The dark side of supply chain digitalisation: supplier-perceived digital capability asymmetry, buyer opportunism and governance

TLDR

Supply‑chain digitalisation research has largely focused on its benefits, leaving the negative consequences largely unexplored. This study examines the dark side of supply‑chain digitalisation by exploring how digital capability asymmetry between large buyers and SME suppliers fosters buyer opportunism and tests whether legal and relational contracts can mitigate this risk. Using survey data from 125 Korean SMEs, the authors applied hierarchical regression to test hypotheses linking digital asymmetry, supplier dependence, opportunism, and governance effectiveness. Results show that digital capability asymmetry heightens SME supplier dependence and vulnerability to opportunistic behavior, and that only relational governance effectively protects suppliers.

Abstract

Purpose In this paper, the authors seek to contribute to the supply chain digitalisation literature by investigating a potential dark side of supply chain digitalisation from the viewpoint of the small and medium-sized enterprise (SME) suppliers, namely digital capability asymmetry and the partner opportunism of more digitally capable large buyers against SME suppliers. The authors seek to contribute further to the governance literature by investigating the effectiveness of the governance mechanism (legal contracts and relational contracts) in suppressing partner opportunism of this nature. Design/methodology/approach Using survey data collected from 125 Korean SMEs, the authors employed a hierarchical regression method to test a set of hypotheses focussing on the dark side of supply chain digitalisation and the effectiveness of the governance mechanism. Findings The study’s findings suggest that supplier-perceived digital capability asymmetry, wherein a buyer has a superior digital capability than its SME supplier, increases the SME supplier's dependence on the more digitally capable buyer, with the result that it is more exposed to buyer opportunism. Moreover, the results suggest that only relational governance is effective in protecting SME suppliers from buyer opportunism of this nature. Originality/value So far, the overwhelming majority of supply chain digitalisation research has debated its “bright side”. On the contrary, from the resource dependence theory perspective, this paper explains its dark side by providing empirical evidence on (1) the links between supplier-perceived digital capability asymmetry and a buyer's opportunism through an increased supplier's dependence and (2) the effectiveness of different types of governance in opportunism suppression.