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Article
Publication date: 2 May 2020

Shui Bo Zhang, Junying Chen and Yafan Fu

The purpose of this paper is to unpack the “black box” of the relationship between contract and inter-organizational trust, both theoretically and empirically. Two mediators…

Abstract

Purpose

The purpose of this paper is to unpack the “black box” of the relationship between contract and inter-organizational trust, both theoretically and empirically. Two mediators, namely perceived safeguard and restriction, are identified to build up two seemingly contrary possible paths between contract and trust from current literature. Both paths are tested in the context of Chinese construction industry due to our access to sample.

Design/methodology/approach

A survey of 295 contractor-subcontractor relationships from Chinese construction industry was conducted. A three-step multiple regression model was employed to test the mediating effect of perceived safeguard and restriction. Then, a hierarchical regression model was used to test the possible moderating effect of bilateral transaction-specific investment.

Findings

The empirical results support the mediating effect of perceived safeguard between contract and trust in the construction subcontracting industry. Bilateral transaction-specific investments enhance the positive effect of contract on safeguard perception.

Originality/value

Theoretically, this study contributes to governance literature by opening up the “black box” of the relationship between contract and trust. It provides a better understanding of how and when contract complexity impacts trust, instead of simply focusing on whether contract and trust act as complements or substitutes. Practically, this study provides guidelines for construction firms to decide the degree of contract complexity under various degrees of bilateral transaction-specific investments to enhance the other party’s trust, so as to improve performance outcomes.

Details

Engineering, Construction and Architectural Management, vol. 27 no. 9
Type: Research Article
ISSN: 0969-9988

Keywords

Article
Publication date: 13 November 2017

Maria Jell-Ojobor and Josef Windsperger

The governance structure of international franchise firms varies from higher control modes, such as wholly owned subsidiaries and joint venture franchising, to lower control…

1775

Abstract

Purpose

The governance structure of international franchise firms varies from higher control modes, such as wholly owned subsidiaries and joint venture franchising, to lower control modes, such as area development and master franchising. Based on organizational economics, strategic management, and international business perspectives, the purpose of this paper is to use the case study analysis to empirically evaluate an integrative model on the franchisor’s choice of international governance modes.

Design/methodology/approach

The study applies qualitative methods, such as in-depth case analysis, to investigate a large set of variables that influence the governance structure decision of the international franchise firm. Specifically, it applies a theory-testing case study with two major competitors in the European automotive rental industry, i.e. Europcar and Sixt. Theory-testing case research is justified by the lack of explanatory research due to the complexity of the franchisor-franchisee relationship phenomena, such as the factors that influence the franchisor’s choice of international governance modes. The investigation of the complex governance structure phenomenon requires a holistic analysis.

Findings

The case study shows that environmental, behavioral, transaction-specific, resource-based (system-specific, market-specific, financial resources), and international strategy considerations are important determinants of the governance mode decision of the international franchise firm.

Research limitations/implications

The study responds to the recent call in organizational economics, marketing, strategic management, and international business literature to develop and test a multi-theoretical framework to explain the governance structure of inter-organizational networks, such as franchise networks.

Originality/value

Few previous studies in international franchising have used more than one theoretical perspective to explain the governance structure of the international franchise firm. This study contributes to the theory-testing case study literature by applying a rigorous method of conducting case research. This includes developing a theoretical framework and a systematic research design. A systematic research design requires a holistic analysis by investigating the international franchise governance modes from a variety of theoretical perspectives which are the organizational economics, strategic management, and the strategy-structure perspective.

Details

International Marketing Review, vol. 34 no. 6
Type: Research Article
ISSN: 0265-1335

Keywords

Article
Publication date: 4 April 2022

Asad Shafiq, P. Fraser Johnson and Robert D. Klassen

Pressured by various stakeholder groups to improve the sustainability performance of their emerging economy suppliers, multinational firms continue to expand their supplier…

Abstract

Purpose

Pressured by various stakeholder groups to improve the sustainability performance of their emerging economy suppliers, multinational firms continue to expand their supplier monitoring. Leveraging the strategy literature on alliances and the buyer-supplier relationship management literature, the authors propose that a buyer firm's efforts to proactively develop cultural sensitivity and operations cognizance to understand the operational culture and routines of its suppliers can ameliorate some shortcomings of supplier monitoring, thereby improving the performance of the buyer firm.

