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From Transaction Cost Containment to Relationship Commitment: An Integrative Perspective of Buyer-Supplier Relationship Governance

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  • Khuram Shahzad

    (University of Vaasa, Department of Production, Finland)

Abstract

Based on transaction cost economics (TCE) and social exchange theory (SET), we investigate the significance of economic (i.e. contract completeness and symmetric dependence) and sociological (i.e. trust and communication) control mechanisms in minimizing transaction cost and enhancing relationship commitment in buyer-supplier relationship. The integrated research model is accessed using quantitative data from 170 buyer-supplier relationships established by Finnish SMEs. Structural equation modelling approach is utilized to analyse the data and results show that governance mechanisms have more effective role in minimizing transaction cost whereas sociological mechanisms enhance relationship commitment more effectively. Further, intriguing findings emerged regarding the interplay effects of economic and sociological governance mechanisms in relation with transaction cost and relationship commitment.

Suggested Citation

  • Khuram Shahzad, 2017. "From Transaction Cost Containment to Relationship Commitment: An Integrative Perspective of Buyer-Supplier Relationship Governance," MIC 2017: Managing the Global Economy; Proceedings of the Joint International Conference, Monastier di Treviso, Italy, 24–27 May 2017,, University of Primorska Press.
    • Handle: RePEc:prp:micp17:211-221
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    References listed on IDEAS

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