0.757)                      Overall supplier’s dependence                         3.25   (0.998)
M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229
                                                ¨                                                                                              227


5. Summary, conclusions and suggestions for further                              justified in the case of channel studies (manufacturer –
research                                                                         distributor), where relations often revolve around one major
                                                                                 supplier. However, the method is also often used in studies
    Purchasing practitioners maintain a variety of supplier                      relating to industrial relationships, in which the limitation to
relationships with different suppliers, and the management of                    the dominant supplier is not a self-evident point of departure.
these relationships is increasingly based on a portfolio frame-                  Alternatively, many studies invite respondents to answer
work. Power and dependence are generally considered to be                        questions referring to Ftheir suppliers_ in general. On the
important for understanding buyer– supplier relationships, yet                   basis of this study we conclude that neither approach provides
these factors are often overlooked in empirical studies. Little is               a comprehensive insight into buyer – supplier relationships. We
known about the role of power and dependence in buyer –                          have found evidence of the existence of four buyer – supplier
supplier relationships from a purchasing portfolio perspective.                  relationships that differ significantly with respect to relative
In this study we filled this gap by first deducing hypotheses from               power and interdependence. This result confirms the notion
the literature on Frelative power_ and Ftotal interdependence_ in                that companies maintain a portfolio of differentiated supplier
each of the four Kraljic quadrants. Second, we empirically tested                relationships. Therefore, neither reference to Fa key supplier_
these hypotheses using data from a comprehensive survey                          nor reference to Fsuppliers_ in general takes into account the
among Dutch purchasing professionals.                                            full variation in the actual supplier base of a company. This
    A comparison of the hypotheses with the empirical findings                   common practice among researchers should only be used if
leads to the following results. The hypotheses that concerned the                the research question specifically requires such a sampling
relative power position of the buyer and the supplier in each                    method. In all other cases it should be discarded. Future and
quadrant (1a – 4a) were confirmed, except Hypothesis 1a. That                    further surveys can no longer ignore the large variety in
is, we observed supplier dominance in the strategic quadrant,                    supplier relationships.
where one would expect a balanced power situation on basis of                        The findings also have managerial relevance. They offer
the literature. This provocative result sheds new light on the                   evidence that in the strategic quadrant a supplier-dominated
buyer’s view on issues of power and dependence. It indicates that                partnership is perceived to be satisfactory from the perspective
suppliers are perceived to dominate satisfactory partnerships.                   of the buyer. Industrial marketers should be aware that
    All hypotheses concerning the level of total interdepen-                     professional purchasers feel dominated by them, even in
dence in each quadrant (1b –3b) were confirmed. Table 9                          satisfactory relationships. Possibly this finding could entice
summarizes the differences between the expectations on the                       marketers to try to exploit their power and to skim off the
basis of the literature on power and dependence, and the                         market surplus. However, marketers should be aware of the
results from this study.                                                         negative effects of the exploitation of their position. In fact, a
    The theoretical contribution of this paper lies primarily in                 situation in which the buyer feels dominated yet satisfied is
the notion that future research can no longer assume that                        desirable, since the buyer will not search for alternatives
buyer –supplier relationships in the strategic quadrant of the                   (suppliers or products). Therefore, marketers should nurture
Kraljic matrix are necessarily characterized by symmetric                        these kinds of relationships.
power positions. When we combine this result with the high                           For professional purchasers the managerial implication of
total interdependence reported in this quadrant, we arrive at a                  this study is that they should be aware that dependence
more refined theoretical implication of this study. Future                       implies vulnerability. Buyers should ask themselves whether
studies should take into account that a relationship which is                    there are sufficient benefits attached to the relationship to
characterized by a high involvement of buyers and suppliers                      offset the obvious disadvantages of such a vulnerable and
does not necessarily imply a balanced power position between                     dependent position towards a supplier. In addition, purchasers
the parties, but can yet be satisfactory, at least from the point of             should assess the risks that are harbored in this kind of
view of the buyer.                                                               relationship, and explore possibilities that might increase the
    Furthermore, this study holds an implication for future                      bargaining power of their company. In other words, even in
research, which pertains to the sampling method in survey-                       satisfactory relationships, buyers should explore the market
based studies. Many studies ask respondents to express their                     by scouting for alternative suppliers and determining their
opinions on their relationship with a single (type of) supplier,                 competencies. Furthermore, professional purchasers should
usually the key or the major supplier. This approach is                          become aware of their own power basis. They should
                                                                                 investigate to what extent the perceived supplier dominance
Table 9                                                                          is based on an objective assessment of the relationship.
Comparison of relative power and total interdependence in the Kraljic matrix:        Despite the rigor of the analysis, this study contains several
theory and practice                                                              limitations that might entice further research. One of the
               Relative power                            Total interdependence   limitations of the study concerns the fact that the survey was
               Expected             Observed             Expected   Observed     confined to the perspective of the buyer. Yet, buyer – supplier
Strategic      Balanced             Supplier dominance   Highest    Highest      relationships are dyadic in nature. Suppliers might have different
Bottleneck     Supplier dominance   Supplier dominance   Moderate   Moderate     opinions on the power and interdependence structure of the
Leverage       Buyer dominance      Buyer dominance      Moderate   Moderate     various buyer –supplier relationships. Therefore, there is a need
Non-critical   Balanced             Balanced             Lowest     Lowest       to more fully study the supplier’s perspective in order to
228                                  M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229
                                                ¨


establish whether or not both parties perceive each other’s power                 by the supplier in the strategic quadrant calls for further
position in the relationship in the same way.                                     research to identify the circumstances under which supplier
   Another limitation concerns the sample, which was drawn                        dominated relationships provide a problem for the buyer
from a list of members of the Dutch Association of Purchasing                     (Frazier & Antia, 1995). Additionally, the operationalisation
Management (NEVI). Although the sample included a wide                            in this study could serve as a promising point of departure for
range of industry sectors, the generalizability of the results                    further quantitative research to the issues of power and
would benefit from the inclusion of firms in the service sector,                  dependence in buyer – supplier relationships. The level of
as well as other Dutch and international companies. This might                    relative power might be related to the sizes of the buying and
be the object of a further study.                                                 the supplying companies. Alternatively, network positions or
   With respect to additional issues for further research we                      the positions in the supply chain could be included as a
propose the following. The finding that buyers feel dominated                     determining factor of relative power.


Appendix A. Results of the factor analyses (factor loadings)


                                      Leverage quadrant              Strategic quadrant             Non-critical quadrant            Bottleneck quadrant
                                      Factor 1       Factor 2        Factor 1       Factor 2        Factor 1        Factor 2         Factor 1        Factor 2
                                      Buyer’s        Supplier’s      Buyer’s        Supplier’s      Buyer’s         Supplier’s       Buyer’s         Supplier’s
                                      dependence     dependence      dependence     dependence      dependence      dependence       dependence      dependence
Items of buyer’s dependence:
Logistical indispensability            0.445         À 0.144          0.654         À0.058           0.529          À0.035             0.556         À0.091
Supplier’s technological expertise     0.692           0.205          0.697          0.237           0.791           0.288             0.709          0.107
Alternative suppliers                 À0.544         À 0.232         À0.484         À0.037          À0.617           0.064           À 0.470          0.334
Switching costs buyer                  0.721           0.177          0.545          0.330           0.586           0.216             0.654          0.139
Overall buyer’s dependence             0.757           0.005          0.790          0.054           0.643           0.142             0.676          0.179

Items of supplier’s dependence:
Financial magnitude                   À0.170           0.661          0.325          0.534          À0.027           0.695             0.036          0.831
Buyer’s technological expertise        0.194           0.683          0.223          0.710           0.330           0.573             0.067          0.874
Alternative buyers                    À0.083         À 0.451          0.023         À0.570          À0.215          À0.499             0.105          0.766
Switching costs supplier               0.105           0.717         À0.722          0.793           0.103           0.727           À 0.046         À0.450
Overall supplier’s dependence         À0.053           0.799          0.188          0.783          À0.323           0.824           À 0.037          0.731



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    Hall.                                                                                towards purchasing and supply. In C. Walter, & F. Kliemann (Eds.),
Jacobs, J. (1974). Dependency and vulnerability: An exchange approach to the             Evaluation of production management methods (pp. 45 – 55). Amsterdam’
    control of organizations. Administrative Sciences Quarterly, 19(1), 45 – 59.         Elsevier Science Publishers.
