Politics in the Supply Chain: The Interplay of Power, People, and Positioning

Author(s):

Alvin J. Williams, Ph.D.
Alvin J. Williams, Ph.D., Chair and Professor of Marketing, University of Southern Mississippi, Hattiesburg, MS 39406, 601/266-4634, Alvin.williams@usm.edu

86th Annual International Conference Proceedings - 2001 

Abstract. Successful supply chain management in dynamic environments requires adroit political acumen and the keenness to juggle the associated power and posturing demands. Chains naturally require an integrative approach to the conceptualizing, developing, and executing of value-adding strategies over time. However, relationships among chain partners can be tenuous, myopic, and otherwise less than optimal because of political maneuverings, power plays, and posturing. Understanding the critical nature of political behavior within supply chains is a key success ingredient. The presentation addresses approaches to political behavior, applications of different models, and examples of how politics can be both an asset and a liability in managing the supply chain.

Introduction. The conceptualization, design, implementation, and assessment of supply chains are all impacted by the interconnectedness of power, politics, and posturing. Given the criticality of these variables to supply chain success, it is instructive to study the nature, structure, and impact of power and politics on chain effectiveness and efficiency. As performance expectations escalate for supply chains, it is incumbent upon all chain participants to understand both the immediate and latent potential, positive and negative, of power and political initiatives. Supply chain cohorts lacking in political discernment will be at a distinct disadvantage when negotiating and otherwise interfacing with counterparts. As negotiating stakes among supply partners swell, the costs of not being politically astute are gaining. Thus, political canniness must be turned into a "sustainable advantage" within the supply chain. The presentation focuses on the role of power, politics, and posturing in managing supply chains.

Power Perspectives. Supply networks are characterized by considerable interdependence. Activities and behaviors at one link influence, to varying degrees, events and actions at all other links in the system. As network components evolve in various ways to achieve simultaneously individual and system goals, power shifts are likely and desirable. The manner in which power is understood and used can seriously affect intra-chain relationships and results.

Basically, power is the capacity to target influence to impact outcomes. All supply partners have some type of influence and they must use that influence judiciously, adroitly, and with attention to the adverse effect and/or the long-term impact of influence misuse. Smeltzer and Goel (1995) posit that power is a relative concept. A supply partner is powerful or powerless only within the context of or relative to other partners in the system. Additionally, power is fluid — it can change across situations and circumstances.

To understand better the power/influence concept, it is useful to address various sources of power. The literature frequently refers to the following power sources: coercive power; reward power; legitimate power, and expert power (French and Raven, 1959). At the core of coercive power is fear. In this context, supply chain partners respond because of the probability of negative actions associated with noncompliance. For example, if a small supplier that is heavily dependent on a large buyer disagrees with a certain course of action, negative consequences could follow. Conversely, reward power exists when partner actions lead to positive benefits.

Legitimate power emanates from the formal position of the supply partner within the network. Power is automatically associated with a particular position in a given hierarchy. The CEO has more formal power ascribed to the position than that accorded a vice-president. In the supply chain there is some characteristically traditional power associated with retailers, distribution centers, manufacturers, and suppliers. While the degree of power is fluid in the chain, by virtue of the network's structure each partner has power that is usually connected with its position.

Expert power in the channel is derived from having specific skills, knowledge bases, technical competencies, or some other identifiable distinction that differentiates a network partner from others. To the extent that various types of expertise are sprinkled throughout the network, so is relative expert power.

How do the above power sources impact supply chain management? First, there is no such thing as a stable chain. Instability is certainly the norm in any channel. Understanding the dimensions and characteristics of power allows each link in the chain to assess the effects of shifts in influence on both short- and long-term outlooks. Second, knowledge of power sources enhances the probability of constructing more effective negotiating strategies and tactics when interfacing with supply partners. Understanding the real sources of strength in a network can be a tremendous management asset to any organization.

Future performance enhancements within supply networks are in part dependent upon thorough appreciation for the 'power of power' by managers. Power imbalance (asymmetry) among supply chain partners is a barrier to substantive integration and subsequently disrupts the mutuality essential for relational exchange (Maloni and Benton, 1998). Their research showed evidence that specific power bases affect the nature of supply chain relationships. In particular, results indicated the harmful or negative nature of completely mediated power strategies such as coercive and legitimate. Expert power had very positive effects on relationships, as did reward power. In general, power is a key balancing element in all facets of inter-firm relations. Thus, it is critical for each firm to understand its sources and uses of power at various points and times in relationships.

