8.3 Measurement models development 132
8.3.2 Measurement model for dependency considerations 140
Power Imbalance
The core construct with regard to dependency considerations, as articulated by resource
dependency theory, is power imbalance. In general, power imbalance refers to the difference
between two actors’ dependencies. In the study’s context, the construct refers to the difference
between the principal’s dependency on agents and the agent’s dependency on principals in the
context of the six focal maintenance activities (identified as the construct’s objects). As such, the
construct’s attribute is deemed to be abstract formed with the two types of dependencies
forming it in a composite (subtractive) manner. Given past research, the two different
dependency attributes are themselves considered as abstract formed (thus rendering power
imbalance a second‐order formed attribute). Two concrete attributes, in turn, form each of the
first‐order dependency attributes again in a composite (though this time multiplicative) manner.
In the case of a principal’s dependence on agents, the two concrete zero‐order attributes that
form it are the principal’s exchanged resource criticality and the principal’s availability of
0 1 2 3 4 5 6 7
Engine maintenance planning: Engine problem troubleshooting: Tactical spare part logistics: Extraordinary spare part logistics: Regular engine maintenance: Extraordinary engine repairs:
How difficult is it to evaluate a supplier's performance in each activity?
not at all slightly difficult quite difficult extremely difficult 0 1 2 3 4 5 6 7
Engine maintenance planning: Engine problem troubleshooting: Tactical spare part logistics: Extraordinary spare part logistics: Regular engine maintenance: Extraordinary engine repairs:
How often do you engage in or need each activity?
every five years every two years every year every semester every month every week every day
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alternative supply sources. In the case of the corresponding agent’s dependence on principals,
the two zero‐order attributes that form it are the agent’s exchanged resource criticality and the
agent’s availability of alternative supply outputs. Focusing on the attribute of the principal’s
exchanged resource criticality it is defined as the degree to which the potentially exchanged
resource, in this case a maintenance activity, is essential to the functioning and daily operations
of the principal (i.e. a focal marine shipping firm). The principal’s availability of alternative supply
sources attribute, in turn, refers to the number of alternative maintenance suppliers from which
the principal may realistically procure each activity. Given the aforementioned definitions for the
zero‐order attributes that form the first order attribute of a principal’s dependence on agents, the
following measures are produced:
With regard to a principal’s exchanged resource criticality:
With regard to a principal’s availability of alternative supply sources:
Focusing on the attribute of the agent’s exchanged resource criticality or essentiality, first and
foremost, it is evident that a maintenance activity is no longer the exchanged resource. Instead,
what the principal provides the agent for the provision of a maintenance activity is remuneration.
In other words, in this case, it is monetary resources (i.e. an amount of currency) that are being
exchanged. Thus, a different content wording approach than that used in the case of a principal’s
exchanged resource criticality is utilized here to emphasize the criticality of monetary resources in
the functioning and daily operations of the agent. Finally, the agent’s availability of alternative
supply outputs refers to the number of alternative firms that could realistically make use of the
agent’s services rendered. Given the aforementioned definitions for the zero‐order attributes
that form the first order attribute of an agent’s dependence on principals, the following measures
are produced:
With regard to an agent’s exchanged resource criticality (reverse‐coded):
0 1 2 3 4 5 6 7
Engine maintenance planning: Engine problem troubleshooting: Tactical spare part logistics: Extraordinary spare part logistics: Regular engine maintenance: Extraordinary engine repairs:
How critical is each activity to your company's ability to conduct business?
not at all slightly critical quite critical extremely critical
Engine maintenance planning: Engine problem troubleshooting: Tactical spare part logistics: Extraordinary spare part logistics: Regular engine maintenance: Extraordinary engine repairs:
number of
suppliers used:
number of other
suppliers:
Approximately how many suppliers do you use for each activity (number of suppliers used),
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The rationale behind this question being that the less financially secure suppliers are, the more
critical monetary resources become.
With regard to an agent’s availability of alternative supply outputs:
Finally, a few comments are in order with regard to the way that the overarching construct of
power imbalance is formed. Firstly, it bears mentioning that the principal’s availability of
alternative supply sources and the agent’s availability of alternative supply outputs, are calculated
through the addition of ‘number of suppliers used’ and ‘number of other suppliers’ in the case of
the principal, and through the addition of ‘number of other client firms’ and number of potential
client firms’ for the agent.
