Uncertainty and contractual hazard in the film industry: managing adversarial collaboration with dominant suppliers

Abstract

This paper focuses on the problems that arise when there is a power asymmetry between buyers and suppliers that is further complicated by risk and uncertainty. The case study analyses the film or movie industry supply chain and the power regime within it. The paper shows that relationships and contracts in the industry are structured to reflect the dominance of key players seeking to protect their own interests at the expense of others. It is argued that this problem of supplier self‐interest is reinforced for buyers in circumstances of uncertainty with high levels of pre‐ and post‐contractual risk. Buyers must enter into collaborative relationships with their suppliers to minimize risk and uncertainty, but the suppliers can appropriate a disproportionate share of value if a project is successful with the buyer taking all of the upfront risk.