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Enabling roles of relationship governance mechanisms in the choice of inter-firm conflict resolution strategies

Khuram Shahzad (Innovation and Entrepreneurship InnoLab, University of Vaasa, Vaasa, Finland)
Tahir Ali (School of Marketing and Communication, University of Vaasa, Vaasa, Finland)
Marko Kohtamäki (School of Management, University of Vaasa, Vaasa, Finland)
Josu Takala (School of Technology and Innovations, University of Vaasa, Vaasa, Finland)

Journal of Business & Industrial Marketing

ISSN: 0885-8624

Article publication date: 31 January 2020

Issue publication date: 23 April 2020

1149

Abstract

Purpose

This study aims to present an integrated framework and investigate the enabling roles of governance mechanisms (i.e. contract, interdependence, trust and communication) in the choice of effective conflict resolution strategies (CRS) that in turn facilitate buyer–supplier relationship (BSR) performance.

Design/methodology/approach

Using Web-survey, data are collected from 170 Finnish small- and medium-sized enterprises that have key relationships with suppliers. This study uses structural equation modeling to test the research framework and hypotheses of the study.

Findings

The results based on empirical evidence demonstrate how the firms’ choice of CRS depends on the governance mechanisms. The problem solving approach is the most preferable choice, while the legalistic approach remains the last resort influenced by different governance mechanisms. Interdependence and trust between firms drive them to compromise while resolving inter-organizational conflicts. The selected strategies by firms may also either reinforce or deteriorate relationship performance.

Practical implications

Supply chain managers should recognize the context in which these choices of CRS are made, as it guides them to anticipate their partner’s behavior as well as influences their strategy choice decisions when coping with conflicts. A trustworthy environment supports in providing a certain level of confidence while interdependency drives firms to compromise. The legalistic strategy can hurt the partner’s feelings and diminish relationship performance.

Originality/value

Conflicts in BSR have become inevitable, but the existing literature is missing evidence on how companies use CRS to enhance relationship performance. Hence, this study differs from those of earlier conflict studies, as it provides a more integrative perspective of buyer–supplier conflict resolution process. This study argues that relationship governance mechanisms can be connected to the choice of effective CRS when tensions arise. Moreover, by assessing the relationship between CRS and relationship performance, this study offers valuable insights to understand that effective strategies enable partners to mutually adapt constructive approaches that facilitate cooperative behavior and accommodate both parties’ interests and needs.

Keywords

Acknowledgements

This paper is an outcome of the “Suuri Yrittäjätutkimus” research project. The financial support provided by Collector Finland through a research grant (271001101 – Collector-toteutus) is also acknowledged and greatly appreciated.

Citation

Shahzad, K., Ali, T., Kohtamäki, M. and Takala, J. (2020), "Enabling roles of relationship governance mechanisms in the choice of inter-firm conflict resolution strategies", Journal of Business & Industrial Marketing, Vol. 35 No. 6, pp. 957-969. https://doi.org/10.1108/JBIM-06-2019-0309

Publisher

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Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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