Balanced power and supply chain knowledge acquisition: A structural equation model

Abstract

Knowledge acquisition from supply chain partners has attracted increasing attentions from academics and practitioners as an important strategy to enhance firm competitive advantage. Despite the previous research efforts in examining the effects of partnership characteristics on knowledge transfer activities, limited understanding was generated regarding the role of interfirm power relationship. In this paper a structural equation model was constructed to examine the role of balanced power between supply chain partners played in the process of supply chain knowledge acquisition, and the subsequent effect on firms’ supply chain performance. The analytical results based on 206 survey responses from the supply network of a large Chinese steel producer confirmed that knowledge acquisition did contribute to the supply chain performance. However, the two dimensions of balanced power, availability of alternatives and restraint in use of power had reverse effects on knowledge acquisition. It was found that knowledge acquisition is more likely to take place when one partner views another as irreplaceable, and when the stronger party is willing to restrain its excess power use. This paper enriches the literature by providing further clarification on why previous research had inconsistent explanations of the role of power structure. It also provides future researchers an example to carry out more rigorous empirical research when studying knowledge management issues in an interfirm relationship context.