Supply chain alignment as process: contracting, learning and pay-for-performance

Under “my way or the highway”! The weaker partner's synergy on collaborative performance in humanitarian relief when experiencing power tactics

Purpose

My way or the highway: A stronger partner in humanitarian relief collaboration often seeks control over its weaker partners by leveraging diverse power tactics that may be non-coercive or coercive in nature. In this backdrop, this research accentuates the perspective of weaker partners to understand how a weaker partner drives collaborative synergy under power tactics. Weaker partner in the collaborative dyad resembles the humanitarian organization (HO) who is less capable in terms of access to resources. This partner is further dependent on the stronger HO's directives to participate in the relief work.

Design/methodology/approach

Based on social exchange theory (SET), a collaborative dyad in humanitarian relief work is visualized from the perspectives of power and power disparity. In terms of power, mediated power tactics such as legal, coercive and reward powers are considered. Disparity recognizes the presence of a stronger and a weaker partner. Set also magnifies the insight on conflict and trust that can respectively hamper and improve the synergy between partners. In total, 295 executives representing self-reported weaker HOs are surveyed.

Findings

Legal power, as experienced by the weaker partner, bears a positive impact over collaborative performance to improve collaborative synergy. Coercive power shows a negative impact. Reward power again bears a positive impact. Coercion can complicate collaborative synergy by establishing conflicts. Yet, the trust of weaker partner on stronger HO positively moderates the negative impact of conflict over collaborative performance.

Originality/value

This research invokes the view of power disparity to explain synergy in inter-organizational collaboration from the perspective of weaker partners.

The interplay between inter-personal and inter-organizational relationships in coordinating supply chain activities

Purpose

This paper aims to identify and explain the link between relational dynamics and the development of coordination capabilities of Fourth-Party Logistics Providers (4PL) within a supply chain (SC). We aim to demonstrate the critical role relational dynamics can play in converting trust from interpersonal to inter-organizational level and facilitate the improvement of capabilities to coordinate customer's SC activities.

Design/methodology/approach

Using semi-structured interviews with 78 logistics managers operating in 45 different logistics service providers located in France, we developed a set of propositions and built a conceptual framework. Exploratory qualitative research in the form of propositional discourse analysis (PDA) is used to develop propositions in our research to contribute to theory in supply chain management (SCM).

Findings

Results indicate that both interpersonal and inter-organizational trust is a convertible capital. Based on their dynamic interactions, these two levels of trust endow the supply chain partners with economic benefits that would otherwise be highly costly or even practically extremely difficult to achieve through complex socio-economic transactions (meso-social level).

Research limitations/implications

Future research may test our conceptual model using primary and secondary data and conduct longitudinal case studies that are necessary to triangulate our results and thus strengthen our conclusions. The prospect of adding control variables to our model would be of considerable importance.

Practical implications

Our results suggest that “4PL” need to invest more in interpersonal relations to facilitate collaboration with their clients and enhance their capability to coordinate and manage customer's supply chain activities. The ability to convert interpersonal trust represents an invaluable capital contributing to the achievement of above-normal profits.

Originality/value

This work contributes to a better understanding of the coordination of supply chain activities through the development, mobilization and maintenance of social capital. While previous research explained the importance of trust in SCM, this paper explores and studies the process of converting interpersonal trust into social capital mobilized at the supply chain level. We add to the existing literature on structural and relational dimensions of social capital by offering a process-based explanation of the conversion of interpersonal trust into inter-organizational trust and its role in facilitating collaboration in logistics services.

Governance Mechanism and Structural Power Fit: Evidence from an Information System Development Project

This study identifies how relational and contractual governance mechanisms differently influence the distinct output of information systems development (ISD) performance at the project level. This study also reveals how the consequence of two modes of inter-organizational relationships (IOR) governance mechanism is affected by the gap of a dyadic partner’s centrality within the network — the client’s structural power (CSP). We collected dyadic samples of clients and vendors for 107 ISD projects and explored their governance mechanisms and project performances, all of which were evaluated by both parties. Our results first reveal a positive relationship between relational (or contractual) governance and qualitative (or quantitative) performance, respectively, but not vice versa. Second, the results incorporating a structural position within the network reveal that CSP facilitates the efficacy of relational governance to lead the quantitative performance, but surprisingly, CSP also mitigates the efficacy of contractual governance.

The influences of contract structure, contracting process, and service complexity on supplier performance

Purpose

To build a more comprehensive understanding of factors affecting the success of service contracting, the purpose of this paper is to investigate the influences of service complexity, contract structure and contracting process on the buyer-perceived supplier performance in business-to-business (B2B) services.

Design/methodology/approach

A research model is developed based on transaction cost economics and the research on service contracting. The model is tested by the survey data collected. Professional focus groups on LinkedIn are used to generate the list of potential respondents. The sample consists of 177 purchasing professionals from 25 countries.

