Chapter 3: Need versus Ability to Contract
The less was the measurability of supplier performance, the wider the use of inter-ﬁrm coordination mechanisms. (Delmestri, 1998: 660) INTRODUCTION In this chapter, I focus on the non-shaded parts of the research framework, as depicted in Figure 3.1. I observe that research on contracting in interorganizational relationships either focuses on the need or on the ability to govern input, outcomes and behaviour (see Gerwin, 2004; Geyskens et al., 2006; Helm and Kloyer, 2004). I reconcile both perspectives by proposing that a higher need to contract is generally accompanied by a lower ability to do so. Managers are expected to cope with this apparent paradox by, amongst other things, investing in information processing and sensemaking activities. I empirically test my hypotheses by means of multiple regression analyses on a sample of 911 buyer–supplier relationships. From the results it accrues that higher levels of asset speciﬁcity and complexity, smaller ﬁrm sizes and an absence of prior experience with the same partner produce gaps between the need and ability to contract, propelling participants in interorganizational relationships to invest, amongst other factors, in information processing and sensemaking activities. Need to govern Positive consequences Antecedents Organization level Exchange level Context level Governance Contracting Trust Performance Value discovery Value creation Value appropriation Ability to govern Negative consequences Figure 3.1 Research framework: focus of theme one 65 66 Contracts and trust in alliances The study presented in this chapter allows for the integration of separate views on the relationships between contracting and its antecedents....
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