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David A. Griffith
Iacocca Chair
Professor of Marketing
Department of Marketing
College of Business and Economics
Lehigh University
Bethelehem, PA 18015
(t): 610.758.6530
(e): david.a.griffith@lehigh.edu
Jessica J. Hoppner
Assistant Professor of Marketing
Department of Marketing
George Mason University
School of Management
Fairfax, VA 22030
(t): 703.993.1796
(e): jhoppner@gmu.edu
Hannah S. Lee
Assistant Professor of Marketing
Department of Marketing
Miami University
Farmer School of Business
Oxford, OH 45056
(p): 513.529.3363
(e) leehs@miamioh.edu
Tobias Schoenherr
Associate Professor of Supply Chain Management
Michigan State University
Department of Supply Chain Management
Michigan State University
The Eli Broad Graduate School of Management
East Lansing, MI 48824-1122
(t): 517.432.6437
(e): schoenherr@bus.msu.edu
The authors would like to thank Ruth N. Bolton and William T. Ross Jr. for their thoughtful comments on previous
versions of this manuscript. The authors would also like to thank the JMR editors, AE and reviewers for their
guidance and support of this manuscript throughout the review process.
THE INFLUENCE OF THE STRUCTURE OF INTERDEPENDENCE ON THE
RESPONSE TO INEQUITY IN BUYER–SUPPLIER RELATIONSHIPS
ABSTRACT
This research investigates the conditions under which inequity in a buyer–supplier relationship
influences a supplier’s resource sharing with its buyer. More specifically, the authors examine
the effects of both positive inequity and negative inequity under varying levels of
interdependence magnitude and relative dependence. They further examine the effect of inequity
on perceived relationship performance. The study includes a longitudinal survey design, with
perceived relationship performance reported by a second informant. The study, conducted within
the context of Japanese suppliers reporting on their relationship with U.S. buyers, takes a
nuanced view of both inequity and relative dependence by employing spline variables to
disentangle potentially different effects of positive and negative inequity and relative dependence
of the supplier and buyer, respectively. The results reveal that firms’ reactions to positive and
negative inequity vary depending on the nature of the interdependence structure and that positive
and negative inequity differentially influence perceived relationship performance. The findings
2
Tension in ongoing buyer–supplier relationships can arise from each partner’s efforts to claim its
“fair share” of the jointly created value (e.g., Cui, Raju, and Zhang 2007; Jap 1999). This
tension, caused by perceptions of positive inequity (i.e., when the party perceives its own ratio of
outputs to inputs as greater than that of its partner) or negative inequity (i.e., when the party
perceives its own ratio of outputs to inputs as less than that of its partner), can have deleterious
effects on the relationship. For example, research has found that inequity can lower trust among
partners (Scheer, Kumar, and Steenkamp 2003) and diminish cooperation (Samaha, Palmatier,
and Dant 2011). Building on that research, we argue that inequity can influence both the sharing
position of positive inequity do not attempt to restore their relationship to equity, even though
such relationships tend to operate more effectively (Samaha, Palmatier, and Dant 2011). The
failure to work toward equity is contrary to equity theory (see Adams 1965), which argues that
maintaining equity between parties is the most important goal for the effective functioning and
continuation of a relationship.
In one of the few works focused on positive and negative inequity in buyer–supplier
relationships, Scheer, Kumar, and Steenkamp (2003) find that firms from the United States
report greater hostility, lower trust, and lower relationship continuity as negative inequity
increases but do not report greater guilt or hostility as positive inequity increases. They theorize
that the acceptance of positive inequity may derive from a cultural orientation of competitive
achievement (i.e., high on masculinity) in which people are socialized to view the world as
consisting of winners and losers (Hofstede 2001; Steensma et al. 2000). This suggests that firms
1
We focus on resource sharing because of its importance as an input to value creation in interorganizational
relationships (e.g., Ghosh and John 1999; Srivastava, Shervani, and Fahey 1998), as well as the call to investigate
relational investments as an outcome of inequity (Scheer, Kumar, and Steenkamp 2003).
3
from such a cultural orientation may not be motivated to restore equity when in a positive
inequity position, but rather may work to strengthen their inequity position. Extending this
research and building on dependence literature (e.g., Gundlach and Cadotte 1994; Kumar,
Scheer, and Steenkamp 1995a; Scheer, Miao, and Palmatier 2015), we question how firms from
Specifically, we examine whether the influence of positive and negative inequity on a supplier’s
resource sharing (i.e., the supplier’s willingness to make resources and information available to
different positions of inequity, this study contributes to the literature in three ways. First, the
work extends the literature on positive and negative inequity (e.g., Coley, Lindemann, and
Wagner 2012; Scheer, Kumar, and Steenkamp 2003; Wangenheim and Bayon 2007) by
employing a spline variable to disentangle the different effects of positive and negative
deviations from equity and demonstrating that behavioral responses to different inequity
positions can be contingent on the magnitude of interdependence (i.e., the sum of the dependence
in an exchange [Gundlach and Cadotte 1994]) of the relationship. This is important because
many studies continue to draw on equity theory as an implicit or explicit mediating (but
unexamined) explanation for observed relationships, given the generally accepted notion that
equity is more stable and preferable than inequity. However, this work demonstrates specific
4
Second, we demonstrate how responses to positions of inequity, under varying
supplier and buyer firms. We distinguish, again through the use of a spline variable, between two
groups of observations: those in which the supplier is relatively more dependent and those in
which the buyer is relatively more dependent. As such, the approach undertaken here is distinct
from much of the extant literature, which conceptualizes relative dependence as a continuum
from a firm’s own relative dependence, through symmetry, to a partner’s relative dependence
(Anderson and Narus 1990; Gundlach and Cadotte 1994).2 By analyzing buyer and supplier
relative dependence separately, we can better show how an increase in either party’s relative
dependence (which always signifies greater asymmetry) influences the effect of inequity
relationship performance (i.e., the extent to which the buyer–supplier relationship has met
and perceived performance, a heretofore unexplored relationship in the literature, this work
2003), and on the willingness to collaborate (Coley, Lindemann, and Wagner 2012).
Furthermore, the results complement the work of Wangenheim and Bayon (2007), who find that
negative inequity decreases while positive inequity increases consumer transactions with a
service provider.
2
Research has also referred to “relative dependence” as “interdependence asymmetry” or “asymmetry of
dependence.” For a broader review, see Scheer, Miao, and Palmatier (2015).
5
We begin with a brief review of the theoretical literature underlying our model. Then,
we develop a series of hypotheses that examine the influence of the structure of interdependence,
positive and negative inequity. We also hypothesize a direct effect of inequity on perceived
relationship performance. Next, we discuss the data collection procedure and test the hypotheses
through spline regression analysis using two-wave survey data from a sample of 296 Japanese
suppliers (firms from a cultural orientation of competitive achievement; i.e., high masculinity).
