Paper info: Supply Risk Management from a Transaction Cost and Social Exchange Theory Perspective
Title
Supply Risk Management from a Transaction Cost and Social Exchange Theory Perspective
Authors
Schiele Holger
University of Twente
Netherlands
Place of Publication
The paper was published at the 27th IMP-conference in Glasgow, Scotland in 2011.
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Abstract
Abstract
Supply risk management gained prominence over the last decade, both in the academic
discourse and in practical application. This research examines the influence of Transaction
Cost characteristics -behavioral uncertainty, environmental uncertainty and asset specificityon
supply risk management performance. We also identify two antecedents of the transaction
cost constructs based on social exchange theory: dependency and preferred customer status.
We used survey data to discover a positive influence of supplier’s asset specificity on supply
risk management performance, and that behavioral uncertainty negatively influences supply
risk management performance. Furthermore, we showed that both dependency and preferred
customer status have a significant effect on supplier’s asset specificity and behavioral
uncertainty.
With this research we developed a framework to integrate transaction cost theory and social
exchange theory to investigate supply risk management, thereby contributing to the emerging
literature on this combination as a more complete governance mechanism to manage supply
relationships. We also extend the existing knowledge on transaction cost theory by showing
that from a supply risk management point of view, behavioral uncertainty is by far the most
important determinant to consider. In order to manage supply risks effectively companies
should avoid dependency, though its negative effects can to some degree be compensated by
preferred customer status, as this will increase supplier’s specific investments and lower
behavioral uncertainty.
Keywords: transaction cost theory, social exchange theory, supply risk management, supply
chain risk management
Supply risk management gained prominence over the last decade, both in the academic
discourse and in practical application. This research examines the influence of Transaction
Cost characteristics -behavioral uncertainty, environmental uncertainty and asset specificityon
supply risk management performance. We also identify two antecedents of the transaction
cost constructs based on social exchange theory: dependency and preferred customer status.
We used survey data to discover a positive influence of supplier’s asset specificity on supply
risk management performance, and that behavioral uncertainty negatively influences supply
risk management performance. Furthermore, we showed that both dependency and preferred
customer status have a significant effect on supplier’s asset specificity and behavioral
uncertainty.
With this research we developed a framework to integrate transaction cost theory and social
exchange theory to investigate supply risk management, thereby contributing to the emerging
literature on this combination as a more complete governance mechanism to manage supply
relationships. We also extend the existing knowledge on transaction cost theory by showing
that from a supply risk management point of view, behavioral uncertainty is by far the most
important determinant to consider. In order to manage supply risks effectively companies
should avoid dependency, though its negative effects can to some degree be compensated by
preferred customer status, as this will increase supplier’s specific investments and lower
behavioral uncertainty.
Keywords: transaction cost theory, social exchange theory, supply risk management, supply
chain risk management