How buyers shape supplier performance: Can governance skills substitute for technical expertise in managing out-sourcing relationships?
This paper compares how a firm's technical expertise and its supplier governance skills influence suppliers' performance. The key question is whether governance skills, including relational supply management capabilities and the use of formal contracts, can substitute for technical skills when firms out-source goods and services. The answer to this question has gained importance as firms increasingly turn to out-sourcing relationships in order to reduce costs, increase quality, and improve their innovativeness. We find that governance expertise leads to superior buyer-supplier cooperation, while a buyer's own technical expertise strongly influences supplier quality and pricing.
Parmigiani, A; Mitchell, W
Academy of Management 2005 Annual Meeting: a New Vision of Management in the 21st Century, Aom 2005