Controlling Case study Essay

Abstract This paper studies management control design of supplier relationships in manufacturing, a supply chain phase currently under-explored. Compared to supplier relations during procurement and R&D, which research found to be governed by a combination of formal and informal controls, supplier relations in manufacturing are more formal, so that they could be governed by more formal and less informal controls. To refine the management control system and influencing contingencies, we propose a theoretical framework specifically adapted for the manufacturing stage. This framework is investigated by an in depth case study of the supplier management control of a Volvo Cars production facility.

We identify three types of suppliers visualizing the associations in the framework and illustrating the framework’s explicative power in (automotive) manufacturing. Furthermore, the case contradicts that supplier relations in the manufacturing phase are governed by little informal control, because the automaker highly values the role of trust building and social pressure. Most notably, a structured supplier team functions as a clan and establishes informal control among participating suppliers, which strengthens the automaker’s control on dyadic supplier relations.

Keywords: Management control; Supplier relationships; Manufacturing; Contingency theory; Case research; Automotive 2 1. Introduction In the current economic environment, characterised by globalisation and enhanced levels of competition, companies require an effective supply chain with inter-organizational relationships (IORs) to strive for sustainable competitive advantage. Not surprisingly, studies show that IORs have a high potential impact on organization performance (e. g. Anderson & Dekker, 2005). Literature, however, also argues that many IORs do not provide the expected benefits and are often terminated because of managing difficulties (Ireland, Hitt & Vaidynanath, 2002).

Academics often propose that lack of coordination and opportunistic behaviour of partners are the two main reasons for the relatively high relationship failure rate (e. g. Dekker, 2004). Hence, management control systems (MCSs) are argued to play a critical role in preventing such failure, by establishing governance mechanisms to control the relationship (Ireland et al. , 2002). The fundamental goal of MCSs is to influence decision making in attaining strategic objectives (Nixon & Burns, 2005).

In an inter-organizational setting, this implies creating bilateral incentives to pursue mutual goals. Already in the mid-nineties, scholars started calling for more attention for this topic (e.g. Hopwood, 1996; Otley, 1994), and have not stopped since (e. g. van der Meer-Kooistra & Vosselman, 2006). Consequently, inter-organisational MCSs have been studied from several angles, including outsourcing (e. g. Anderson, Glenn & Sedatole, 2000), inter-organizational cost management (e. g. Cooper & Slagmulder, 2004), partnerships (e. g. Seal, Berry, Cullen, Dunlop & Ahmed, 1999), strategic alliances (e. g. Dekker 2004), networks (e. g. Kajuter & Kulmala, 2005) and joint ventures (e.g.

Kamminga & van der MeerKooistra, 2007). Yet, the main emphasis was put on relational collaboration during the first stages of the supply chain, namely procurement, which involves the make-or-buy decision, partner selection and contract design, and R&D. Although this historical focus is certainly justified, management control in a later phase of the supply chain, namely manufacturing, remains relatively under-explored (Cooper & Slagmulder, 2004; Langfield-Smith & Smith, 2003).

However, purchased products and services for manufacturing account for more than 60% of the average company’s total costs (Degraeve & Roodhooft, 2001) and are subject to continuous improvement with suppliers, also requiring adequate management control. Therefore, this study illustrates how manufacturers design the MCS of supplier relations in the manufacturing phase of the supply chain, which we refer to as “manufacturer-supplier relationships” (MSRs). In other words, we abstract from 3 procurement and R&D influences.

1 Nevertheless, management control research on previous supply chain stages, offers a first theoretical insight into how a MCS for MSRs could look like. In particular, prior empirical research on IORs such as R&D collaboration (Cooper & Slagmulder, 2004), strategic alliances (Dekker 2004) and joint ventures (Kamminga & van der Meer-Kooistra, 2007) found MCSs that combine both formal controls, like outcome controls, and more informal controls, such as trust building. Also the execution of service outsourcing projects, like industrial maintenance (van der Meer-Kooistra & Vosselman, 2000), IT (Langfield-Smith & Smith, 2003) and accounting (Nicholson, Jones & Espenlaub, 2006) is governed by a combined MCS.

So if we assume these findings to hold for other IOR types (external validity) and neglect potential characteristic differences, MSRs could be expected to be governed by a combination of formal and informal control as well. Yet, by taking into account differences between MSRs and other types of IORs, the MCS design could be different. In that respect, we argue that manufacturing is more formal than procurement and R&D.

