The Importance of Power in Partnership Relationships

Abstract

The attractions of partnership agreements have been powerfully expounded by many academics, and also been enthusiastically promoted by government agencies. The work of academics, the support of government agencies and observations of Japanese practices have contributed to the bandwagon movement towards the adoption of partnership relationships in buyer-supplier transactions. The perceived success of the Japanese keiretsu model of supplier relationships has been reinforced by the strong theoretical case for partnerships that emerges from transaction cost theory. It is suggested that unequal power within relationships can, in theory, provide a serious obstacle to effective partnerships. Differences in institutional frameworks have a strong influence on the effectiveness of partnership relationships. The results of this analysis are used to provide some explanation of the results of empirical studies that indicate that partnerships are not widespread.