Beyond the Contract: Managing Risk in Supply Chain Relations

Posted: 24 Apr 2012 Last revised: 3 Aug 2015

See all articles by Henri C. Dekker

Henri C. Dekker

VU University Amsterdam

Junya Sakaguchi

Kansai University

Takaharu Kawai

Doshisha University - Faculty of Commerce

Date Written: March 26, 2013

Abstract

As a consequence of the development of intensified relations with suppliers, for many firms the supply chain has become a significant source of risk exposure. In this paper we examine firms’ use of control practices to manage risks associated with intensified collaboration with supply chain partners. Specifically, we examine how buyers manage risks associated with interfirm transactions through their choice of supply partner, in terms of perceived goodwill and competence trust, and their use of multiple interrelated supply chain management (SCM) control practices. These control practices include contractual contingency planning, performance target setting, operational reviews, information sharing, supplier support and joint problem solving. We collect survey data from Japanese manufacturing firms about their relations with part suppliers to test hypotheses about the associations between transaction risks, selection of trusted suppliers and use of SCM practices. Our results support that transaction characteristics that are at the basis of transaction risks significantly affect the selection of trusted partners to collaborate with as well as their use of various control practices to manage relationships. We also find that in particular competence trust facilitates the use of control practices to support effective SCM.

Keywords: supply chain management, risk, management control

JEL Classification: M4

Suggested Citation

Dekker, Henri C. and Sakaguchi, Junya and Kawai, Takaharu, Beyond the Contract: Managing Risk in Supply Chain Relations (March 26, 2013). Dekker, H.C., Sakaguchi, J. & Kawai, T. (2013). Beyond the contract: managing risk in supply chain relations. Management Accounting Research, 24, 122-139., Available at SSRN: https://ssrn.com/abstract=2044562 or http://dx.doi.org/10.2139/ssrn.2044562

Henri C. Dekker (Contact Author)

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, 1081 HV
Netherlands

Junya Sakaguchi

Kansai University ( email )

3-3-35 Yamatecho
Osaka, 564-8680
Japan

Takaharu Kawai

Doshisha University - Faculty of Commerce ( email )

Karasuma Imadegawa
Kamigyo-ku
Kyoto, Kyoto 602-8580
Japan

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