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Strategic interdependence, governance effectiveness and supplier performance: A dyadic case study investigation and theory development
Author(s) -
Mahapatra Santosh K.,
Narasimhan Ram,
Barbieri Paolo
Publication year - 2010
Publication title -
journal of operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.649
H-Index - 191
eISSN - 1873-1317
pISSN - 0272-6963
DOI - 10.1016/j.jom.2010.04.001
Subject(s) - transactional leadership , corporate governance , context (archaeology) , knowledge management , business , transaction cost , relational view , process management , industrial organization , computer science , management , economics , paleontology , finance , biology
Inter‐organizational exchange governance approaches are often characterized as two broad types: relational and transactional. However, in fast changing business contexts, the contextual contingencies do not present ideal conditions for practicing purely relational or transactional approach. Understanding the dynamic of key contextual factors and their effects on a firm's resource capabilities and inter‐organizational power structure is crucial for identifying the appropriate governance structure over time. In this paper we explore the exchanges between an OEM and five of its strategic suppliers that operate in high‐end, short product life cycle motorbike industry, to understand the key contextual factors and the relationships among business context, governance structure, and exchange practices in a dyadic context. It is observed that firms deviate from the conventional choices of either transactional or relational governance to a combination of contractual and relational aspects to make the governance structure effective. Based on case studies, a theoretical framework is proposed to explain the rationale, feasibility and effectiveness of combining contractual and relational aspects in different contexts. The framework suggests that the degree of strategic interdependence between the trading partners fundamentally drives the effectiveness of governance structure and exchange practices.