Journal of Operations Management 32 (2014) 88–98

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Journal of Operations Management

journal homepage: www.elsevier.com/locate/jom

Are relational ties always good for knowledge acquisition?

Buyer–supplier exchanges in China
Kevin Zheng Zhou a , Qiyuan Zhang a , Shibin Sheng b , En Xie c,∗ , Yeqing Bao d
a
Faculty of Business and Economics, University of Hong Kong, Pokfulam, Hong Kong
b
Collat School of Business, University of Alabama at Birmingham, Birmingham, AL 35205, USA
c
School of Management, Xi’an Jiaotong University, 28 Xianning West Road, Xi’an, Shaanxi 710049, China
d
College of Business Administration, University of Alabama in Huntsville, Huntsville, AL 35899, USA

a r t i c l e i n f o a b s t r a c t

Article history: Relational ties between manufacturers and their suppliers serve as an important strategic resource for
Received 1 July 2012 value creation and realization. However, conflicting evidence exists regarding their role in the acquisition
Received in revised form of specific knowledge. This study proposes that relational ties have a nonlinear effect on specific knowl-
28 November 2013
edge acquisition and that this nonlinear relationship is conditional on contract specificity and competitive
Accepted 3 January 2014
intensity. Results from a sample of 385 manufacturer–supplier exchanges in China demonstrate that a
Available online 13 January 2014
buyer’s relational ties with its major supplier have an inverted U-shaped effect on specific knowledge
acquisition from this supplier; this inverted U-shaped relationship is stronger (steeper) when contract
Keywords:
Relational view
specificity is high and competition is more intense. These findings suggest that managers should under-
Transaction cost economics stand the benefits and downsides of relational ties in acquiring specific knowledge and avoid building
Relational ties highly embedded ties when they draft detailed contracts or competition is highly intensive.
Contract specificity © 2014 Elsevier B.V. All rights reserved.
Competitive intensity
Knowledge acquisition

1. Introduction increased socialization between the buyer and supplier contributes

The acquisition, assimilation, and exploitation of heteroge-
neous, valuable, knowledge-based resources contribute critically
to a firm’s competitive advantage and superior performance (Hunt
and Davis, 2012; Nonaka, 1994; Tsang, 2002). Research in supply
chain and strategic management indicates that abnormal returns
derive from not only resources within a firm but also those out-
side of the firm’s boundaries (Cheung et al., 2010; Cousins and
Menguc, 2006). Attaining external resources often involves acquir-
ing knowledge from external ties (Capaldo, 2007; Carey et al., 2011).
For example, firms embedded in cohesive ties could gain access to
complex, noncodified information (Li et al., 2010a; Perry-Smith and
Shalley, 2003), whereas loosely connected firms can obtain novel
and nonredundant information from exchange parties (Capaldo,
2007; Hansen, 1999).
In supply chain management studies, researchers highlight the
positive role of relational ties in fostering performance and knowl-
edge acquisition (Carey et al., 2011). As Cousins et al. (2006) show,
∗ Corresponding author. Tel.: +86 29 82668536; fax: +86 29 82668700.
E-mail addresses: kevinzhou@business.hku.hk (K.Z. Zhou), bessieqy@hku.hk
(Q. Zhang), ssheng@uab.edu (S. Sheng), xieen@mail.xjtu.edu.cn (E. Xie),
baoy@uah.edu (Y. Bao).
to the creation of relational capital that leads to deeper interfirm
communication. Li et al. (2010a) find that manufacturers can gain
access to tacit, hard-to-imitate knowledge through interactions
with their major suppliers. Carey et al. (2011) further argue that
social ties act as conduits for information flows. Through frequent,
in-depth interactions with channel members, firms acquire both
observable and, perhaps more important, tacit components of
knowledge (Yli-Renko et al., 2001). However, recent supply chain
management research cautions about the potential dark side of
highly embedded ties (Lechner et al., 2010; Villena et al., 2011).
Lechner et al. (2010) posit that highly connected ties create a
lock-in trap and harm the performance of strategic initiative units
by creating pressures to reciprocate with existing partners. Villena
et al. (2011) argue that strong ties also may become a source of
blindness by restricting information flows and increasing the risk
of opportunistic exploitation. Thus it remains unclear whether
relational ties facilitate or inhibit knowledge flows between
embedded parties.
Moreover, though relational ties offer a critical informal gov-
ernance mechanism, extant studies rarely consider how relational
ties, formal mechanisms (e.g., contracts) jointly affect knowledge
acquisition (Carey et al., 2011; Li et al., 2010a). Early studies argued
that relational ties would offer effective, self-enforcing safeguards,
provide access to privileged, difficult-to-copy know-how, such that

