The Effect of Coercive Power on Supply Chain Inventory Replenishment Decisions

Supply chains often consist of stakeholders with different power levels 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, imbal-anced power without awareness and imbalanced power with awareness. Results show that power awareness does play a significant role in the way coercive power is exercised. In particular, a significant increase of the size and variabil-ity of order quantity and order time interval is observed in the case of imbal-anced power with awareness.