Design/methodology/approach

Using primary survey data from a sample of US manufacturing firms, combined with secondary data of supplier monitoring and financial performance, this research examines the relationship between supplier monitoring, cultural sensitivity, operations cognizance, and buyer firm performance.

Findings

Supplier monitoring was associated with positive but diminishing returns for financial and sustainability performance for the buyer. Second, increasing cultural sensitivity and operations cognizance for suppliers in emerging economies were associated with improved buyer performance. Finally, the synergistic use of supplier monitoring and operations cognizance was associated with improved buyer firm financial performance.

Originality/value

While the buyer-supplier relationship literature has mainly treated organizational differences between dyadic supply chain partners as exogenous to the context in which their relationship evolves, the authors posit that buyer firms' efforts to understand such differences can affect the value of buyer-directed interactions, such as supplier monitoring. This research adds to the theoretical understanding of the process of developing relational mechanisms with emerging economy suppliers. In particular, efforts of buyer firms to better understand the operational culture and routines of their suppliers can complement monitoring and are associated with a positive impact on performance.

Details

International Journal of Operations & Production Management, vol. 42 no. 5
Type: Research Article
ISSN: 0144-3577

Keywords

Article
Publication date: 16 October 2007

Rodolfo Vázquez, Víctor Iglesias and Ignacio Rodríguez‐del‐Bosque

Transaction‐specific investments are often required in marketing channels in order to improve channel efficiency. However, such investments often increase the risk of…

1064

Abstract

Purpose

Transaction‐specific investments are often required in marketing channels in order to improve channel efficiency. However, such investments often increase the risk of opportunistic behaviors being sparked off. This paper aims to analyze the role of partners' investments in specific assets and the development of relational norms as safeguarding mechanisms against opportunism.

Design/methodology/approach

Three hypotheses are developed in line with transaction cost economics and relational exchange theories. The hypotheses are tested on a sample of 479 manufacturer‐distributor relationships in the food sector in Spain.

Findings

The paper finds that partner‐specific investments and relational norms are effective mechanisms against opportunism. However their efficacy differs depending on which opportunism (supplier's or distributor's) is to be avoided.

Research limitations/implications

The paper focuses on two mechanisms, yet there are other safeguards that firms can employ.

Practical implications

The partner's investments in specific assets are an effective safeguard for suppliers as well as for distributors. Companies should aim for balanced investment in this field, as it is the optimum way in which to avoid opportunistic behavior. Relational norms have shown to be effective only for distributors.

Originality/value

The study adopts a bilateral approach analyzing the effects of the governance mechanisms on both supplier and distributor opportunism. The paper provides new evidence on the role of the partner's specific investments as a safeguard against opportunism. They do not directly act against opportunism, but they act as variables that moderate the causal relationship between the specific investments of the firm and the partner's opportunism.

Details

Journal of Business & Industrial Marketing, vol. 22 no. 7
Type: Research Article
ISSN: 0885-8624

Keywords

Article
Publication date: 1 May 2006

Danny Pimentel Claro, Priscila Borin de Oliveira Claro and Geoffrey Hagelaar

It is the aim of this paper to discuss the value of trust and the effects of transaction specific investments for the relative degree of collaborative joint efforts, and also to…

3308

Abstract

Purpose

It is the aim of this paper to discuss the value of trust and the effects of transaction specific investments for the relative degree of collaborative joint efforts, and also to assess the moderating effect of the information network on such joint efforts.

Design/methodology/approach

The paper takes the perspective of the buyer making the joint effort decision and draws on transaction cost economics, relational exchange and network perspectives to develop the hypotheses of the conceptual framework. Wholesalers and other merchant‐distributors in the Dutch flower industry provided the data to test the hypotheses.