Kamann, D. F., & Bakker, E. F. (2004). Changing supplier selection and               Van Weele, A. J. (2000). Purchasing management: Analysis, planning and
    relationship practices: A contagion process. Journal of Purchasing and               practice. London’ Chapman and Hall.
    Supply Management, 10(2), 55 – 64.                                               Wagner, S. M., & Johnson, J. L. (2004). Configuring and managing strategic
Kempeners, M., & van Weele, A. J. (1997). Inkoopportfolio: Basis voor                    supplier portfolios. Industrial Marketing Management, 33(8), 717 – 730.
    inkoop-en marketingstrategie. In H. W. C. Van der Hart, & A. J. van Weele        Wynstra, J. Y. F., & ten Pierick, E. (2000). Managing supplier involvement in
    (Eds.), Dynamiek in Commerciele Relaties. Bunnik’ F & G Publishing.
                                     ¨                                                   new product development: A portfolio approach. European Journal of
Kraljic, P. (1977). Neue Wege im Beschaffungsmarketing. Beschaffung Aktuell              Purchasing and Supply Management, 6(1), 49 – 57.
    (pp. 20 – 26).                                                                   Yu, J., & Cooper, H. (1983). A quantitative review of research design mail
Kraljic, P. (1983). Purchasing must become supply management. Harvard                    survey response behavior. Public Opinion Quarterly, 55, 613 – 639.
    Business Review, 61(5), 109 – 117.                                               Zolkiewski, J., & Turnbull, P. (2002). Do relationship portfolios and networks
Kumar, N., Sheer, L. K., & Steenkamp, J. E. M. (1995). The effects of                    provide the key to successful relationship management? Journal of
    perceived interdependence on dealer attitudes. Journal of Marketing                  Business and Industrial Marketing, 17(2), 575 – 597.
    Research, 32, 348 – 356.
Lamming, R. C., & Harrison, D. (2001). Smaller customers and larger                  Marjolein C.J. Caniels is Assistant Professor Supply Chain Management in
                                                                                                            ¨
    suppliers: The potential for strategic purchasing approach: A case study.        the Faculty of Management Sciences of the Open University of the Nether-
    Proceedings of the 10th International IPSERA Conference, Jonkoping, ¨ ¨          lands. Her research interests include buyer – supplier relationships, supply chain
    Sweden (pp. 595 – 610).                                                          management, technological change and economic growth. She has published
Lilliecreutz, J., & Ydreskog, L. (1999). Supplier classification as an enabler for   among others in the Cambridge Journal of Economics and in Industrial and
    a differentiated purchasing strategy. Global Purchasing and Supply Chain         Corporate Change.
    Management, 11, 66 – 74.
Maloni, M., & Benton, W. C. (2000). Power influences in the supply chain.            Cees J. Gelderman is Associate Professor of Marketing and Purchasing
    Journal of Business Logistics, 21(1), 49 – 73.                                   Management in the Faculty of Management Sciences of the Open University of
McDonald, F. (1999). The Importance of power in partnership relationships.           the Netherlands. His research interests include buyer – supplier relationships,
    Journal of General Management, 25(1), 43 – 59.                                   purchasing portfolio management, and power and dependence. He has
Morgan, R. M., & Hunt, S. D. (1994). The commitment – trust theory of                published among others in the Journal of Supply Chain Management and the
    relationship marketing. Journal of Marketing, 58, 20 – 38.                       Journal of Purchasing and Supply Management.

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Caniels and gelderman 2007 imm 36(2)

  • 1. Industrial Marketing Management 36 (2007) 219 – 229 Power and interdependence in buyer supplier relationships: A purchasing portfolio approach Marjolein C.J. Caniels *, Cees J. Gelderman 1 ¨ Faculty of Management Sciences (MW), Open University of the Netherlands (OUNL), P.O. Box 2960, 6401 DL Heerlen, The Netherlands Received 27 September 2004; received in revised form 4 July 2005; accepted 3 August 2005 Available online 23 September 2005 Abstract Power and interdependence are generally considered to be important concepts for understanding buyer – supplier relationships. Yet, empirical research on power and interdependence in buyer – supplier relationships is still limited. Power and interdependence issues also play an important role in Kraljic’s portfolio approach, which is increasingly used by purchasing practitioners for managing different supplier relations and developing appropriate purchasing strategies. In this paper, the concepts of power and interdependence have been quantified for each quadrant of the Kraljic portfolio matrix, using data from a comprehensive survey among Dutch purchasing professionals. Several hypotheses have been tested and the findings largely confirm the theoretical expectations. The observed supplier dominance in the strategic quadrant of the Kraljic matrix is a notable finding, which indicates that even satisfactory partnerships are dominated by the supplier. Therefore, the presumed power symmetry of buyer – supplier relationships in the strategic quadrant seems no longer valid. D 2005 Elsevier Inc. All rights reserved. Keywords: Buyer – supplier relationships; Power and interdependence; Purchasing portfolio approach; Kraljic matrix; Purchasing strategies 1. Introduction models using other classification dimensions (e.g. Bensaou, 1999; Olsen & Ellram, 1997; Van Stekelenborg & Kornelius, Purchasing portfolio models have received much attention 1994). However, the fundamental assumption of all portfolio in recent literature about professional purchasing. Not only did models seems to be the occurrence of differences in power and Kraljic’s seminal paper in the Harvard Business Review in dependence between buyers and suppliers (Dubois & Pedersen, 1983 have a broad influence on professional purchasing (see 2002). Kraljic (1983) does not explicitly deal with issues of the evidence of Gelderman, 2003; Kamann & Bakker, 2004), it power and dependence. However, some of his recommendations has also inspired many academic writers to undertake further obviously refer to the power structure (Fexploit power_). Others research into portfolio models (e.g. Bensaou, 1999; Croom, are aimed at reducing the dependence on suppliers (Fdiversify_). 2000; Dubois & Pedersen, 2002; Dyer, Cho, & Chu, 1998; Moreover, Kraljic (1983: 112) stated that the general idea of the Gelderman & Van Weele, 2002, 2003; Lilliecreutz & Ydres- portfolio approach is to ‘‘minimize supply vulnerability and kog, 1999; Nellore & Soderquist, 2000; Olsen & Ellram, 1997; make the most of potential buying power’’. Therefore, power Wagner & Johnson, 2004; Wynstra & ten Pierick, 2000; and dependence play a significant part in the Kraljic approach. Zolkiewski & Turnbull, 2002). Although power and dependence are generally considered Kraljic’s model classifies a firm’s purchased intermediate important for the understanding of buyer –supplier relation- goods into four categories on the basis of two dimensions: (1) ships (e.g. Cox, 2001; Frazier & Antia, 1995), it seems that profit impact and (2) supply risk. Recent adaptations and they are still often overlooked factors in conceptual and refinements of Kraljic’s model have led to alternative portfolio empirical studies (e.g. Cox, 2001; Maloni & Benton, 2000). Little is known about the exact way in which power and dependence in buyer – supplier relationships enter the Kraljic * Corresponding author. Tel.: +31 45 5762724; fax: +31 45 5762103. E-mail addresses: marjolein.caniels@ou.nl (M.C.J. Caniels), ¨ matrix (Dubois & Pedersen, 2002; Gelderman & Van Weele, kees.gelderman@ou.nl (C.J. Gelderman). 2003). Moreover, the few portfolio models that do discuss 1 Tel.: +31 45 5762590; fax: +31 45 5762103. power and dependence issues in relation to portfolio matrices 0019-8501/$ - see front matter D 2005 Elsevier Inc. All rights reserved. doi:10.1016/j.indmarman.2005.08.012