Indications for that argument and its consequences for management control can be found in the management control framework of Das & Teng (2001). Based on the variables in their framework2, task programmability and outcome measurability, it should be clear that for manufacturing both variable levels are high, or at least higher than in the case of procurement and R&D. Consequently, the framework indicates that formal controls are suited mechanisms to govern MSRs. This argument is strengthened by the type of knowledge usage in MSRs, for which organization literature provides a clear distinction between knowledge exploration and knowledge exploitation.

On the one hand, it is argued that the first supply chain phases, think of procurement and R&D, aim at knowledge exploration, while the later stages, like manufacturing, primarily 1 Obviously, procurement and R&D do impact the manufacturing phase. Yet, as our aim is refining supplier MCS design in the manufacturing phase, we deliberately exclude these influences. In terms of research methodology, this abstraction is put into operation by studying a MSR between a manufacturer facility and supplier facility only dealing with manufacturing, while procurement and R&D are handled by their respective mother companies (cf part three of this paper “research methodology”).

2 Although this framework was originally developed by Ouchi (1979) for use in MCS design within organizations, Das & Teng (2001) further adapted it for use in IORs. Task programmability refers to the degree to which managers understand the transformation process in which appropriate behaviour is to take place. Outcome measurability refers to the ability to measure outcome precisely and objectively.

When outcome measurability is high/low and task programmability is low/high, formal outcome/behaviour control should be set up to govern the relation. When both dimensions are low, informal control is preferable, but when both measures are high, both outcome and behaviour control are suited control mechanisms (Das & Teng, 2001). 4 aim at knowledge exploitation.

On the other hand, research shows that the exploration of knowledge is best governed by informal controls, while knowledge exploitation is most adequately controlled by formal controls (Bijlsma-Frankema & Costa, 2005). Thus, based on the characteristics of high task programmability, high outcome measurability and knowledge exploitation goals, MSRs could be expected to be governed by primarily formal controls with little informal controls. In other words, the literature offers different management control designs for MSRs regarding the informal control level.

Therefore, this study investigates how the MCS of MSRs is designed and how important informal controls are in that design, in particular in IORs between an original equipment manufacturer (OEM) and suppliers of outsourced manufacturing activities in the trend-setting automotive industry (cf Womack, Jones & Roos, 1990). An automobile is a complex product manufactured with thousands of components. Consequently, also this industry increasingly outsourced non-core activities and started relying on suppliers to create lower costs.

To that end, a variety of supply chain management practices has been implemented, such as lean supply and continuous improvement. Yet, these induce the need for appropriate management control structures and bi-directional communication to organize and manage the relation (Carr & Ng, 1995; Scannell, Vickery & Droge, 2000). In that respect, one particular automaker, namely Toyota, is known for partnering with suppliers, transferring its expertise to help suppliers and installing softer forms of control including trust.

To govern the search for continuous improvement in manufacturing, Toyota established the “Toyota Group” by means of a supplier association, an operations management consulting division and voluntary small group learning teams (Dyer & Nobeoka, 2000). However, practitioner literature (e. g. Automotive News/Automotive News Europe) describes several other automakers governing this search by heavily formalized supplier relations. Contrary to cooperation during procurement and R&D, manufacturing is argued to become much more demanding towards suppliers. Automakers increasingly transfer manufacturing risk and supply responsibility to first-tier suppliers, which results in suppliers delivering to very tight just-in-time and in-sequence schedules (Alford, Sackett & Nelder, 2000).

As a result, OEMs install formal controls and supplier improvement techniques, which alert suppliers to the importance of ameliorating supply performance at lower costs. Hence, also automotive practice shows evidence of high and low levels of informal control. Therefore, this study specifically investigates how the MCS of automotive MSRs is designed.

Yet, besides illustrating MCS design, this paper contributes to explaining MCS design of automotive 5 MSRs. To our knowledge, little inter-organizational management control research specifically investigated contingency theory’s explicative power in manufacturing. Naturally, several papers study influences on MCS design in production environments, like the impact of manufacturing flexibility (Abernethy & Lillis, 1995), customization and related interdependence (Bouwens & Abernethy, 2000), profit centre strategy (Lillis, 2002), production strategy, production technology and organization (van Veen-Dirks, 2006).