0272-6963/$ – see front matter © 2014 Elsevier B.V. All rights reserved.
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 K.Z. Zhou et al. / Journal of Operations Management 32 (2014) 88–98
contracts would become unnecessary (e.g., Dyer and Singh, 1998;
Uzzi, 1997). More recent developments instead posit that by spec-
ifying roles, rules, procedures, contracts provide an adaptation
framework in which trusted parties can coordinate knowledge
transactions (Li et al., 2010a; Zhou and Xu, 2012). Because firms
deploy both formal, informal mechanisms to govern exchanges,
more assessments are needed to understand the joint effect of
relational, formal governance mechanisms in affecting knowledge
acquisition.
In addition, the value of relational ties is likely conditional
on the industrial context that surrounds the exchange (Acquaah,
2007; Ketokivi and Schroeder, 2004). At the industry level, business
decisions and outcomes depend critically on the degree of com-
petitive intensity (Porter, 1985). When competition is high, many
rivals fight for limited resources, which lead to resource instabil-
ity and sparseness (Ang, 2008). Facing a high level of competition,
firms also may find it difficult to attract quality partners (Li et al.,
2008), so they use collaborative ties as buffers against competi-
tive forces and pathways to much needed technologies and skills
(Wu and Pangarkar, 2010). In this case, competitive intensity may
complicate the relationship between relational ties and knowledge
acquisition.
To address these research gaps, we build on a relational view
(Dyer and Singh, 1998) and transaction cost economics (TCE)
(Williamson, 1985) to examine how a manufacturer’s relationship
with its major supplier affects its acquisition of specific, complex
knowledge. Our study contributes to supply chain and knowledge
management literature in several ways. First, previous studies limit
their attention to the linear effects of relational ties; we investi-
gate the nonlinear impact of relational ties on specific knowledge
acquisition by considering both the benefits and risks of relational
ties. Whereas prior research emphasizes how strong ties bene-
fit the acquisition of specific, complex knowledge, we argue that
very strong ties may be detrimental for such knowledge acquisi-
tion. Second, extending extant literature on formal and informal
governance, we assess the interaction effect between relational
ties and formal contracts on knowledge acquisition. Third, because
firm strategies are bound by the surrounding context, we consider
the contingent role of competitive intensity on the relationship
between relational ties and knowledge acquisition. With these
efforts, we aim to uncover the nonlinear and contingent relation-
ships between relational ties and interfirm knowledge acquisition.
2. Knowledge acquisition through buyer–supplier ties
Knowledge acquisition refers to the extent to which a firm obtains
information resources from its exchange partners (Tsang, 2002).1
Several types of knowledge can be acquired from external ties,
namely product, process, and management knowledge (Capon and
Glazer, 1987). Accumulated management knowledge influences
the organizational design of a firm; product and process knowl-
edge determine the firm’s fulfillment of production tasks and
operational performance in a supply chain (Germain et al., 2001).
Product and process knowledge, manifested as the set of skills
and technologies involved in product manufacturing, is charac-
terized by complex, product-specific features (Modi and Marbert,
2007). Such knowledge is most likely acquired through interfirm
1
We refer to the activity by which a focal manufacturer acquires knowledge
“from” its major supplier, which is different from “acquiring knowledge with”
another party. This latter activity is more evident in the context of strategic alliances,
such that allied companies communicate and develop shared knowledge stocks for
product co-development (Koka and Prescott, 2002). In our buyer–supplier contexts,
the focal manufacturer acquires knowledge from its major supplier to develop its
own products, which makes “acquired from” activity more relevant.
89
ties and connections and almost impossible to acquire through
market exchanges (Nonaka, 1994). Accordingly, we focus on how
relational ties affect the acquisition of specific, complex product
and process knowledge, instead of novel knowledge.
By integrating external know-how into their own knowledge
structure, firms improve their capability to develop and man-
ufacture their own products (Hunt and Davis, 2012; Yli-Renko
et al., 2001). For example, apparel manufacturers connected with
different fabric suppliers can better design and produce garments if
they grasp the material contents of each fabric and acquire the tacit
skills to work with these fabrics (Uzzi, 1997). In the IT industry,
hardware companies interact frequently with their software sup-
pliers to understand complex software codes and design matching
hardware products.2 In this regard, acquiring external product-
related knowledge and technologies from supply chain partners
reinforces the focal firm’s core competencies for manufacturing
its current products and also stimulates the formation of specific
skills for developing future competencies (Paiva et al., 2008).
Yet the amount of knowledge a firm can acquire from strate-
gic partners depends on their willingness to share information
and know-how (Yli-Renko et al., 2001). Because firms possess
unique resources to support their own competitive advantage, they
remain always sensitive and reserved in their knowledge shar-
ing with external partners (Kale et al., 2000). Therefore, firms
undertake facilitating initiatives, such as building relational ties, to
enhance partners’ cooperative incentives and create opportunities
for knowledge acquisition (Villena et al., 2011).
2.1. A relational view of knowledge acquisition
Individual or organizational embeddedness is important to the
acquisition of information and knowledge (Burt, 1992). Gulati
(1998) proposes two aspects of embeddedness, structural and rela-
tional, such that the former focuses on structural properties of
networks (e.g., structural holes, network centrality; Burt, 1992),
while the latter addresses the strength of ties at the dyadic level
(Granovetter, 1973). In line with a relational embeddedness view,
we theorize that relational ties reflect the dyad between a manufac-
turer and its major supplier, characterized by varying interaction,
trust, mutual commitment, and reciprocity (Poppo and Zenger,
2002).
According to the relational view, a firm may dedicate spe-
cific investments to improving its exchange relationships, create
complementarities with its partner’s external resources, or devise
information sharing routines to facilitate knowledge transfer (Dyer
and Singh, 1998; Lavie, 2006). Dyer and Singh (1998) further
posit that self-enforcing structures such as cohesive relational ties
have the greatest influence on the promotion of knowledge flows.
Functioning as reliable information conduits, relational ties facili-
tate flows of high-quality information and fine-grained knowledge
(Rowley et al., 2000). As a social governance mechanism, relational
ties also secure and enhance knowledge flows among exchange
parties through accumulated social capital and intensified collec-
tive norms (Dhanaraj et al., 2004).
The efficacy of relational ties for facilitating knowledge flows
depends on their strength. Tie strength is a function of inter-
action frequency, emotional intensity, intimacy, and reciprocity
between exchange parties (Granovetter, 1973). Accordingly, rela-
tional ties represent a continuum, with weak ties at one end
and strong ties at the other. Weak ties imply infrequent, distant
relationships between loosely connected parties, whereas strong
ties feature high levels of closeness, reciprocity, and indebtedness
2
This information came from in-depth interviews with senior purchasing man-
agers.
90 K.Z. Zhou et al. / Journal of Operations Management 32 (2014) 88–98
(Capaldo, 2007; Hansen, 1999). Compared with weak ties, strong
ties are more effective in fostering the flow of complex and specific
know-how (Hansen, 1999; Perry-Smith and Shalley, 2003). Consis-
tent with this line of research (Capaldo, 2007; Granovetter, 1973;
Hansen, 1999), we treat relational ties as a continuous variable and
examine how varying levels of tie strength affect the acquisition of
specific product and process knowledge.
2.2. A TCE view of knowledge acquisition
As a prevalent framework for understanding how firms
choose governance arrangements to manage risky and uncer-
tain exchanges (Williamson, 1996), TCE emphasizes the use of
formal mechanisms, such as specific contracts, to facilitate inter-
firm exchanges (Eccles, 1981; Williamson, 1985). In supply chain
management, when exchange parties make idiosyncratic invest-
ments for the relationship, managers craft detailed contracts to
protect their investments from opportunistic expropriation (Li
et al., 2010b). Written contracts explicitly codify supply chain
partners’ rights, duties, and responsibilities, so they help sup-
press opportunism, create mutual gains, and facilitate cooperation
(Williamson, 1996).
Most TCE studies do not treat knowledge acquisition as an out-
come, but recent advances show that detailed contracts can foster