Finally, we discuss the theoretical and managerial implications of the study, along with its
THEORETICAL BACKGROUND
Equity, defined as a party’s perception that its ratio of outputs to inputs is equivalent to its
partner’s, is a cornerstone of successful relationships (e.g., Adams 1965; Samaha, Palmatier, and
Dant 2011).3 Equity theory posits that when perceiving inequity, parties of an ongoing
relationship are motivated to restore equity by responding in a way that might reduce inequity
(e.g., Ariño and Ring 2010; Huppertz, Arenson, and Evans 1978). Multiple behavioral responses4
exist, but the most actionable response, and therefore the most likely to be used, is to adjust
individual inputs by either augmenting or curtailing the amount of resources invested in the
3
Two streams of research on equity exist. The first focuses on comparing the outputs-to-inputs ratio between the
focal party and its partner (e.g., Scheer, Kumar, and Steenkamp 2003); the second focuses on the focal party’s
evaluation of its own outputs given its inputs (e.g., Samaha, Palmatier, and Dant 2011). The current research is
based on the first approach.
4
To reduce inequity, a party can adjust its own inputs into and/or outputs from the relationship, attempt to have its
referent adjust its inputs into and/or outputs from the relationship, change the party used as a referent, or exit the
relationship (Huppertz, Arenson, and Evans 1978). To examine the potential behavioral responses to inequity given
the structure of interdependence of the buyer–supplier relationship, we conducted an experimental study with
Japanese managers. Web Appendix A provides a detailed description of the experiment and an analysis of the
responses.
6
relationship. Specifically, in the context of an ongoing buyer–supplier relationship, equity theory
argues that a supplier in a position of positive inequity will attempt to rebalance the relationship
by increasing its level of resource sharing with its buyer, while a supplier in a negative inequity
position will attempt to rebalance the relationship by decreasing the level of resources.
Although equity may be the ideal, research and practice suggest that inequity continues
to exist in ongoing buyer–supplier relationships (e.g., Casemore 2012; Coley, Lindemann, and
Wagner 2012). Scheer, Kumar, and Steenkamp (2003, p. 312) note that “one should not presume
that firms behave in line with the predictions of classic equity theory,” particularly when
orientation plays a significant role in shaping responses to inequity positions, research indicates
that the structure of the relationship also influences relationship partner behaviors. For example,
Benson (1975) argues that relationships are characterized by a continual struggle for money and
authority and that the actions taken to achieve these aims rely on the relationship’s structure.
1984; Gundlach and Cadotte 1994; Mallapragada et al. 2015). This framework is founded on the
theory of power dependence (Emerson 1962), which argues that a party’s dependence on another
forms the other party’s power over them and that power gained from dependence increases a
party’s use of influence and control to achieve its goals (Frazier, Gill, and Kale 1989). To better
explain the actions taken in buyer–supplier relationships, researchers have examined magnitude
interdependence (e.g., Gundlach and Cadotte 1994; Heide and John 1988; Kumar, Scheer, and
Steenkamp 1995a; Mallapragada et al. 2015; Scheer, Miao, and Palmatier 2015).
7
Magnitude of interdependence refers to the sum of the dependence in an exchange
(Gundlach and Cadotte 1994) and denotes the importance of the relationship to the exchange
partners by the amount of “attention” given to their relationship (Frazier and Summers 1984;
Gundlach and Cadotte 1994; Scheer, Miao, and Palmatier 2015). As magnitude of
interdependence increases, the parties increasingly view the relationship as important and, as
such, not only invest in the relationship but also avoid taking actions likely to instigate conflict
or jeopardize the relationship (Kumar, Scheer, and Steenkamp 1995a; Scheer, Miao, and
concerned about the long-term viability of the relationship and becomes more focused on
benefiting from short-term interactions with its partner. These relationships tend to be more
competitive, with each party working to get the most from the relationship with as little effort as
possible (Macneil 1981). Consistent with this argument, research has found that relationships
with lower magnitude of interdependence experience increased conflict (Kumar, Scheer, and
Steenkamp 1995a) and decreased cooperation (Samaha, Palmatier, and Dant 2011).
in comparison with the level of dependence of its partner (Anderson and Narus 1990; Gundlach
and Cadotte 1994). Asymmetry in relative dependence, in which either the buyer or the supplier
is relatively more dependent than its partner, generates greater conflict, lower trust, and lower
commitment (Mentzer, Min, and Zacharia 2000). This occurs because a firm that is relatively
less dependent on its partner is less motivated to cooperate. Research shows that a firm that is
relatively less dependent on its partner makes more normative statements, uses more coercive
tactics, and puts greater demands on its more dependent partner (Frazier, Gill, and Kale 1989;
Gundlach and Cadotte 1994). Although firms that have more relative dependence can be
8
receptive to their partners’ requests to maintain the continuity of the relationship (Anderson and
Narus1990), there is a limit to the influence attempts they are willing to accept before
it is also important to consider how differing inequity positions influence perceived relationship
performance (i.e., the extent to which the buyer–supplier relationship has met expectations).
(Scheer, Kumar, and Steenkamp 2003) and behaviors, such as the willingness to collaborate
(Coley, Lindemann, and Wagner 2012), we theorize that differences in inequity positions
influence the effective functioning of the relationship, over and above the sharing of resources,5
HYPOTHESES
Equity theory suggests that a supplier in a position of positive inequity will work to rebalance its
relationship by increasing its level of resource sharing with its buyer (i.e., increasing its inputs).
Contrary to equity theory, we contend that a supplier from a culture of competitive achievement
will not willingly take action to reduce its favorable outputs-to-inputs ratio or work to rebalance
the ongoing relationship. The logic underlying this position is that these suppliers are
enculturated to accept the world as consisting of winners and losers (Steensma et al. 2000).
Research reports that firms originating from a cultural orientation of competitive achievement in
a positive position of inequity (i.e., a winning position in the relationship) have limited guilt
(Scheer, Kumar, and Steenkamp 2003) and are unwilling to collaborate with their partners
5
The positive effect of resource sharing on relationship performance is well established in literature, and therefore
we provide no formal hypothesis herein.
9
(Coley, Lindemann, and Wagner 2012). Building on this notion, we argue that such suppliers
will not engage in increased resource sharing, but rather maintain the status quo. However, the
response to differing positions of inequity will likely change in the context of interdependence in
relationship will operate in accordance with equity theory and be motivated to increase its level
of resource sharing with its buyer. This behavioral response is due to the importance of the
relationship of significant importance, the supplier will want to continue the relationship and
therefore invest additional resources to restore equity, as the longevity of the relationship is
threatened by the supplier benefiting more than its buyer due to its position of positive inequity.
