The Effect of Coercive Power on Supply Chain Inventory Replenishment Decisions

Abstract. Supply chains often consist of stakeholders with different power le-vels collaborating with each other in order to meet customer demand. This im-balance of power along the supply chain is a critical factor that affects its short and long-term behavior, as well as its overall stability and efficiency. The role and the impacts of power in distribution channels have been explored quite ex-tensively in Marketing, but far less so with regard to power in the context of supply chains. This paper explores the effect of power on supply chain func-tioning by focusing on a specific power type i.e. coercive power. More specifi-cally, the impact of power and power awareness on inventory replenishment human decision-making is investigated. An experimental approach with un-known market demand and local information availability is implemented so as to provide a controlled environment for decision-making. Three different treat-ments are implemented in order to create situations of balanced power, imba-lanced power without awareness and imbalanced power with awareness. Results show that power awareness does play a significant role in the way coer-cive power is exercised. In particular, a significant increase of the size and va-riability of order quantity and order time interval is observed in the case of imbalanced power with awareness