Findings

The results show the importance of trust in coordinating the joint efforts and the joint effort response in terms of safeguarding and better integrating the transaction specific investments.

Originality/value

While the information network does not moderate the relation between trust and joint efforts, there is a significant moderating effect of the network on the relation between transaction specific investments and joint effort. This result suggests that buyers temper their specific investments to the degree of joint effort according to the information that is obtained in the network. This implies that coordinating collaborative joint efforts with suppliers is more than just buying well. The degrees of trust, specific investments and the information from the network have managerial implications for the coordination of a buyer‐supplier relationship.

Details

Supply Chain Management: An International Journal, vol. 11 no. 3
Type: Research Article
ISSN: 1359-8546

Keywords

Article
Publication date: 13 July 2015

Yi Li, Gang Li and Taiwen Feng

The purpose of this paper is to investigate the relationships among suppliers’ trust and commitment, transaction-specific investment, switching cost, and customer involvement…

2098

Abstract

Purpose

The purpose of this paper is to investigate the relationships among suppliers’ trust and commitment, transaction-specific investment, switching cost, and customer involvement within the context of relational governance mechanism and the social exchange theory.

Design/methodology/approach

The authors use survey data from 214 Chinese manufacturing firms and employ the structural equation model to verify the conceptual model.

Findings

Relational governance benefits customer involvement. Transaction-specific investment mediates the relationship between trust and commitment of suppliers. Switching costs negatively moderate the relationship between suppliers’ trust and customer involvement, but positively moderate the relationship between suppliers’ commitment and customer involvement.

Research limitations/implications

The authors focus on two key elements of relationship, namely, trust and commitment of suppliers, but neglect other relational factors, such as relational norms and interdependence.

Originality/value

These findings broaden the understanding and present new directions for the implementation of customer involvement from the perspective of relational governance and social exchange theory.

Details

Industrial Management & Data Systems, vol. 115 no. 6
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 23 August 2011

Danny Pimentel Claro and Priscila Borin de Oliveira Claro

This study aims to assess the moderating effect of the business network on the effects of between relational behavior and the effects of transaction‐specific investments on joint…

1168

Abstract

Purpose

This study aims to assess the moderating effect of the business network on the effects of between relational behavior and the effects of transaction‐specific investments on joint actions.

Design/methodology/approach

The study was a survey based field study designed using theoretical support from marketing channels, transaction cost economics and network perspectives.

Findings

The results show the importance of relational behavior and the network in coordinating joint actions, and this has relevant managerial implications for the coordination of a collaborative relationship. The characteristics of the relationship, its length as well as the size of each partner affect the collaborative efforts of the partners.

Practical implications

Firms and managers should understand not only the dyadic relationships they are in but also the network structure. Dyadic characteristics affect collaboration, while the network also has effects on the collaboration of partners in vulnerable positions.

Originality/value

The paper points out the role of the network as a countervailing safeguard for dyadic TSIs and network stability. Dyadic relationships are supported by the network.

Details

Journal of Business & Industrial Marketing, vol. 26 no. 7
Type: Research Article
ISSN: 0885-8624

Keywords

Article
Publication date: 1 June 1997

Pierre Barthon and Brian Jepsen

There has been a steady increase in the amount of research and theorising in the area of interorganisational research, especially with regard to buyer‐seller arrangements in…

