Relational asymmetry, trust, and innovation in supply chain management: a non-linear approach

• Published date: 11 February 2019
• Pages: 303-328
• DOI: https://doi.org/10.1108/IJLM-01-2018-0011
• Date: 11 February 2019
• Author: Marek Michalski,Jose Luis Montes,Ram Narasimhan
• Subject Matter: Management science & operations,Logistics

Relational asymmetry, trust, and

innovation in supply chain

management: a non-linear approach

Marek Michalski

College of Business Administration,

San Francisco de Quito University, Quito, Ecuador

Jose Luis Montes

Department of Applied Economics I, Rey Juan Carlos University,

Madrid, Spain, and

Ram Narasimhan

Michigan State University, Lansing, Michigan, USA

Abstract

Purpose –The purpose of this paper is to examine the non-linear aspects of the asymmetry-performance

relationship under varying conditions of trust and innovation. Its novel approach is useful for addressing the

strategic elements of supply chain management (SCM) relationships based on trust and innovation decisions.

Design/methodology/approach –Results are based on a study of 90 managers from small- and medium-

sized firms in Spain. Instead of a classical linear relationship analysis, the authors performed a non-linear

analysis, using polynomial modeling and Warp 3 partial least squares method, which provides a more

nuanced view of the data and constitutes an original approach to empirical research in SCM.

Findings –This study adds a new viewpoint on SC relationships by suggesting that not all trust and

innovation development leads directly to performance improvement. The principal finding is, in varying trust

and innovation contexts, that the influences of asymmetry on performance have uneven characteristics and

follow non-linear paths.

Research limitations/implications –This study focuses on only one particular institutional environment

in one country. The data are also cross-sectional, which makes it difficult to empirically test causality.

Practical implications –The findings provide rational insights to managers on when it is appropriate to

reduce (or not) asymmetric relationships with partners.

Originality/value –Trust and innovation are important and ones of the key requirements of supply chain

relationships in any environment, this study argues that the interactions of key SCM elements that drive

members to better performance are more complex and non-linear.

Keywords Europe, Small- to medium-sized enterprises, Management research, Structural equation modelling,

Buyer–supplier relationships, Supply chain innovation, Performance measurements

Paper type Research paper

1. Introduction

In today’s intensely competitive global market, effective supply chain management (SCM)

plays a critical role in improving organizational performance. This dynamic environment

requires organizations to provide high-quality products and services, respond quickly to

demands and be able to adapt to ongoing changes in the environment. Consequently, supply

chains (SCs) are not static: they evolve and change in size, shape and configuration, and in

how they are coordinated, controlled and managed (MacCarthy et al., 2016). In this

environment, organizations need to develop relationships on an “exchange platform”of joint

activities (Fawcett and Magnan, 2001; Lin, 2008; Skippari et al., 2017). It is argued that

relationship exchanges are the ultimate determinants of the nature and parameters of

SCs. Two of these parameters are the trust and innovation that exist in relationships among

the parties involved. Trust and innovation are not only the core, essential factors of

relational management but also the basic elements of SC organization, formation and

operations (La Londe, 2002; Pomponi et al., 2015).

The International Journal of

Logistics Management

Vol. 30 No. 1, 2019

pp. 303-328

© Emerald PublishingLimited

0957-4093

DOI 10.1108/IJLM-01-2018-0011

Received 19 January 2018

Revised 21 May 2018

10 August 2018

8 November 2018

Accepted 11 November 2018

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0957-4093.htm

303

Relational

asymmetry, trust,

and innovation in

SCM

SC partners can gradually develop mutual trust through the exchange processes. In

these activities, innovation helps organizations to achieve efficiency, especially through

innovative applications of information technology. Innovation creates value for customers

and improves the quality of processes and products (Lin, 2008). From this perspective, trust

and innovation help partners to build an “exchange platform,”continually negotiating

resource exchanges as requirements change. The firm’s continuous interaction with other

network members is an important factor in developing new resources (Håkansson and Ford,

2002). Thus, the possibility of advantageous resource interchange helps firms to change the

SC structure and motivate its members to pursue innovation. Consequently, rather than

seeking an optimal equilibrium, an SC network is in a constant state of dynamic change

(Halldorsson et al., 2007).

The challenges facing today’s SCs include increasing risks of demand and supply

imbalances, liabilities related to a firm’s position in the market, guarantees of availability of

the required resources and technologies and optimizing costs (Cao and Zhang, 2011; Pavlou

and Gefen, 2004; Pradabwong et al., 2015). In reality, SCM is much more complex than

maintaining compatible and linear relationship among the upstream and downstream actors

of the SC network (Vanteddu et al., 2006). The presence of imbalance in such relationships

affects partners’behaviors and may encourage opportunism and environmental uncertainty

(Pradabwong et al., 2015). It is argued that this imbalance is related to relationship

asymmetry. Imbalance in relationship dimensions could be a barrier to SC cooperation: in

such situations, relationships are often dominated by formal agreements, rather than by

trust. While this may serve to ensure access to resources, it does not motivate innovative SC

cooperation (Colurcio and Russo-Spena, 2013).

The SC itself is a kind of network system or structure. As such, it is a complex non-linear

system, co-influenced by various independent but related elements (Tang et al., 2016). The

relationships within inter-firm networks are built upon several core attributes, among the

most important of which are innovation and trust (Colurcio and Russo-Spena, 2013;

Laeequddin et al., 2012). In a symmetric relationship, all involved parties have similar levels

of trust and contribute equally to collaborative innovation activities (Moberg et al., 2003). In

such a situation, both fears of opportunism and the relationship costs may be reduced, and

mutual reciprocity may be achieved (Thomas and Skinner, 2010).

Asymmetry inSC relationshipsis an important area for research becausesome differences

between partners are generally inevitable (Nyaga et al., 2013). Asymmetry in SC network

relationshipshas been analyzed from differentperspectives. Most studies have focusedon the

potentially“negative”linear effectsof asymmetry on relationshipstability, dissatisfactionand

network development or performance (Johnsen and Ford, 2001, 2008; Thomas and Skinner,

2010). In other cases, though not as prevalent, asymmetry is suggested to be “positive”

because the clear dominance of one party over another serves to stabilize a relationship

(Thomas and Esper,2010). This paradox suggests non-linearity in SC relationships, allowing

us to argue that focusing on linear relationships is insufficient. Additionally, if asymmetry is

importantto the core relationship attributes,then exploring all of its implications,especially in

relation to trust and innovation, may offer insightsinto why SC relationships succeed or fail.

This study proposes a research model to ascertain how asymmetry influences

performance under different levels of trust and innovation in the relationships between SC

firms. Specifically, it attempts to address the following research question:

RQ1. How do different levels of trust and innovation affect the influence of asymmetry

on organizational performance?

We expect that the results of this research could advance understanding of the topics of

trust and innovation in SCM and deliver new insights into the relationship between

asymmetry and performance.

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