However, these studies investigate characteristics explaining MCS design in one organisation, while our study focuses on inter-organizational relations. To that end, we propose a refined theoretical contingency framework based on recent inter-organizational management control theory, but specifically adapted for the manufacturing stage. This framework proposes several contingencies determining the level of risk, which is governed by different levels of management control techniques. In order to illustrate the validity of the framework in practice and answer how and why automakers design their MCS, we perform an in depth case study of the relations between a facility (VCG) of the international OEM Volvo Cars and a selection of its first-tier supplier facilities.

The case study provides considerable evidence of three supplier types, namely batch, low value-added just-in-sequence and high value-added just-in-sequence suppliers, visualizing the associations in the framework between contingencies, risks and management controls. These controls include both formal and informal techniques, of which trust building and social pressure are highly valued. Most notably, VCG’s structured supplier team functions as a clan and establishes informal control among participating suppliers, which strengthens control on the OEM’s dyadic supplier relations. As our framework draws on case findings from other less formal IORs, it seems that our case findings offer more evidence of their external validity.

That way, the findings contradict that informal controls play a minor role in automotive MSRs. In particular, VCG’s MCS, combining both formal and informal controls, is argued to be designed specifically to improve supply performance. The remainder of this paper is organized as follows. In the second part, we develop the theoretical contingency framework. The third part describes the case research methodology.

The fourth part is the actual case study, which presents VCG, describes three supplier types by means of contingency levels and clarifies how VCG designed the MCS governing them. In the fifth part, we discuss our findings by comparing VCG’s management control with previous findings and elaborating on the significance of VCG’s supplier team. We conclude the paper with a summary of the main findings and some avenues for further research. 6 2. Theoretical framework In this part, we develop a theoretical contingency framework for MCS design of MSRs, which can be found in figure I. >Backup theory originated with the purpose of explaining the structure of organizations by simply particular instances.

Later, management accounting researchers adopted and additional developed the theory in order to make clear the shape of MCSs in organizations (e. g. Chenhall, 2003; Luft & Glasses, 2003). Therefore , contingency theory suits this study, concerning MCS type of MSRs as well as explicative parameters. The central concept of the framework is the level of risk a certain HELI runs. Inter-organizational management control theory suggests two types of risk, which usually result from five different situational antecedents, characterizing the MSR. Even though we simplify both risk types separately, we stress the integrative interpretation of contingencies collectively determining both levels of risk.

Subsequently, this risk is definitely governed by different supervision control tools, either using a large or a small part for casual control. several 2 . 1 . Performance risk The 1st risk type is performance risk, defined as the likelihood of not achieving the RC HELICOPTER objectives, in spite of satisfactory co-operation (Das & Teng, 2001). This type of risk is also known as “coordination requirements” (Dekker, 2005; Gulati & Singh, 1998) or “the mastery of events” (Tomkins, 2001). Since the MSR objective concerns manufacturing as many goods of the purchase book as possible, on time, with good quality at the lowest possible expense, performance risk is the risk of a source chain interruption disturbing the realisation on this goal.

Three contingencies related to technology maximize this risk, namely intricacy, task uncertainness and task interdependence (Chenhall, 2003). Yet as intricacy and process uncertainty are highly related (Chenhall, 2003), the framework does not include complexity separately (cf Dekker, 2004). several According to van Veen-Dirks (2006), most situational characteristics and MCS characteristics happen to be determined jointly instead of sequentially. Also Kamminga & truck der Meer-Kooistra (2007) propose that the effect of eventualities is certainly not determined by each antecedent consequently, but by way of a interaction. In addition , they suggest studying control as an integrative principle, in which most control measurements are integrated.

Consequently, do not propose one-on-one associations between one particular contingency, one specific kind of risk and one particular type of control, suggested to match that risk type. Instead, our style simultaneously studies the interactions between situational contingencies, risks and management control methods, as put forward by the 3 boxes of figure We. The containers of contingencies and hazards are come up with to stress all their interdependence and joint impact on management control.

7 Process uncertainty relates to variability in transformation responsibilities and the offered knowledge of methods for performing all those tasks (Chenhall, 2003). This situational attribute determines the measurability difficulty of end result and activities (Kamminga & van welcher Meer-Kooistra, 2007; van welcher MeerKooistra & Vosselman, 2000), which improves with increasing levels of complexness of both the delivered product and its detailed processes (Woodward, 1965). The first difficulty is related to additional value of the product and gradually boosts depending on perhaps the supplier delivers a standard aspect or a significant customized module (Cooper & Slagmulder, 2004).

