Minority and women business enterprises (MWBEs) that function as suppliers to much larger firms face many challenges in growing their companies and succeeding in their various enterprises. Yet research by Commerce Professor Kisha Lashley examines how MWBEs can develop their relationships with large buyers by employing “soft power” with key stakeholder groups.
Lashley and her co-author, Professor Timothy G. Pollock of Haslam College of Business, University of Tennessee, Knoxville, discuss their findings in “Dancing with Giants: How Small Women- and Minority-Owned Firms Use Soft Power to Manage Asymmetric Relationships with Larger Partners,” published in Organization Science.
The paper discusses how MWBEs operate in a difficult position, with little leverage to deal with “large suppliers who often demand economies of scale and scope.” And as creating working relationships with MWBEs often serves these larger companies that may be simply checking a box for their company-sponsored diversity program, many MWBEs face a very competitive environment that renders their products or services easily replaceable by other MWBEs operating in the same field or in an entirely different field.
One option MWBEs rely on to survive—and in the best cases, thrive, in these types of uneven business collaborations—is through soft power.
“We found that MWBE suppliers can succeed in relationships with large buyers by using soft power—which is based on subtle persuasion—with stakeholder groups we refer to as functional and political influencers,” Lashley says. “Functional influencers are the end users of products and services. By developing a deep knowledge of the internal workings of the buyer firm, identifying powerful end users, and providing services that go above and beyond their expectations, MWBEs can protect themselves from everyday threats.”
Lashley says that political influencers are community leaders or those who work within the buyer firms, and who are keenly aware of their responsibility to meet the needs of stakeholder groups such as the local community. MWBEs can use political influencers to shield their businesses from more severe threats like the termination of the contract with a large buyer.
Their research suggests that when facing a notable differential between the traditional forms of power they may utilize when compared to their considerably larger business partners, MWBEs are capable of creating and calling upon their soft power to protect their continued relationships.
Read Lashley and Pollock’s research here.