the acquisition of explicit knowledge (Li et al., 2010a). By codifying
informational requirements ex ante, contracts establish a bind-
ing framework for fulfilling informational obligations (Williamson,
1996). Thus the written agreement aligns partners’ interests and
reduces the agency problems inherent to business transactions,
which is conducive to ex post knowledge acquisition from exchange
parties (Li et al., 2010a).
In addition, TCE indicates that business transactions are
embedded in a larger transactional context, so the performance
implications of transactional activities rest on firms’ capabilities to
respond effectively to various exchange uncertainties (Williamson,
1996). At the market level, organizations face uncertainty arising
from product and capital market competition, because competi-
tion constitutes a source of natural selection pressures (Williamson,
1985). The existence of many, strong competitors influences the
environmental munificence that a firm confronts and the responses
it offers (Ang, 2008). In this regard, competitive intensity is a fun-
damental characteristic, at the core of the market structure, that
may shape interfirm knowledge acquisition.
The relational view and TCE together provide constructive, dis-
tinct insights into how to facilitate knowledge flows across firm
boundaries. We seek to incorporate these two views to examine
interfirm knowledge acquisition in two ways. First, though previous
studies emphasize the positive effect of relational ties on specific,
complex knowledge acquisition, we posit that a curvilinear rela-
tionship may exist, such that very strong ties can be detrimental.
Second, the value of relational ties may be bounded by exchange
characteristics and transactional contexts. Accordingly, we assess
the contingent value of ties in relation to contractual design and
industrial competition.
3. Hypotheses development
3.1. Direct effects of relational ties
Relational ties contribute to acquisition of specific knowledge
for two main reasons. First, they provide access to high-quality,
timely information, which enhances the quality of knowledge
acquisition. Uzzi (1997) postulates that knowledge flows embed-
ded in cohesive relations contain not only codified, fine-grained
information but also privileged, difficult-to-imitate know-how.
Whereas explicit knowledge can be transferred through formal,
systematic procedures, tacit know-how is more proprietary and can
be reached only through frequent interactions and active involve-
ment by the partners (Dhanaraj et al., 2004; Li et al., 2010a).
Cohesive relational ties are thus necessary to acquire tacit and
quality information.
Second, relational ties create norms of reciprocity and solidar-
ity between exchange parties (Rindfleisch and Moorman, 2003),
which increases the efficiency of knowledge acquisition. Norms
of reciprocity entail the exchange of favors of equivalent value
(Granovetter, 1985). They motivate knowledge sources to coop-
erate (Ireland and Webb, 2007) and bear the potential risk of
knowledge leakage (Inkpen and Tsang, 2005), which facilitates the
transfer of knowledge across organizational boundaries. Norms of
solidarity signify a bilateral expectation that both parties value the
relationship (Heide and John, 1992). When exchange parties share
the same value, the recipient is more likely to be open and recep-
tive to the knowledge offered by the source. As Hansen (1999)
observes, when relational ties are present, manufacturers have bet-
ter opportunities to seek instructions from intimate suppliers, and
suppliers are willing to spend more time articulating their know-
how. Lechner et al. (2010) also show that relational ties make
information sharing more efficient, through greater mutual under-
standing.
However, these positive effects may decline and even become
negative if relational ties are too strong. First, firms that are over-
embedded in idiosyncratic relational ties suffer from unnecessary
obligations that require continuous investments of their time and
resources (Lechner et al., 2010; Villena et al., 2011). When the man-
ufacturer takes on additional responsibilities and dedicates more
resources to help the supplier, out of a sense of social obligation,
the resulting lock-in situation inhibits learning at both the firm and
individual levels (Lechner et al., 2010; Uzzi, 1997). At the firm level,
over-embeddedness creates pressures for a buyer to yield to its
supplier to avoid adverse social consequences, which distracts the
buyer from its goal accomplishment and reduces its efforts to learn
additional information and knowledge (Lechner et al., 2010). At the
individual level, heavy social obligations inhibit managers’ learning
efforts by constraining their cognitive capabilities to process infor-
mation and lowering their motivation in knowledge acquisition
(Villena et al., 2011).
Second, cohesive ties imply collectivism, but too much cohesion
may lead to collective blindness, which severely limits firms’ open-
ness to information and undermines their acquisition efficiency
(Nahapiet and Ghoshal, 1998). The source may become overly opti-
mistic regarding its understanding of the transaction and share
only information that it considers important. The recipient may get
complacent with its existing partner and become blindness with-
out qualifying shared knowledge or expanding its search horizons
(Koka and Prescott, 2002; Lechner et al., 2010). Such complacency
undermines the motivation for continuous learning and inhibits
knowledge transfer between the two closely connected parties
(Villena et al., 2011). As Levinthal and March (1993: 100) explain,
“success will decrease search,” because an organization responds
to successful knowledge acquisition by lowering its search inten-
sity and aspirations. Such collective blindness reduces the buyer’s
search motivation and effort and jeopardizes its knowledge acqui-
sition from the supplier.
Third, opportunistic behavior and malfeasance may arise as rela-
tional ties reach high levels (Granovetter, 1985). With a high level
of trust in the supplier, the buyer tends to reduce its monitoring
(Villena et al., 2011). When the supplier senses this change in the
buyer’s monitoring efforts, it may reduce its sharing of product- or
process-related information. However, strong relational ties likely
prevent the buyer from switching suppliers, regardless of the per-
formance of this dyadic relationship (Kim et al., 2006). Then the
supplier may take advantage of the buyer’s trust and engage less in
 K.Z. Zhou et al. / Journal of Operations Management 32 (2014) 88–98
timely and accurate feedback, slowing interfirm knowledge flows
(Villena et al., 2011).
Overall, relational ties increase access to quality knowledge and
improve information acquisition efficiency, unless they become too
strong, in which case they burden acquisition activity with heavy
obligations, collective blindness, and potential supplier oppor-
tunism. Collectively, we predict,
H1. Relational ties have an inverted U-shaped relationship with
knowledge acquisition.
3.2. Contingent role of contract specificity
Contract specificity refers to formal specifications that stipulate
the rules of behavior for each party and major objectives to be
achieved (Williamson, 1985). Detailed contracts specify the poli-
cies and procedures for task fulfillment, information disclosure, and
dispute resolution (Cannon and Perreault, 1999). Unlike relational
ties that facilitate the acquisition of specific knowledge through
informal norms and interactions, contractual agreements estab-
lish formal and legal stipulations that specify knowledge flows in
interfirm exchanges (Dahlstrom et al., 1996).
We posit that contract specificity strengthens the positive effect
of relational ties when ties are at relatively low or moderate lev-
els. Because relational norms have not been fully established when
tie strength is low to moderate, exchange parties still might have
ambiguous or incomplete understanding of each other’s informa-
tion needs and resource obligations (Cannon et al., 2000). Specified
contracts decrease this ambiguity and enhance mutual understand-
ing by offering a formal documentation of the exchange parties’
information-related duties (Williamson, 1996), thus improving the
quality of shared information.
Detailed contractual provisions also specify procedures for
knowledge exchange (Heide and John, 1992), which build up a con-
duit for efficient knowledge flows through relational ties. When
ties are at relatively low to moderate levels, relational protection
based on norms may still be unreliable as a means to safeguard
interfirm exchanges (Li et al., 2010b). Detailed contracts ensure
knowledge exchanges through third-party surveillance and pun-
ishment (Liu et al., 2009). This formal safeguard fosters exchange
partners’ confidence in knowledge sharing, thus improving the effi-
ciency of knowledge acquisition through relational ties.
Detailed contracts coupled with high levels of relational ties
may inhibit knowledge acquisition though. First, strong ties cre-
ate collective blindness that limits partners’ openness to external
information. Specific contracts stipulate task and contingency pro-
visions ex ante and render limited autonomy to exchange parties
to adapt ex post (Jap and Ganesan, 2000). Such a constraint makes
collective blindness more severe, because learning is an adaptive
