Rudimentary Forms for the Effect of Dependence Structures on Relational Outcomes in Interfirm Relationships: A Confirmatory Latent Class Structural Equations Model

Abstract:     
Dependence structures, including organizational dependence on its partner and the partner's dependence on the firm, provide basic building blocks for interfirm relationships and influence important relational outcomes. Building on extant literature, the authors recognize heterogeneity in the translation of dependence structures into relational outcomes (in statistical terms, the pattern and value of regression coefficients varies across latent regimes) and propose a rudimentary interfirm relational typology to capture this heterogeneity. The typology recognizes three types of interfirm relationships in which dependence structures influence relational outcomes: (1) the parity doctrine form, such that the effects of dependence on relational outcomes are symmetric; (2) the hierarchical linkage form, in which only one firm's dependence is critical; and (3) the interdependence interplay form, in which the dependence of the two firms has unique effects on relational outcomes. To model the relational typology empirically, the authors propose a confirmatory latent-class structural equation modeling framework, in which the influence of dependence structures varies according to the rudimentary relational typology. Results from an analysis of survey data from U.S. subsidiaries of Japanese and German multinational corporations on their marketing channel relationships support the structure of the proposed relational typology.

Keywords: Interfirm, strategy, SEM, unobserved heterogeneity

Working Paper Series