Safeguarding mechanisms in a supply chain network
| Date | 01 July 2006 |
| Pages | 759-777 |
| DOI | https://doi.org/10.1108/02635570610671461 |
| Published date | 01 July 2006 |
| Author | Pierre‐Majorique Léger,Luc Cassivi,Pierre Hadaya,Olivier Caya |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Safeguarding mechanisms in
a supply chain network
Pierre-Majorique Le
´ger
Department of Information Technologies, HEC Montre
´al, Canada
Luc Cassivi
Department of Management and Technology, Universite
´du Que
´bec a
`Montre
´al,
Canada
Pierre Hadaya
Department of MIS and Quantitative Methods, Universite
´de Sherbrooke,
Canada, and
Olivier Caya
Faculty of Management, McGill University and Universite
´de Sherbrooke,
Canada
Abstract
Purpose – Building on the transaction cost theory and power structure literature, this paper aims to
investigate the extent to which firms use two safeguarding mechanisms (supply chain relational
investments and electronic collaboration) in different network dependency contexts in order to protect
their portfolios of business relationships.
Design/methodology/approach – Empirical evidence is gathered though a survey data conducted
with 159 firms in the wireless communication sector. The paper tests the assumption that the two
safeguarding mechanisms are used to a greater extent in interdependency-intensive networks than in
other supply chain contexts.
Findings – This empirical study suggests that: in a network-dependent context, relational
investments allow firms to safeguard their portfolios of relationships; electronic collaboration seems
to be a safeguarding mechanism for firms in downstream-dependent network contexts; in general,
firms appear to use both relational investments and electronic collaboration to manage their
relationships in a supply chain network; and the knowledge-based theory may explain the strong
relationship between upstream and downstream use of electronic collaboration.
Research limitations/implications – Overall, the present study complements the extant literature
on supply chain management and inter-firm electronic collaboration by showing how an important
structural characteristic of supply chain networks (i.e. dependency) operates on the choice of using two
key safeguarding mechanisms.
Practical implications – Results stress the importance of these safeguarding mecha nisms in joint
actions such as collaborative planning, forecasting and replenishment.
Originality/value – The paper addresses interdependencies from a network perspective which
encompasses the firms’ complete portfolio of relationships.
Keywords Supply chain management, Supplier relations,Communication, Electronic media
Paper type Research paper
Introduction
To maintain their competitiveness and ensure their access to world-class competencies,
firms often need to break down their business boundaries and team up with business
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Safeguarding
mechanisms
759
Industrial Management & Data
Systems
Vol. 106 No. 6, 2006
pp. 759-777
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635570610671461
partners to create value. Although these emerging extended organizational structures
do generate benefits, doing business in a network context involves an increasing
number of joint business decisions and actions among the supply chain partners (Reed
and Walsh, 2002; Sahay, 2003). In such supply chain networks, the interactions among
the various decision-makers and the underlying dynamic of the supply chain become
increasingly complex (Nagurney et al., 2005; Sivadasan et al., 2006), creating a context
in which no firm can operate intotal isolation from the rest of its network.
In this context, the development and the safeguarding of firms’ portfolios of
business relationships become increasingly strategic activities. Bantham et al. (2003)
define a supply chain network as an interdependent system of firms and suggest that
this interdependency influences the way relationships are managed within the
network. Thus, mechanisms are set up to safeguard against opportunistic behaviors
that might undermine key relationships, especially the relationships on which the firm
depends for the success of its operations.
Building on the transaction cost theory and power structure literature, this paper
investigates two safeguarding mechanisms that firms may use in supply chain
networks in order to safeguard their portfolios of business relationships. Supply chain
relational investments, defined as the investments (in time and money) made to
support interorganizational relationships within the supply chain network, constitute
the first safeguarding mechanism. Furthermore, with network boundaries that need to
be better controlled, firms will look for increased information exchanges and more
intense collaborative relationships with important partners, which constitute the
second safeguarding mechanism. Several authors have recently provided empirical
evidence of the growing use of e-collaboration tools to support supply chain
collaborative activities such as supply chain planning, supply chain execution and
collaborative product development (Fliedner, 2003; McIvor et al., 2003).
The objective of this paper is to demonstrate that the above-mentioned
safeguarding mechanisms – relational investments and e-collaboration – are used
to a greater extent in interdependency-intensive networks than in other supply chain
contexts. The main theoretical concepts are introduced in section Theoretical context.
The next section briefly describes the methodology used in this research initiative,
while Results and analysis section presents the analysis of the results and Discussion
section offers a brief discussion of the general results. Finally, we conclude with our
research implications and proposed future research initiatives.
Theoretical context
Interdependency in supply chain networks
In light of the new business opportunities arising from information techno logies,
several traditional industry value chains are rapidly moving toward supply chain
networks (Caputo et al., 2004; Nagurney et al., 2005). A supply chain network
incorporates all of the value-adding stakeholders involved in activities such as the
development, production and commercialization of a product or service (Hakansson
and Snehota, 1989; Nagurney et al., 2005). A firm positioned in a supply chain network
must manage interactions in both upstream and downstream segments of this network
(Andersen and Christensen, 2005). The firm’s upstream network includes its suppliers
and all of the suppliers’ upstream partners, whereas the downstream network
comprises the firm’s customers as well as all of the customers’ downstream
IMDS
106,6
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