Political Perspectives. All organized behavior systems are political in nature. Organizations, regardless of size, degree of formality, or makeup, have a political dimension that must be understood and managed. In this regard, supply chains are no different. Robbins (1998, p. 410) defines political behavior in organizations as those activities that are not required as part of one's formal role in the organization, but that influence, or attempt to influence, the distribution of advantages and disadvantages within the organization. This definition is quite applicable to inter-organizational contexts as well. Supply chain partners use political acumen to alter the 'distribution of advantages and disadvantages' within the network. Particularly, partners attempt to influence goals, criteria, and processes of others in the chain. Political maneuverings are part and parcel of this influence effort. Politically-oriented behavior could involve one or more of the following: (Ivancevich and Matteson, 1996, p.373)

  • Behavior that usually is outside the legitimate, recognized power system.
  • Behavior that is designed to benefit an individual or subunit, often at the expense of the organization in general.
  • Behavior that is intentional and is designed to acquire and maintain power.

All supply chains are not equally political. Differences stem from characteristics of individual players, as well as those of organizational players in the chain. Robbins (1998, p. 414) identifies factors influencing the degree of political behavior in organizations.

Individual Factors Influencing Political Behavior

  • Internal locus of control
  • Organizational investment
  • High self-monitoring
  • Expectations of success

Organizational Factors Influencing Political Behavior

  • Reallocation of resources
  • Low trust
  • Role ambiguity
  • Democratic decision making
  • High performance pressures
  • Unclear performance evaluation system

The above variables in varying proportions also impact inter-firm political behavior. In a more specific vein, supply network politics can be influenced by: size of the partners, relative market power of partners, time pressures, information advantages or disadvantages, perceived motivations of partners, historical relationships, levels of perceived integrity and trust, risk assessment models used by different partners, and cultural distinctiveness across the chain. The mixture of these elements can shape, define, and alter the political tenor in the supply chain.

Should supply chain partners be skillful politicians? The answer is a resounding yes. All too often 'politics' has a negative connotation. However, within the context of the supply chain, politics primarily means understanding and managing the nuances, peculiarities, and motivations of supply chain partners. Political astuteness is a critical survival ingredient in competitive inter-organizational environments. Shrewdness and cleverness are admirable qualities for supply chain partners to possess. Theoretically and practically, it is to the advantage of each partner to behave in the interest of the entire network. However, there is frequently some semblance of a 'self-interest' in the actions of others in the supply chain. Understanding the power of politics as a balancing mechanism in the chain is essential in overcoming selfish motives.

Posturing and Positioning Perspectives. Positioning is a marketing-oriented concept that focuses on the way a product or service is defined by consumers on key attributes — the place the product occupies in consumers' minds relative to competing products. In particular, positioning involves implanting the brands' unique benefits and differentiation in customers' minds (Kotler and Armstrong, 2001, p. 269).

How does positioning relate to supply chain partners? Each chain member is perceived in a certain manner by other members. They have a certain position or posture and a unique 'personna' relative to other network members. Each partner 'stakes claim' to some category of expectations, responsibilities, and resources. Given the dynamics of these inter-organizational exchanges, it is important for each chain component to constantly 'market' itself to others in the network. Marketing involves understanding customers and value. Every other chain member is in fact a market or a customer group with a distinct set of complex aspirations and motivations. Chain partners may have varying perceptions of what value is all about. Positioning efforts allow for the assessment of the relative competitive stances of chain members. It focuses attention on the competitive advantages enjoyed by each channel participant and how those advantages change over time.

Summary and Conclusions. The interplay of power, politics, positioning, and people makes for a contrived and convoluted environment for substantive and effective supply chain management decisions. However, regardless of the enormity of the undertaking, astute supply chain managers must address skillfully the issues of power, politics, and positioning as key survival tools in competitive and spirited supply situations.

The escalated use of power, politics, and positioning emanate in part from greater risk-sharing in inter-organizational relationships. As the demands on supply chains soar, relationships among partners will be tested to the fullest extent (Handfield and Nichols, 1999, p. 154). Additionally, Handfield and Nichols identify the following risk sharing areas that might impact inter-organizational relationships:

  • Confidentiality
  • Research and development
  • Increased service expectations
  • Leverage
  • Mass customization
  • Shared responsibility

Each of the above areas will continue to test the boundaries of trust and a collaborating spirit in competitive supply chains. While it would appear that each chain partner should behave in a fashion beneficial to all, given the high stakes, this is not always the natural outcome of these interactions. In a collaborative, trusting supply chain environment, power and politics should have minimal roles. While that is true to some extent, power and politics can be used adroitly as tools to ensure the desired outcomes of supply partners.

As supply chains grapple with myriad issues and challenges, power, politics, and positioning will continue to play integral parts in the functioning and operating of vibrant systems capable of delivering sustained customer satisfaction and value. While power and politics may not be the most significant contributor to supply chain success, their subtle, understated influence is a recognizable fact. It is incumbent upon supply chain partners to use power and politics and positioning as enlightened management tools capable of heightening overall network performance.

REFERENCES
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