  • 2. 220 M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229 ¨ generally focus on the strategic quadrant only (Wagner & Kraljic’s approach includes the construction of two portfolio Johnson, 2004). Buyer –supplier relationships in this quadrant matrices. The first matrix classifies a firm’s purchased products can be characterized as strategic partnerships. However, many on the basis of two dimensions: profit impact and supply risk. studies have acknowledged that not all supplier relationships Each dimension has two possible values: Flow_ and Fhigh_. The can or should be strategic partnerships (e.g. Gadde & Snehota, resulting 2 Â 2 matrix consists of four quadrants (see Table 1). 2000; Wagner & Johnson, 2004). In fact, firms are found to Depending on the category, Kraljic identifies certain Fmain benefit from entering into a variety of relationships with tasks_ for the firm in the interaction with its supplier. He also different suppliers (e.g. Bensaou, 1999; Lilliecreutz & Ydres- identifies the required information and the decision level in kog, 1999). Therefore, undertaking research into power and organizations per category. dependence in all four quadrants of the matrix for all The main purpose of Kraljic’s approach is to identify relationship types is critically important. strategic items. The second Kraljic matrix focuses on this The aim of this paper is to empirically test hypotheses that can category. This matrix shows the relative power position of the be deduced from the literature on power and dependence with company in the corresponding supply markets. Three general respect to all quadrants of the Kraljic purchasing portfolio purchasing strategies are distinguished, depending on the matrix. In order to do this we have defined the concepts of power balance of power in the buyer – supplier relationship: exploit and dependence in terms of buyer’s and supplier’s dependence. (in case of buyer dominance), balance (in case of a balanced Subsequently, we have developed constructs for buyer’s relationship), and diversify (in case of supplier dominance). dependence as well as supplier’s dependence. The empirical Note that Kraljic does not pay much attention to strategic analysis is founded on a survey among 250 purchasing aspects of product categories other than the strategic items. professionals. On the basis of the survey data we have assessed Other scholars have filled this gap (e.g. Bensaou, 1999; Elliott- power and interdependence in buyer –supplier relationships for Shircore & Steele, 1985; Lilliecreutz & Ydreskog, 1999; Olsen all quadrants of the Kraljic matrix. In general terms this study & Ellram, 1997; Syson, 1992; Van Weele, 2000). They refined contributes to a better understanding of the (perceived) power the original matrix and elaborated on the Fmain tasks_ for and interdependence in buyer – supplier relationships. bottleneck, non-critical and leverage items. In addition, they The organization of the paper is as follows. In Section 2 a formulated strategic recommendations, resulting in one overall brief overview of the Kraljic approach is given and, on the basis purchasing strategy for each cell/category. of recent literature, we will identify hypotheses with respect to Although power and interdependence issues underpin these power and dependence for each quadrant. In Section 3 the survey purchasing strategies, they are not explicitly discussed in any design and the constructs for the key variables are presented. The of the studies referred to above. Yet, the purchasing strategies results of the survey are shown in Section 4. Section 5 will for each of the Kraljic quadrants give rise to hypotheses on the conclude and give suggestions for further research. importance of power and dependence in the Kraljic matrix. In Section 2.3 we will revisit these strategies and connect them to 2. Conceptual background the power and interdependence balance. 2.1. The Kraljic matrix 2.2. Power and interdependence Kraljic (1977, 1983) introduced a comprehensive portfolio Firms always depend, to varying extents, on their trading approach as a tool for professional purchasers. With the help of partner. Early studies on dependence focused on the effects for the portfolio matrix, professional purchasers could optimize the the buyer of its dependence on the supplier, without taking into use of capabilities of different suppliers (Nellore & Soderquist, account the supplier’s dependence (e.g., El-Ansary & Stern, 2000) and thereby effectively manage suppliers. Currently, 1972). More recent studies have incorporated dependence from Kraljic’s matrix is widely used by purchasing professionals. the perspective of the buyer as well as the supplier (Buchanan, Especially in Western Europe the Kraljic approach has received 1992; Geyskens, Steenkamp, Sheer, & Kumar, 1996; Kumar, large-scale recognition and has attained an increasing degree of Sheer, & Steenkamp, 1995). In other words, dependence is adoption. Lamming and Harrison (2001) stated that Kraljic’s mutual. matrix remains the foundation for purchasing strategies of many Mutual dependence and power are closely related concepts. organizations across sectors. In a survey of Dutch companies The buyer’s dependence on the supplier is a source of power for Boodie (1997) found that 44% of the responding purchasing managers used the Kraljic matrix for formulating purchasing strategies. No less than 80% of industrial companies that operate Table 1 on a mass production basis use it. Several years later, Bos, Van The Kraljic purchasing portfolio model (modified from Kraljic, 1983: 111) der Heijden, Goedhart, and Notermans (2005) reported in a Profit impact Supply risk similar study that portfolio usage was increased to 61%. In the Low High course of time the Kraljic approach has entered many textbooks High Leverage items Strategic items on purchasing and supply management. Gradually Kraljic has Exploitation of purchasing power Diversify, balance, or exploit gained acceptance in other countries, notably in the USA, Low Non-critical items Bottleneck items Canada and Northern Europe. Efficient processing Volume assurance
  • 3. M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229 ¨ 221 the supplier, and vice versa. A well-known definition is that the possesses much power, it is not likely that either side is going relative power of an organization over another is the result of the to use it. The risk of retaliation is often considered as being too net dependence of the one on the other. If A depends on B more high (Ramsay, 1996). In addition, when total interdependence than B depends on A, then B has power over A (Pfeffer, 1981). is high, both partners are faced with high exit barriers Similarly, Bacharach and Lawler define relative power as ‘‘the (Geyskens et al., 1996). dependence of one party compared to the dependence of the From the above can be concluded that the literature makes a other party’’ (1981: 65). Likewise, Dickson (1983) states that clear difference between the concepts of (1) relative power, the power of one party over another is a function of relative which is the result of interdependence asymmetry; and (2) total dependence. Anderson and Narus (1990) also use the term power, which is the result of full interdependence of both parties relative dependence to refer to the difference between a firm’s on each other and which is commonly referred to as total dependence on its partner and its partner’s dependence on the interdependence. However, empirical research on the impact of firm. The primary consequence of relative dependence is relative power and total interdependence on buyer – supplier indicated as power. relationships is scarce. To be able to fill this void, both concepts Buchanan (1992) conceptualized power-dependence imba- were defined in terms of buyer’s and supplier’s dependence (cf. lances in buyer –supplier relationships as the difference in Bacharach & Lawler, 1981; Pfeffer, 1981). In this study, the value that buyers and sellers attach to the relationship. In buyer’s relative power will be measured as the difference asymmetric relationships, the most