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- Genre: Doctoral Dissertation
Description
In this dissertation research, I expand the definition of the supply network to include the buying firm’s competitors. Just as one buyer-supplier relationship impacts all other relationships within the network, the presence of competitor-supplier relationships must also impact the focal buying firm. Therefore, the concept of a “competitive network” made up of a focal firm, its competitors and all of their combined suppliers is introduced. Utilizing a unique longitudinal dataset, this research explores how the organic structural changes within the new, many-to-many supply network impact firm performance. The investigation begins by studying the change in number of suppliers used by global auto manufacturers between 2004 and 2013. Following the Great Recession of 2008-09, firms have been growing the number of suppliers at more than twice the rate they had been reducing suppliers just a few years prior. The second phase of research explores the structural changes to the network resulting from this explosive growth in the number of suppliers. The final investigation explores a different flow – financial flow -- and evaluates its association with firm performance. Overall, this dissertation research demonstrates the value of aggregating individual supply networks into a macro-network defined as the competitive network. From this view, no one firm is able to control the structure of the network and the change in structure directly impacts firm performance. A new metric is introduced which addresses the subtle changes in buyer-supplier relationships and relates significantly to firm performance. The analyses expand the body of knowledge through the use of longitudinal datasets and uncovers otherwise overlooked dynamics existing within supply networks over the past decade.
ContributorsHuff, Jerry (Author) / Fowler, John (Thesis advisor) / Rogers, Dale (Committee member) / Carter, Craig (Committee member) / Arizona State University (Publisher)
Created2016
Description
While agency problems inevitably exist in buyer-supplier relationships, the focus on how to overcome such problems has been confined to the buyer-supplier dyad as if the dyad exists in isolation. In this dissertation, I re-frame the agency problems beyond the dyadic relationship between a buyer and its supplier and suggest a new way to overcome agency problems. While the current Agency Theory suggests that the buyer can monitor and provide incentives to mitigate the agency problems, I propose to look beyond the dyad in addressing buyer-supplier agency problems.
In the first chapter, I examine the impact of the “indirect links” in which the buyer is connected to the supplier through a third actor. I propose a conceptual framework that specifies how the indirect links can overcome agency problems through the effects of information exchange, mutual monitoring, power change, and network governance. These different effects are enabled by the indirect links based on the different network positions and levels of connectivity of the third actor. The first chapter provides a theoretical framework for Chapter 2 and 3.
In Chapter 2, the effect of network governance enabled by the indirect links is investigated. In particular, two scenario-based role-play experiments were conducted with managers to examine the effects of dyadic and network governance mechanisms on supplier opportunism. In Study 1, the participants took the perspective of a supplier, while in Study 2, the participants took the role of a buyer. The results show that network governance mechanism reduces the supplier's opportunistic behavioral intentions directly and indirectly through the negative affection prediction, and while suppliers may overlook the buyer's reactions as they make decisions, the buyers are likely to react against the supplier, such as engage in negative word-of-mouth or reduce level of commitment.
Finally, directed sourcing, a direct application of how a buyer could overcome agency problems beyond the dyad, is examined in Chapter 3. Directed sourcing is an emerging sourcing practice in which the buying firms bypass the top-tier suppliers and directly manage or contract with lower-tier suppliers, and research on this new practice is in its infancy. Therefore, multi-tier multi-task principal-agent models are developed to investigate the effect of directed sourcing practice on each member in this three-tier supply chain, comparing with traditional tiered sourcing. The results show that directed sourcing generally benefits the original equipment manufacturer (OEM) and the lower-tier supplier, while it harms the top-tier supplier. Yet, directed sourcing is not always beneficial to the OEM. Therefore, an OEM should be selective in implementing this new strategy.
In the first chapter, I examine the impact of the “indirect links” in which the buyer is connected to the supplier through a third actor. I propose a conceptual framework that specifies how the indirect links can overcome agency problems through the effects of information exchange, mutual monitoring, power change, and network governance. These different effects are enabled by the indirect links based on the different network positions and levels of connectivity of the third actor. The first chapter provides a theoretical framework for Chapter 2 and 3.
In Chapter 2, the effect of network governance enabled by the indirect links is investigated. In particular, two scenario-based role-play experiments were conducted with managers to examine the effects of dyadic and network governance mechanisms on supplier opportunism. In Study 1, the participants took the perspective of a supplier, while in Study 2, the participants took the role of a buyer. The results show that network governance mechanism reduces the supplier's opportunistic behavioral intentions directly and indirectly through the negative affection prediction, and while suppliers may overlook the buyer's reactions as they make decisions, the buyers are likely to react against the supplier, such as engage in negative word-of-mouth or reduce level of commitment.
Finally, directed sourcing, a direct application of how a buyer could overcome agency problems beyond the dyad, is examined in Chapter 3. Directed sourcing is an emerging sourcing practice in which the buying firms bypass the top-tier suppliers and directly manage or contract with lower-tier suppliers, and research on this new practice is in its infancy. Therefore, multi-tier multi-task principal-agent models are developed to investigate the effect of directed sourcing practice on each member in this three-tier supply chain, comparing with traditional tiered sourcing. The results show that directed sourcing generally benefits the original equipment manufacturer (OEM) and the lower-tier supplier, while it harms the top-tier supplier. Yet, directed sourcing is not always beneficial to the OEM. Therefore, an OEM should be selective in implementing this new strategy.
ContributorsYang, Yang (Author) / Choi, Thomas Y. (Thesis advisor) / Carter, Craig (Thesis advisor) / Kull, Thomas (Committee member) / Yin, Rui (Committee member) / Arizona State University (Publisher)
Created2016