The dark side of supply chain digitalisation: supplier-perceived digital capability asymmetry, buyer opportunism and governance

Son, B., Kim, H., Hur, D., Subramanian, N. (2021) International Journal of Operations & Production Management

In this paper, the authors seek to contribute to the supply chain digitalisation literature by investigating a potential dark side of supply chain digitalisation from the viewpoint of the small and medium-sized enterprise (SME) suppliers, namely digital capability asymmetry and the partner opportunism of more digitally capable large buyers against SME suppliers. The authors seek to contribute further to the governance literature by investigating the effectiveness of the governance mechanism (legal contracts and relational contracts) in suppressing partner opportunism of this nature. Using survey data collected from 125 Korean SMEs, the authors employed a hierarchical regression method to test a set of hypotheses focussing on the dark side of supply chain digitalisation and the effectiveness of the governance mechanism. The study’s findings suggest that supplier-perceived digital capability asymmetry, wherein a buyer has a superior digital capability than its SME supplier, increases the SME supplier’s dependence on the more digitally capable buyer, with the result that it is more exposed to buyer opportunism. Moreover, the results suggest that only relational governance is effective in protecting SME suppliers from buyer opportunism of this nature. So far, the overwhelming majority of supply chain digitalisation research has debated its “bright side”. On the contrary, from the resource dependence theory perspective, this paper explains its dark side by providing empirical evidence on (1) the links between supplier-perceived digital capability asymmetry and a buyer’s opportunism through an increased supplier’s dependence and (2) the effectiveness of different types of governance in opportunism suppression.

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