independent partner dom- between supplier’s dependence and buyer’s dependence. Sim- inates the exchange. Balanced relationships refer to domination ilarly, the supplier’s relative power will be measured as the of neither party (Buchanan, 1992). Kumar et al. (1995) use the difference between buyer’s dependence and supplier’s depen- term interdependence asymmetry in this respect, which is dence. This conforms Pfeffer’s (1981: 99) viewpoint that the defined as the difference between the two partner’s levels of relative power of one social actor over another is the result of the dependence. Symmetrical interdependence exists when parties net dependence of the one on the other. In accordance with are equally dependent on each other. Bacharach and Lawler (1981: 61), total interdependence in a Buyer – supplier relationships that are characterized by relationship will be measured by ‘‘the sum of the parties’ asymmetric interdependence are believed to be deficient because dependence on one another’’. the independent partner experiences high power and might be attempted to exploit it (Anderson & Weitz, 1989; Frazier & 2.3. Hypotheses on relative power and total interdependence in Rody, 1991; Geyskens et al., 1996). McDonald (1999) states in the Kraljic matrix this respect that power imbalances within a buyer –supplier relationship can lead to unproductive partnerships. In the long In Section 2.1 we referred to purchasing strategies for each term the position of the weaker party will be eroded too much of the four Kraljic quadrants. These strategies will be used to and the partnership will be destroyed. Anderson and Weitz point characterize the relation between the Kraljic quadrants and the out that ‘‘imbalanced channel relationships are characterized by power-dependence balance in buyer – supplier relationships less cooperation and greater conflict’’ (1989: 312). However, (see also Van Weele, 2000). note that an unbalanced relationship does not automatically Strategic products 2 represent a considerable value to the involve actual misuse of power (Provan & Gassenheimer, 1994). organization in terms of a large impact on profit and a high Power can provide an effective coordination of exchange supply risk. Examples are engines and gearboxes for automo- relationships, as the distribution of power has become legitimate bile manufacturers, turbines for the chemical industry and over time (Frazier & Antia, 1995). Maloni and Benton (2000) bottling equipment for breweries. Often strategic products can found empirical evidence, which indicates that power asymme- only be purchased from one supplier (single source), causing a try can be used as a tool to promote supply chain integration and significant supply risk. In order to counterbalance this risk, to induce high levels of performance. firms will aim at building a partnership relationship with its Various researchers have argued that a comprehensive view supplier (Elliott-Shircore & Steele, 1985). The mutual trust and of the interdependence of a dyadic relationship should include commitment that comes with the intensified relationship is not only interdependence asymmetry (or relative power), but likely to reduce the supply risk to a minimum. A close and also total interdependence (or total power), for example lasting cooperation with suppliers will lead to improvements in Bacharach and Lawler (1981), Frazier and Antia (1995), product quality, delivery reliability, lead times, product devel- Gundlach and Cadotte (1994), Geyskens et al. (1996), Kumar opment, product design, and it will lead to cost reduction et al. (1995). Total interdependence refers to the intensity of a (Hadeler & Evans, 1994; Tuten & Urban, 2001). This situation relationship. A high level of total interdependence is an can be characterized as one with balanced power. Buyers and indicator for a strong, cooperative long-term relationship in suppliers are both heavily involved in the partnership, therefore which both parties have invested. Mutual trust and mutual commitment will characterize those relationships (Geyskens et 2 al., 1996). Besides this loyalty towards the other partner and Although Kraljic (1983) identified three strategies for this quadrant (exploit, balance and diversify), our discussion will be limited to the balance strategy, the accompanying desire to continue the relationship, there is which is in accordance with the approach adopted by many others, e.g. Elliott- an alternative motivation for both firms to keep the partnership Shircore and Steele (1985), Hadeler and Evans (1994), Olsen and Ellram intact. In the case that both parties know that the other party (1997), and Van Weele (2000).
  • 4. 222 M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229 ¨ mutual dependence is expected to be high. Total interdepen- Table 2 dence is high as well, since the relationship is very intense. Expectations on basis of the literature with respect to relative power and total interdependence in the Kraljic matrix Hypothesis 1a. The strategic quadrant of the Kraljic matrix is Profit Supply risk characterized by balanced power. impact Low High Hypothesis 1b. In the strategic quadrant of the Kraljic matrix High Leverage items Strategic items Buyer dominated: BD < SD Balanced power: BD = SD total interdependence is higher than in each of the other Moderate level of High level of interdependence: quadrants. interdependence: (BD + SD) in (BD + SD) in the strategic the leverage quadrant < (BD + SD) quadrant > (BD + SD) in each Bottleneck products have a moderate influence on the in the strategic quadrant and of the other quadrants financial results of a firm, however, they are vulnerable with (BD + SD) in the leverage regard to their supply. Suppliers have a dominant power position quadrant > (BD + SD) in the for these products (Kempeners & van Weele, 1997). The non-critical quadrant purchasing strategy is therefore primarily focused on assurance Low Non-critical items Bottleneck items Balanced power: BD = SD Supplier dominated: BD > SD of supply, if necessary even at additional cost. Keeping extra Low level of interdependence: Moderate level of stocks of the materials concerned or developing consigned stock (BD + SD) in the non-critical interdependence: (BD + SD) agreements with suppliers are examples of this strategy. Firms quadrant < (BD + SD) in each in the bottleneck can make a risk analysis to determine the most important of the other quadrants quadrant < (BD + SD) in the bottleneck products and the consequences hereof. Contingency strategic quadrant and (BD + SD) in the bottleneck planning might be a possibility for dealing with unexpected bad quadrant > (BD + SD) in the situations. Since the buyers and suppliers are not highly involved non-critical quadrant in the relationship, total interdependence in this quadrant is Note that BD refers to buyer’s dependence and SD denotes supplier’s expected to be lower than in the strategic quadrant. dependence. Hypothesis 2a. The bottleneck quadrant of the Kraljic matrix is characterized by supplier dominance. From a purchasing point of view, these items cause only few technical or commercial problems. As a rule of thumb routine Hypothesis 2b. In the bottleneck quadrant of the Kraljic matrix products require 80% of the purchasing department’s time, while total interdependence is higher than in the non-critical they often represent less than 20% of the purchasing turnover. quadrant. The handling of these products requires a purchasing strategy In general leverage products can be obtained from various aimed at reducing the logistic and administrative complexity suppliers. These products represent a relatively large share of the (Olsen & Ellram, 1997). Systems contracting is generally end product’s cost price in combination with a relatively low advised as the way of doing business with suppliers of routine supply risk. As a consequence, this segment is buyer dominated products (Elliott-Shircore & Steele, 1985; Kempeners & van (Kempeners & van Weele, 1997). The buyer has many possibilities Weele, 1997). The main idea is to enhance purchasing power by and incentives for negotiation, since small percentages of cost standardization and bundling of purchasing requirements. The