Findings

The results indicate that three major contract dimensions and follow-up management practices positively influence buyer-perceived supplier performance. Furthermore, service complexity amplifies the effects of incentives designed in the contract and the buyer’s follow-up contract management on perceived supplier performance.

Research limitations/implications

The sample consists of respondents from 25 countries and provides good geographic coverage. However, the results should be generalized with caution because not all countries were represented equally.

Practical implications

The study suggests a framework and guidelines for purchasing managers to improve the design and management of service contracts to secure good performance from their supplier.

Originality/value

This paper contributes to understanding the performance-enhancing aspects of designing and monitoring service contracts in B2B contexts. It also adds to the knowledge of the role of service complexity in successful B2B service purchasing.

Effective contracting for high operational performance in projects

Purpose

The purpose of this paper is to examine combinations of contract clauses in order to ascertain which combinations correlate to high operational performance (OP).

Design/methodology/approach

Two hypotheses were formulated from contracting theory and tested on data collected from 45 projects. Fuzzy set qualitative comparative analysis was used and validated with multiple regression and simulation.

Findings

The hypotheses were tested to determine whether combinations of classical, relational, and/or associational contract clauses correlate to high OP. The results show that whereas high OP correlates to combinations of relational and associational contract clauses, classical and relational clauses should not be combined.

Research limitations/implications

Directions are proposed to guide future research in order to produce a more nuanced testing of contractual complementarity.

Practical implications

The managerial implications of the findings include a more thorough understanding of the use of contract clauses and of which clauses managers should combine to achieve high OP.

Originality/value

This study contributes to the theory of contractual incompleteness and complementarity, specifically in the context of project contracting. The analysis produced two theoretical implications: first, that better performing contracts are created when combining relational and associational contract clauses; and second, that in projects, relational and classical contract clauses are not complementary with regards to realizing high OP.

Framing contractual performance incentives: effects on supplier behaviour

Purpose

The purpose of this paper is to investigate the effects that the framing of contractual performance incentives have on supplier’s behavioural and relational responses and on the buyer–supplier relationship.

Design/methodology/approach

The authors conducted three in-depth case studies of contractual relationships, which exhibit differences in terms of how performance incentives are framed, i.e., using promotion, prevention and “hybrid” frames, respectively. The study involved 38 semi-structured interviews and content analysis of contract agreements.

Findings

First, while promotion-framed incentives lead to positive supplier responses and improved relationships, prevention-framed incentives result in negative responses and deteriorating relations. Second, hybrid-framed incentives can lead to productive supplier responses when positiveex anteexpectations are met, although the creation of such positive expectations in the first place depends on the proportionality of bonus and penalty elements. Third, promotion- and hybrid-framed incentives do not by default lead to positive effects, as these are contingent on factors pertaining to contractual clarity. Fourth, the overarching purpose of the contract moderates the effects of contract framing on supplier responses.

Research limitations/implications

The study contributes to contracting research by showing how the framing of performance incentives influences supplier behavioural and relational responses. It also extends the existing literature on contract framing by examining the effects of hybrid-framed incentives, and stressing that contract framing should be considered in joint with the clarity and overall purpose of the contract to elicit desired supplier behaviours.

Practical implications

Managers of buying firms may differentiate their approach to contract framing depending on the type of supplier relationship in focus. Furthermore, effective design of promotion- and hybrid-framed incentives requires attention to: realistic performance targets (on the short, medium and long term); salient bonuses related to these targets; incentive structures that appropriately balance rewards and risks; and: mechanisms that explicate and consider uncontrollable factors in the calculation of bonus–malus payments.

Originality/value

The paper extends the literature stressing the psychological impact of contracts on buyer–supplier relationships by highlighting that contractual clarity and the overarching purpose of the contract moderate the effects of contract framing on supplier behavioural and relational responses.

Me, myself and I

Purpose

This research focuses on the role of customer behavior in service outsourcing relationships that are governed by outcome-oriented contracts. The purpose of this paper is to explain how non-collaborative customer behavior impedes the effectiveness of outcome-oriented contracts to align the goals and incentives of the customer and service provider, and leads to service provider opportunism.

Design/methodology/approach

Nine hypotheses are developed regarding customer behavior and the reaction of the service provider to this. These are tested using structural equation modeling with data from 213 service outsourcing relationships.

Findings

Outcome-orientated contracts in service outsourcing may have unintended consequences because they create value attribution ambiguity. This ambiguity induces non-collaborative customer behavior, which, in turn, results in service provider opportunism. This reveals a paradox, where customer behavior aimed at curbing service provider opportunism instead induces such opportunism. This chain of effects can be counteracted by increased outcome attributability, which reduces the ambiguity and, thus, the motivation for non-collaborative customer behavior.

Originality/value

This research extends the existing literature by stressing that non-collaborative customer behavior is a key reason why outcome-oriented contracts fail in effectively governing outsourcing relationships, and that this can be counteracted by increased outcome attributability.