By Allison Muss
More than three decades ago, American political scientist and author of Bound to Lead: The Changing Nature of American Power, Joseph S. Nye Jr., coined the phrase and introduced the concept of “soft power.” In contrast to “hard power,” which uses coercion to get results, soft power employs the non-coercive push of persuasion and appeal to get a desired outcome. “Soft power resources are the assets that produce attraction, which often leads to acquiescence,” Nye said.
Not Powerless, But Soft Power(ful)
Buyers often dominate small minority/women-owned business enterprise (MWBE) suppliers with hard power, putting them at a huge disadvantage. Some face the reality of operating in a saturated market, where their goods and services are easily replaceable. Disadvantages in size and resources make it challenging for them to adequately meet large buyers’ needs. But, writes UVA Commerce Professor Kisha Lashley, “Lacking hard power does not mean that a firm is powerless.”
Lashley and colleague Timothy G. Pollock, of Haslam College of The University of Tennessee, Knoxville, explored how MWBEs operating with little leverage and dealing with “large suppliers who often demand economies of scale and scope” can survive these challenges by creating and using soft power to maintain their positions in large buyers’ supply chains. Their paper, “Dancing with Giants: How Small Women- and Minority-Owned Firms Use Soft Power to Manage Asymmetric Relationships with Larger Partners,” published in the April 2020 edition of Organization Science, suggests that MWBEs, however devoid of hard power, can still compete in buyer-supplier relationships with corporate giants by implementing a soft power strategy to fortify their influence.
How It Works
Small MWBE suppliers use soft power tactics in an effort to attract corporate partners, particularly when their position in the supply chain is threatened. In addition to trying to directly persuade the corporate buyer that their products and services are an end-user necessity and more valuable than that of their competition, MWBEs take a roundabout approach by implementing soft power tactics on their stakeholder groups, which include both functional and political influencers. (Functional influencers are the end users of a product or service, and political influencers work for a corporation; have no allegiance to any particular supplier; are solely responsible for meeting the needs of their stakeholder groups, which can include the local community; and have a higher perception of credibility, legitimacy, and trustworthiness by the buyer.) These influencers are then employed by the MWBEs to subtly affect a corporate buyer’s purchasing decisions in their favor often without detection by the buyer that any influence has been employed.
“Suppliers who use soft power to become cognitively central with influencers inside and outside the firm, and who can then influence the buyer without them realizing it, have an additional soft power tool they can employ to protect their interests,” Lashley and Pollock write. In other words, they have a power play that not only helps them to navigate the challenges in an asymmetrical corporate world, but one that also keeps them in the game.
For this process to work, the authors suggest that this approach requires the supplier to “develop 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.”
Why It Matters
Although supplier diversity programs are everywhere, research on them is not. Typically, studies focus solely on the concerns of the corporate buyers, while MWBE suppliers are portrayed as entities with limited options for protecting their interests. But by spotlighting the small minority- and women-owned suppliers, Lashley and Pollock were able to identify the many challenges MWBEs face, along with the few clever solutions they use. The researchers were able to show how MWBEs manage asymmetrical relationships and how they are essentially “dancing with giants” to ensure their survival—a perspective that is “uncommon in the supplier diversity literature.”
And survival is necessary for these entrepreneurs. With MWBEs having a total economic impact of over $400 billion in output, resulting in the creation of and/or preservation of more than 2.2 million jobs, they are an integral part of the national economy.
Lashley and her co-author’s unique angle raises questions worthy of further research that has the potential to further expose and understand the inequalities within corporate-supplier relationships, while potentially improving conditions for future women- and minority-owned suppliers.