The Hollow Corporation Revisited: Can Governance Mechanisms Substitute for Technical Expertise in Managing Buyer-Supplier Relationships?

European Management Review, Forthcoming

50 Pages Posted: 27 Oct 2009

See all articles by Anne E. Parmigiani

Anne E. Parmigiani

University of Oregon

Will Mitchell

Duke University - Fuqua School of Business; University of Toronto - Rotman School of Management

Date Written: October 20, 2009

Abstract

This paper considers how a firm's system of exchange skills including internal technical expertise and supplier governance mechanisms influence supplier performance, both independently and jointly. The core question is whether inter-firm governance mechanisms, including both relational and contractual mechanisms, can substitute for a firm’s internal technical skills in maintaining supplier performance or, alternatively, whether a firm risks hollowing itself out by de-emphasizing internal expertise when it outsources. The arguments build on the capabilities, inter-organizational governance, and supply management literature. We find that internal technical expertise influences multiple dimensions of supplier performance, including cooperation, price, quality, delivery, and communication, while relational governance also affects supplier performance though in a more focused way. In turn, combinations of technical expertise, relational governance, and contractual agreements jointly affect supplier performance. Thus, firms generate superior supplier performance if they retain internal technical skills as well as increase their use of external governance mechanisms to manage buyer-supplier relationships.

Keywords: supply management, purchasing, buyer-supplier relationship, technology management, resource based view

JEL Classification: D23

Suggested Citation

Parmigiani, Anne E. and Mitchell, Will, The Hollow Corporation Revisited: Can Governance Mechanisms Substitute for Technical Expertise in Managing Buyer-Supplier Relationships? (October 20, 2009). European Management Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1494477

Anne E. Parmigiani (Contact Author)

University of Oregon ( email )

1280 University of Oregon
Eugene, OR 97403
United States

Will Mitchell

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

University of Toronto - Rotman School of Management

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
89
Abstract Views
1,145
rank
386,037
PlumX Metrics