Sungmin Ryu

Volatile Environments and Interfirm Governance: Does Trust Matter?

Purpose: Manufacturers in volatile environments should rely on governance mechanisms to reduce the risks inherent in those environments. However, it remains to be determined which governance mechanism a given manufacturer will develop in volatile environments in order to manage the relationship with its supplier. The principal objective of this study is to explain circumstances in which different governance mechanisms function under volatile environmental conditions. Methodology: The empirical test was conducted with manufacturing companies in the context of manufacturer-supplier relationships. Construct measures were based on existing measures and previous research. Measurement reliability and validity were established using exploratory and confirmatory factor analysis and an overall measurement model was assessed with structural equation modeling using LISREL 8.54. Findings: The results of this study showed that manufacturers should consider the level of trust they bestow on their suppliers to select an appropriate governance mechanism to deal with environmental volatility. When a manufacturer does not trust its supplier under conditions of environmental volatility, the manufacturer should consider adopting unilateral governance. If a manufacturer trusts its supplier, it should consider bilateral governance to respond in a timely manner to changes in the resource market. Contribution: This study introduced trust to explain governance mechanisms in an uncertain environment and showed that interorganizational trust is a condition for influencing a manufacturers propensity toward a specific governance mechanism.

Effects of Network Embeddedness on the Relationship Between Environmental Volatility and Interfirm Contracts

Purpose: This study examines the effects of an embedded network on the contractual relationship between exchange parties under conditions reflecting varying levels of environmental volatility and investigates the role of an important network factor—the embedded network—in the contractual relationship between manufacturers and their suppliers. Methodology: The empirical test was conducted with manufacturing companies in the context of manufacturer–supplier relationships. Construct measures were based on existing measures and previous research. Measurement reliability and validity were established using exploratory and confirmatory factor analysis and an overall measurement model was assessed with structural equation modeling using LISREL. Findings: The results of a survey of manufacturers indicate that firms in an embedded network preferred “soft” contracts even when they face volatile environments, whereas those facing volatile environments in a less embedded network preferred “hard” contracts with explicitly specified written requirements. Network partners carefully evaluated embedded networks (a critical factor that has not received enough attention) before forming contractual relationships in a network perceiving interfirm relationships differently. Originality: The study introduces network embeddedness to explain governance mechanisms in volatile environments and shows that the explicit recognition of embedded network may facilitate the development of contracts with specific provisions as the contractual relationship evolves.

Korea as a Comparative Business Marketing System: Review and Prospects

Purpose: South Korea is now considered to be one of the major players in the global business arena. Along with its economic progress, the Korean business market has also been growing steadily for the past 40 years. Despite the prominence of Korean business, research on Korean business and in particular Korean marketing has been less systematic. This is especially true of business-to-business marketing (B2B) in Korea, which is a well-established area of study in most other developed countries. The purpose of this study is to therefore review and categorize the articles published in a broad range of B2B marketing research involving Korea. In so doing, we intend to provide a desirable agenda for the development of B2B marketing in this country. Methodology/approach: This article analyzed 50 Korean B2B marketing articles, which were published in international leading journals during the period 1990–2012. The descriptive data were reported and then a contents analysis was performed. The contents analysis was divided into two frameworks: (1) Intra firm dynamics and (2) inter firm dynamics. Each part was then analyzed more deeply from cultural and relationship perspectives. Findings: This article enables a deeper understanding of Korea’s B2B research situation and provides direction as to what we should study in the future. In the descriptive analysis, Korean B2B articles account for only 4% of marketing-related research, and 70% of the articles used Korean data only, whereas 28% referred to data from abroad. In the contents analysis, the articles mainly addressed the cultural differences between the East and the West as well as the differences in the perception regarding B2B relationships. In particular, Koreans consider the special relationship regarding education (Hakyoen) and region (Jiyeon) as being significant factors. Originality/value: This research addresses a unique phenomenon, Chaebol, in the Korean economy. Chaebols, conglomerates originating from Korea, are defined as business groups consisting of formally independent firms under the single common administrative and financial control of one family. Chaebols have had a tremendous impact on the Korean economy. Chaebols have successfully transformed themselves from being exporters of cheap products to now being major global players. Thus, Chaebols have been regarded as a driving force of the Korean economy. Firms affiliated with Chaebols tend to generate higher profitability than independent firms in some circumstances. However, buyers in group-affiliated companies do not generate positive outcomes because they often support loss-making parts suppliers by paying higher-than-market prices. This research also introduces the most unique phenomenon, the North Korean economy. The fundamental principle of distribution in North Korea is to systematically distribute goods through the national distribution network as established by the state. However, the recent distribution trend in North Korea seems to not be in suppressing commerce itself, but in tightening the regulation of public market activity while absorbing the deviated distribution demands through the state-operated store network. The authorities have also created an organization that integrates company production, distribution, and sales; however, there have not been sufficient resources or time for this model to succeed. To address this challenge, North Korean authorities are actively seeking unprecedented changes in order to deal with their distribution problems and are aggressively reorganizing the entire producer and consumer goods sectors.

Inter-Organizational Governance in Uncertain Environments: Does Trust Matter?

Manufacturers in uncertain environments should rely on governance mechanisms to reduce risk involved with the environments. A question yet to be answered is which governance mechanism (i.e., unilateral or bilateral governance) the manufacturer develops in uncertain environments to manage the relationship with its supplier. This study proposes an integrative empirical model in which inter-organizational trust is a condition for affecting manufacturer’s propensity for a governance mechanism.

An Empirical Study on Bargaining Positions and Exchange Relationship in Supply Chain Network

Abstract Bargain position and trust are core issues in supply chain management, yet the effect of bargain position on trust remains to be undetermined. The purpose of this research is to present theoretical and methodological hurdles for the relationship among various bargain positions and trust, and develops a set of hypotheses about the asymmetric effect of bargain position on trust in supply chain network. An analytical tool to analyze nonlinear effects on a response surface is introduced. Based on the data collected through a survey of firms participating in Project Supply chain, a set of hypotheses is tested. The analysis results support the prediction that the bargain position perceived by the buyers have asymmetric effects on trust toward supplies, and provide more fine-grained accounts on the relationships among bargain power, bargain position and trust in a supply chain network. Key Words : Response Surface, Bargain Position, Trust, Supply Chain, Non-linear Function Received 3 January 2014, Revised 28 January 2014,Accepted 20 April 2014Corresponding Author: Sungmin Ryu(SKK Business School, SungKyunKwan University)Email: smryu@skku.eduⒸ The Society of Digital Policy & Management. All rights reserved. This is an open-access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/3.0), which permits unrestricted non-commercial use, distribution, and reproduction in any medium, provided the original work is ISSN: 1738-1916 properly cited.