Influence of subcontractors' “strategic capabilities” on “power”, “dependence” and “collaboration”: an empirical analysis in the context of procurement decisions
Engineering, Construction and Architectural Management
ISSN: 0969-9988
Article publication date: 4 October 2022
Issue publication date: 1 February 2024
Abstract
Purpose
Research on strategic procurement was mostly focussed on the clients' and main contractors' perspectives, while limited work had been done from a subcontractor's perspective. The paper hypothesises that “strategic capability” influences the latent constructs of power, dependence and collaboration in the main contractor–subcontractor relationship. Therefore, the purpose of this study is to investigate the influence of a subcontractor's strategic capabilities on power, dependence and collaboration.
Design/methodology/approach
A survey questionnaire was developed and distributed amongst the subcontractors in Australia, and 212 complete responses were received. Then second order confirmatory factor analysis and partial least square structure equation modelling (PLS-SEM) analysis were performed to test the hypothesised relationships.
Findings
The findings support “strategic capabilities” as a construct expressive of a subcontractor's unique market position and good business reputation. The findings also suggest that strategically capable subcontractors enhance their potential for forming partnerships with main contractors through dependence (StratC. → Dep., β = 0.84; Effect Size (ES) = 0.713; p < 0.01), collaboration (StratC. → Collab., β = 0.84; ES = 0.697; p < 0.01) and bargaining power (StratC. → Pow., β = 0.83; ES = 0.672; p < 0.01).
Originality/value
The study is one of its kind to explore the impact of a subcontractor's strategic capability on their bargaining power, dependability and ability to form collaborations. Furthermore, results indicate that the “strategic capabilities” of subcontractors can strongly influence their ability to create “dependence”, foster “collaboration” and exert “power” over a main contractor. The findings can help improve the strategic procurement decision-making processes of both subcontractors and main contractors to build better business relationships.
Keywords
Acknowledgements
Authors have conducted the study using their own resources so no external funding to acknowledge.
Data availability statement: All data, models and code generated or used during the study appear in the submitted article.
Citation
Deep, S., Gajendran, T., Jefferies, M., Uggina, V.S. and Patil, S. (2024), "Influence of subcontractors' “strategic capabilities” on “power”, “dependence” and “collaboration”: an empirical analysis in the context of procurement decisions", Engineering, Construction and Architectural Management, Vol. 31 No. 2, pp. 571-592. https://doi.org/10.1108/ECAM-04-2022-0346
Publisher
:Emerald Publishing Limited
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