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JEL Classification System

M31

Abstract

Firms enter into partnerships to improve their competitive position, create and appropriate superior value, and increase their effectiveness and efficiency. Although balanced relationships (in terms of power and equitable value sharing) between the two partners exist, many researchers argue that these ideal relationships are not the norm and that asymmetry of power and unequal distribution of benefits are a reality of current business-to-business relationships. This study examines how power asymmetry affects the relationship climate in general and partner attitudes and behaviors in particular. Specifically, this study focuses on the sources of power exercised and how these impact value creation appropriation, partner satisfaction, and ultimately relationship continuity. Structural equation modeling is used to analyze data from a national survey of a supplier organization’s relationship with its main customer. The results indicate that coercive and non-coercive sources of power differentially influence value creation and stakeholder satisfaction. Value creation was then found to be positively related to value appropriation, a prerequisite for partner satisfaction and relationship continuity. Conclusions and managerial implications arising from the results of the study are also presented.

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