227

Abstract

There has been a steady increase in the amount of research and theorising in the area of interorganisational research, especially with regard to buyer‐seller arrangements in marketing channels (Andersen and Narus 1990, Bergen et.al., 1992, Boyle et.al., 1992). Alternative interorganisational governance models, such as joint ventures, strategic alliances, and sole‐sourcing are the reality of modern business management (Borys and Jemison 1989, Buckley and Casson 1988), and so interfirm governance has become a strategic management issue. The much‐cited work of Porter (1985, 1991) has focused on the optimal linkage of interfirm activities, and regards the planning and governance of interfirm relations as an important competitive strategic issue, a point reiterated by Heide (1994). The issue of channel relationships has been one of concern for both practitioners and academics, and theories such as those of transaction cost analysis (TCA), agency theory, and relational norms have on the one hand shed much light on the problems, and on the other provided a fruitful backdrop to much empirical research. Less attention has been given to the effects of time on these notions, both in the literature and in empirical research. In this article we provide an overview of the theories, and attempt an integration. The purpose of this article is to focus on transaction cost economics (TCE) and relational exchange theory to provide an overview of the areas of interorganisational research where relationships play a role. A number of areas where the theories diverge and converge are outlined. More importantly, we endeavour to bring the effects of time into consideration, and to develop propositions for further research.

Details

Management Research News, vol. 20 no. 6
Type: Research Article
ISSN: 0140-9174

Article
Publication date: 6 February 2017

Yu-Xiang Yen and Shiu-Wan Hung

This paper aims to propose an integrated model based on buyer and supplier opportunism to show the mechanism through which current and competing suppliers influence buyer market…

1358

Abstract

Purpose

This paper aims to propose an integrated model based on buyer and supplier opportunism to show the mechanism through which current and competing suppliers influence buyer market competitiveness.

Design/methodology/approach

Questionnaires were distributed to purchasing staff in listed electronics firms in Taiwan to collect empirical data. Structural equation modeling was used to analyze these data and examine the fitness of the proposed model.

Findings

The findings show that current and competing suppliers influence buyer market competitiveness through supplier opportunistic behaviors and buyer commitment. The alternative attractiveness of competing suppliers affects buyer market competitiveness through the influence of asset specificity. Supplier opportunism negatively and indirectly influences buyer market competitiveness through buyer commitment. Nevertheless, buyer opportunism does not influence buyer commitment and market competitiveness.

Research limitations/implications

The investigation focused on only one industry in one country. Future research could investigate other industries and countries to increase the generalizability of the findings.

Practical implications

The results suggest that buyers can focus on utilizing the pressure of alternative suppliers to improve market competitiveness through increased specific investments by the current supplier.

Originality/value

On the basis of buyer–supplier opportunism, this study shows the mechanism through which the asset specificity of current suppliers and alternative attractiveness influence buyer market competitiveness.

Details

Journal of Business & Industrial Marketing, vol. 32 no. 1
Type: Research Article
ISSN: 0885-8624

Keywords

Article
Publication date: 19 May 2020

Lei Wang, Chun Zhang, Jun Li, Dong Huo and Xing Fan

This study examines how unilateral supplier transaction-specific investments (TSIs), directly and indirectly, influence international buyer opportunism and the extent to which…

Abstract

Purpose

This study examines how unilateral supplier transaction-specific investments (TSIs), directly and indirectly, influence international buyer opportunism and the extent to which detailed contracts enable suppliers to safeguard against international buyer opportunism. The study also examines whether relationship length affects the efficacy of detailed contracts in cross-border outsourcing relationships.

Design/methodology/approach

The hypotheses are tested by using data collected from multiple informants working for 229 manufacturing suppliers in China. Multiple regression with a three-way interaction is used to test the hypotheses.

Findings

Unilateral supplier TSIs encourage international buyer opportunism through increased supplier dependence. Contract specificity negatively moderates the effect of supplier dependence on international buyer opportunism. This moderating effect is stronger in long-term cross-border buyer–supplier relationships than in short-term ones.

Originality/value

The current study extends the cross-border outsourcing literature by examining how emerging-market suppliers in a weak power position can proactively safeguard against international buyer opportunism by using detailed contracts. Our findings show that supplier dependence mediates the relationship between unilateral supplier TSIs and international buyer opportunism; detailed contracts, however, can help dependent suppliers safeguard against international buyer opportunism. In particular, the findings highlight the importance of long-term buyer–supplier relationships that enhance the efficacy of detailed contracts.

1 – 10 of 196