process; partners likely suffer the myopia of focusing on codified
information without searching for or assimilating knowledge out-
side these standard contractual procedures and policies (Levinthal
and March, 1993).
Second, for exchange partners with strong ties, detailed con-
tracts can signal distrust and hurt the feeling of both sides,
undermining their motivation to share information cooperatively
(Ghoshal and Moran, 1996). Whereas strong ties depend on norma-
tive conventions to coordinate exchanges, specific contracts rely on
regulatory authorities or courts to impose sanctions (McFadyen and
Cannella, 2004; Perry-Smith, 2006). The third-party enforcement
of contracts conflicts with the self-enforcing obligation of strong
ties (Antia and Frazier, 2001), which undercuts the relational com-
mitments between buyers and suppliers. Exchange partners then
may act more opportunistically and exhibit less willingness to share
their knowledge.
91
In summary, whereas high (vs. low) contract specificity
strengthens the positive effects of ties by further improving the
quality and efficiency of knowledge acquisition, it also enhances
the negative impacts of ties by aggravating collective blindness and
supplier opportunism issues. Therefore, we predict that contract
specificity strengthens the inverted U-shaped relationship between
relational ties and knowledge acquisition.
H2. The inverted U-shaped effect of relational ties on knowledge
acquisition is stronger (steeper) when contract specificity is high,
and vice versa.
3.3. Contingent role of competitive intensity
Competitive intensity refers to the extent of competition in a par-
ticular industry (Porter, 1985). Competition has long been viewed
as the most salient environmental factor affecting firms’ resource
allocation, operational capabilities, and use of collaborative ties
(Porter, 1985). Heavy competition generates unpredictable changes
in the demand–supply equilibrium and puts firms in vulnerable
positions (Ang, 2008). They must act proactively and rapidly in the
face of intensified competition; otherwise, they will be driven out
of the market (Li et al., 2008).
We predict that when competition is greater, a moderate level of
relational ties is beneficial for knowledge acquisition. First, as com-
petition intensifies, firms need high quality information to achieve
effective competitive responses (Luo, 2003). Obtaining quality
information from suppliers without relational ties is unlikely;
rather, buyers turn to trusted suppliers to secure access to updated,
valid information (Li et al., 2008). As Kim et al. (2008) docu-
ment, when competition is high, manufacturers proactively search
for and acquire knowledge from existing suppliers. Meanwhile,
suppliers have a strong motivation to share their idiosyncratic
knowledge with manufacturers to achieve bilateral adaptation
(Ang, 2008).
Second, intensified competition compels firms to act quickly to
adapt to the changing environment. However, coordinating with
new market players is difficult and time consuming, because they
lack a common ground and mutual trust (Ang, 2008). By estab-
lishing norms of information sharing and solidarity, preexisting
relational ties provide a reliable means for firms to achieve joint
action, knowledge transfer, and efficient adaptation (Lee, 2007).
Mahapatra et al. (2012) observe that firms operating in highly com-
petitive markets have greater propensity to collaborate to access
important resources that are unavailable to their competitors.
We further argue that when competition is high, strong
relational ties may be counterproductive to knowledge acquisi-
tion. Competition makes concerns about unnecessary obligations
induced through strong ties more salient. Facing competitive
pressures, firms engage in more frequent adaptation and compro-
mise, to consolidate their existing partners (Ang, 2008; Wu and
Pangarkar, 2010). When exchange partners invest significant time
and resources to help each other, they devote fewer resources to
attaining optimal knowledge acquisition (Lechner et al., 2010).
To counteract competition, exchange parties also must trans-
fer and assimilate knowledge in a timely manner (Ang, 2008). In
a highly competitive environment where firms need to engage in
various price and promotion rivalries, market conditions change
rapidly, so any firm’s market knowledge becomes obsolete quickly
(Porter, 1985). However, excessive relational ties generate collec-
tive blindness, such that the buyer and supplier become overly
complacent in their thinking and knowledge reservoir (Villena
et al., 2011). Collective blindness thus becomes a more critical con-
cern when competition is high, and strong relational ties likely
inhibit efficient knowledge acquisition.
92 K.Z. Zhou et al. / Journal of Operations Management 32 (2014) 88–98
Heavy competition also forces firms to spend more resources
and energy to deal with the changing needs of the market (Pelham
and Wilson, 1996), which divert its attention from interfirm
monitoring. Without strict monitoring, the partner can opportunis-
tically exploit the knowledge recipient’s vulnerability, by providing
incomplete or distorted information disclosures (Granovetter,
1985). As Peng (2003) explains, when the transactional environ-
ment becomes more competitive, informal information processing
through network ties is less reliable, because deviations are harder
to punish. Supplier opportunism then represents a greater hurdle
to the buyer’s knowledge acquisition.
Taken together, high (vs. low) competition strengthens the pos-
itive effects of ties by improving knowledge quality and acquisition
efficiency, but it also enhances the negative effects of ties by
aggravating unnecessary obligations, collective blindness, and sup-
plier opportunism. Therefore, we predict that competitive intensity
strengthens the inverted U-shaped relationship between relational
ties and knowledge acquisition.
H3. The inverted U-shaped effect of relational ties on knowledge
acquisition is stronger (steeper) when competitive intensity is high,
and vice versa.
4. Method
4.1. Sampling and data collection
Our empirical setting involves the buyer–supplier relationships
of manufacturing firms in China. Chinese firms have a long tradition
of using relational ties (guanxi) to conduct business, though the use
of contracts has become more prevalent with economic reforms
(Zhou and Poppo, 2010). In addition, the industrial environment
varies dramatically across different regions in China (Sheng et al.,
2011). As a result, it provides a rich context to test the interplay
among ties, contracts, and industry competition.
We developed a survey instrument by following the procedures
recommended by Gerbing and Anderson (1988). First, we con-
ducted 10 in-depth interviews with senior managers to understand
business practices, especially networking activities by executives
and knowledge and information flows across organizational part-
ners. These interviews revealed pervasive relational ties among
business partners. Second, on the basis of the exploratory inter-
views and an extensive review of previous literature, we developed
an English version of the questionnaire, translated it into Chinese,
and then commissioned a back-translation by two independent
translators to ensure conceptual equivalence. Third, to ensure the
content and face validity of the constructs, we conducted five in-
depth interviews with senior managers of target manufacturing
firms and asked them to verify the relevance and completeness of
the measures. On the basis of these in-depth interviews, we revised
some questionnaire items to enhance their clarity. Fourth, we con-
ducted a pilot test with 40 purchasing managers, who answered
all the survey questions and provided feedback about the ques-
tionnaire design. We finalized the instrument on the basis of the
results of this pilot study.
For the final survey, we randomly selected a sample of 1000
firms from a list of manufacturing firms in Beijing and Shang-
hai, provided by a marketing research firm. These sample firms
represented the four-digit Chinese Industrial Classification codes
1311–4290. The sample covered a broad spectrum of industries,
including mechanical, materials, chemicals, electronics, and tex-
tiles. A senior procurement manager from each firm served as the
key informant; our in-depth interviews revealed that these man-
agers were highly familiar with their suppliers and would be the
most knowledgeable about the focal firm’s ties with and acquisition
of specific knowledge from suppliers.
We collaborated with local researchers and hired and trained
interviewers to run the survey onsite. The interviewers met the
managers in their offices, presented them with the survey, col-
lected the completed survey, and answered their questions. This
method is critical for obtaining reliable and valid data in emerg-
ing economies (Zhou et al., 2006). The interviewers first contacted
the purchasing managers by telephone to solicit their participation.
In total, 476 managers agreed to participate, and 403 eventually
completed the onsite interviews. The informants identified one of
their firm’s top five suppliers and answered the survey questions
regarding their ties and interactions with that specific supplier.
After dropping samples with excessive missing values, we obtained
385 usable samples, for a response rate of 38.5% (385 of 1000 firms).