More formally:
positive inequity on a supplier’s resource sharing with its buyer will be contingent on the relative
dependence of each party in the buyer–supplier relationship. Specifically, we argue that the
supplier’s relative dependence will negatively moderate the positive effect of magnitude of
interdependence and positive inequity on a supplier’s resource sharing. The underlying logic is
that as a supplier’s relative dependence increases, the supplier is motivated to reduce its
asymmetric dependence on its buyer to reduce its vulnerability to potential exploitation. The
validity of this perceived threat (i.e., the potential for its vulnerability to be exploited) is
consistent with research demonstrating that a firm that is relatively less dependent on its
exchange partner often uses more coercive influence tactics and puts greater demands on its
10
more dependent partner in an attempt to tailor the relationship to its individual goals (e.g.,
Frazier, Gill, and Kale 1989; Gundlach and Cadotte 1994). More formally:
H1b: The supplier’s relative dependence negatively moderates the positive interaction
effect of magnitude of interdependence and positive inequity on a supplier’s level
of resource sharing.
Conversely, we argue that changes in the buyer’s relative dependence will not moderate
resource sharing with its buyer. The underlying logic is that a supplier in a position of positive
inequity, within the context of a high-magnitude interdependence relationship, will not want to
exploit its position of inequity further by continuing to restrict its resources, as such action could
increase conflict and threaten the continuation of the relationship. Although a relatively less
dependent partner may also use coercive influence tactics (e.g., Frazier, Gill, and Kale 1989;
Gundlach and Cadotte 1994), because the supplier is already benefiting more from the
relationship than its buyer and the relationship is of high magnitude (and, thus, important), the
supplier’s motivation to exploit its buyer’s increasing relative dependence will be mitigated.
More formally:
H1c: The buyer’s relative dependence does not moderate the positive interaction effect
of magnitude of interdependence and positive inequity on a supplier’s level of
resource sharing.
The extent to which the buyer–supplier relationship has met expectations (i.e., perceived
relationship performance) is a key outcome for measuring its success. We theorize a positive
influence of positive inequity on perceived relationship performance. That is, all else being
equal, as positive inequity increases, the supplier will be more satisfied with the relationship
because it is receiving disproportionally more than it puts into it; thus, the supplier is
incentivized to work with the buyer to continue to reap the rewards of the relationship. In the
11
same vein, Wangenheim and Bayon (2007) find that customers who experience positive inequity
(e.g., service upgrades) increase the amount of transactions with the service provider because of
increased customer delight, satisfaction, and loyalty resulting from perceptions of fairness. More
formally:
Equity theory suggests that a supplier in a position of increasing negative inequity will work to
rebalance the relationship by decreasing the level of resources it shares with its buyer. Contrary
to equity theory, and building on the concept of credible commitments (i.e., Williamson 1983) as
applied within the context of ongoing buyer–supplier relationships (e.g., Heide 1994; Jap 1999),
we contend that a supplier in a position of negative inequity will increase its level of resources
shared with its buyer. Increasing the amount of resources shared represents a credible
commitment by the supplier, serving to increase its attractiveness to its partner (Hamel, Doz, and
Prahalad 1989) by signaling its long-term commitment to the relationship (Williamson 1983).
supplier in this cultural context is averse to being in a less advantageous position in the
relationship and therefore actively works to be perceived as more valuable to the buyer.
However, we posit that the response to inequity will vary depending on the structure of
relationship will be motivated to increase its level of resource sharing with its buyer. The
underlying logic is that as the relationship increases in its level of magnitude of interdependence,
it is increasingly important for the supplier to signal its long-term commitment to the relationship
12
to not only maintain its continuation (Kumar, Scheer, and Steenkamp 1995a; Scheer, Miao, and
interdependence relationship, we expect the supplier to curtail the sharing of resources as the
negative inequity on a supplier’s resource sharing with its buyer will be subject to the influence
dependence will enhance the positive effect of magnitude of interdependence and negative
inequity on the supplier’s level of resource sharing. That is, when a supplier is in a position of
greater relative dependence, within the context of a high-magnitude relationship and negative
inequity, its concern with the relationship’s viability is heightened given its disadvantageous
position. As such, the supplier is motivated to go to greater lengths (by making credible
commitments to the relationship) to enhance the buyer’s perceptions of its contribution and value
to the relationship, even though increasing resource commitments in a position of greater relative
dependence puts the supplier at greater potential risk of exploitation (Frazier, Gill, and Kale
H3b: The supplier’s relative dependence positively moderates the positive interaction
effect of magnitude of interdependence and negative inequity on a supplier’s level
of resource sharing.
Alternatively, we expect that increases in the buyer’s relative dependence will dampen
the positive effect of magnitude of interdependence and negative inequity on a supplier’s level of
resource sharing. The underlying logic is that, given increased levels of the buyer’s relative
dependence, the supplier reduces its resource commitment in an attempt to enhance the buyer’s
13
perceptions of its contribution and value to the relationship. This is consistent with Scheer, Miao,
and Garrett’s (2010, p. 92) benefit-based dependence argument that the restriction of a supplier’s
resources can stimulate the buyer’s “desire to maintain the relationship because of the
irreplaceable net benefits it gains from the on-going relationship.” More formally:
H3c: The buyer’s relative dependence negatively moderates the positive interaction
effect of magnitude of interdependence and negative inequity on a supplier’s level
of resource sharing.
between negative inequity and perceived relationship performance.6 That is, all else being equal,
as negative inequity increases, the supplier will be more dissatisfied with the relationship
because it is receiving disproportionally less than it puts into the relationship and thus, while
engaging in resource sharing to drive the relationship toward equity, will be less motivated to
engage in other behaviors that could enhance the relationship’s effectiveness. In a similar vein,
Scheer, Kumar, and Steenkamp (2003) find that firms in a position of negative inequity report
increased hostility toward their exchange partners. In addition, Coley, Lindemann, and Wagner
(2012) find that increases in negative inequity decrease a firm’s level of engagement in future
collaborations with its partner in the short run. Finally, Wangenheim and Bayon (2007) observe
that customers who experience negative inequity (e.g., a service failure) reduce the amount of
transactions with the service provider because of perceptions of unfairness. More formally:
METHOD
6
As mentioned previously, we theorize that negative inequity stimulates the supplier’s sharing of resources with its
buyer. Though not specifically hypothesized herein, we expect and find a positive relationship between the
supplier’s sharing of resources and perceived relationship performance.
