To Use or Not to Use Supply Chain Power: Empirical Evidence From Dyadic Buyer–Supplier Relationships

ABSTRACT While firms may enjoy power advantages over their supply chain partners, how they use their power remains underexplored in the literature. Drawing upon resource dependence theory, the authors posit that both power asymmetry and mutual dependence influence supply chain power use. Specifically, power asymmetry defines the potential of a firm's power, while mutual dependence alters the extent to which a power‐advantaged party exercises its power. Using a panel dataset of 4620 buyer–supplier dyad–year observations from Chinese listed firms during 2009–2023, this study empirically tests the hypothesized relationships in the trade credit setting. Regression analyses indicate that power‐advantaged suppliers provide less trade credit, whereas greater mutual dependence is associated with more trade credit provision. Furthermore, the analyses reveal a double‐edged effect of buyer ownership structure. Specifically, buyer state ownership and ownership concentration attenuate the negative association between supplier power advantage and trade credit, but weaken the positive association between mutual dependence and trade credit. This study extends the supply chain power literature and provides important implications for managers and policymakers.