The average age of these firms was 10.3 years, and their average
size, in terms of the number of employees, was 344, with average
annual sales revenue of US$23.7 million. In addition, 57.7% were
domestic firms, whereas 42.3% were foreign-owned firms or joint
ventures. On average, the focal manufacturer–supplier relationship
had existed for five years. As a quality control follow-up, we called
40 respondents at random to confirm that they had participated in
the interviews and found no signs of cheating. A comparison of the
responding and nonresponding firms indicated no significant dif-
ferences with regard to key firm characteristics, such as ownership
type, firm size, or annual sales revenues, so nonresponse bias was
not a serious concern for our study.
4.2. Measures
In Appendix A, we report the measurement items and their
validity assessments. Following Rowley et al. (2000), Uzzi (1999),
and Wegener (1991), we developed a measure of relational ties to
assess the interaction, closeness, and reciprocity of the relationship
between the manufacturer and supplier. The measure of contract
specificity was adapted from Cannon and Perreault (1999), to exam-
ine the degree to which the contract clearly specifies and details the
obligations and responsibilities of each party and documents any
agreements between them. For competitive intensity, we used scales
adapted from Jaworski and Kohli’s (1993) work, which assessed the
degree of competition a firm faces in its industry. On the basis of
Rindfleisch and Moorman’s (2001) study, we developed a measure
of knowledge acquisition to assess the extent to which manufactur-
ers acquired specific product and process skills from suppliers.
We controlled for firm, relationship, and industry variables that
might influence information and knowledge exchanges within the
supply chain. Firm size may affect knowledge acquisition, because
larger firms tend to have more resources; we used the logarithm
of the number of employees as an indicator. We also used two
dummies to control for the impact of firm type, namely, foreign
wholly owned and international joint venture (IJV) buyers, because
foreign firms have greater learning capabilities in China’s market
(Li et al., 2010a).
For relationship characteristics, we considered three variables:
relationship tenure, buyer concentration, and supplier concentra-
tion. Relationship tenure should relate positively to knowledge and
information sharing (Kotabe et al., 2003), so we measured the
number of years the manufacturer had been doing business with
the supplier. To control for a firm’s impact and importance in the
relationship, derived from its share of the partner’s business, we
included buyer concentration and supplier concentration. The former
equals the percentage (0–100%) of the buyer’s total annual demand
for focal products obtained from the supplier, and the latter is the
percentage of the supplier’s total annual sales of focal products sold
to that buyer (Rokkan et al., 2003).
Finally, we used five dummy variables to control for
industry heterogeneity across mechanical, materials, chemicals,
 K.Z. Zhou et al. / Journal of Operations Management 32 (2014) 88–98
electronics, and textiles. Other industries represented the baseline
group.
4.3. Construct validity
To assess the reliability and validity of the measures, we applied
an overall confirmatory measurement model. Each measurement
item loaded only on its latent construct, and all latent constructs
were set correlated. The key fit indexes (2(112) = 352.48, p < .001;
goodness-of-fit index = .90, comparative fit index = .93, normed fit
index = .90, root mean square error of approximation = .07) and
factor loadings (all statistically significant at p < .001) suggested
acceptable model fit. The composite reliability and average vari-
ances extracted (AVE) of each construct exceeded the .70 and .50
thresholds (see Appendix A).
We used two standards to assess discriminant validity. First,
we ran chi-square difference tests for all the constructs in pairs, to
determine whether the constrained model (correlation fixed at 1)
was significantly worse than the unconstrained model (correlation
estimated freely). All the chi-square differences were highly signif-
icant (e.g., knowledge acquisition vs. relational ties, 2 = 47.70,
p < .01), in support of discriminant validity (Gerbing and Anderson,
1988). Second, the AVE of each construct was much higher than its
shared variances with other constructs, which again supported dis-
criminant validity. Overall, the results indicated that the measures
possessed adequate reliability and construct validity.
4.4. Common method bias
Because we used only one informant in the interviews, com-
mon method bias could be a potential issue. Therefore, we applied a
method variance (MV) marker to assess potential common method
bias, as suggested by Lindell and Whitney (2001). We used a scale
theoretically unrelated to at least one variable in the analysis as the
MV marker, which provided a proxy for common method variance.
For our test, the marker was a four-item variable to assess gov-
ernment support for the focal firm (Li and Atuahene-Gima, 2001;
Cronbach’s ˛ = .92). The lowest positive correlation between gov-
ernment support and other latent variables (r = .02) served to adjust
the correlations among the variables. As we show in Table 1, only
4 of 33 significant correlations became non-significant after the
MV adjustment, and no significant correlations related to the latent
constructs became insignificant. Therefore, common method bias
was unlikely to be a serious concern in the study.
5. Analyses and results
To test our hypotheses, we employed a stepwise regression
approach that revealed the explanatory power of each set of
variables (Cohen et al., 2003). To deal with the potential multi-
collinearity between the quadratic and interaction terms, we mean
centered each scale that constituted an interaction or quadratic
term and created the interaction terms by multiplying the rele-
vant mean-centered scales (Cohen et al., 2003). In these models,
the largest variance inflation factor (a multicollinearity indica-
tor) emerged from the interaction between contract specificity
and squared relational ties, with a value of 2.72, substantially less
than the critical threshold of 10. Therefore, multicollinearity did
not appear to be a significant issue. In Table 2, we present the
results of the standardized regression estimates, allowing for a
direct comparison between coefficients with respect to the relative
explanatory power of the independent variables. Model 1 included
the control variables. Model 2 added the independent variable and
its quadratic term to test the main effects, whereas Models 3 and 4
93
Fig. 1. Direct and contingent effects of buyer–supplier ties.
added the interactions individually. Model 5 included all predictors
in the regression.
As Table 2 shows, the control variables accounted for 9.0% of
the total variance in knowledge acquisition (F = 3.13, p < .01). Firms
in mechanical manufacturing and material industries seemed to
achieve greater knowledge acquisition than firms in other indus-
tries. In Model 2, adding the focal independent variables and the
quadratic term of relational ties increased the R-square value by .16
(p < .01). Adding the interaction terms in Models 3–5 also increased
the R-square value significantly compared with Model 2 (R2 = .03,
.02, and .05, respectively; all p < .01), which supports that contract
specificity and competitive intensity have significant moderating
effects.
In H1 we predicted an inverted U-shaped relationship between
relational ties and knowledge acquisition. According to Table 2,
Model 2, relational ties related positively to knowledge acquisition
(ˇ = .31, p < .01), but the quadratic term exhibited a negative relation
(ˇ = −.14, p < .01). Therefore, relational ties displayed a curvilinear
relationship with knowledge acquisition. To depict this curvilinear
relationship, we used Cohen et al.’s (2003) approach and plotted
the relationship in Fig. 1a: Relational ties have an inverted U-shaped
effect on knowledge acquisition. We calculated the simple slopes of
the curvilinear relationship at low and high levels (i.e., one standard
deviation below/above mean) for the relational ties. The results
showed that relational ties exerted a positive effect on knowledge
acquisition when they were low (ˇ = .94, p < .01) but a negative
effect if those relational ties were high (ˇ = −.32, p < .05). A further
simple slope calculation indicated that the turning point (i.e., loca-
tion of the dotted line in Fig. 1a, where the first [partial] derivative
of knowledge acquisition with respect to relational ties equaled 0)
occurred for relational ties = 5.98. Overall, these results support H1.
With H2 we predicted that contract specificity strengthens
the inverted U-shaped relationship between relational ties and
knowledge acquisition. In Table 2, Model 5, the first-order inter-
action between relational ties and contract specificity was positive
(ˇ = .13, p < .05), whereas the second-order interaction was negative
(ˇ = −.18, p < .05). For greater clarity, we plotted the relationship
between relational ties and knowledge acquisition for the low and
high levels of the moderators in Fig. 1b and c, respectively (Cohen
94 K.Z. Zhou et al. / Journal of Operations Management 32 (2014) 88–98

