A stakeholder perspective on buyer-supplier conflict

Abstract

This study seeks to investigate how stakeholder power and an organization's pursuit of legitimacy influence its reaction to conflict with a supplier. We conducted an empirical study among travel agents and tour operators to test the relationship between conflict and stakeholder power and legitimacy derived from three different stakeholders. Our findings imply that power has a dual role. Whereas supplier power reduces buyer–supplier conflict, stakeholder power increases it. Moreover, this study shows that the quest to achieve greater legitimacy from the firm's competitive arena increases conflict. This study is one of the few that test stakeholder theory empirically. We demonstrate that stakeholder theory provides additional explanations above the hitherto taken dyadic approach toward understanding conflict. This study also shows that power can simultaneously reduce and increase conflict depending on which party possesses power. Greater supplier power decreases conflict, while greater stakeholder power and stakeholder-derived legitimacy increases it. Therefore, organizations have to balance their stakeholder and supplier interests.