savings usually involve large sums of money (Olsen & Ellram, routine character of the transaction implies that the mutual 1997). At the same time the supply risk is minimal. These dependence between buyers and suppliers is balanced. Total characteristics justify an aggressive approach to the supply market interdependence is low, since the buyer’s dependence and the (e.g. Van Weele, 2000). Frequently, a purchasing strategy on the supplier’s dependence will both be quite low. basis of principles of competitive bidding is pursued. Since Hypothesis 4a. The non-critical quadrant of the Kraljic matrix suppliers and products are interchangeable, there is no need for is characterized by balanced power. long-term supply contracts. In general, a coordinated purchasing approach is adopted that has the form of a centrally negotiated Note that it is not necessary to propose a separate hypothesis umbrella agreement with preferred suppliers. Call-off orders are about total interdependence in the non-critical quadrant. The then placed as an administrative formality. The buying power is combination of hypotheses 1b, 2b and 3b makes a separate actively used to get better deals with interchangeable suppliers. hypothesis redundant. Total interdependence is expected to be moderate. Although the In sum, the quadrants in the Kraljic matrix correspond to four supplier’s dependence is expected to be high, the buyer’s basic power-and-dependence positions. Table 2 gives an dependence is expected to be quite low. overview of our expectations for the balance of power and the level of total interdependence in each of the four quadrants. Hypothesis 3a. The leverage quadrant of the Kraljic matrix is characterized by buyer dominance. 3. Methodology Hypothesis 3b. In the leverage quadrant of the Kraljic matrix 3.1. Survey design, sample and response total interdependence is higher than in the non-critical quadrant. Non-critical products usually have a small value per unit. The hypotheses were tested in a survey among 250 Many alternative suppliers can be found for these products. purchasing professionals. For this purpose we translated each
  • 5. M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229 ¨ 223 of the purchasing strategies discussed in Section 2.3 into (NEVI) in three stages. Purchasing professionals were speci- comprehensive descriptions of real-life situations (scenarios). fically targeted with this survey. Purchasing professionals The description of the four scenarios is given in Table 3. undertake negotiations with suppliers on a daily basis. There- The survey adopts a repeated measures design, i.e. respon- fore, they have vast experience, expertise and insight into the dents had to evaluate a series of identical questions for each of power and dependency issues in the relationship with their the four scenarios from their own perspective, i.e. the suppliers. In the first two stages, the questionnaires were sent out perspective of the buyer. The distinct advantage of using a by postal mail. The last stage consisted of an electronic mailing. repeated measures design instead of other experimental designs In each round only those respondents were addressed that had is that the potential bias caused by individual differences among not responded to an earlier mailing. Tests on the likelihood of a groups of respondents is taken away. Each of the respondents has non-response bias indicated no statistical significant differences to answer all questions in each of the four scenarios. Therefore, between the first wave and the second wave of respondents. specific characteristics of the respondents, such as I.Q., A total number of 248 responses were received, resulting in a education and motivation, do not differ across the four groups response rate of 21.5% (248 / 1153). Questionnaires that were that reply to the questions in each scenario. In sum, by adopting a completed for less than 90% were declared invalid. Hence, a repeated measures design, variability among groups of respon- total of 10 reactions were discarded due to incomplete dents is removed from the error term, which makes the design information. In addition, all responses were removed that scored more powerful than randomized designs (Stevens, 2001). on average less than 3 for recognition on a 5-point Likert scale. A potential drawback of the adopted research method is that In this way, another 22 responses were omitted, resulting in an respondents might not be able to fully visualize themselves in the effective response rate of 18.7% (216 / 1153). This can be proposed descriptions, resulting in unreliable answers. This considered as quite satisfactory for an industrial mail survey in shortcoming was countered by including an entry for recognition Europe (Erdogan & Baker, 2002; Frohlich, 2002), especially of the scenario, i.e. respondents were asked to assess the degree when we take into account that the questionnaire was very long. in which they recognize the described situation. In the analysis of Whereas Yu and Cooper (1983) have shown that an optimal the data, we removed the survey results for respondents with low response is received on questionnaires that contain 40 to 50 scores on Frecognition_ from the database. In this way we items, the questionnaire contained 8 pages with 175 items in ensured the validity of the results. total. The survey procedure included a pilot study aimed at enhancing the reliability and the validity of the questionnaire. 3.2. Developing constructs for buyer’s and supplier’s The pilot study entailed discussions with six purchasing dependence professionals in four manufacturing companies in the Nether- lands. Several issues were discussed during these interviews, In Section 2.2 we have explained that relative power and such as the clarity of the questionnaire items, the recognizability total interdependence were defined in terms of buyer’s and of the scenarios, the time needed to fill in the questionnaire and supplier’s dependence (cf. Bacharach & Lawler, 1981; Pfeffer, issues for further improvement of the items. On account of the 1981). There is no general consensus in the literature on how pilot study several improvements have been made in the these two concepts should be operationalised. We have description and layout of the questionnaire items, response examined relevant academic contributions to the literature to options and scenarios. derive several aspects of organizational dependence that could The final questionnaire has been administered to 1153 be used to operationalise buyer’s dependence and supplier’s members of the Dutch Association of Purchasing Management dependence. Table 3 Description of the scenarios corresponding to the Kraljic quadrants Scenario Characterization Corresponding Kraljic quadrant Scenario description 1 Maintain partnership Strategic quadrant Consider a product with a high purchasing risk and a high financial value. You consider the supplier as an important partner with whom a satisfactory strategic relationship exists. The performance of the supplier is excellent. Both parties have an interest in continuing the relationship and the parties have a good mutual understanding. 2 Keep safety stocks Bottleneck quadrant Consider a product with a relative low financial value, but a high purchasing risk. Your firm is vulnerable regarding the supply of one supplier. You try to ensure a constant supply by keeping high stocks. 3 Partner of convenience Leverage quadrant You have a very favorable negotiating position with this product. The purchasing risk is low, while the product has a relatively high financial value. Negotiations are fierce. You let those suppliers prevail that offer the lowest price while guaranteeing quality and prompt delivery. Competitive bidding is one of your tactics. You only allow short-term contracts. 4 Pooling of requirements Non-critical quadrant Consider a product that has a relative low financial value and a low purchasing risk. The product is not very critical for your company, but still it has to be purchased. You choose to buy the product as a part of a package of similar products from a certain supplier. In this way it is possible to have only one supplier for several products.
