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Contract Roles in Governing Interfirm Relationships and the Moderating Effect of Interdependence
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Author: Shen Lu, Xi'an Jiaotong U.
Author: Wang Yong, Xi'an Jiaotong U.
Author: Teng Wenbo, Dongbei U. of Finance and Economics
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By separating the contract functions for governing interorganizational relationships into safeguarding and coordination, this study proposes that these functions are associated with equity and efficiency and that interdependence between cooperating firms moderates their relative salience. Retailer data analysis supports these proposed roles and the moderating effects of interdependence, operationalized as joint dependence and dependence asymmetry. Specifically, a contract can operate as a safeguarding mechanism for ensuring equity and a coordination mechanism for ensuring efficiency, and the relative salience of its two roles is contingent on dependence asymmetry: Holding joint dependence constant, a contract¡¯s safeguarding role prevails over its coordination role as dependence asymmetry increases.
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Search Terms: contract | interdependence
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Paper is No Longer Available Online: Please contact the author(s).
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Power, Relationship Strength, and Structural Holes in a Supplier's Network of Major Customers
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Author: Yoon Hee Kim, Georgia Southern U.
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This study investigates the economic risks and benefits of embedded relationships with major customers accruing to supplier firms. Due to high levels of dependence a supplier has on its major customers, researchers have expressed concerns about the increasing concentration and bargaining power of customers in those embedded relationships. In the presence of power imbalance, how relationship strength and structural holes in networks of major customers affect a supplier’s profitability is the central interest of this study. Using 716 suppliers and their networks of major customers drawn from the Compustat database, this study shows that strengthening ties with major customers enhances the supplier’s profitability in terms of return on assets (ROA) and return on sales (ROS), while reducing the negative effect of customers’ bargaining power. The findings also suggest that, in networks of power-unbalanced relationships with major customers, structural holes tend to reduce the supplier’s ROA and ROS. Whereas previous research on supply chain networks focused mainly on the networks of major suppliers, this study fills a gap in the literature by exploring the relational and structural characteristics of networks of major customers and their impacts on the financial performance of suppliers.
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Search Terms: Buyer-supplier relationship management | Supply networks | Research with secondary data
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Paper is No Longer Available Online: Please contact the author(s).
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Trust as a Governance Mechanism in Value Co-Creation: Trustworthiness Signals and Trust Construction
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Author: Yao Henry Jin, Miami U. Ohio
Author: Amydee M. Fawcett, Weber State U.
Author: Stanley E. Fawcett, Weber State U.
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Purpose: Trust has long been viewed as a potential governance mechanism. However, recent research discloses substantive incongruities in trust conceptualization and operationalization—especially in the supply chain buyer/supplier context. Our goal is to develop an empirically grounded conceptualization of trust and to explore the trust-construction process. Design/Methodology/Approach: We use three related studies—each with an inductive component—to evaluate trust construction. We began by interviewing over 50 companies to identify behaviors that comprise trust. We then conducted 11 focus studies involving over 250 managers to delineate how these behaviors coalesce into theoretical constructs. We concluded by conducting two in-depth dyadic case studies to evaluate how—and how well—companies proactively construct trust as a governance mechanism. Findings: We find divergence in the way companies operationalize trust and the way academics define trust. In the supply chain setting, managers describe trust as consisting of credibility and relationship commitment. Missing is the notion of benevolence. Companies use an iterative approach to signal trustworthiness. However, ambiguity surrounding trust conceptualization increases the costs and decreases the effectiveness of proactive trust construction as a form of supply chain governance. Originality/Value: We specify and evaluate novel constructs used to signal trustworthiness and document that companies struggle to use the signaling process efficiently and effectively. For some, this is an issue of managerial commitment. For others, this represents a lack of understanding of trustworthiness signals and the trust-construction process. Ultimately, we develop a more robust conceptualization of inter-organizational trust and present a roadmap for proactive trust construction.
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Search Terms: trust | supply chain governance | value co-creation
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Paper is No Longer Available Online: Please contact the author(s).
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How to Cope with Buyer-Supplier Dependencies? A Conceptual Differentiation
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Author: Tobias Mandt, U. of Cologne, Dept. of Business Policy & Logistics
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Dependence is frequently observed in dyadic partnerships and considered to be one of the key constructs in buyer-supplier relationships. Existing research discusses its effects for the partners and derives strategic recommendations on how to cope with buyer-supplier dependencies appropriately. However, these recommendations contradict. While some contributions recommend to avoid dependence relations and to disengage from such dyads, other authors point to the strategic value of dependencies and vote for deeper integrating into a dependence relation. These countervailing evaluations cause confusion in managerial practice and provide a discussion base for scholars in the domain. Hence, the aim of this paper is to shed light on this issue by arguing that both opinions might be appropriate. However, the particular form of buyer-supplier dependence is decisive to select a strategic approach that fits the situation. This conceptual paper provides a structured picture of extant scholarly recommendations on handling buyer-supplier dependencies and suggests a typology of five dependence forms based on the dimensions of dependence intensity, symmetry and interactive atmosphere. It finally allocates strategic recommendations to the specific dependence forms to offer a more organized picture for practitioners and to propose a discussion base for future research.
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Search Terms: Buyer-supplier relationship | Dependence | Dyad
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Paper is No Longer Available Online: Please contact the author(s).
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