This study explores how distinct information access patterns affect a supplier’s supply chain agility. A supplier’s specific investments for IT-enabled supply chain coordination and relational adaptation in supply chain operations are identified as the technical and behavioral antecedents to its supply chain agility. Because both are non-contractible elements in formal contracts and complementa...

Focusing on long-term buyer–supplier relationships, this article addresses two questions: (1) What are the antecedents that lead to the adoption of formal control, social control, or both? (2)What is the nature of the relationship between formal control and social control are they substitutes or complements?We develop amodel to investigate the impact of the length of cooperation and institution...

We study the structure of an optimal management for innovative activities. The top management of a buyer hires a supplier for production. The production e¢ ciency can be enhanced by investing in R&D before production. The buyer chooses between using its own subunit for the R&D, or outsourcing the task to the supplier (integration of R&D and production). Our analysis reveals that (i) when the R&...

This paper investigates how the formation of larger buyers affects a supplier’s profits and, by doing so, his incentives to undertake non-contractible activities. We first identify two channels of buyer power, which allows larger buyers to obtain discounts. We subsequently examine the effects of buyer power on the supplier’s incentives and on social welfare. Contrary to some informal claims in ...

We consider the order ful ̄llment process of a customized capital equipment supplier. Prior to receiving a ̄rm purchase order from the customer, the supplier receives a series of shared forecasts, which are called `soft orders'. Facing a stochastic internal manufacturing lead-time, the supplier must decide at what time to begin the ful ̄llment of the order. This decision requires a trade-o® betwe...

This Article offers an explanation of the role of intellectual property rights (IPRs) in information-intensive vertical supply relationships. In particular, we explore the connection between stronger property rights and the enhanced viability of independent (versus vertically integrated) input supply firms when contracts are incomplete. We start by modeling a tradeoff between two types of infor...

We develop a new theory of supplier diversification based on buyer risk. When suppliers are subject to the risk of buyer default, buyers may take costly action to signal creditworthiness so as to obtain more favorable terms. But once signaling costs are sunk, buyers sourcing from a single supplier become vulnerable to future holdup. Although ex ante supply base diversification can be effective ...

The theory of incomplete contracts has been used to study the relationship between buyers and suppliers following the deployment of modern information technology to facilitate coordination between them. Previous research has sought to explain anecdotal evidence from some industries on the recent reduction in the number of suppliers selected to do business with buyers, by appealing to relationsh...

This paper provides a novel explanation for the use of supply chain intermediaries such as Li & Fung Ltd.. We find that even in the absence of the well-known transactional and informational advantages of mediation, intermediaries improve supply chain performance. In particular, intermediaries facilitate responsive adaptation of the buyers’ supplier base to their changing needs while simultaneou...