Arnt Buvik

The Impact of Vertical Coordination on Ex Post Transaction Costs in Domestic and International Buyer-Seller Relationships

Even though the transaction costs framework has evolved considerably in the past decade, there is still only modest empirical knowledge about the governance performance implications of the theory. This article focuses on the governance performance of vertical coordination in relationships between manufacturing firms. On the basis of transaction cost analysis and related works in international marketing, the authors examine the impact of asset specificity and vertical coordination on ex post transaction costs in domestic and international buyer–seller relationships. In accordance with current literature in international marketing, performance measurement problems are expected to be more evident in international business trade than in domestic business-to-business relationships. The empirical findings show that under conditions with substantial asset specificity, vertical coordination reduces ex post transaction significantly more in international buyer–seller relationships than in domestic channel dyads.

Inter-firm co-ordination: international versus domestic buyer–seller relationships

The use of transaction cost analysis (TCA) to study the choice of governance mode in foreign countries has been a source of considerable research. Empirical tests of the TCA predictions within a single governance mode are, however, limited. Building on transaction costs arguments, and related work in international marketing literature, we examine the association between asset specificity and inter-firm co-ordination in domestic and international buyer-seller relationships. The extant literature is extended by also comparing the impact of environmental uncertainty on inter-firm co-ordination across domestic and international relationships. Empirical findings from a survey of 164 industrial buyers demonstrate that there is a positive association between asset specificity and inter-firm co-ordination, and further that this association is stronger in international relationships than in domestic business-to-business trade. Furthermore, the results indicate that environmental uncertainty is stronger related to inter-firm co-ordination in international buyer-seller relationships compared to domestic buyer-seller relationships.

Outsourcing of logistics activities in a complex supply chain: a case study from the Norwegian oil and gas industry

This paper argues that the evolution of gradually more complex supply chains makes the logistics outsourcing decision more difficult and that a main reason for this is the increased number of interorganisational links that appear in complex supply chains. A wider Supply Chain Management (SCM) consideration seems to be warranted and the dyadic approach frequently taken in the outsourcing literature is not sufficient to provide adequate decision support in outsourcing decisions. The paper reviews the current literature on how interorganisational links should be regarded in an outsourcing decision process. A business case from the Norwegian oil and gas business is used to illustrate and analyse the broad problem scope and the complexity associated with the decision of possible outsourcing of the Supply Terminal Management (STM) within the framework of Transaction Cost Analysis (TCA) and SCM theory. The outcome of the empirical analysis shows that it is not beneficial to outsource the function when both economic and organisational factors are brought into consideration.

Do relationship history and norms matter in overcoming inter-organisational difficulties in the procurement function?

This study underlines the importance of relationship duration and how it affects procurement and purchasing relationships. Relationship history and relational norms have become significant factors for explaining the scope and stability of purchasing relationships (Dwyer et al., 1987; Sweeney and Webb, 2002; Liu et al., 2009). Relationship duration facilitate in developing a combination of behavioural components, contractual arrangement and trust that overcome organisation problems in inter-firm businesses and it offers an opportunity to ensure stability, and comparative advantages for the procurement partners. The authors explore how the prior length of an inter-firm relationship helps in handling problems associated to behavioural uncertainty, opportunism and ex post transaction costs. The findings highlight the critical role of the prior length of business relationships and how it can help in attenuating organisation problems in procurement relationships. This study supports that relationship duration is a significant antecedent in overcoming organisational difficulties in business relationships and also enhancing relationship quality.

The threat-based influence strategy and monitoring arrangements in voluntary retail chains: the conflict and control effects

A Threat-based Influence Strategy (TIS) means that the principal communicates to the agent that negative sanctions will be carried out if the agent fails to perform a desired action. This type of influence is often associated with a high conflict potential. This article presents an empirical study that focuses on the effectiveness of using TIS, given the different levels of monitoring in voluntary retail chains. Specifically, the research explores two complementary scenarios about the effect of TIS on free-riding behaviour: the conflict scenario and the control scenario. If the level of monitoring is low to modest, the TIS lacks credibility and the principal is unable to discriminate between the free riders and the conformers. Hence, the TIS undermines cooperation and increases the level of free riding within the system. When TISs are combined with substantial monitoring, we expect this governance pattern to change significantly. Comprehensive monitoring increases the incentive for compliance in order to avoid punishment, makes the chains obligations and performance standards clearer and, hence, easier to follow and improves the precision with which the principal can discriminate between the agents that conform to or deviate from their obligations. An empirical study of 79 voluntary retail chains provides support to the proposed hypotheses.