  • 6. 224 M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229 ¨ Jacobs (1974) introduces two concepts from economic alternative suppliers and low switching costs between suppliers theory to describe dependence, namely Fessentiality_ and are much more important to the buyer than the relative amount of Fsubstitutability_. He points out that it is of primary importance money that is involved. Hence, we have excluded Ffinancial to the concept of dependence whether A can do without B magnitude_ from the construct of buyer’s dependence and (essentiality of a resource) or whether other sources are included it in the supplier’s dependence construct. available (substitutability of the resource). Scholars in Re- There is a difference in the perspective of buyers and source Dependence Theory refer to Fessentiality_ as Fthe suppliers with regard to the second component of dependence importance of a resource_, which is said to be determined by as well. The criticality of a resource refers to the degree in which (1) the relative financial magnitude of the resource and (2) the the organization is able to continue its business processes in the criticality of the resource (Pfeffer & Salancik, 1978). On the absence of the resource. In essence, however, the concept is two- other hand, substitutability can be subdivided into (1) the fold in nature. On the one hand it refers to a need for availability of alternative sources and (2) the level of relation technological expertise of the partner, on the other hand it specific investments (i.e. the costs involved with switching points to issues of logistical indispensability (Cagliano, Caniato, between suppliers) (e.g. Bourantas, 1989). & Spina, 2002). The need for technological expertise is critical In addition to these conceptual studies, several empirical for both parties, buyer and supplier. In an industrial context, studies pay attention to the concept of organizational depen- companies rely more and more on technologically advanced dence. Most of these studies regard organizational dependence (key) suppliers. From the supplier’s perspective a similar as an explanatory variable instead of trying to find the factors argument holds. Companies increasingly need the critical that have an influence on it. The few studies that try to explain expertise and specialized knowledge of their (industrial) the factors that influence organizational dependence (e.g. customers. Logistics-based dependence, on the other hand, is Nooteboom, de Jong, Vossen, Helper, & Sako, 2000; Sriram, less an issue to the supplier than it is to the buyer. The buyer is Krapfel, & Spekman, 1992) find similar factors as indicated by mainly interested in receiving the goods in a way that is the conceptual studies above. In all empirical studies logistically compatible with its own production system. In Fimportance_ and Fsubstitutability_ determine dependence, contrast, the supplier will deliver the goods in any logistic way whereby importance is found to have a positive relationship that is required, as long as the buyer will pay for it. The buyer’s with dependence and substitutability is found to have a negative main concern is the correct delivery of the goods, whereas the relationship. The empirical studies do not provide decisive supplier’s main concern is of a financial nature. On the basis of answers concerning the statistical significance of the dimensions these considerations we have redefined the concept of resource of dependence. Only some tentative empirical evidence can be criticality in the construct of supplier’s dependence to solely found that importance and substitutability are significantly include the need for the buyer’s technological expertise. The related to dependence. construct for buyer’s dependence includes the logistical In summary, the analysis of conceptual and empirical studies indispensability of the supplier, in addition to the need for a shows that organizational dependence contains four key supplier’s technological expertise. characteristics: With respect to the availability of alternative sources and switching costs the dependence positions of buyers and suppliers (1) the financial magnitude of the exchanged resources; are symmetrical. The buyer depends as much on the supplier as (2) the criticality of the resources; the other way around. Both buying and supplying organizations (3) the availability of alternative sources; invest in the relationship with their trading partner. When the (4) switching costs, incurred when replacing a trading supplier develops and uses dedicated equipment assigned partner. exclusively to one customer this will result in high switching costs if the relationship deteriorates. On the other hand, buying With these characteristics in mind we have set up organizations also face relation specific investments, making constructs for buyer’s dependence and supplier’s dependence significant investments in suppliers. as follows. For obvious reasons the overall dependency on the other The Resource Dependence Theory posits a positive re- party is also included in both variables, the construct of buyer’s lationship between the (financial) magnitude of a resource and dependence and the construct of supplier’s dependence. Table 4 the mutual dependence of the trading partners. It is reasonable to assume that the first characteristic of organizational dependence, Table 4 the relative financial magnitude of transactions, particularly Aspects that compose buyer’s dependence and supplier’s dependence relates to supplier’s dependence. In the view of the supplier, a Construct Buyer’s dependence Supplier’s dependence relatively important buyer (in terms of financial magnitude of the transaction) will have a very powerful position in negotiations, Aspects Logistical indispensability Financial magnitude (items) Need for supplier’s Need for buyer’s causing the supplier to be dependent on the buyer. For the buyer technological expertise technological expertise the financial magnitude of the transaction with a certain supplier Availability of alternative Availability of is much less crucial for it’s dependence position. If switching suppliers alternative buyers costs are low, the buyer will not experience any dependence on Switching costs buyer Switching costs supplier the supplier. Therefore, factors such as the availability of Overall buyer’s dependence Overall supplier’s dependence
  • 7. M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229 ¨ 225 Table 5 4. Results Reliability analysis: Cronbach’s alphas Construct A comprehensive view of the dyadic nature of buyer – Category in the Kraljic matrix Buyer’s dependence Supplier’s dependence supplier relationships should include the assessment of (1) the Strategic quadrant 0.64 0.74 difference between buyer’s and supplier’s dependence (net Bottleneck quadrant 0.61 0.76 dependence) which corresponds to the relative power of each Leverage quadrant 0.64 0.69 party; and (2) the sum of buyer’s and supplier’s dependence Non-critical quadrant 0.67 0.72 (total interdependence) which indicates the intensity and development phase of the relationship between parties. summarizes the aspects of buyer – supplier relationships that Note that the repeated measure design of the survey was pertain to buyer’s dependence and supplier’s dependence. Note accounted for when analyzing the data. We used Estimated that each aspect was measured by a corresponding item in the Marginal Means (EMMEANS) in SPSS (General Linear questionnaire, using a 5-point Likert scale. Model-repeated measures) for the comparisons of the means in different scenarios. Bonferroni adjustments were made to 3.3. Validity analysis control for Type I errors (Tabachnick & Fidell, 2001). Table 6 shows the average score for the construct variables A reliability analysis using Cronbach’s alpha was performed supplier’s dependence and buyer’s dependence in the four to ensure the internal consistency of the items that constitute scenarios. The last two columns in Table 6 show the resulting each construct as shown in Table 4 (Cronbach, 1951). Table 5 findings for the power balance and total interdependence. Note presents the results of the reliability analysis. The table shows that column 3 indicates the relative power position of the buyer, the values of Cronbach’s alpha for each of the four Kraljic i.e. the difference between supplier’s dependence and buyer’s quadrants. The coefficients of Cronbach’s alpha are all higher dependence. Therefore, a negative sign for the power balance than 0.60, indicating an acceptable internal consistency and shows that the supplier dominates the relationship, whereas a reliability of the constructs. positive sign points to buyer dominance. Total interdependence Additional correlation analysis in each quadrant showed that (last column in Table 6) is measured by the sum of buyer’s items that should be related, are strongly correlated, indicating dependence and supplier’s dependence. On a scale that runs convergent validity. In addition it was found that items that from +2 (minimal interdependence) to +10 (maximum interde- theoretically should not be related, did not correlate (discri- pendence) we consider values below 5 as low, between 5 and 7 as minant validity). moderate and above 7 as high. Furthermore, we used explanatory factor analysis (principal Several points emerge from Table 6. Column 1 in Table 6 components analysis with varimax rotation) to identify a shows a relatively high buyer’s dependence on the right hand possible underlying factor structure (see the table in the side of the Kraljic matrix (bottleneck and strategic quadrant), Appendix for the detailed results of the factor analysis). For and a relatively low buyer’s dependence on the left hand side of each quadrant of the Kraljic matrix a separate factor analysis has the matrix (non-critical and leverage). These findings are in been executed. The factor solutions confirmed our expectations, accordance with our prior expectations. Column 2 in Table 6 i.e. in each quadrant two components were found: one contain- indicates that the findings for supplier’s dependence are not ing the items that were expected to indicate buyer’s dependence clear-cut. Remarkably, the supplier’s dependence in the leverage and the other containing the items that were expected to point to quadrant is lower than we might have expected in advance (2.68 supplier’s dependence. Almost all items had factor loadings that on a 5-point scale). The same holds for the strategic quadrant, exceeded the recommended level of 0.50 (Hair, Anderson, where the supplier’s dependence is medium (3.31 on a 5-point Tatham, & Black, 1998). Note that none of the items cross- scale). However, the relatively low supplier’s dependence in the loaded on both factors. In other words, the items that should not bottleneck and the non-critical quadrant confirm our expecta- be related were indeed not related. We can safely conclude that tions on the basis of the literature. buyer’s dependence and supplier’s dependence in each of the These findings have notable implications for the hypoth- four quadrants are dissimilar constructs. eses. With respect to the power balance (column 3) it was Table 6 Power and interdependence in the Kraljic matrix (n = 216) Scenario Buyer’s Supplier’s Relative Total interdependence dependence (1)* dependence (2)* power (2) À (1)** (1) + (2)*** Strategic quadrant Maintain partnership 4.03 3.31 À0.72a 7.34 Bottleneck quadrant Keep safety stocks 3.66 2.32 À1.34a 5.97 Leverage quadrant Partner of convenience 2.41 2.68 +0.27a 5.09 Non-critical quadrant Pooling of requirements 1.90 1.97 +0.07 3.87 a Difference between supplier’s dependence and buyer’s dependence is significant at p < 0.05. *Supplier’s and buyer’s dependence are measured by taking the average score on the items of each construct respectively. **Power is measured on a scale from À4 (maximum supplier’s dominance) to +4 (maximum buyer’s dominance). ***Total interdependence is measured on a scale from +2 (minimum interdependence) to +10 (maximum interdependence).
