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Inter-firm dependence, environmental uncertainty and vertical co-ordination in industrial buyer-seller relationships

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  • Buvik, Arnt
  • Grønhaug, Kjell

Abstract

Effective co-ordination of business-to-business relationships is an important determinant of firms' competitiveness under changing market conditions. Drawing on transaction cost analysis (TCA) and resource-dependence theory (RDT), the authors analyse the effects of inter-firm dependence and environmental uncertainty on vertical co-ordination in industrial purchasing relationships. Analysis of data from a survey of 157 industrial buyers of items repetitively used in production shows that the RDT-predicted association between environmental uncertainty and vertical co-ordination is highly contingent on the magnitude of the present safeguarding problem in supplier relationships. When asset specificity is modest, the safeguarding problem is trivial and substantial environmental uncertainty induces higher inter-firm co-ordination in order to handle the need for environmental adaptation. This pattern of inter-firm organisation is significantly modified as asset specificity increases and imposes trading hazards. Under conditions with substantial asset specificity, increased environmental uncertainty actually undermines inter-firm co-ordination. Implications for theory and practice in business-to-business relationships are highlighted.

Suggested Citation

  • Buvik, Arnt & Grønhaug, Kjell, 2000. "Inter-firm dependence, environmental uncertainty and vertical co-ordination in industrial buyer-seller relationships," Omega, Elsevier, vol. 28(4), pages 445-454, August.
    • Handle: RePEc:eee:jomega:v:28:y:2000:i:4:p:445-454
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    Cited by:

    1. Shaohan Cai & Minjoon Jun & Zhilin Yang, 2017. "The Effects of Boundary Spanners’ Personal Relationships on Interfirm Collaboration and Conflict: A Study of the Role of Guanxi in China," Journal of Supply Chain Management, Institute for Supply Management, vol. 53(3), pages 19-40, July.
    2. Gërdoçi, Blendi & Skreli, Engjell & Imami, Drini, 2016. "Determinants of Sustainable Relationships in the Albanian Apple Production Sector," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 7(1), pages 1-16, February.
    3. Yang, Jie & Yu, Guangsheng & Liu, Mingyu & Xie, Hongming & Liu, Haiwei, 2018. "Disentangling the impact of cost transparency on cooperation efficiency in exchange partnerships," International Journal of Production Economics, Elsevier, vol. 197(C), pages 27-34.
    4. Li, Wenli & Humphreys, Paul K. & Yeung, Andy C.L. & Edwin Cheng, T.C., 2007. "The impact of specific supplier development efforts on buyer competitive advantage: an empirical model," International Journal of Production Economics, Elsevier, vol. 106(1), pages 230-247, March.
    5. Sanner, Leif, 2005. "Dependence and trust between suppliers and industrial customers," Working Papers 2005:6, Örebro University, School of Business.
    6. Roden, Sinéad & Lawson, Benn, 2014. "Developing social capital in buyer–supplier relationships: The contingent effect of relationship-specific adaptations," International Journal of Production Economics, Elsevier, vol. 151(C), pages 89-99.
    7. Rod B. McNaughton & Brian Paul Cozzarin, 2014. "Inter-organizational linkages and resource dependence," Cogent Economics & Finance, Taylor & Francis Journals, vol. 2(1), pages 1-18, December.
    8. Sanner, Leif, 2005. "After outsourcing – the outsourced unit: Dependence, capabilities and strategy," Working Papers 2005:2, Örebro University, School of Business.
    9. Ashish Sood & V. Kumar & Shaphali Gupta, 2023. "Modeling the antecedents of multi-generational services adoption behavior of clients across countries: The role of mindset metrics," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(9), pages 1661-1686, December.
    10. D. Vandaele & P. Gemmel, 2007. "Dealing with Business Service Transactions after the Sourcing Decision: Influence of Contract and Uncertainty," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 07/432, Ghent University, Faculty of Economics and Business Administration.

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