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Upstream and downstream dyad governance within the network structures: Creating supply chain governance for the customized products

Abstract

Drawing upon the tenets of Relational Contracting Theory (RCT), augmented by Transaction Cost Economics (TCE) and Social Capital Theory (SCT), this paper seeks to determine the role of supply chain governance, composed of both upstream and downstream dyad governance for customized products within the network established by three-tier structures. The empirical findings show that supply chain governance within the three-tier structures can be composed of upstream and downstream dyad governance. Specifically, upstream dyad governance mainly consists of market and nonmarket unilateral governance, while downstream dyad is organized by the portion of market and nonmarket (unilateral and bilateral) governance. The research also demonstrates that both upstream and downstream dyad governance differentiate supply chain governance within the three-tier structure. Interestingly, however, a comparison of both upstream and downstream dyads shows consistency in regard to governance. Likewise, supply chain governance requires an admixture of nonmarket governance (unilateral and bilateral) to ensure the desired level of product customization.

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Acknowledgements

The study was financed by the National Science Centre as a research project no. 2015/18/M/HS4/00388.

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Correspondence to Natalia Szozda.

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Appendix A

Appendix A

An Excerpt of the Questionnaire

Categories No./Abbr. Question References
Please rate mechanisms of network governance with reference to company B in the following areas: (1-‘strongly disagree’, 3-‘neutral’, 5-‘strongly agree’)
1. Market Governance 1.1. MG_1 The price is a predominant factor that determines my collaboration with B Krause et al. (2000), Kohtamaki et al. (2008); Kohtomaki (2010)
  1.2. MG_2 My company is very active in searching for new partners who can potentially substitute B
  1.3. MG_3 My company can easily switch to another partner, dropping out the collaboration with B
  1.4. MG_4 The goods delivered by my company to B can be easily delivered by my competitors
  1.5. MG_5 My company keeps reminding our partner that it can be easily replaced, if it does not offer good deals
2. Unilateral Non-market Governance 2.1. UG_1 My company very actively interfere in the operations performed by B Bello and Gilliland (1997), Cannon and Perreault (1999), Abdi and Aulakh (2012)
  2.2. UG_2 My company controls B using certain formal methods
  2.3. UG_3 My company would be exposed to high costs when switching B
  2.4. UG_4 My company provides B with formal guidelines concerning how to solve problems and/or deal with disruptions.
  2.5. UG_5 My company signs very detailed contracts concerning collaboration with B
  2.6. UG_6 My company resolves ongoing disputes with B by referring to clauses in signed contracts
  2.7. UG_7 My company sticks precisely to formal rules when collaborating with B
3. Bilateral Non-market Governance 3.1. BG_1 My company strives to build trust and sense of community by organizing meetings and trainings to encourage B to share empathy and mutual understanding Kohtamaki (2010), Liu et al. (2012)
  3.2. BG_2 My company maintains a discussion with B which concerns all relevant issues of its operations and strategy
  3.3. BG_3 My company keeps trying to develop trust with B
  3.4. BG_4 Disruptions in collaboration with B are productively resolved in the spirit of mutual understanding
Please rate the level of product customization in the following areas: (1-‘strongly disagree’, 3-‘neutral’, 5-‘strongly agree’)
4. Customized product offering 4.1. CP_1 My company adjusts its product offering to the customer requirements Blecker and Abdelkafi (2006), Gilmore and Pine (1997)
  4.2.CP_2 The products delivered by my company are highly complex
  4.3. CP_3 The product offering of my company is competitive
  4.4. CP_4 My company makes the product to order in terms of time and quantity Piller and Tseng (2010), Lampel and Mintzberg (1996)
  4.5. CP_5 My company collaborates with its partners in product designing
  4.6. CP_6 The lead time for delivering the standard products by my company is shorter (does not exceed 2 weeks) Xia and Rajagopalan (2009), Blecker and Abdelkafi (2006), Chandra and Kamrani (2004)
  4.7. CP_7 The lead time for delivering the customized products by my company is longer (exceeds 2 weeks)
  4.8. CP_8 The goods delivered by my company can be considered to be innovative Zhang et al. (2015a, b), Qi et al. (2020)
  4.9. CP_9 My company implements the product innovation at least once per year (improvement of existing goods or development of innovative products)
  4.10 CP_10 The number of new products yearly introduced to the market is large Smith et al. (2013), Chandra and Kamrani (2004)
  4.11 CP_11 The number of products withdrawn from the market is large
  4.12 CP_12 My company is usually the first one in introducing new products to the market
  4.13 CP_13 The lifecycle of products delivered by my company is short and do not exceed 1 year
  4.14 CP_14 The diversity of product offering in my company is large Um et al. (2017)
  4.15 CP_15 My company delivers many different products

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Szozda, N., Świerczek, A. Upstream and downstream dyad governance within the network structures: Creating supply chain governance for the customized products. Electron Markets (2022). https://doi.org/10.1007/s12525-022-00533-3

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  • DOI: https://doi.org/10.1007/s12525-022-00533-3

Keywords

  • Supply chain
  • Governance
  • Product customization
  • Network

JEL

  • L81
  • O33
  • D85