14
We tested the hypotheses in the context of ongoing buyer–supplier relationships, in which the
supplier reported on its primary buyer. By focusing on the supplier’s primary buyer, we could
ensure that the respondent would possess adequate knowledge of the relationship and that the
classification codes representing both durable and nondurable goods industries, we drew a
systematic random sample of 1000 suppliers from Japan. We chose Japan, which has a
masculinity index score of 95, because it represents a country where firm managers largely
operate with a cultural orientation of competitive achievement (Hofstede, Hofstede, and Minkov
2010; Steensma et al. 2000). The manager with the responsibility of overseeing the firm’s
relationship with its primary U.S. buyer served as the key informant. These managers were
appropriate because of the position held in the firm and their years of experience (i.e., 23 years
on average). Each of the selected managers received a questionnaire, in Japanese, and a cover
letter that offered a summary of the results, to enhance the response rate. The questionnaire,
which contained measures derived from extant literature, was translated, back-translated, and
assessed for equivalence in form and meaning. We mailed a replacement questionnaire three
After six months, we contacted informants who had completed the initial questionnaire
and asked them to have a colleague who was familiar with the specified relationship respond to a
set of performance measures. The rationale for this was twofold. First, research suggests that the
relationship between evaluations and/or the behaviors performed by a party and perceived
design (Hoppner and Griffith 2011; Rindfleisch et al. 2008). Second, we minimized common
15
method variance by introducing a six-month time lag and by having different key informants
complete the measures for the independent and dependent variables (Podsakoff et al. 2003).
The final sample consisted of 296 completed matched questionnaires (e.g., responses to
both the initial questionnaire at Time 1 and the follow-up questionnaire at Time 2). The effective
response rate was 30.1%. The final sample of firms represented a balance of durable and
nondurable goods suppliers. The majority of suppliers generated annual sales revenues of less
than $25 million (62.5% of the sample) and, on average, employed 44 people. Suppliers were
engaged in their relationship with their primary U.S. buyer for an average of 15 years and
Measures
To ensure content validity of the construct measures, we reviewed the literature, discussed the
preliminary instrument with people familiar with the administrative aspects of buyer–supplier
relationships, and pretested the measures in a buyer–supplier population. Table 1 presents the
Inequity. Inequity exists when partners perceive the ratio of outputs to inputs as unequal
(Scheer, Kumar, and Steenkamp 2003). We operationalized inequity as the difference between
supplier distributive justice (SDJ) and buyer distributive justice (BDJ).7 Distributive justice
refers to the perception of how equitable the distribution of the outputs that a party receives from
a relationship is relative to the inputs the party invests in the relationship (Frazier 1983). We
7
Prior research has used distributive justice to examine the predictions of equity theory (e.g., Bies and Moag 1986;
Cohen-Charash and Spector 2001). Our measurement of inequity as a difference of distributive justice ratios (i.e.,
the evaluation of rewards relative to input) is comparable, though not identical, to how research has previously
measured inequity (firm outcomes/firm inputs) – (partner outcomes/partner inputs) (e.g., Scheer, Kumar, and
Steenkamp 2003).
16
measured this twice, once for the supplier’s ratio and once for the buyer’s ratio, with two items
adapted from Griffith, Harvey, and Lusch (2006). To ensure that inequity would be appropriately
estimated by a difference score, we needed to establish that supplier distributive justice and
analysis (CFA). The fit indexes failed to meet any of the recommended critical values for the
one-factor model (χ2(2) = 366.076, p < .01; comparative fit index [CFI] = .559; standardized root
mean square residual [SRMR] = .506) but exceeded the recommended critical values for the two-
factor model (χ2(1) 3.024, p > .05; CFI = .998; SRMR = .010) (Bollen 1989; Hu and Bentler
1999). Furthermore, the two-factor model indicated the existence of convergent validity (λ =
.899 to .957; p < .01) and discriminant validity (AVESDJ = .738; AVEBDJ = .778; SVSDJ-BDJ =
.062) (Anderson and Gerbing 1988; Fornell and Larcker 1981). We conclude from this analysis
that supplier distributive justice and buyer distributive justice are distinct constructs, thus
allowing the construct of inequity to be estimated. When interpreting this construct, positive
values indicate positive supplier inequity (i.e., the supplier receives more from its buyer than it
provides to the buyer), a value of zero indicates equity between the supplier and the buyer, and
negative values indicate negative supplier inequity (i.e., the supplier receives less from the buyer
than it provides to the buyer). To better represent the asymmetry of inequity, following Scheer,
Kumar, and Steenkamp (2003), we created a spline variable for inequity. Positive supplier
inequity (PSI) reflects the degree of inequity when the supplier receives more from its buyer than
it provides to its buyer (i.e., PSI = |SDJ–BDJ| when SDJ > BDJ and 0 when BDJ ≥ SDJ), and
negative supplier inequity (NSI) reflects the degree of inequity when the supplier provides more
17
to its buyer than it receives from its buyer (i.e., NSI = |SDJ–BDJ| when BDJ > SDJ and 0 when
SDJ ≥ BDJ). Both PSI and NSI are zero when equity exists.
dependence in the relationship between two partners (Gundlach and Cadotte 1994). We
operationalized magnitude of interdependence as the sum of the supplier dependence (SD) and
buyer dependence (BD). Supplier dependence refers to the extent to which the supplier relies on
its buyer, and buyer dependence refers the extent to which the buyer relies on its supplier. Three
items each, adapted from Lusch and Brown (1996), measured supplier dependence and buyer
distinct constructs. The fit indexes failed to meet any of the recommended critical values for the
one-factor model (χ2(9) = 2489.469, p < .01; CFI = .436; SRMR = .288) but exceeded the
recommended critical values for the two-factor model (χ2(8) = 0.857, p > .05; CFI = 1.0; SRMR
= .003). Furthermore, the two-factor model indicated the existence of convergent validity (λ =
.899 to .957; p < .01) and discriminant validity (AVESD = .940; AVEBD = .983; SVSD-BD = .22).
We conclude from this analysis that supplier dependence and buyer dependence are distinct
between two partners in a dyad (Lusch and Brown 1996). We operationalized relative
dependence as the difference between the supplier’s dependence and the buyer’s dependence
(Kim and Hsieh 2003). When interpreting this construct, positive values indicate a supplier’s
relative dependence (i.e., the supplier is more dependent on its buyer than vice versa), a value of
18
zero indicates an equivalent level of dependence between the supplier and the buyer, and
negative values indicate a buyer’s relative dependence (i.e., the supplier is less dependent on its
buyer than vice versa). Again, to better represent the asymmetry of relative dependence,
following Scheer, Kumar, and Steenkamp (2003), we created a spline variable. Specifically,
supplier relative dependence (SRD) reflects the asymmetry in dependence when the supplier is
the more dependent party in the relationship (i.e., SRD = |SD–BD| when SD > BD and 0 when
BD ≥ SD), and buyer relative dependence (BRD) reflects the asymmetry in dependence when the
buyer is the more dependent party in the relationship (i.e., BRD = |SD–BD| when BD > SD and 0
when SD ≥ BD). Both SRD and BRD are zero when the parties are equally dependent.
resources and information available to its buyer. We adapted four items from Spreitzer (1996) to
measure a supplier’s level of resource sharing with its buyer. When interpreting this construct,
higher values represent greater resource sharing. To confirm that resource sharing was an
Japanese managers. Each manager was randomly assigned to a scenario that manipulated
inequity (positive vs. negative), magnitude of interdependence (high vs. low), and relative
dependence (supplier vs. buyer). Following Seggie, Griffith, and Jap (2013), we first asked
managers, in an open-ended format, what they would do in response to the scenario. The coded
results indicate that managers frequently modified the resources invested in the relationship.
