Tag Archive | Relationship

Ecosystems vs. Supply Chains

There has recently been surge of interest in ecosystems as a distinct solution to the problem of inter‐firm coordination. Ecosystems play a particular role in sectors such as IT, telecommunications, video games, among others. In their recent SMJ article, Jacobides et al. (2018) define an ecosystem as “a set of actors with varying degrees of multilateral, nongeneric complementarities that are not fully hierarchically controlled”. From their research it becomes apparent why and when ecosystems emerge, and what makes them distinct from other governance forms, including markets, alliances, or hierarchically managed supply chains. An important difference between ecosystems and supply chains is that in supply chains “the hub (OEM, or buying firm) has hierarchical control—not by owning its suppliers, but by fully determining what is supplied and at what cost”, whereas ecosystems tend to be rather modular. The authors also reflect on “when we might expect to see ecosystems displace traditional market‐based arrangements or vertically integrated supply chains”.

Jacobides, M.G., Cennamo, C., & Gawer, A. (2018). Towards a theory of ecosystems. Strategic Management Journal, 39 (8), 2255-2276 https://doi.org/10.1002/smj.2904

The Dark Side of Interorganizational Relationships

What would supply chain management be without interorganizational relationships! Interorganizational relationships are always great, right? Maybe it is not that simple, if we look at a brand-new article by Oliveira & Lumineau, titled The Dark Side of Interorganizational Relationships: An Integrative Review and Research Agenda. What they mean by the “dark side” of interorganizational relationships are negative dimensions or, in their words, “damaging aspects” of such relationships, including detrimental outcomes, ill-intended behaviors or unethical practices. These aspects are driven by competence or integrity issues. Based on a review of the literature, the authors identified antecedents, ex-ante and ex-post moderators as well as consequences that are rooted in the country, industry, interorganizational relationship, partner and individual levels of analysis. The authors “not only discussed actionable research steps aimed at addressing lacunae in the current knowledge but also presented a research agenda to advance the theory on the dark side of IORs”. I am sure this piece will be inspiring also for many SCM researchers.

Oliveira, N. & Lumineau, F. (2018). The Dark Side of Interorganizational Relationships: An Integrative Review and Research Agenda. Journal of Management, https://doi.org/10.1177/0149206318804027

The Constitution of Trust

Trust plays an important role in supply chain management research (see some of my previous posts, e.g. The More Trust the Better! Really?, The Evolution of Trust). An article by Free (2008), titled Walking the Talk? Supply Chain Accounting and Trust among UK Supermarkets and Suppliers, asks: “How are calculative practices implicated in the constitution of trust in the UK retail sector?” This leads to two principal findings: First, “existing definitions of trust need to be more tightly and coherently elaborated to be applicable in the inter-organizational context”. The author proposes “a set of trust constructs that reflects both institutional phenomena (system trust) and personal and interpersonal forms of trust (trust, trusting behaviours, trustworthiness and trusting disposition)”. Second, “trust can be invoked in both ritualistic and instrumental ways”. Here, the author suggests “that the simple dichotomy of trust and distrust […] should be expanded to embrace manipulation and the use of trust as a discursive resource”.

Free, C. (2008). Walking the Talk? Supply Chain Accounting and Trust among UK Supermarkets and Suppliers. Accounting, Organizations and Society, 33 (6), 629–662. https://doi.org/10.1016/j.aos.2007.09.001

The Evolution of Trust

Trust plays an important role in supplier–buyer relationships. One way to approach this important concept is game theory. If you have ever wondered how game theory could be taught in a supply chain management course, I can recommend Nick Case’s The Evolution of Trust – an interactive guide to the game theory of why and how we trust each other. The guide starts by explaining the game of trust (= the prisoner’s dilemma). Then it illustrates what happens if multiple games and multiple tournaments are played with different players. We can learn from this guide that “the game defines the players” but also that “the players define the game”. We can learn that, in order for trust to evolve, we need the knowledge of possible future repeat interactions, we need a win–win situation, and we need a low level of miscommunication. I will definitely use The Evolution of Trust in my future supply chain management courses.

The More Trust the Better! Really?

We certainly all agree: Trust between supply chain partners has a lot of benefits. However, in their interesting study of trust in the buyer–supplier relationship, Villena and her co-authors argue that there is a “duality of trust”: Trust has benefits but it can also become dysfunctional if it is excessive. The results of their study show “that trust follows an inverted-U shape with performance”, i.e., at a certain point the negative effects offset the benefits of trust and performance declines. The authors also show that “[t]rust’s negative effects are more severe for those buyers that are highly dependent and operate in stable markets”. But why could trust ever be harmful? Well, trust might create “blind faith” into a supplier when the buyer is too optimistic. Another explanation could be that buyers might avoid tensions with suppliers that they otherwise trust – even if they observe declining performance. Trust can also increase reliance and unnecessary obligations that constrain the buyer.

