Tie Strength and Value Creation in the Buyer-Supplier Context: A U-Shaped Relation Moderated by Dependence Asymmetry

Abstract

This study integrates two disparate genres within tie-strength literature into one model to investigate the mechanisms for value creation in the buyer-supplier context. This research brings together the opposite ends of the tie-strength continuum: the “weak ties,” which are instrumental in tapping into novel ideas and emerging technologies, and the “strong ties,” which promote joint resource investments and capability development. By doing so, we bring salience to the existence of “intermediate ties” (i.e., the ties of moderate strength) and their implications for value creation. Even though the intermediate ties are likely most common in the buyer-supplier context, they have been given short shrift in the literature. We predict a U-shaped relation, where weak ties and strong ties are more effective than intermediate ties in value creation. Furthermore, we explore the moderating role of dependence asymmetry. Our hypotheses are tested using survey data from a major global automaker and its North American suppliers. The results demonstrate that both the weak and strong buyer-supplier ties lead to higher value creation, whereas intermediate ties do not increase value creation. Also, the study illustrates that, overall, asymmetric buyer-supplier ties show diminished value creation, and this moderating effect is particularly pronounced for intermediate ties.