Xu, Y., Wang, L. orcid.org/0000-0001-6807-5496, Wang, J.X. et al. (1 more author) (2025) Power dynamics and financial flexibility: Insights from Chinese supply chain dyads. International Journal of Production Economics. 109797. ISSN: 0925-5273
Abstract
Grounded in Resource Dependence Theory and Bargaining Power Theory, this study investigates how power asymmetries in supplier–customer relationships affect customer operational efficiency, with a particular focus on the supplier’s strategic use of financial flexibility. We collected 974 paired dyadic data from the China Stock Market and Accounting Research Database in 2016–2023 and used panel-data regression analysis. Surprisingly, we discovered an inverted U-shaped relationship between the supplier’s financial flexibility and the customer’s efficiency. This suggests the power effect of financial flexibility on performance in a supply chain dyad is not quickly realized until a certain threshold is reached in our context. We also investigated contextual factors of power dynamics, focusing on relationship strength and environmental uncertainty. We found that higher supplier dependence reduces the threshold for the impact of the supplier’s financial flexibility on customer efficiency, as does high market uncertainty. Our study contributes to the literature by highlighting the challenges of utilizing financial flexibility to readjust power dynamics in Chinese supply chain dyads. However, our findings suggest to the supplier managers that the effective use of this approach relies heavily on the dependence factor and market uncertainty.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2025 The Authors. Except as otherwise noted, this author-accepted version of a journal article published in International Journal of Production Economics is made available via the University of Sheffield Research Publications and Copyright Policy under the terms of the Creative Commons Attribution 4.0 International License (CC-BY 4.0), which permits unrestricted use, distribution and reproduction in any medium, provided the original work is properly cited. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/ |
Keywords: | financial flexibility; supply chain dyads; uncertain environment; bargaining power theory |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Management School (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 22 Sep 2025 10:46 |
Last Modified: | 22 Sep 2025 10:46 |
Status: | Published online |
Publisher: | Elsevier |
Refereed: | Yes |
Identification Number: | 10.1016/j.ijpe.2025.109797 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:231555 |