An Empirical Analysis of Power in Retailer-Manufacturer Supply Chain Relationship : A Resource Dependency Perspective

By increased outsourcing of activities apparel retailers are gaining greater control over strategic activities, which were formerly the remit of manufacturers or which were the source of the manufacturer's competitive advantage. This study aims to investigate the factors that determine the extent to which manufacturers have dependence to retailers. Resource dependency theory is been used to prove that in a typical retailer-manufacturer outsourcing relationship in close culture countries like India, manufacturer's perception of a retailer's power is derived from the manufacturers' perception of its dependence on the retailer. Data was collected through in-person interviews through Likert-type scale based structured questionnaire from 230 respondents of 128 apparel manufacturers units of India and its respective boundary person representing the apparel retailer. Research confirms the channel behavior studies conducted in Western countries, the relationship of power of one, based on dependency of other. In our research too, it was confirmed. An implication of the research findings is that dependence may be used as a strategy in dealing with channel relationships in Indian marketing channels. Looking at the attractive apparel retail market and manufacturers high product diversity, manufacturers can completely skip passive dependency and engage themselves in active dependency. Also the retailers cannot exert coercive power sources if the dependency is active