Electronic commerce and governance forms: a transaction cost approach

A large amount of the electronic commerce (EC) literature is focused on the benefits of digitalising transactions, as well as technological and organisational issues related to implementing inter-firm information systems. Even though firms choose different electronic solutions for different purposes, there are still modest research contributions focusing on what kind of governance structures that emerge from business to business (B2B) electronic commerce and why these different governance forms emerge. This paper develops a framework for analysing how certain transaction characteristics such as order frequency, relation specific assets and uncertainty affect the alignment of electronic governance form (EGF). The authors discuss the concept of EGF and categorise electronic governance structures into four different types. The basis for the discussion is transactions cost economics (TCE) combined with theoretical contributions from electronic commerce.

Buyer-supplier integration and logistics performance in healthcare facilities in Tanzania: the moderating effect of centralised decision control

This research concerns logistics performance in public purchasing relationships. It examines the effect of buyer-supplier integration on supplier logistics performance. Particularly focuses on purchasing centralisation in healthcare facilities, and examine whether centralisation of decision control exercised by the health authorities influence the effect of buyer-supplier integration on supplier logistics performance. A survey data of 164 informants from public health facilities in Tanzania was used for analysis. It reveals that buyer-supplier integration improves supplier logistics performance significantly and stronger purchasing centralisation reduces the effect of buyer-supplier integration on supplier logistics performance. It provides a broad and interesting focus on significant antecedents to supplier logistics performance. In the future, the government should focus more on supporting the individual public health facilities in developing and adapting proper governance mechanisms for supporting buyer-supplier integration. Further research in other empirical and cultural settings is desirable to test the external validity of these findings.

The effects of the degree of produce perishability and the choice of procurement channel on supplier opportunism: empirical evidence from the food processing industry

Opportunism is an important topic in supply chain management and distribution channels. The emergence of this behaviour in buyer-supplier relationships tends to reduce performance while diminishing value creation in the effected relations. Different transactions call for different control levels depending on the gravity of opportunism in the transaction, with the need for control being higher as opportunism increases. In this regard, it is important to understand the factors that give rise to opportunism to apply appropriate control mechanisms. This study, therefore, explores the effect of the degree of the perishability of the transacted produce on supplier opportunism. Additionally, this study treated the choice of procurement channel as a control mechanism; therefore, we compared the effect of perishability on opportunism in direct and indirect procurement channels. In this study, cross-sectional survey data collected from 239 food processor-produce supplier relationships served as source of empirical evidence. The empirical findings support our hypotheses, and demonstrate that perishability is positively associated with supplier opportunism, with the effect being significantly lower in the direct procurement channels than in the indirect procurement channel.

Manufacturing complexity and inter-firm coordination: evidence from the textile-exporting firms of Pakistan

This study explores the concept of manufacturing complexity relating to textile fabrics and examines whether the interplay between manufacturing complexity and specific assets enforces inter-firm coordination in international textile procurement relationships. It also accentuates the role of turnkey suppliers in international value chains. The research findings demonstrate that the combined presence of manufacturing complexity and supplier held specific assets leads to higher inter-firm coordination that is crucial for achieving order compliance. Moreover, the results indicate that inter-firm coordination is highly effective in mitigating the prospect of opportunistic behaviour in international procurement relationships. By describing the vital procedural techniques and aesthetic features that are involved in manufacturing a textile fabric order, this study provides valuable insights about manufacturing complexity. Further, the empirical findings demonstrate that international buyers need closer coordination with their key suppliers to mitigate performance ambiguity regarding order compliance for complex customised products.

The effect of buyer specific-monitoring procedures on buyer control in dynamic supply chain links

Based on transaction cost analysis (TCA), resource dependency theory (RDT), and supply chain management literature, this study explores the effect of buyer-specific monitoring procedures on buyer control in industrial buyer-seller transactions, particularly in relation to how environmental uncertainty affects the buying firms ability to exercise control over the supplier firm. The research design is based on primary data from a survey of 168 industrial buyer-seller relationships which map a broad set of dimensions of the economic transactions and structures in these business-to-business relationships. The empirical findings provide support for the hypotheses, and demonstrate that the effect of the buyer-specific monitoring procedures is positively associated with buyer control arrangements under conditions with rather modest external disturbances. This governance pattern is completely changed when business relationships face substantial environmental uncertainty. Under such conditions, the effect of buyer specific monitoring procedures on buyer control is significantly attenuated.