After the open-ended question, we asked respondents if they would have modified, in any way,
the resources invested in the relationship described in the scenario. According to the results,
58.24% responded in the affirmative. Thus, we can conclude that resource sharing is an
19
more detailed description of the experiment and analysis of the other responses to inequity
extent to which the buyer–supplier relationship has met expectations. Three items, adapted from
Zou, Taylor, and Osland (1998), measured perceived relationship performance. When
interpreting this construct, higher values represent greater performance. We evaluated perceived
relationship performance twice: once at the initial survey collection with the first informant when
the independent variables were collected (i.e., Time 1) and once at the follow-up survey
collection with a second informant six months after the initial survey collection (i.e., Time 2).
Perceived relationship performance measured at Time 2 was the dependent variable, and
the supplier firm’s size and industry to control for firm- and relationship-specific characteristics.
We operationalized supplier firm size (i.e., number of employees) and industry (i.e., durable vs.
Measure Validation
prior perceived relationship performance with CFA. Table 3 reports the results of the CFA.
dependence, which are linear combinations created by either subtracting (i.e., inequity and
relative dependence) or adding (i.e., magnitude of interdependence) the average of the items
20
constituting their underlying dimensions. For each of these indicators, we restricted the error
variance to (1 – reliability) times the variance of the indicator and the corresponding lambda to
the square root of the reliability (Baumgartner and Homburg 1996; Hunter and Perreault 2007).
We calculated the reliability of each linear combination following Nunnally and Bernstein
(1994). The model fit the data acceptably (χ2(53) = 366.976, p < .01; CFI =.933; SRMR =.025).
Convergent validity was demonstrated, as all factor loadings were large (range: .787 to .992) and
statistically significant (p < .01) (Anderson and Gerbing 1988). Furthermore, the average
variance extracted was greater than the shared variance between any pair of constructs (Fornell
and Larcker 1981), thus demonstrating discriminant validity. We conclude from this analysis that
We selected spline regression analysis as the appropriate method of analysis because it allows
the asymmetry inherent in certain constructs to be incorporated in its analysis. For our purposes,
spline regression allows us to estimate separate and potentially different direct and interaction
effects of the asymmetric constructs of inequity and relative dependence on a supplier’s level of
resource sharing with its buyer and the perceived relationship performance. As described
previously, we created spline variables for positive inequity and negative inequity, as well as for
supplier relative dependence and buyer relative dependence. When asymmetry exists, the
appropriate spline variable reflects the nature and degree of that asymmetry; the other spline
variable equals zero. When symmetry exists, both spline variables equal zero. Using the spline
variables, we estimated two regression equations to test the hypotheses. The first equation
21
examines the influence of positive and negative inequity on a supplier’s resource sharing with its
buyer. The second equation evaluates the performance implications of positive and negative
is firm size, IND is industry, and all others are as defined previously.
magnitude of interdependence included in the interactions (Cohen et al. 2003). The adjusted R-
square for Equation 1 was .908 and for Equation 2 was .173. Multicollinearity was not a
significant issue as the maximum variance inflation factor (i.e., 7.828 and 1.388) and the
maximum condition index (i.e., 12.072 and 17.586) in both equations were below 10 and 30,
RESULTS
H1a predicted a positive interaction effect of magnitude of interdependence and positive inequity
on a supplier’s level of resource sharing. The results indicate that the interaction effect is positive
8
The positive effect of resource sharing on relationship performance has been well established. Though not
formally hypothesized in this study, to be consistent with the literature, we included resource sharing as an
independent variable in our second spline regression equation that examines the influence of inequity on perceived
relationship performance. Given the resulting endogeneity of resource sharing, we conducted supplemental analysis
to determine the robustness of our results to simultaneous estimation. Our results are consistent in both analyses.
Web Appendix B presents the full results of the supplemental analysis.
22
and significant (Equation 1: β = .062, t = 1.748, p < .05). Thus, H1a is supported. To further
clarify the meaning of the significant interaction, we examined it following Aiken and West’s
(1991) outlined procedure. We found that, though the directionality of H1a is supported, the
simple slope analysis only indicates that in response to positive inequity, a supplier in a low-
magnitude relationship will try to expand its position by decreasing its level of resource sharing
with its buyer (simple slope: b = –.09, t = –1.62). Suppliers made no adjustments to their level of
H1b predicted that a supplier’s relative dependence would negatively moderate the
sharing, and H1c predicted that a buyer’s relative dependence would not moderate this effect. In
support of both H1b and H1c, the results indicate that the three-way interaction among positive
significant (Equation 1: β = –.100, t = –2.186, p < .05); the three-way interaction among positive
(Equation 1: β = .016, t = .607, p > .10). Figure 1 plots the significant three-way interaction
(H1b) (Aiken and West 1991). Panel A reveals that in response to positive inequity, suppliers in
high-magnitude interdependence relationships reduce resource sharing when the level of relative
dependence is high (simple slope: b = –.22, t = –1.35) but make no change to resource sharing
when relative dependence is low (simple slope: b = –.01, t = –.22). Panel B reveals that in
resource sharing when the level of relative dependence is high (simple slope: b = .11, t = 1.32)
but make no change to resource sharing when relative dependence is low (simple slope: b = –.05,
23
t = –1.10). Thus, although the expected direction of H1b is supported, the results indicate a more
H2 predicted that positive inequity also would positively influence perceived relationship
performance. The results provide support for H2 (Equation 2: β = .106, t = 1.710, p < .05).
inequity on a supplier’s level of resource sharing. The results indicate that the interaction is not
significant (Equation 1: β = –.053, t = –1.189, p > .10). Thus, H3a is not supported. However,
though not hypothesized, we found that negative inequity had a positive direct effect on resource
sharing (Equation 1: β = .098, t = 1.985, p < .05). This indicates that suppliers increase the level
of resource sharing with their buyers as negative inequity increases, regardless of whether the
H3b predicted that a supplier’s relative dependence would positively moderate the
and H3c predicted that a buyer’s relative dependence would negatively moderate the effect. In
support of H3b but not H3c, the results indicate that the three-way interaction among negative
significant (Equation 1: β = .050, t = 1.746, p < .05) and that the three-way interaction among
significant (Equation 1: β = –.026, t = –.874, p > .10). Figure 2 plots the significant three-way
dependence (H3b) (Aiken and West 1991). Panel A shows that in response to negative inequity,
24
level of relative dependence is low (simple slope: b = .07, t = 1.92) but make no change to
resource sharing when relative dependence is high (simple slope: b = .07, t = .52). Panel B
relationships reduce resource sharing when the level of relative dependence is high (simple
slope: b = –.37, t = –1.52) but make no change to resource sharing when relative dependence is
low (simple slope: b = .07, t = .85). Thus, although the expected direction of H3b is supported,
the results indicate a more nuanced effect than what we previously theorized.
relationship performance. The results provide support for H4 (Equation 2: β = –.397, t = –6.519,
p < .01).