The second difficulty regards the added value of the production method and displays the complexness of the supplier’s manufacturing procedures needed to properly produce and deliver products as needed. Task interdependence refers to the amount to which subactivities of the value creation procedure have been separation and made influenced by each other (Dekker, 2004). In MSRs, this interdependence can be sequential (Thompson, 1967)4, because the relation involves transferring the supplier’s end result to the manufacturer’s input procedure.

The level of continuous interdependence is definitely impacted by the dependence amount of the manufacturer’s operational performance on the source quality (timeliness and item quality). In addition, the interdependence level of a specific MSR is definitely influenced by the production flexibility required via both parties as well as the manufacturer’s not enough precise knowledge to perform actions previously carried out in-house. installment payments on your 2 . Relational risk The 2nd type of risk is relational risk, implying the likelihood of without having satisfactory cooperation because of opportunistic behaviour with the supplier, exemplified in shirking, cheating, distorting information and appropriating resources (Das and Teng, 2001).

This type of risk is also called “appropriation concerns” (Dekker, 2005; Gulati & Singh, 1998) or “the generation of trust” (Tomkins, 2001). Deal cost economics (TCE) theory5 proposes three contingencies that influence relational risk and subsequently identify appropriate control: asset specificity, environmental uncertainty and transaction frequency (Williamson, 1979). But, as the maker possesses no specific assets related to a certain supplier, for 4 Thompson (1967) determines three amounts of task interdependence from low to high, which influence the level of inter-organisational coordination and communication: pooled, sequential and reciprocal interdependence. 5 TCE argues that parties are merely boundedly logical and act opportunistically.

Consequently , the total cost of outsourcing is a sum of both the delivered component costs and the deal costs, which includes costs pertaining to negotiation, creating contracts, dexterity, control and risk of opportunistic behaviour (van der Meer-Kooistra & Vosselman, 2000). almost eight least certainly not in the production phase with the supply chain, there is no lock-in to supplier opportunistic behavior. 6 Therefore, unlike concern and purchase frequency, asset specificity will not influence supplier opportunistic behavior in MSRs and is not included in our theoretical framework. According to being a central contingency exploration concept, environmental uncertainty as well forms an effective characteristic of MSRs (Chenhall, 2003).

Particularly, this a contingency relates to standard market uncertainties and uncertainness about not known future contingencies (Kamminga & van jeder Meer-Kooistra, 2007; Langfield-Smith & Smith, 2003; van der Meer-Kooistra & Vosselman, 2000). Because manufacturer and dealer interact underneath these questions, both parties face changes with time, which require detailed agreements (Dekker, 2004). However , imperfect contract theory argues that there are present limitations in drawing up total contracts, since all foreseeable future contingencies can not be foreseen, are very expensive to foresee or are too expensive or impossible to contract after (Gietzmann, 1996).

Consequently, the combination of concern and unfinished contracts leads to potential opportunistic behaviour from the supplier. In respect to TCE, more recurrent interactions decrease the possibility of opportunistic behaviour (Williamson, 1979). Therefore , to preserve an optimistic relation between contingencies and relational risk, we could utilize infrequency as contingency changing (e. g. Anderson & Dekker, 2005).

Yet, even as study MSRs with no link with commercial discussions determining the contract term, we are the antecedent relational stability goal. This backup relates to the manufacturer’s purpose of continued foreseeable future interactions with the supplier and serves to develop bilateral commitment (Cooper & Slagmulder, 2004). We believe MSRs, in which relational stability is considered necessary and thus aspired by the manufacturer, are subject to higher relational risk.

For example , if distributor switching costs are excessive due to large interdependence, high commitment through the manufacturer may incite the supplier to accept lower quality or delivery performance. Besides including a transaction environment characteristic and a transaction characteristic, we also incorporate a deal party attribute (Langfield-Smith & Smith, 2003; van der Meer-Kooistra & Vosselman, 2000). In particular, we all include distributor knowledge importance, which involves the degree of importance for the maker to know the supplier also to be able to examine characteristics, including management proficiency, trustworthiness and willingness to share proprietary know-how. Usually, this kind of assessment is performed by means of first hand or second-hand experience.

Hence, we argue that when the six Obviously, suppliers do have specific possessions in place, rendering them vulnerable to opportunistic actions from the part of the manufacturer. Yet , this examine and the produced theoretical structure only focus on supplier opportunistic behaviour. 9 importance of provider knowledge rises, the risk to get insufficient or perhaps erroneous assessment and subsequent supplier opportunistic behaviour boosts. 2 . several. Management control system Even though MCSs have been conceptualised and categorised in numerous ways, the present management control literature features reached a consensus on two types of management regulates, namely formal and relaxed control devices (Langfield-Smith & Smith, 2003).

