Supply Networks for Relational Sourcing

42 Pages Posted: 7 Jan 2014 Last revised: 22 Oct 2017

See all articles by Elena Belavina

Elena Belavina

Cornell SC Johnson College of Business

Date Written: October 12, 2015


Making long-term commitments to exclusive suppliers, or relational sourcing, is critical in industries where quality includes social, ethical, and technical elements concerning which contractual terms would be costly to verify or enforce. This study identifies supplier network topologies that best facilitate such relational sourcing. We consider a brand-owning firm that sources in an ongoing fashion from a general multi-tier network of idiosyncratic suppliers. Alternate network designs are compared in terms of three defining structural properties: network scope, the number of suppliers at each tier in the network; degree of control/delegation, the number of tiers in the network; and network connectivity, the connections between firms located at different tiers. Our analysis reveals that neither network connectivity nor the distribution of costs among suppliers affects the ability to sustain relational sourcing. Networks characterized by more delegation or less scope have the most to gain from relational sourcing, but they are also most vulnerable to exploitation of a relational agreement. We characterize this trade-off and identify preferred network topologies. Our analysis shows that, all else equal, delegation is better than control for products with higher margins, greater sourcing stability, or lower costs of noncompliant quality. Numerical analysis reveals that low-scope networks, too, are preferable for higher-margin products with greater sourcing stability; however, low-scope networks are preferred at higher costs of noncompliant quality. These results are robust to alternate information environments, supplier replaceability and equilibrium concepts.

Suggested Citation

Belavina, Elena, Supply Networks for Relational Sourcing (October 12, 2015). INSEAD Working Paper No. 2015/78/TOM, Available at SSRN: or

Elena Belavina (Contact Author)

Cornell SC Johnson College of Business ( email )

New York, NY 10044
United States


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

Paper statistics

Abstract Views
PlumX Metrics