Additional Findings
Though not directly hypothesized, the analysis revealed significant additional relationships.
Specifically, we found that a supplier’s relative dependence had a significant, negative effect on
the level of resource sharing with its buyer (Equation 1: β = –.289, t = –8.193, p < .01), whereas
a buyer’s relative dependence had a significant, positive effect on resource sharing (Equation 1:
β = .203, t = 5.871, p < .01). Both these results are suggestive of efforts to minimize asymmetry
literature in terms of actions taken to facilitate the continuation of the relationship. Magnitude of
17.722, p < .01). This result was not surprising, given both the high correlation between the
constructs and Scheer, Miao, and Palmatier’s (2015) finding of a similar relationship in their
25
its buyer had a significant, positive effect on perceived relationship performance (Equation 2: β =
DISCUSSION
Theoretical Implications
The findings extend the literature in marketing on positive and negative inequity (e.g., Coley,
Lindemann, and Wagner 2012; Scheer, Kumar, and Steenkamp 2003; Wangenheim and Bayon
2007) in three ways. First, this work demonstrates that behavioral responses to different inequity
findings indicate that, though a supplier in a positive inequity position does not change the level
of resource sharing with its buyer when in a relationship of high magnitude of interdependence,
when in a positive inequity position, it reduces resource sharing when in a relationship with a
low magnitude of interdependence. This suggests that, contrary to equity theory, the cultural
orientation of competitive achievement, coupled with the limited value the supplier places on the
relationship, motivates the supplier to leverage its position of positive inequity, even under the
Also of note, we found that the magnitude of interdependence did not moderate the
positive influence of negative inequity on resource sharing. A possible explanation is that these
ongoing buyer–supplier relationships hold a degree of value to the partners and therefore are
interdependence level. In such relationships, the sharing of resources signals the supplier’s long-
term commitment to the buyer (Williamson 1983), which in turn increases the supplier’s
attractiveness to its partner (Hamel, Doz, and Prahalad 1989). Taken together, the results indicate
that magnitude of interdependence becomes a boundary condition for the behavioral response to
26
positive inequity (in the case of low-magnitude relationships), but not negative inequity. As such,
this work extends the literature on positive and negative inequity (e.g., Scheer, Kumar, and
Steenkamp 2003), highlights the importance of examining positive and negative inequity as
separate constructs, and demonstrates the limitations of equity theory in explaining responses to
Second, our findings extend the dependence literature (e.g., Anderson and Narus 1990;
Gundlach and Cadotte 1994) by demonstrating that supplier and buyer relative dependence
when relative dependence is greater but make no changes when relative dependence is lower. In
dependence, suppliers increase resource sharing in response to positive inequity. We also found
that as the magnitude of interdependence increases, the level of a buyer’s relative dependence
has no effect on the supplier’s response to positive inequity (i.e., they maintain the status quo).
Taken together, these results suggest a balancing effort on the part of suppliers. Specifically, as
suppliers’ relative dependence increases, in the context of jointly increasing positive inequity and
positive inequity, suppliers increase the sharing of resources, potentially in an attempt to increase
27
Our results with respect to responses to negative inequity differ considerably. In general,
we found that a supplier’s relative dependence moderates the relationship between magnitude of
interdependence and negative inequity and a supplier’s resource sharing with its buyer, but a
buyer’s relative dependence does not. Specifically, in response to negative inequity, suppliers in
high-magnitude interdependence relationships increase the level of resource sharing when their
relative dependence is low but make no changes when relative dependence is high. Although
these findings confirm the credible commitment argument (Williamson 1983), in which the
supplier’s concern with the relationship’s viability induces it to go to greater lengths to convince
its buyer of the relationship’s value and its contributions to the relationship, the results introduce
a caveat—that is, suppliers only increase their exposure to positions of negative inequity in high-
magnitude interdependence relationships when they are not overly vulnerable (i.e., lower levels
relationships; here, suppliers maintain the current level of resource sharing when relative
dependence is low but reduce resource sharing in response to negative inequity when the level of
relative dependence is high. Taken together, these findings suggest the intricacies of the
Third, the findings shed light on the influence of inequity on perceived relationship
indicate that increasing levels of positive inequity positively influence the perception of
relationship performance. In accordance with extant literature (e.g., Coley, Lindemann, and
Wagner 2012; Scheer, Kumar, and Steenkamp 2003; Wangenheim and Bayon 2007), this finding
suggests that as positive inequity increases, a supplier is both more satisfied with the relationship
28
and more loyal to its partners, and therefore it may be more committed to working with the buyer
negative inequity increases dissatisfaction with the relationship. This dissatisfaction stimulates
the supplier to engage in fewer actions that would advance the relationship, beyond the sharing
of resources, resulting in decreased ability of the relationship to meet its initial performance
expectations.
Managerial Implications
From a managerial perspective, this study highlights the importance of recognizing the
operating within a cultural context of competitive achievement. Furthermore, the study provides
decreasing the level of resources shared with buyers. The motivation to leverage a positive
suppliers maintain the status quo), as well as by increasing levels of suppliers’ relative
dependence on buyers. This suggests that managers should consider both the limitations of
managerial action. It also suggests that buyers should proactively work to subvert their suppliers
29
from restricting contributions to the relationship. For example, buyers could communicate the
important that buyers recognize the use of these credible commitments as a strategic effort to
advance the relationship (i.e., high magnitude of interdependence and low supplier relative
dependence) or to transition away from the relationship (i.e., low magnitude of interdependence
suppliers, when making credible commitments in efforts to stimulate greater recognition of their
value to buyers, restrain themselves from engaging in other collaborative actions that could
advance the functioning of the relationship. For both suppliers and buyers, such adjustments in
resource sharing and other actions can serve as signals for evaluating the future potential of their
relationships.
