Towards a theory of supplier embeddedness: Contextualized mechanisms, contingent conditions, interactive properties and unorthodox observations

Abstract

Buyer-supplier relationships, as typical hierarchical inter-firm arrangements, epitomize embedded dyadic situations, particularly for the suppliers' part. The embeddedness processes, presumably, will be different for suppliers and buyers. Extant embeddedness theory, however, does not differentiate the processes between the two parties. Rather, the prevalent approach to firm-level embeddedness simply borrows or elevates individual-level theorization. Consequently, the literature falls short in explaining how suppliers, as subordinate parties, are embedded in generally status-asymmetric relations. To fill the theoretical gap, this study theorizes supplier embeddedness (SE)—i.e., how a supplier's ways of strategizing, deciding and behaving are constrained by its (significant) buyer, and the extent to which such pattern varies across suppliers. Given the exploratory nature and theory elaboration purpose of our inquiry, we use a case-based research method. Specifically, we conducted case studies of eight suppliers of a single automaker (Automo) and employed abductive (merging inductive and deductive) reasoning, as particularly suited for theory elaboration. Our analysis of qualitative data revealed noticeable variances in suppliers' SE with respect to Automo, while unearthing context-specific mechanisms and their interactive properties that jointly characterize SE, as well as its antecedent/contingent conditions that define the boundaries of SE. Additionally, we made some unorthodox observations on inter-firm reciprocity and brokerage in our context. These findings are summarized in the form of propositions for future research.