Secondly, it should further be underlined that in the formation of the first‐order attributes of a
principal’s dependency on agents and an agent’s dependency on principals the corresponding
exchanged resource criticalities are not to be multiplied directly with the availability of alternative
supply sources and outputs respectively. Instead, according to Jacobs (1974), they are to be
multiplied with 1 over the total number of available supply sources and 1 over the total number
of available supply outputs respectively. In the interest of clarity these new transformed
quantities are labelled ‘Principal’s potential for oligopolistic suppliers’ and ‘Agent’s potential for
oligopsonistic clients’ respectively, to more accurately portray the quantities’ conceptual
meaning.
Given the above, the second‐order attribute of the power imbalance construct, is calculated by
subtracting the agent’s dependency on principals from the principal’s dependency on agents. As
such, based on the dependency consideration’s posited causal relationship, the lower the
subtraction’s result is the more favourable the power imbalance is towards the principal, and thus
the more outsourced a focal activity is likely to be.
To more explicitly depict the power imbalance construct’s formation, the processes described
previously are hierarchically further exemplified below in an equation format:
In each activity:
0 1 2 3 4 5 6 7
Engine maintenance planning: Engine problem troubleshooting: Tactical spare part logistics: Extraordinary spare part logistics: Regular engine maintenance: Extraordinary engine repairs:
How financially secure are your suppliers in general?
not at all slightly secure quite secure extremely secure
Engine maintenance planning: Engine problem troubleshooting: Tactical spare part logistics: Extraordinary spare part logistics: Regular engine maintenance: Extraordinary engine repairs:
Approximately how many other firms do your suppliers serve in each activity (number of other firms served),
and how many additional firms could realistically make use of their services (number of potential client firms)?
number of
other client firms:
number of
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Power imbalance = Principal’s dependency on agents – Agent’s Dependency on principals
Power imbalance = (Principal’s res. criticality * Principal’s potential for oligopolistic suppliers) – (Agent’s res. criticality * Principal’s potential for oligopsonistic clients)
Power imbalance = [Principal’s res. criticality * (1 / Availability of alternative supply sources) – (Agent’s res. criticality * (1 / Availability of alternative supply outputs)]
Power imbalance = {Principal’s res. criticality * [1 / (n of suppliers used + n of other suppliers)] – {Agent’s res. criticality * [1 / (n of other client firms + n of pot. client firms)]
Resource Internalization Potential
The construct of resource internalization potential refers to the ease or difficulty with which a
principal (i.e. a focal firm) may internalize (i.e. in‐source) a focal resource. The construct’s objects
are, once more, recognized to be the six focal maintenance activities, while the construct’s
attribute, held to be of a concrete nature, is the degree of difficulty with which a focal marine
shipping firm may entirely internalize each maintenance activity (given that the activity is
outsourced to any degree, of course). Furthermore, to provide a more solid frame of reference
for the survey’s respondents, as per the instructions provided by expert judges form the marine
shipping industry, the notion of difficulty in internalizing an activity was further tied to the
process’s requirements in terms of time and money. As such, the following measure was
produced:
Cooptation Potential
The construct of cooptation potential refers to the ability of a principal (i.e. a focal firm) to
influence an agent (i.e. a focal firm’s supplier) by creating vested interests through socialization,
information sharing or even participation in the agent’s managerial boards. In this study’s case,
the construct is operationalized simply as the ability of a focal marine shipping firm in influencing
the strategic decisions of a maintenance activity’s supplier. As such, the construct’s objects are
the six focal maintenance activities, while the construct’s attribute, considered as a concrete one
and defined in‐line with the previously reported contextual specification, is measured through the
following scale:
(in terms of time and money)
0 1 2 3 4 5 6 7
Engine maintenance planning: Engine problem troubleshooting: Tactical spare part logistics: Extraordinary spare part logistics: Regular engine maintenance: Extraordinary engine repairs:
How difficult is it to fully develop each activity internally?
not at all slightly difficult quite difficult extremely difficult
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Agent Actual Dependence
The construct of agent actual dependence refers to a principal’s contribution to an agent’s circle
of operations. In this study’s case, the construct thus refers to a focal marine shipping firm’s
contribution to a maintenance activity supplier’s operating revenue in the context of the six focal
maintenance activities (i.e. the construct’s objects). The construct’s attribute is held to be a
concrete one and is measured through an estimate of a focal shipping firm’s percentage
contribution to each activity’s supplier income. Thus, the following measure was produced: