“Network Embeddedness as a Dependence Balancing Mechanism in Developing Markets: Differential Effects for Weaker and Stronger Channel Partners” by Dr. Maggie Chuoyan Dong
Dr. Maggie Chuoyan Dong
Associate Professor Department of Marketing
City University of Hong Kong
Asymmetric buyer-seller relationships, in which one party is more dependent on the other party than the other way round, abound in the developing markets. Such asymmetric relationships are more harmful to the weaker partners with dependence disadvantage, because the stronger ones can exploit their gains. As the dependence-disadvantageous party usually lacks internal resources to balance such disadvantage, it may resort to networking with external communities, such as business and government networks, to gain more cooperative rather than exploitative reactions from the dependence-advantageous party. Meanwhile, the dependence-advantageous party is also embedded in its business and government networks. Does network embeddedness exert different effects on the exchange partner’s cooperation for the dependence-disadvantageous and –advantageous party? Are the effects of embeddedness in business and government networks varying under different levels of dependence asymmetry? To answer these research questions, we collected a dyadic survey data of buyer-supplier pairs in consumer product industries in China. The results reveal the differential effects of the weaker and stronger partner’s embeddedness in business and government networks on its counterpart’s relationship-specific investments and use of coercive power, which in turn enhance or depress the channel performance. Moreover, such effects are moderated by the level of dependence asymmetry. The findings provide theoretical and managerial implications for the partners in asymmetric channel relationships in developing markets.