Beyond Firm Boundaries: Exploring The Interdependence Between Supply Chain Partners

Firms have increasingly become more tightly coupled with one another and reliant upon their supply chain partners in recent decades. This research examines this trend by evaluating the extent to which supply chain partners are able to directly influence one another`s performance as well as indirectly influence supply chain partners beyond their immediate dyad. It seeks to do so through three essays that focus on an in-depth examination of the bullwhip phenomenon, a study of dyadic bargaining power relationships, and finally an analysis of dyadic financial and inventory performance. Even though a growing body of research has sought to empirically authenticate the existence of the bullwhip effect over the past decade, conclusive validation has thus far been elusive. In Essay 1, utilizing secondary data from 348 firm level supply chain triads, we not only empirically confirm the existence of the bullwhip effect, but also show that other patterns of demand amplification exist as well. When these different patterns are combined together, the amplification patterns effectively cancel each another out such that amplification at any single stage in the supply chain becomes undetectable. In Essay 2, utilizing a secondary dataset of 2861 buyer-supplier dyads and Seemingly Unrelated Regression (SUR), we jointly evaluate the extent to which buyer`s bargaining power is simultaneously associated with improved buyer performance and diminished supplier performance. We find that buyer`s bargaining power is associated with improved buyer operational performance and diminished supplier operational performance. While supplier financial performance is negatively associated with buyer`s bargaining power; the buyer`s financial performance is not significantly improved. In Essay 3, we evaluate the extent to which dyadic supply chain partners influence one another`s financial and inventory performance. Utilizing CompuStat database and Markov Chain Monte Carlo methods, a complex Multiple Membership Multiple Classification (MMMC) data structure model is evaluated for 10,459 customer observations and 20,706 supplier observations. We find that although corporate effects are the primary contributor to a firm`s performance variability, dyadic trading partners also significantly impact the firm`s variable performance. However, the relative proportion of performance variance explained is highly dependent upon the type of customer (manufacturer or retailer) or type of supplier (manufacturer or non-manufacturer) with which the firm interacts. Overall, the findings of this research contribute to extant literature by not only showing that firms can greatly influence the behavior and performance of one another, but also that they can significantly impact their supply chain partners beyond their own immediate dyad.