Obviously, learning the usage of casual controls compared to formal regulates requires equally control types to be contained in the theoretical framework. Formal settings are clearly set up to coordinate this helicopter and include end result controls and behaviour settings. Outcome control involves the measurement and evaluation in the outcomes of operations against pre-defined results or objectives, by using a lot of performance way of measuring techniques (Ouchi, 1979; Dekker, 2004). The main outcome metrics for MSRs are percentage of disorders, quality of delivered products and on period delivery of products (Gunasekaran, Patel & McGaughey, 2004).

Behavioural control concerns the standards and real surveillance of behaviour, by way of rules and standard procedures (Ouchi, 1979). Additionally , conduct control comes with evaluating conformity with pre-specified planning, types of procedures, rules and regulations (Dekker, 2004). Simple controls (also called interpersonal controls) aren’t explicitly designed, but are expanded out of shared rules and principles, shaped simply by frequent discussion, meetings and management attitude (Ouchi, lates 1970s; Merchant, 1998). Especially trust building7 provides emerged like a very important casual control device in inter-organizational MCSs (e. g. Dekker, 2004).

Although formal settings reduce the risk by changing the bonuses for underperformance and opportunistic behaviour, trust mitigates risk by minimizing the fear of underperformance and opportunistic conduct to occur (Das and Teng 2001). Therefore , we incorporate three types of inter-organizational trust building, namely building contractual trust, competence trust and goodwill trust (Sako, 1992). almost eight Contractual trust results from previous contractual associations or grows during the RC HELICOPTER 7 Rousseau, Sitkin, Burt & Camerer (1998, g. 394). Establish trust since “a internal state composed of the purpose to accept vulnerability, based upon great expectations of the intentions or perhaps behaviour of another”.

According to these people “trust is not a behavior (cooperation), or a choice (e. g. having a risk), but the underlying internal condition which could cause or result from these kinds of actions” (Rousseau et al., 1998, g. 395; italics added). As a result, trust in alone can not be a control tool in the MCS of MSRs. Instead, the control tactics are the activities the manufacturer performs to create and create trust in the supplier. almost eight Contractual trust is based on the expectation the fact that supplier could keep promises and comply with contracts made, if these10 (Sako, 1992). Skills trust is usually increased by simply previous very good performance, i. e. high quality and delivery results.

Furthermore, competence trust results from buying activities from reputable suppliers or shifting competences to the supplier. In addition , product and process certification and procedure standardisation boost competence trust (Sako, 1992). To develop goodwill trust, Sako (1992) recognizes shared principles and best practice rules as necessary, but insufficient, while transaction get-togethers also need to demonstrate willingness to get indebted to one another. Gulati (1995) stresses creating and growing an inter-organizational bond of friendship to trigger goodwill trust (Gulati, 1995).

Other possible goodwill trust initiators are active goal setting, trustworthiness reputation and a long term romance (Dekker, 2004). Next to these specific trust building components, the materials also offers an important total trust building technique, namely close interaction, based on shared interests and established by way of joint making decisions and joint problem solving via a joint romantic relationship board and joint process groups (Das & Teng, 2001; Dekker, 2004). 9 Besides trust building, MSRs can be ruled by another kind of informal control, which Ouchi (1979) refers to as clan control.

Based on shared norms, values and one common inter-organizational target, supplier behavior in the interest of the MSR will be sturdy, because suppliers are enthusiastic to achieve the objective (Das & Teng, 2001). This motivation results from inter-organisational social pressure (Spekle, 2001) exerted by manufacturer, which usually we believe is definitely social control in its exacto meaning. As a result of high interdependence between manufacturer and supplier, below standard results of the supplier directly impact the manufacturer’s performance.

Consequently, dealer management is definitely unpleasantly confronted with manufacturer administration and looks personal embarrassment because of the mistake. Additionally , distributor management operates the risk of their very own reputation and private relationship with interacting manufacturer management obtaining injured. As well Dyer & Singh (1998) mention reputation and personal contact as interpersonal control components, besides rules and trust.

By acting as negatively valued sociable sanctions (Bijlsma- are contractually stipulated or not. Proficiency trust issues the expectation that the distributor possesses the mandatory technical and managerial competences to deliver the order while agreed.