Last, managers should not neglect the influence of inequity on perceived relationship
performance. The results suggest that while perceptions of positive inequity can stimulate a more
effective relationship and perceptions that the relationship’s performance expectations are
increasingly being met, perceptions of negative inequity can correspondingly reduce efforts in
the relationship and perceptions that the relationship is meeting expectations. In the case of
negative inequity, continued perceptions of poor performance may lead to the eventual
30
influences of positive and negative inequity on performance expectations to properly manage the
This research provides new insights into the influence of the structure of interdependence on the
its implications are tempered by limitations that additional research could address. The results
show that suppliers act differently depending on whether their relationships have a high or low
magnitude of interdependence, whether they or their buyers are the dependent party, and whether
perceived inequity is or is not in their favor; however, these findings come from a sample of
small Japanese suppliers reporting on their relationship with their primary U.S. buyers, which
limits the generalizability of the findings. Beyond increasing the size of the supplier base,
researchers could also try to discern whether other predictable differences in reactions to inequity
arise from the position in the buyer–supplier relationship (e.g., do the findings from the
perspective of the supplier hold for the perspective of the buyer), as well as other environmental
and/or cultural contingencies, as the response to inequity is likely to vary depending on the
cultural orientations of respondents. For example, although Japan and the United States are
similar in that both have cultural orientations of competitive achievement (i.e., countries high on
masculinity), research could explore many other similarities and differences (e.g., other cultural
relationships of a relatively long duration. As relationships can vary over their life cycle (e.g.,
31
Dwyer, Schurr, and Oh 1987; Jap and Anderson 2003), examining whether behavioral responses
and perceived relationship performance change depending on the stage of the relationship could
provide important insights for managers. For example, are suppliers of early-stage relationships
more likely to work toward equity than suppliers overseeing relationships that have reached
maturity or are in decline? How do actions of suppliers in maintaining equity influence changes
strategy? Are suppliers more likely to leverage inequity as their partners become less important
for them to realize their objectives under strategy changes (e.g., Cui 2013; Cui, Calantone, and
Griffith 2011)? Research addressing these and similar questions would substantively advance the
literature.
This research is also limited by the constructs employed regarding the behavioral
behavioral response of resource sharing, given its relationship to equity theory and the
importance of such resources in ongoing buyer–supplier relationships (e.g., Cui 2013; Ghosh and
John 1999; Srivastava, Shervani, and Fahey 1998), but other behavioral responses are possible,
and their effects should be investigated. For example, research indicates that relational behaviors
occur in the management of buyer–supplier relationships (e.g., Hoppner and Griffith 2011;
Lusch and Brown 1996). Moreover, while our operationalization of performance considers the
perceived ability of the relationship to meet the expectations set forth by the supplier, other
performance measures, such as objective financial performance, could provide additional insight
and behavioral responses are all dynamic. As a supplier changes the level of resources it shares
32
with its buyer, it also has the potential to fundamentally change the inequity existing between
them as well as the elements constituting the structure of interdependence in the relationship.
Although our findings present a snapshot of the responses and effects that occur in buyer–
supplier relationships, an exploration of the dynamic nature of changes that occur between these
33
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Table 1: Construct Measures
Constructs
Supplier Inequity (Difference in Distributive Justice)
Received from the Buyer (Buyer Distributive Justice)
Our Primary Buyer…
BDJ1: Ensures that the monetary rewards we receive from our buyer are fair, given our
contributions.
BDJ2: Ensures that they share the gains from this relationship according to contributions.
Buyer Dependence
BD1: Our primary buyer is dependent on us.
BD2: Our primary buyer would find it difficult to replace us.
BD3: Our primary buyer would find it costly to lose us.
Resource Sharing
RS1: We provide our primary buyer access to the resources they need to be successful.
RS2: Our primary buyer obtains resources to support new ideas from us.
RS3: When our primary buyer needs additional resources, they can usually get them from us.
RS4: We provide our primary buyer access to the strategic information they need to be successful.
Firm Size
Number of employees
Industry
Durable goods = 0; Non-durable goods = 1
*The measure for these items were taken six months later (at Time 2) and provided by a second informant .
39
Table 2: Correlation Matrix
40
Table 3: Measure Validation
Average
Standardized Composite
Construct Variance
Loadings Reliability
Extracted
Supplier Inequity .787 .620 ---
Magnitude of ---
Interdependence .984 .969
Prior Perceived
Relationship Performance .926 .806
PRP1 .914
PRP2 .894
PRP3 .885
CFA Model Fit Indexes: χ2(53) = 366.976, CFI = .933, SRMR = .025.
41
Table 4: Results of the Influence of Inequity
Equation 1 – Overall Model Fit: F(10, 295) = 154.466, p < .00; R2 = .914; Adj. R2 = .908.
Equation 2 – Overall Model Fit: F (6, 295) = 11.286, p < .001 R2 = .190; Adj. R2 = .173.
*
p < .10; ** p < .05; *** p < .01 (one-tailed).
42
Figure 1: Graphical Interpretation of Interaction Effect of Positive Inequity, Magnitude of
Interdependence, and Supplier Relative Dependence
4 2
3 1
Low Positive Inequity High Positive Inequity Low Positive Inequity High Positive Inequity
*
Black lines indicates a significant slope, and gray lines indicates a nonsignificant slope.
43
Figure 2: Graphical Interpretation of the Interaction Effect of Negative Inequity, Magnitude of
Interdependence, and Supplier Relative Dependence
4 2
3 1
Low Negative Inequity High Negative Inequity Low Negative Inequity High Negative Inequity
*
Black lines indicates a significant slope, and gray lines indicates a nonsignificant slope.
44
WEB APPENDIX A:
AN EXPERIMENTAL STUDY OF THE RESPONSES TO INEQUITY
Purpose
Managers have multiple possible responses to the existence of inequity in their buyer–supplier
relationships. We conducted an experiment to identify the actions that managers take in response
to positive and negative inequity given the constraints imposed by the relationship’s structure of
interdependence. This experiment allowed us (1) to determine whether resource sharing was an
appropriate choice of a behavioral response to inequity and (2) to validate the causal ordering of
our constructs within the cross-sectional survey model by determining whether resource sharing
was an outcome of inequity.
Experimental Design
We employed a 2 × 2 × 2 between-subjects experimental design in which each treatment
represents a combination of the three manipulations of interest: supplier inequity (positive vs.
negative), magnitude of interdependence (high magnitude vs. low magnitude), and relative
dependence (supplier relative dependence vs. buyer relative dependence).
Experimental Scenario
The objective of the scenario development was to ensure that the scenario was realistic and that
respondents correctly interpreted both the manipulations and the context. For the context of the
scenario, respondents were asked to assume the role of a manager of a firm responsible for the
supply of microchips to a midsized U.S. electric component manufacturer. The relationship
between a Japanese supplier and a U.S.-based buyer allows for correspondence with the sample
used in the two-wave survey. We chose the microchip category because (1) it is bought on a
repetitive basis and forms a key component in electronic equipment, encouraging ongoing
interorganizational exchanges (Noordewier, John, and Nevin 1990), and (2) it has been
successfully used in prior buyer–supplier research (e.g., Joshi and Arnold 1997; Seggie, Griffith,
and Jap 2013). For the manipulation of magnitude of interdependence, we used the terminology
of Gundlach and Cadotte (1994) and labeled each relationship as either a major or a minor
relationship, as well as specified the relationship’s level of dependence. Furthermore, we held
additional factors (i.e., asset specificity, environmental and behavioral uncertainty, and
transaction frequency) constant to limit the interference of alternative theoretical explanations
(Seggie, Griffith, and Jap 2013).
Respondents were randomly assigned to one of the eight treatments. The final scenario read as
follows:
Imagine you are a manager responsible for supplying microchips to a midsize, U.S.
electronic components manufacturer. You have been supplying microchips twice a week
to this buyer for two years.
