Safeguarding mechanisms in a supply chain network

Abstract

Purpose Building on the transaction cost theory and power structure literature, this paper aims to investigate the extent to which firms use two safeguarding mechanisms (supply chain relational investments and electronic collaboration) in different network dependency contexts in order to protect their portfolios of business relationships. Design/methodology/approach Empirical evidence is gathered though a survey data conducted with 159 firms in the wireless communication sector. The paper tests the assumption that the two safeguarding mechanisms are used to a greater extent in interdependency‐intensive networks than in other supply chain contexts. Findings This empirical study suggests that: in a network‐dependent context, relational investments allow firms to safeguard their portfolios of relationships; electronic collaboration seems to be a safeguarding mechanism for firms in downstream‐dependent network contexts; in general, firms appear to use both relational investments and electronic collaboration to manage their relationships in a supply chain network; and the knowledge‐based theory may explain the strong relationship between upstream and downstream use of electronic collaboration. Research limitations/implications Overall, the present study complements the extant literature on supply chain management and inter‐firm electronic collaboration by showing how an important structural characteristic of supply chain networks (i.e. dependency) operates on the choice of using two key safeguarding mechanisms. Practical implications Results stress the importance of these safeguarding mechanisms in joint actions such as collaborative planning, forecasting and replenishment. Originality/value The paper addresses interdependencies from a network perspective which encompasses the firms' complete portfolio of relationships.