Goodwill trust relation the requirement that the dealer shares a commitment, with all the willingness to perform activities beneficial to the MSR, yet possibly nor in the supplier’s interest neither required by contract (Sako, 1992). being unfaithful Other potential overall trust building techniques in a MSR are interaction via regular inter-organizational meetings (Chalos & O’Connor, 2004; Das & Teng, 2001), information sharing of troublesome areas (Chalos & O’Connor, 2004), supplier development activities (Carr & Ng, 1995), networking (Das & Teng, 2001), training (Chalos & O’Connor, 2004) plus the extent where the employees of both parties understand the factors making sure the collaboration’s future success (Chalos & O’Connor, 2004). 11 Frankema & Playa, 2005), these types of social outcomes create bonuses for adequate supplier efficiency and give supplier opportunism hard to sustain (Spekle, 2001).

Whenever we assume functional snags to become day-today organization in MSRs, this social pressure makes an informal methods to mitigate risk in MSRs. 3. Research methodology three or more. 1 . Case study research The empirical component to this daily news is based on an in depth case study, which is an investigation of a real life phenomenon, relying on multiple sources of evidence and taking advantage of prior advancement theoretical selections (Yin, 1994). This analysis method matches our exploration that concerns refining existing interorganizational management control theory for the relatively under-explored manufacturing period of the supply chain.

10 According to Keating (1995), such theory refinement needs a clear assumptive starting point, supplemented with visibility to the breakthrough discovery of unexpected findings. To balance these theory add-on and distance requirements, we developed a theoretical platform to guide the data collection, yet at the same time used data collection techniques allowing for sufficient openness. Furthermore, a lot of interorganizational managing control circumstance studies (e. g. Cooper & Slagmulder, 2004; Dekker, 2004; Kamminga & van der Meer-Kooistra, 2007; Nicholson et ing., 2006) enhance the discussion that cases allow investigating in detail the structure and influencing parameters of IORs (Sartorius & Kirsten, 2005).

These research shows that theory refinement of MCS design can be properly investigated by way of qualitative analysis. The sociable meaning of inter-organizational MCSs, especially about the use and interpretation of informal regulates, and the following behaviour of companies and employees is extremely complex. Thus if we only skim the, we will never discover how several parties interpret certain IORs and perhaps the MCS is designed accordingly.

This argument not only justifies the selection for a example, but likewise forms the key reason why 10 Our research corresponds to investigating a complex phenomenon inside its actual life context of which empirical data is rather limited, and addressing how and why concerns about this trend, for which example research is best suited (Eisenhardt, 1989; Yin, 1994). Furthermore, Keating (1995) argues that circumstance studies fit three goals and that each of our theory refinement goal signifies the middle earth between theory discovery (describing novel phenomena) and theory refutation (disconfirming well particular theories by simply bringing in unfavorable evidence).

Specifically, our circumstance research is from the theory illustration type, telling “previously unappreciated aspects of management accounting practice” and identifying “aspects with the illustrated theory that require reformulation or more strenuous specification” (Keating, 1995, g. 71). Without a doubt, the goal of this kind of study is to illustrate just how manufacturers design and style supplier MCSs, to what degree this style differs coming from designs in other IORs and how the design may be explained by ways of a especially adapted theoretical framework. doze why associated with this research is requested (e. g. Langfield-Smith & Johnson, 2003; Dekker, 2004; van der MeerKooistra & Vosselman, 2006). several.

2 . Product of analysis In most inter-organizational research, the unit of analysis is one dyadic relation between two independent celebrations (van welcher Meer-Kooistra & Vosselman, 2006). Since there exist distinct dyadic MSRs within a single manufacturer and study MCS’s dependence on marriage contingencies, our unit of research consists of specific MSRs. Dyer & Singh (1998) explicitly propose the “relational view”, focusing on the buyer-supplier dyad, as opposed to the “industry structure view” and “resource based view”, when analyzing cooperative approach and sources of inter-organizational competitive advantage.

In order to answer the proposed study questions regarding MSR MCS design, we analyzed most relations after the manufacturer acquired decided to delegate the production activities. Put simply, we addressed neither the make-or-buy decision nor related commercial transactions, but collected data right away of creation onwards. Furthermore, we only gathered data on common MCSs intended for MSRs with good operational performance.

3. 3. Circumstance company selection The selection of the situation company as well as its suppliers was influenced by two assortment concerns: assumptive sampling (Eisenhardt, 1989), and open and versatile access to.