Winning the competition for supplier resources:The role of preferential resource allocation from suppliers

PurposeThis paper examines the competition between buying firms for the supplier’s competitive resources. The purpose of this paper is to examine how indirect capabilities – the ability to access external resources – can help in obtaining preferential resource allocation from suppliers.Design/methodology/approachPartial least squares structural equation modeling is used to analyze data of 163 buying firms that assess preferential resource allocation from suppliers.FindingsTwo indirect capabilities (a buying firm’s selection capability and relational capability) positively influence the firm’s competitive advantage. These relations are significantly mediated by preferential resource allocation of suppliers. The impact of preferential resource allocation appeared stronger for manufacturing firms than for service firms.Research limitations/implicationsThis study’s data set represents the buyer’s assessment of suppliers’ resource allocation. Future research should aim for dyadic data for further validation. In addition, due to sample size limitations, this study’s data does not allow sector segmentation. A larger study that provides insights into segmentation is suggested for future research.Practical implicationsThe results inform managers about the relevance of the competition for supplier resources with rival firms that share suppliers, and the influence of this competition on firm competitiveness. Managers should not only focus on the supplier itself, but also on the capabilities of the supply chain management (SCM) function to recognize and integrate the supplier resources.Originality/valueThis study adds to the extended resource-based view literature by integrating the notion of supplier resource competition. In addition, the study shows the importance of indirect capabilities for obtaining preferential resource allocation from suppliers. Finally, the authors show the importance of separating between service and manufacturing when examining SCM practices