  • 8. 226 M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229 ¨ found that buyer – supplier relationships are dominated by the Table 8 supplier in the strategic quadrant, rejecting Hypothesis 1a. We Differences with respect to interdependence between quadrants of Kraljic matrix will come back to this unexpected result in the next Results with respect to interdependence paragraph. The results in column 3 indicate that buyer – supplier relationships are also dominated by the supplier in (1) INDEPstrat À INDEPbottle +1.37a (2) INDEPstrat À INDEPnon +3.47a the bottleneck quadrant, confirming Hypothesis 2a. In (3) INDEPstrat À INDEPlev +2.25a contrast, the buyer is dominant in the leverage quadrant, (4) INDEPnon À INDEPbottle À2.10a supporting Hypothesis 3a. The t-tests showed that, with the (5) INDEPnon À INDEPlev À1.22a exception of the non-critical quadrant, all quadrants presented a Significantly different from zero at p < 0.05. statistically significant differences between supplier’s and buyer’s dependence. The insignificant difference between When we look at the underlying data of the supplier’s supplier’s dependence and buyer’s dependence in the non- dependence construct (Table 7) we find that respondents critical quadrant refers to a significant power balance in this reported that they: quadrant, thereby confirming Hypothesis 4a. The results for the strategic quadrant lead to a rejection of - have more need for the supplier’s technological expertise Hypothesis 1a that suggested a balanced power relationship than vice versa; and for this quadrant. The literature puts a lot of emphasis on the - face higher switching costs than the suppliers; and idea that buyer – supplier relationships in this quadrant are - have fewer alternative trading partners than the supplier typically characterized as satisfactory relationships based on does. trust, commitment and open communication (e.g. De Ruyter, Moorman, & Lemmink, 2001; Morgan & Hunt, 1994). The last column of Table 6 shows the level of total However, the results suggest that such satisfactory relation- interdependence in the various quadrants. ships in the strategic quadrant have an asymmetric power From the literature on the Kraljic matrix we are expecting: balance. From the buyer’s perspective the supplier dominates the relationship. When we examine the data in greater detail, - high levels of interdependence in the strategic quadrant this result can be traced back to the medium level of (Hypothesis 1b); supplier’s dependence (3.31 on a 5-point scale) and the high - moderate levels of interdependence in the bottleneck and level of buyer’s dependence (4.03 on a 5-point scale) that leverage quadrant (Hypotheses 2b and 3b respectively); and was reported by the respondents in the survey. This deviates consequently from what is expected from the literature, which indicates - low levels of interdependence in the non-critical quadrant. that supplier’s dependence is high as well in the strategic quadrant. Several separate tests have been undertaken to determine Presumably, once a buyer has entered a partnership this whether total interdependence in one quadrant significantly ensures a disproportionate raise in the dependence of the buyer differs from total interdependence in all other quadrants. The on the supplying partner. Cox, Lonsdale, Watson, and Qiao results are reported in Table 8, where INDEPstrat, INDEPbottle, (2003) give a possible explanation for this phenomenon. In INDEPlev and INDEPnon refer to total interdependence in the their belief a pre-contractual situation of balanced power shifts strategic, bottleneck, leverage and non-critical quadrant to a post-contractual situation of supplier dominance, when the respectively. supplier refuses to offer balance in the relationship and locks The results largely confirm our prior expectations. Total the buyer in. Other writers suggest that unbalanced relation- interdependence has its highest value in the strategic ships may not always be troublesome: a known distribution of quadrant, confirming Hypothesis 1a. As expected, total power between both partners could provide effective co- interdependence is moderate in the bottleneck and the ordination of the exchange relationship (Frazier & Antia, leverage quadrant, thereby giving confirmation of Hypotheses 1995). A relative power position can be used to enhance the 2b and 3b respectively. Consequently, the non-critical nature of relational exchange between trading partners. It quadrant contains the lowest value of total interdependence. seems that the distribution of power can become legitimated We conclude that the empirical findings confirm the hitherto over time, so that both social actors expect and value a certain untested theoretical notions about total interdependence in pattern of influence. buyer – supplier relationships. Table 7 Item scores and standard deviations (between parentheses) for the buyer’s dependence and the supplier’s dependence construct in the strategic quadrant Buyer’s dependence Supplier’s dependence Logistical indispensability 4.63 (0.541) Financial magnitude 3.95 (0.761) Supplier’s technological expertise 4.08 (0.868) Buyer’s technological expertise 3.32 (1.038) Alternative suppliers 2.81 (1.168) Alternative buyers 3.27 (1.079) Switching costs buyer 4.08 (1.074) Switching costs supplier 3.36 (1.131) Overall buyer’s dependence 4.22 (0.757) Overall supplier’s dependence 3.25 (0.998)
  • 9. M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229 ¨ 227 5. Summary, conclusions and suggestions for further justified in the case of channel studies (manufacturer – research distributor), where relations often revolve around one major supplier. However, the method is also often used in studies Purchasing practitioners maintain a variety of supplier relating to industrial relationships, in which the limitation to relationships with different suppliers, and the management of the dominant supplier is not a self-evident point of departure. these relationships is increasingly based on a portfolio frame- Alternatively, many studies invite respondents to answer work. Power and dependence are generally considered to be questions referring to Ftheir suppliers_ in general. On the important for understanding buyer– supplier relationships, yet basis of this study we conclude that neither approach provides these factors are often overlooked in empirical studies. Little is a comprehensive insight into buyer – supplier relationships. We known about the role of power and dependence in buyer – have found evidence of the existence of four buyer – supplier supplier relationships from a purchasing portfolio perspective. relationships that differ significantly with respect to relative In this study we filled this gap by first deducing hypotheses from power and interdependence. This result confirms the notion the literature on Frelative power_ and Ftotal interdependence_ in that companies maintain a portfolio of differentiated supplier each of the four Kraljic quadrants. Second, we empirically tested relationships. Therefore, neither reference to Fa key supplier_ these hypotheses using data from a comprehensive survey nor reference to Fsuppliers_ in general takes into account the among Dutch purchasing professionals. full variation in the actual supplier base of a company. This A comparison of the hypotheses with the empirical findings common practice among researchers should only be used if leads to the following results. The hypotheses that concerned the the research question specifically requires such a sampling relative power position of the buyer and the supplier in each method. In all other cases it should be discarded. Future and quadrant (1a – 4a) were confirmed, except Hypothesis 1a. That further surveys can no longer ignore the large variety in is, we observed supplier dominance in the strategic quadrant, supplier relationships. where one would expect a balanced power situation on basis of The findings also have managerial relevance. They offer the literature. This provocative