Table 1
Descriptive statistics and correlations.

Variable 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

1 Knowledge acquisition .35** .07 .18** −.01 .01 .04 .08 .17** .14** .12* −.07 −.04 .06 −.12*
2 Relational ties .36** .24** −.04 −.01 .05 .16** .15** .31** .27** −.05 .05 .03 −.03 −.02
3 Contract specificity .09 .26** .02 .00 .08 .06 .00 −.06 −.07 −.15** .08 .01 −.04 −.08
4 Competitive intensity .20** −.02 .04 −.08 −.05 .02 −.19** −.14** .02 −.03 −.11* −.06 −.11* .00
5 Firm size .01 .01 .02 −.06 .08 .03 .13** .12* .05 −.01 −.07 .13** −.14** .00
6 Foreign wholly owned .03 .07 .10 −.03 .10* −.30** −.07 .07 .04 −.04 .03 .09 −.09 −.02
7 IJV .06 .18** .08 .04 .05 −.27** .03 .08 .09 .04 −.10* .09 −.04 .03
8 Relationship tenure .10* .17** .02 −.17** .15** −.05 .05 .29** .22** .06 −.03 −.07 −.06 −.05
9 Buyer concentration .19** .32** −.04 −.12* .14** .09 .10* .30** .56** −.01 .06 −.01 −.03 −.08
10 Supplier concentration .16** .28** −.05 .04 .07 .06 .11* .24** .57** −.06 −.03 −.08 −.03 −.08
11 Mechanical .14** −.03 −.13* −.01 .01 −.02 .06 .08 .01 −.04 −.34** −.23** −.22** −.21**
12 Chemical −.05 .07 .10 −.09 −.05 .05 −.08 −.01 .08 −.01 −.31** −.12* −.12* −.12*
13 Electronics −.02 .05 .03 −.04 .15** .11* .11* −.05 .01 −.06 −.21** −.10* −.09 −.09
14 Materials .08 −.01 −.02 −.09 −.12 −.07 −.02 −.04 −.01 −.01 −.20** −.10* −.07 −.08
15 Textile −.10* .00 −.06 .02 .02 −.00 .05 −.03 −.06 −.06 −.19** −.10 −.07 −.06
16 MV marker .36** .26** .02 .09 .00 −.01 .15** .04 .20** .16** .01 −.09 .02 .00 .01

Mean 3.96 4.86 5.31 4.56 2.26 0.23 0.19 4.98 33.55 48.59 0.38 0.14 0.06 0.06 0.06
Std. deviation 1.14 1.12 1.31 1.05 0.43 0.42 0.39 4.22 25.07 28.01 0.49 0.34 0.25 0.24 0.23

Notes: N = 385. Zero-order correlations are below the diagonal; adjusted correlations for potential common method variance (Lindell and Whitney, 2001) are above the
diagonal.
*
p < .05.
**
p < .01.

et al., 2003). Fig. 1b reveals the differential moderating effects of
contract specificity: When relational ties were relatively low (left
side of the dotted line), they exerted a stronger positive effect on
knowledge acquisition (steeper slope) at high (vs. low) levels of
contract specificity. However, when relational ties were relatively
high (right side of the dotted line), knowledge acquisition declined
faster as relational ties increased when contract specificity was high
(vs. low). A further simple slope calculation indicated a turning
point (i.e., location of the dotted line in Fig. 1b) when relational
ties = 5.73.
We also employed Cohen et al.’s (2003) approach to quantify the
impact of relational ties on knowledge acquisition at low and high
values of the moderators. As Table 3, Panel A, shows, the coefficient
of RT2 was more negative as contract specificity increased (from
−.07 to −.13 to −.19), consonant with a steeper curvilinear effect
when contract specificity was high in Fig. 1b. These results provide
support for H2.
We examined the moderating effect of competitive intensity
to test H3. According to Table 2, Model 5, the first-order interac-
tion between relational ties and competitive intensity was positive
and significant (ˇ = .10, p < .05), and the interaction between the
quadratic term of relational ties and competitive intensity was
negative and significant (ˇ = −.17, p < .01). As Fig. 1c shows, when
relational ties were relatively low (left side of the dotted line),

Table 2
Standardized regression results.

