The influence of relational experience and contractual governance on the negotiation strategy in buyer-supplier disputes

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Lumineau, Fabrice ; Henderson, James (2012)
  • Subject: D23 - Organizational Behavior ; Transaction Costs ; Property Rights | L14 - Transactional Relationships ; Contracts and Reputation ; Networks | L22 - Firm Organization and Market Structure | D74 - Conflict ; Conflict Resolution ; Alliances ; Revolutions | K40 - General | D21 - Firm Behavior: Theory | Buyer-supplier relationships; contractual governance; relational experience; supply chain governance; negotiation; dispute
    • jel: jel:D21 | jel:D74 | jel:K40 | jel:D23 | jel:L22 | jel:L14

This paper theoretically refines and empirically extends the debate on the type of interplay between relational experience and contractual governance in an under-researched area: supply chain disputes. We define relational experience as either cooperative or competitive; distinguish between control and coordination functions of contractual governance; and assess their interplay on the negotiation strategy used in disputes. Using a unique data set of buyer-supplier disputes, we find, in particular, that increasing contractual control governance weakens the positive effect of cooperative relational experience on cooperative negotiation strategy. However, increasing contractual control governance for a buyer-supplier dyad with competitive relational experience will increase cooperative negotiation strategy. Contractual coordination governance reinforces the positive effect of cooperative relational experience. Through this study, we reach a better understanding of how and when contractual and relational governance dimensions interact; rather than whether they act as substitutes or complements as has been studied in prior research. We discuss the implications of these findings for the field of supply chain management.
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