You consider it a major relationship as you believe that there is significant mutual
dependence in the relationship, that you and the buyer would find it difficult to replace
each other, and that it would be costly if the relationship were to end (High-Magnitude
Relationship)/You consider it a minor relationship as you believe that there is limited
45
mutual dependence in the relationship, that you and the buyer would not find it
difficult to replace each other, or that it would be costly if the relationship were to end
(Low-Magnitude Relationship). While it is a major/minor relationship, you are more
dependent upon your buyer than they are on you (Supplier Relative Dependence)/your
buyer is more dependent upon you than you are on them (Buyer Relative Dependence).
There are no unanticipated changes in the external environment. There are multiple
qualified buyers and suppliers of microchips in the market. You have made some
investments specifically dedicated to your relationship with this buyer, but these do not
completely bind you to the relationship.
As part of your annual planning process, you re-evaluate each and every supplier
relationship. When evaluating the gains and costs of this relationship, you believe, on
average, that you have received significantly more from this buyer than you have
provided to the buyer (Positive Supplier Inequity)/that you have received significantly
less from this buyer than you have provided to the buyer (Negative Supplier Inequity).
After reading their specific scenario, respondents responded first to the following open-ended
question: “Given your evaluation of the gains and costs of the relationship, what actions might
you take?” After moving to the next screen, respondents were asked: “Did you indicate that you
would have modified, in any manner, the resources invested in this relationship?”
Sample
To maintain a sample consistent with the sample used in the two-wave survey, we selected
Japanese managers of buyer–supplier relationships as our respondents. A market research
company (i.e., Research Panel Asia) helped us access Japanese managers. The respondent pool
was sent an invitation to participate in an online survey. To qualify for participation, respondents
had to be a manager at a firm operating in the manufacturing, wholesale, or retail industries and
to have at least five years of work experience. In total, 304 Japanese managers participated in the
experiment.
46
To gain a better understanding of the open-ended data, we grouped responses according to their
type of investment: (1) increased investment response (i.e., information gathering, constructive
discussion, and strengthening the relationship, or any combination thereof), (2) neutral
investment response (i.e., continuing the relationship, search for alternatives, or the combination
thereof), (3) decreased investment response (i.e., withdrawal), and (4) exit.
The open-ended data in response to both positive and negative inequity conditions indicated that
a significant percentage of respondents (ranging from 38% to 55%) would increase their
investment in the relationship. This suggests that the sharing of resources with one’s partner can
be viewed as an appropriate outcome of inequity.
47
Table A1: Coded Responses to Positive and Negative Inequity within Interdependence
Structures
Positive Inequity Negative Inequity
High Magnitude Low Magnitude High Magnitude Low Magnitude
BRD SRD BRD SRD BRD SRD BRD SRD
1 C C C C C C C C
2 C C C C C C C C
3 C C C C C C C C
4 C C C C C C C C
5 C C C C C C C C
6 C C C C C C C C
7 C C C C C C I C
8 C C C C C, A I I C
9 C C C C C, A I I I
10 C C C C I I I I
11 C C C C I I I I
12 C C C C I I I I
13 C C C C I I D I, A
14 C C C C I D D D
15 C C C C I D D D
16 C I C C I D D D
17 C I C, A C I D D D
18 C I I C D D D D
19 C I I C D D D S
20 C I I C, I D D D W
21 C I D I D D D A
22 C I D I D D S A
23 C D D I D D S A
24 C, I D S I D D S, E A
25 C, S D S I D D W A
26 C, A D S I D D W A
27 C, A D S D D D W A
28 I S S D D W A A
29 I S S D S W, A A E
30 I S S D, A S A A E
31 I S S S S A A E
32 D S S S A A E E
33 D A S S A A E E
34 D A W W A A E E
35 S E W A E A E E
36 S E E A E A E E
37 S E E E A E E
38 S E E E E
39 A E E
40 E
Notes: C = Continuation (no action), I = Information Gathering, D = Discussion (constructive), S = Strengthening
the Relationship (increase own input), W = Withdraw from the Relationship (reduce own input), A = Alternatives
(search for alternatives), and E = Exit from the Relationship. Each column represents the sequential response of an
individual manager. The order of the respondents in the experiment is not the same as presented here (we changed
the order to make the table easier to follow).
48
References
Gundlach, Gregory T. and Ernest R. Cadotte (1994), “Exchange Interdependence and Interfirm
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49
WEB APPENDIX B:
SYSTEM ESTIMATION OF MODEL
Method
Because of the potential endogeneity problem of resource sharing, we employed both a partial
least squares structural equation model (PLS-SEM) and a two-stage least squares model (2SLS)
to check for robustness of the model.
1. PLS-SEM Estimation
2. 2SLS Estimation
From the results of the two estimation procedures, we conclude that the previous spline
regression analysis results of the model are robust.
50
Table B1. PLS-SEM Estimation: Influence on Resource Sharing and Relationship Performance
DV Β t-value
Equation 1 Resource Positive Supplier Inequity (PSI) -.016 -.532
Sharing (RS) Negative Supplier Inequity (NSI) .098** 1.841
Supplier Relative Dependence (SRD) -.289*** -7.504
Buyer Relative Dependence (BRD) .203*** 5.671
Magnitude of Interdependence (MI) .730*** 18.163
PSI × SRD -.012 -.308
PSI × BRD .016 .662
NSI × SRD -.048* -1.482
NSI × BRD .015 .427
PSI × MI .062** 1.951
NSI × MI -.053 -1.136
SRD × MI .085** 1.677
*
BRD × MI -.037 -1.293
PSI × SRD × MI -1.00** -2.011
PSI × BRD × MI .016 .755
NSI × SRD × MI .050* 1.64
NSI × BRD × MI -.026 -1.093
Firm Size -.012 -.753
Industry -.013 -.659
2
Adj. R = .908
51
Table B2. 2SLS Estimation of Equation 2: Influence on Relationship Performance
DV β t-value
**
Equation 2 Perceived Positive Supplier Inequity (PSI) .142 2.036
Relationship Negative Supplier Inequity (NSI) -.425*** -6.360
Performance Resource Sharing (RS) .330*** 4.116
(RP) Firm Size -.075* -1.293
Industry .067 1.147
Prior Perceived Relationship Performance .233 .996
2
Adj. R = .158
*
p < .10; ** p < .05; *** p < .01 (one-tailed).
52
References
Chin, Wynne W., Barbara L. Marcolin, and Peter R. Newsted (2003), “A Partial Least Squares
Latent Variable Modeling Approach for Measuring Interaction Effects: Results from a Monte
Carlo Simulation Study and an Electronic-mail Emotion/adoption Study,” Information Systems
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Staiger, Douglas O. and James H. Stock (1997), “Instrumental Variables Regression with Weak
Instruments,” Econometrica, 65 (3), 557-86.
53