Model 1 Model 2 Model 3 Model 4 Model 5

ˇ t-Value ˇ t-Value ˇ t-Value ˇ t-Value ˇ t-Value

Control variables
Firm size −.02 −.42 .01 .26 .02 .42 .01 .26 .02 .43
Foreign wholly owned .05 .98 .01 .25 .00 .02 .02 .30 .00 .09
IJV .04 .82 −.04 −.72 −.05 −.98 −.03 −.69 −.05 −.96
Relationship tenure .04 .82 .06 1.16 .05 1.08 .06 1.20 .05 1.13
Buyer concentration .11 1.76 .08 1.31 .08 1.40 .08 1.28 .08 1.37
Supplier concentration .09 1.50 .01 .22 .05 .86 .00 .08 .04 .71
Mechanical .17** 2.81 .19** 3.40 .19** 3.52 .19** 3.43 .19** 3.57
Chemical .00 .06 .02 .31 .02 .32 .02 .31 .02 .35
Electronics .02 .31 .02 .32 .03 .54 .01 .28 .02 .50
Material .12* 2.20 .15** 3.05 .15** 3.20 .15** 3.17 .16** 3.33
Textile −.05 −.97 −.05 −1.12 −.04 −.75 −.05 −1.08 −.04 −.72
Direct effects
Contract specificity .00 .07 .07 1.21 .00 −.04 .08 1.35
Competitive intensity .25** 5.19 .24** 5.10 .32** 5.37 .32** 5.46

H1: relational ties (RT) .31** 6.09 .36** 6.76 .29** 5.60 .34** 6.39
RT2 −.14** −2.85 −.27** −4.55 −.06 −1.23 −.21* −3.25
Moderating effects
H2: RT × contract specificity .14* 2.38 .13* 2.18
RT2 × contract specificity −.16* −2.14 −.18* −2.55
H3: RT × competitive intensity .10* 1.99 .10* 2.02
RT2 × competitive intensity −.16* −2.51 −.17** −2.78

R2 .09 .25 .28 .27 .30

R2 .16** .03** .02** .05**

Note: N = 385.
*
p < .05 (two-tailed).
**
p < .01 (two-tailed).
 K.Z. Zhou et al. / Journal of Operations Management 32 (2014) 88–98
Table 3
Centered regression equation with curvilinear by linear interaction.
Centered regression equation
Panel A
Regression equation with respect to contract specificity
Level of contract specificity
Low = −1.31
Mean = 0.00
High = 1.31
Panel B
Regression equation with respect to competitive intensity
Level of competitive intensity
Low = −1.05
Mean = 0.00
High = 1.05
Notes: Coefficients are unstandardized; the control variables are omitted for illustration. RT = relational ties; CS = contract specificity; CI = competitive intensity. Low and high
levels of the moderators are one standard deviation below or above the mean, respectively.
knowledge acquisition increased faster with increasing relational
ties when competition was high (vs. low). However, when rela-
tional ties were relatively high (right side of the dotted line),
relational ties had a more negative effect on knowledge acquisition
at high (vs. low) levels of competition. The curves reached a turning
point when relational ties = 5.38. Table 3, Panel B, also shows that
the coefficient of RT2 grew more negative as competitive intensity
increased (from −.04 to −.13 to −.23), consonant with the steeper
inverted U-shaped effect at high competition in Fig. 1c. Overall,
these results support H3.
6. Discussion
6.1. Theoretical contributions
Relational ties in a supply chain represent an important learning
opportunity for firms to achieve competitive advantages (Dyer and
Singh, 1998; Hult et al., 2006). This study adds to our understanding
of why firms should maintain but be cautious about their relational
ties with supply chain members. By revealing a curvilinear relation-
ship between relational ties and knowledge acquisition, this study
echoes prior operations management studies that call for exami-
nations of both the bright and dark sides of relational ties (Cousins
et al., 2006; Krause et al., 2007; Villena et al., 2011). By demonstrat-
ing the differential moderating effects of contract specificity, we
extend operations management research and offer new evidence
of how informal and formal mechanisms jointly influence business
transactions. By examining the industrial competition surrounding
interfirm exchanges, this study also addresses the critical question
of when relational ties are helpful for the acquisition of specific
knowledge. In turn, our study makes three major contributions to
operations and supply chain management literature.
First, we highlight the dual role of relational ties in acquiring
specific and complex knowledge from supply chain partners.
Extant studies acknowledge that weak ties are good for assimilat-
ing novel information, whereas strong ties facilitate complex and
specific information flows (Capaldo, 2007; Molina-Morales and
Martínez-Fernández, 2009). Instead of examining the acquisition
of novel knowledge, our study focuses on how relational ties
influence the acquisition of specific, complex product and process
knowledge from exchange parties. We find an inverted U-shaped
effect of relational ties, which indicates that a moderate level of
ties is optimal, but very strong ties are detrimental to specific
knowledge acquisition. As our results suggest, relational ties
foster the acquisition of specific knowledge by providing exchange
95
Regression equation
Knowledge
acquisition = −.13 × RT2 + (−.05) × CS × RT2 + (−.09) × CI × RT2 + .34 × RT + .08
× CS × RT + .10 × CI × RT + .07 × CS + .34 × CI + 3.51
Knowledge
acquisition = [−.13 + (−.05) × CS] × RT2 + (.34 + .08 × CS) × RT + .07 × CS + 3.51
Knowledge acquisition = −.07 × RT2 + .24 × RT + 3.42
Knowledge acquisition = −.13 × RT2 + .34 × RT + 3.51
Knowledge acquisition = −.19 × RT2 + .44 × RT + 3.60
Knowledge acquisition = [−.13 + (−.09) × CI] × RT2 + (.34 + .10 × CI) × RT + .34 × CI + 3.51
Knowledge acquisition = −.04 × RT2 + .24 × RT + 3.15
Knowledge acquisition = −.13 × RT2 + .34 × RT + 3.51
Knowledge acquisition = −.23 × RT2 + .44 × RT + 3.87
partners with access to high-quality, timely information, as well
as by enhancing the efficiency with which firms can assimilate
acquired knowledge. However, when relational ties become too
strong, they inhibit, rather than enhance, the acquisition of specific
knowledge, due to the increased risk of heavy obligations, collec-
tive blindness, and supplier opportunism. In response to Villena
et al.’s (2011) call, our study offers new insights to help explain
the theoretical inconsistency between the relative merits and dark
sides of relational ties in buyer–supplier relationships.
Second, this study enriches extant supply chain governance lit-
erature pertaining to the collective use of formal and informal
mechanisms. Operations management scholars have offered con-
flicting views on how the joint use of formal contracts and informal
relations influences firm behaviors and performance in a supply
chain (Li et al., 2010b; Liu et al., 2009; Lumineau and Henderson,
2012; Stouthuysen et al., 2012). Our findings reveal that detailed
contracts strengthen the inverted U-shaped relationship between
relational ties and the acquisition of specific knowledge. When rela-
tional ties are at low to moderate levels, contracts provide a formal
framework to support the ties’ effects on the acquisition of specific
know-how. However, when ties grow too strong, the deployment
of detailed contracts signals distrust, and the legal enforcement of
those formal contracts conflicts with the self-enforcing nature of
highly cohesive ties, which impairs interfirm knowledge acquisi-
tion. Thus, when contract specificity is high, a moderate level of
relational ties is associated with optimal knowledge acquisition.
In contrast, both low and high levels of ties are associated with a
lower degree of knowledge acquisition (see Fig. 1b). These findings
offer new insights into the ongoing controversy regarding the col-
lective use of formal and informal governance mechanisms (Li et al.,
2010b).
Third, operations management research has called for additional
assessments of the ways in which supply chain practices depend
on external environments (Patel, 2011; Sousa and Voss, 2008). Our
study enriches this contingency view by examining the curvilinear
moderating effects of competitive intensity. When competition is
high, a moderate level of relational ties can improve the quality
of information and efficiency of cooperation, whereas a high level
would suffer more from unnecessary obligation, collective blind-
ness, and supplier opportunism. As our findings show (Fig. 1c), a
moderate level of ties is best for knowledge acquisition when com-
petition is high; both low and high levels of relational ties instead
relate to lower degrees of knowledge acquisition. By incorporating
a contingency view into the analysis of the nonlinear effect of ties,
we develop a more nuanced understanding of how various levels
96 K.Z. Zhou et al. / Journal of Operations Management 32 (2014) 88–98

