The Influence of Relational Experience and Contractual Governance on the Negotiation Strategy in Buyer-Supplier Disputes

Journal of Operations Management, 2012, 30(5): 382-395

52 Pages Posted: 5 May 2012 Last revised: 4 Feb 2016

Date Written: May 4, 2012

Abstract

This paper theoretically refines and empirically extends the debate on the type of interplay between relational experience and contractual governance in an under-researched area: supply chain disputes. We define relational experience as either cooperative or competitive; distinguish between control and coordination functions of contractual governance; and assess their interplay on the negotiation strategy used in disputes. Using a unique data set of buyer-supplier disputes, we find, in particular, that increasing contractual control governance weakens the positive effect of cooperative relational experience on cooperative negotiation strategy. However, increasing contractual control governance for a buyer-supplier dyad with competitive relational experience will increase cooperative negotiation strategy. Contractual coordination governance reinforces the positive effect of cooperative relational experience. Through this study, we reach a better understanding of how and when contractual and relational governance dimensions interact; rather than whether they act as substitutes or complements as has been studied in prior research. We discuss the implications of these findings for the field of supply chain management.

Keywords: Buyer-supplier relationships, contractual governance, relational experience, supply chain governance, negotiation, dispute

JEL Classification: D21, D23, D74, K40, L14, L22

Suggested Citation

Lumineau, Fabrice and Henderson, James E., The Influence of Relational Experience and Contractual Governance on the Negotiation Strategy in Buyer-Supplier Disputes (May 4, 2012). Journal of Operations Management, 2012, 30(5): 382-395. Available at SSRN: https://ssrn.com/abstract=2051171

Fabrice Lumineau (Contact Author)

Purdue University ( email )

610 Purdue Mall
West Lafayette, IN 47906
United States

James E. Henderson

IMD International ( email )

Ch. de Bellerive 23
P.O. Box 915
CH-1001 Lausanne
Switzerland

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