Social Comparison in Retailer–Supplier Relationships: Referent Discrepancy Effects

Social comparisons among suppliers connected through a common retailer pose significant management challenges for the retailer. For instance, a focal supplier’s social comparison can result in upward or downward referent discrepancy, decreasing or increasing perceptions of distributive fairness, respectively, subject to the tie strength of the relationship. Because decreasing perceptions of distributive fairness can be harmful to the retailer–supplier relationship, the authors examine the use of tie strength and timing of explanations as actions a retailer can take to mitigate such perceptions. They test their hypotheses with a two-study, multimethod design conducted in Japan. Study 1 employs a survey of suppliers in a store-within-a-store context as well as objective performance data. The results indicate that upward (downward) referent discrepancy decreases (increases) a focal supplier’s perceptions of distributive fairness. Study 2 employs an experiment using brand/store managers. The results show that when upward referent discrepancies are present, retailers can mitigate the invidious effects of decreased perceptions of distributive fairness by developing strong ties and enacting procedurally fair policies such as proactively providing explanations.