result sheds new light on the evidence that in the strategic quadrant a supplier-dominated buyer’s view on issues of power and dependence. It indicates that partnership is perceived to be satisfactory from the perspective suppliers are perceived to dominate satisfactory partnerships. of the buyer. Industrial marketers should be aware that All hypotheses concerning the level of total interdepen- professional purchasers feel dominated by them, even in dence in each quadrant (1b –3b) were confirmed. Table 9 satisfactory relationships. Possibly this finding could entice summarizes the differences between the expectations on the marketers to try to exploit their power and to skim off the basis of the literature on power and dependence, and the market surplus. However, marketers should be aware of the results from this study. negative effects of the exploitation of their position. In fact, a The theoretical contribution of this paper lies primarily in situation in which the buyer feels dominated yet satisfied is the notion that future research can no longer assume that desirable, since the buyer will not search for alternatives buyer –supplier relationships in the strategic quadrant of the (suppliers or products). Therefore, marketers should nurture Kraljic matrix are necessarily characterized by symmetric these kinds of relationships. power positions. When we combine this result with the high For professional purchasers the managerial implication of total interdependence reported in this quadrant, we arrive at a this study is that they should be aware that dependence more refined theoretical implication of this study. Future implies vulnerability. Buyers should ask themselves whether studies should take into account that a relationship which is there are sufficient benefits attached to the relationship to characterized by a high involvement of buyers and suppliers offset the obvious disadvantages of such a vulnerable and does not necessarily imply a balanced power position between dependent position towards a supplier. In addition, purchasers the parties, but can yet be satisfactory, at least from the point of should assess the risks that are harbored in this kind of view of the buyer. relationship, and explore possibilities that might increase the Furthermore, this study holds an implication for future bargaining power of their company. In other words, even in research, which pertains to the sampling method in survey- satisfactory relationships, buyers should explore the market based studies. Many studies ask respondents to express their by scouting for alternative suppliers and determining their opinions on their relationship with a single (type of) supplier, competencies. Furthermore, professional purchasers should usually the key or the major supplier. This approach is become aware of their own power basis. They should investigate to what extent the perceived supplier dominance Table 9 is based on an objective assessment of the relationship. Comparison of relative power and total interdependence in the Kraljic matrix: Despite the rigor of the analysis, this study contains several theory and practice limitations that might entice further research. One of the Relative power Total interdependence limitations of the study concerns the fact that the survey was Expected Observed Expected Observed confined to the perspective of the buyer. Yet, buyer – supplier Strategic Balanced Supplier dominance Highest Highest relationships are dyadic in nature. Suppliers might have different Bottleneck Supplier dominance Supplier dominance Moderate Moderate opinions on the power and interdependence structure of the Leverage Buyer dominance Buyer dominance Moderate Moderate various buyer –supplier relationships. Therefore, there is a need Non-critical Balanced Balanced Lowest Lowest to more fully study the supplier’s perspective in order to
  • 10. 228 M.C.J. Caniels, C.J. Gelderman / Industrial Marketing Management 36 (2007) 219 – 229 ¨ establish whether or not both parties perceive each other’s power by the supplier in the strategic quadrant calls for further position in the relationship in the same way. research to identify the circumstances under which supplier Another limitation concerns the sample, which was drawn dominated relationships provide a problem for the buyer from a list of members of the Dutch Association of Purchasing (Frazier & Antia, 1995). Additionally, the operationalisation Management (NEVI). Although the sample included a wide in this study could serve as a promising point of departure for range of industry sectors, the generalizability of the results further quantitative research to the issues of power and would benefit from the inclusion of firms in the service sector, dependence in buyer – supplier relationships. The level of as well as other Dutch and international companies. This might relative power might be related to the sizes of the buying and be the object of a further study. the supplying companies. Alternatively, network positions or With respect to additional issues for further research we the positions in the supply chain could be included as a propose the following. The finding that buyers feel dominated determining factor of relative power. Appendix A. Results of the factor analyses (factor loadings) Leverage quadrant Strategic quadrant Non-critical quadrant Bottleneck quadrant Factor 1 Factor 2 Factor 1 Factor 2 Factor 1 Factor 2 Factor 1 Factor 2 Buyer’s Supplier’s Buyer’s Supplier’s Buyer’s Supplier’s Buyer’s Supplier’s dependence dependence dependence dependence dependence dependence dependence dependence Items of buyer’s dependence: Logistical indispensability 0.445 À 0.144 0.654 À0.058 0.529 À0.035 0.556 À0.091 Supplier’s technological expertise 0.692 0.205 0.697 0.237 0.791 0.288 0.709 0.107 Alternative suppliers À0.544 À 0.232 À0.484 À0.037 À0.617 0.064 À 0.470 0.334 Switching costs buyer 0.721 0.177 0.545 0.330 0.586 0.216 0.654 0.139 Overall buyer’s dependence 0.757 0.005 0.790 0.054 0.643 0.142 0.676 0.179 Items of supplier’s dependence: Financial magnitude À0.170 0.661 0.325 0.534 À0.027 0.695 0.036 0.831 Buyer’s technological expertise 0.194 0.683 0.223 0.710 0.330 0.573 0.067 0.874 Alternative buyers À0.083 À 0.451 0.023 À0.570 À0.215 À0.499 0.105 0.766 Switching costs supplier 0.105 0.717 À0.722 0.793 0.103 0.727 À 0.046 À0.450 Overall supplier’s dependence À0.053 0.799 0.188 0.783 À0.323 0.824 À 0.037 0.731 References Cox, A., Lonsdale, C., Watson, G., & Qiao, H. 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Caniels is Assistant Professor Supply Chain Management in ¨ suppliers: The potential for strategic purchasing approach: A case study. the Faculty of Management Sciences of the Open University of the Nether- Proceedings of the 10th International IPSERA Conference, Jonkoping, ¨ ¨ lands. Her research interests include buyer – supplier relationships, supply chain Sweden (pp. 595 – 610). management, technological change and economic growth. She has published Lilliecreutz, J., & Ydreskog, L. (1999). Supplier classification as an enabler for among others in the Cambridge Journal of Economics and in Industrial and a differentiated purchasing strategy. Global Purchasing and Supply Chain Corporate Change. Management, 11, 66 – 74. Maloni, M., & Benton, W. C. (2000). Power influences in the supply chain. Cees J. Gelderman is Associate Professor of Marketing and Purchasing Journal of Business Logistics, 21(1), 49 – 73. Management in the Faculty of Management Sciences of the Open University of McDonald, F. (1999). The Importance of power in partnership relationships. the Netherlands. His research interests include buyer – supplier relationships, Journal of General Management, 25(1), 43 – 59. purchasing portfolio management, and power and dependence. He has Morgan, R. M., & Hunt, S. D. (1994). The commitment – trust theory of published among others in the Journal of Supply Chain Management and the relationship marketing. Journal of Marketing, 58, 20 – 38. Journal of Purchasing and Supply Management.