of relational ties differ in their roles with respect to the industry
environment.
6.2. Managerial implications
Our study offers several implications to supply chain managers.
First, managers should be aware of the benefits and downsides
associated with relational ties. Although ties with supply chain
partners provide access to valuable information, a strong relation
may create a lock-in risk, such that it prevents the firm from obtain-
ing know-how from its partners. For example, Man Group, the
world’s largest publicly traded alternative investment provider,
recently ended an eight-year relationship with BlueCrest, in an
attempt to reduce its overly strong presence in the managed futures
business (Cauchi, 2011). Similarly, Toyota and JCI decided to phase
out a long-term partnership in Trim Masters, their IJV, seemingly
because they sensed the risks associated with their long-term rela-
tionship (Villena et al., 2011).
Second, managers should understand how to employ formal and
informal mechanisms to manage knowledge acquisition from their
supply chain partners. When managers intend to draft detailed
contracts, it is beneficial to develop a moderate level of relational
ties to achieve a high level of knowledge acquisition. However,
when tie strength is already very strong, managers should avoid
using detailed contracts, because contracts become dysfunctional
for embedded ties.
Third, managers should recognize the industrial conditions in
which relational ties may benefit knowledge acquisition. When
competition is high, firms can leverage their preexisting ties to
obtain valuable knowledge resources. For example, to fight Google’s
market leadership, Microsoft deepened its existing partnership
with Facebook, in an attempt to enhance the performance of its Bing
search engine by tapping people’s social connections (Fowler and
Wingfield, 2010). However, competition also makes very strong
ties detrimental to knowledge acquisition, so firms should avoid
becoming too strongly embedded when procuring information in
competitive environments. Overall, our findings warn about the
dark side of very strong ties and suggest that companies should
reduce their reliance on highly embedded suppliers; instead, firms
should develop a supplier network with moderate levels of tie
strength to keep them open to broader informational resources and
opportunities.
6.3. Limitations and further research
Extant research indicates that different types of ties may carry
different characteristics and perform different functions (Lazzarini
et al., 2008; Sheng et al., 2011). For example, strong and weak
ties have differential implications for different types of knowledge
acquisition. Our study only measures and examines the acquisition
of specific product/process know-how; it does not distinguish the
acquisition of existing knowledge from that of novel knowledge.
Further studies involving different types of ties and knowledge
would offer a richer understanding.
We also assume that relational norms underlie the effects of ties
on knowledge acquisition. Levin and Cross (2004) note that rela-
tional ties promote knowledge flows through competence trust and
benevolence trust, whereas Hansen (1999) suggests that strong ties
can lead to knowledge redundancy. Further research could explore
the mediating logic (e.g., trust, norms, knowledge redundancy)
through which relational ties affect performance outcomes.
Finally, the universality of relational ties in both developed and
developing economies has been well documented (Burt, 1992; Li
et al., 2008). Our findings are specific to a Chinese context, which
may differ from other economies in terms of tie utilization and
transactional traditions. Further research should corroborate our
findings in other advanced and emerging economies, to fully grasp
the role of relational ties in a supply chain.
Acknowledgement
The authors thank the three anonymous reviewers, the Asso-
ciate Editor, and the Editor Thomas Choi for their helpful comments.
This study was supported by the General Research Fund from the
Research Grants Council, Hong Kong SAR Government (Project no.
HKU 757810H) and the grant from the National Natural Science
Foundation of China (NSFC, 71172185).
Appendix A. Constructs and items
Construct and source Description Factor
loadings
Knowledge acquisition The extent to which your company has
(Rindfleisch and learned from this partnership
Moorman, 2001) (1 = “very low” to 7 = “very high”):
CR = .90 • Specific skills and competencies 1.00
AVE = .75 (e.g., technology) of production.
• Specific skills for improving .95
product quality.
• Specific R&D know-how. .92

Relational ties (Rowley • Our company has a close social .87

Our study has several limitations that additional research can et al., 2000; Uzzi, 1999; relationship with this supplier.
address. We limit our investigation to buyer–supplier relationships, Wegener, 1991) • There is a sense of “being in the 1.00
viewed from the buyer perspective, which may differ from the CR = .88 same boat” between our company and
AVE = .55 this supplier.
supplier perspective. For example, with regard to tie strength, a
• Our company and this supplier 1.00
manufacturer may adopt a sense of cohesion toward its focal sup- often visit each other.
plier, even if the supplier regards the relationship as distant. Further • Our company and this supplier .82
research based on matched dyadic data could reveal whether the often have activities that are purely
social, such as after-work
different sides perceive and behave similarly or not.
get-togethers.
The cross-sectional design of this study also prevents us • Our company and this supplier .92
from testing causal relationships in our theoretical model. An often offer favors to each other.
alternative specification might suggest that knowledge trans- • The relationship between our .81
fer influences the choice and evolution of relational or formal company and the supplier is in good
shape.
governance (Hoetker and Mellewigt, 2009). Longitudinal inves-
tigations would be required to examine the causality of the Contract specificity • We have specific, well-detailed 1.00
governance mechanism–knowledge acquisition linkage. A longi- (Cannon and Perreault, agreements with this supplier.
1999) • We have customized agreements .97
tudinal study also could enable consideration of the life cycle CR = .87 that detail the obligations of both
of collaborative ties (Autry and Golicic, 2010). Researchers could AVE = .70 parties.
investigate how a buyer–supplier relation emerges and evolves • We have detailed contractual .97
over time, whether it reaches the dark side of relational ties, and agreements specifically designed with
this supplier.
how formal governance interacts with relational ties at various
stages.
 K.Z. Zhou et al. / Journal of Operations Management 32 (2014) 88–98
Construct and source Description Factor
loadings
Competitive intensity • Competition in our industry is .84
(Jaworski and Kohli, cut-throat.
1993) • There are many “promotion wars” .99
CR = .83 in our industry.
AVE = .50 • Any product that a company can .82
offer, others can easily match.
• Price competition is a hallmark of 1.00
our industry.
• There are many competitors in our .93
industry.
Notes: All items, except otherwise specified, used Likert scales (1 = “strongly dis-
agree,” and 7 = “strongly agree”). CR = composite reliability; AVE = average variance
extracted.
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