Villena, V.H., Choi, T.Y., & Revilla, E. (2016). Revisiting Interorganizational Trust: Is More Always Better or Could More Be Worse? Journal of Management. https://doi.org/10.1177/0149206316680031

2015 Harold E. Fearon Best Paper Award Winners

The Journal of Supply Chain Management has recently announced the winner of the 2015 Harold E. Fearon Best Paper Award, which is the award for the best paper published in that journal. The award goes to an article by Kim & Choi: Deep, Sticky, Transient, and Gracious: An Expanded Buyer–Supplier Relationship Typology. Herein, the authors propose an expanded typology of buyer–supplier relationships, which they theorize in two orthogonal aspects: “(1) relational posture, that is, how two firms regard each other (as cooperative partners or as adversaries) and (2) relational intensity, that is, how much two firms’ operations are interlinked (closely tied or arms-length)”. And these are the two finalists for the 2015 Harold E. Fearon Best Paper Award: Examining Absorptive Capacity in Supply Chains: Linking Responsive Strategy and Firm Performance by Dobrzykowski, Leuschner, Hong & Roh, and When Buyer-Driven Knowledge Transfer Activities Really Work: A Motivation–Opportunity–Ability Perspective by Kim, Hur & Schoenherr. Hopefully, you will enjoy reading these insightful articles as much as I did.

Kim, Y., & Choi, T. (2015). Deep, Sticky, Transient, and Gracious: An Expanded Buyer-Supplier Relationship Typology. Journal of Supply Chain Management, 51 (3), 61-86 DOI: 10.1111/jscm.12081

Dobrzykowski, D., Leuschner, R., Hong, P., & Roh, J. (2015). Examining Absorptive Capacity in Supply Chains: Linking Responsive Strategy and Firm Performance. Journal of Supply Chain Management, 51 (4), 3-28 DOI: 10.1111/jscm.12085

Kim, H., Hur, D., & Schoenherr, T. (2015). When Buyer-Driven Knowledge Transfer Activities Really Work: A Motivation-Opportunity-Ability Perspective. Journal of Supply Chain Management, 51 (3), 33-60 DOI: 10.1111/jscm.12077

Contract Manufacturing

How does contract manufacturing work? The following figure illustrates this.

Contract Manufacturing

Horizontal Alliances between Logistics Service Providers

Supply chain research typically investigates phenomena that occur in vertical relationships, e.g., between suppliers and buyers. In our new article, The Interplay of Different Types of Governance in Horizontal Cooperations: A View on Logistics Service Providers, we take a look at horizontal relationships. For example, such relationships occur when two LSPs collaborate to complement their service portfolios. Particularly, our research analyzes the influence of contractual governance on the effectiveness of two types of operational governance (a formal and a relational type). It relates contractual governance and operational governance to two major outcome dimensions of horizontal cooperations between LSPs (cooperation-based firm performance and cooperation-based learning). The results reveal that contractual safeguarding is able to partly replace process formalization when aiming for better cooperation-based firm performance and complement process formalization when aiming for cooperation-based learning. At the same time, relational capital is always complemented by contractual safeguarding independently from the desired cooperation outcome.

Raue, J.S., & Wieland, A. (2015). The Interplay of Different Types of Governance in Horizontal Cooperations: A View on Logistics Service Providers. International Journal of Logistics Management, 26 (2) DOI: 10.1108/IJLM-08-2012-0083

Supply Chain vs. Supply Chain Competition

Many theory-testing efforts in our field are made by borrowing theories from other fields (e.g., transaction cost economics or resource-based theory), adapting them to a supply chain context and deriving hypotheses that are eventually tested statistically. By doing so, we have reached a lot! But we also need our own theories. For example, several years ago, Lambert & Cooper (2000) noted: “One of the most significant paradigm shifts of modern business management is that individual businesses no longer compete as solely autonomous entities, but rather as supply chains”. So, part of our theoretical toolkit could be a theory of supply chain vs. supply chain competition which could explain how the supply chains of Apple and Samsung interact. However, surprisingly few attempts have been made towards such a theory. This includes a thought piece by Rice & Hoppe (2001) and, more recently, a case study by Antai & Olson (2013). We need to continue this theory-building process.

Rice, J.B. & Hoppe, R.M. (2001). Supply Chain vs. Supply Chain: The Hype & the Reality. Supply Chain Management Review, 5 (5) http: web.mit.edu/supplychain/repository/scvssc.pdf

Antai, I. & Olson, H. (2013). Interaction: A New Focus for Supply Chain vs Supply Chain Competition. International Journal of Physical Distribution & Logistics Management, 43 (7), 511-528 https://doi.org/10.1108/IJPDLM-06-2012-0195

Personal Predictions for Supply Chain Management in 2015

Dear readers. I hope you enjoyed reading this blog in 2014. Based on dozens of discussions I had throughout the year, I would like to share my predictions for topics that could become important in supply chain management in 2015 with you. First, I believe that ethical issues will soon play a much more important role than ever, as, so far, social standards or animal rights have too often been neglected in our textbooks. Second, a supply chain consists of relationships between people, who work in teams and groups across independent companies. So, there might soon be a supplementation of the traditional view of the supply chain as a network of black boxes called “suppliers”, “buyers”, “consumers”. Finally, better technologies and algorithms, and, thus, lower transaction costs, might soon make the old SCM dream come true to integrate the end-to-end supply chain. We might soon see totally new business models (enterprise mobility linked to SCM could be a good example). I wish you a good start into 2015.