47 research outputs found
The Determinants of Inter-Firm trust in Supplier-Automaker Relationships In the U.S., Japan, and Korea
In this paper we examine the determinants of supplier trust in the buyer in 453supplier-automaker relationships in the U. S., Japan, and Korea. We define trust and derive a model of its determinants drawing upon (1) an embeddedness (relationship-based) perspective, (2) a processbased perspective, and an (3) economic (hostage-based) perspective. Our findings indicate
strong support for the process-based perspective in all countries; embeddedness (e.g., length of
relationship) was only important as a determinant of trust in Japan, and the hostage-based
variable (stock ownership) was not important in any country. More specifically, we found that
high supplier trust emerges when (1) automakers have developed supplier-selection routines that
favor incumbents and which maintain a continuing (repeated) exchange relationship with the
supplier, and (2) automakers have developed assistance-giving routines to help suppliers solve
problems and improve. Although there were some differences across institutional environments,
notably higher trust in Japan, the findings are quite robust across the institutional environments.
Indeed, in a sample of U.S. suppliers selling to both U.S. and Japanese automakers in the United
States, we found that Japanese automakers were more effective than U.S. automakers at building
trusting relations with U.S. suppliers. The ability of Japanese automakers to build high levels of
trust with suppliers in the United States suggests that the institutional environment may be less
important than firm-level practices in the production of inter-organizational trust
The Determinants and Economic Outcomes of Trust in Supplier-Buyer Relations
In this paper we examine the antecedents and outcomes of supplier trust in 453 supplier-automaker
relationships in the U.S., Japan and Korea. Our findings indicate that high supplier trust emerges
when (1) automakers have developed assistance-giving routines to help suppliers improve, and (2)
automakers maintain a continuing (repeated) exchange relationship with the supplier. We also found
that trust reduces transaction costs and increases information sharing in supplier-buyer relationships.
Moreover, the findings suggest that the economic value created for tmnsactors may be substantial
as evidenced by the fact that the automaker with the least trusting supplier relations had five times
the procurement costs and spent tice as much of its face-to-face interaction time with suppliers on
ex ante contracting and ex post haggling when compared to the most trusted automakers. Thus, our
findings suggest that trust in supplier-buyer relations can create economic value and may be an
important source of competitive advantage
The Economic Value of Trust in Supplier-Buyer Relationships
In this paper we investigate the relationship between supplier trust in the buyer and transaction
costs, information sharing, and re[ation-specific investments in a sample of 453 supplier automaker
exchange relationships in the U. S., Japan, and Korea. Our findings indicate that trust
reduces transaction costs and increases information sharing in supplier-buyer relationships.
Moreover, the findings suggest that the economic value created for transactors, in terms of lower
transaction costs, may be substantial. In particular, we found that the automaker with the least
trusting supplier relations spent twice as much of its face-to-face interaction time with suppliers
on ex ante contracting and ex post haggling when compared to the most trusted automakers.
This translated into procurement (transaction) costs which were as much as five times higher for
the least trusted automaker compared to the most trusted automaker. Finally, we argue that trust
is unique as a governance mechanism because it not only minimizes transaction costs, but also
has a mutually causal relationship with other behaviors (i.e. information sharing. buyer technical
assistance) that create value in the exchange relationship. Other governance mechanisms (e. g..
contracts. financial hostages) are necessary costs incurred to prevent opportunistic behavior but
do not create value beyond transaction cost minimization. Thus, our findings indicate that trust in supplier-buyer relations can create economic value and may be an important source of
competitive advantage
The Determinants of Interfirm Trust: Evidence from Supplier Automaker Relationships in the U.S., Japan and Korea
This paper has been accepted for presentation at the Academy of Management Meetings,
Cincinnati, 1996.The determinants of interfirm trust are examined in 453 supplier automaker relationships in the
U.S., Japan, and Korea. The findings indicate high supplier trust emerges when (1) suppliers
receive assistance from the automaker, (2) the automaker has a track record of maintaining a
continuing (repeated) exchange relationship with the supplier. Although there were some
differences across institutional environments, notably higher trust in Japan, the findings are robust
across the three institutional environments. Indeed, in a sample of U.S. suppliers that worked
with both U.S. and Japanese automakers in the United States, we found that Japanese automakers
were more effective than U.S. automakers at building trusting relations with U.S. suppliers.
Thus, firm level practices appear to be more important than the institutional environment in the
development of interfirm trust.
A central issue in the literature on strategic alliances and interfirm cooperation is how firms create
trust and control opportunism, particularly when the transactors have made investments in
transaction specific assets.
Under these conditions, trust has been described as an important antecedent to interorganizational
cooperation and economic efficiency (Sako, 1991; Smith, Carroll, and Ashford, 1995). In fact,
recent research suggests that trust in supplier buyer relations may be an important source of
competitive advantage because it: (1) lowers transaction costs and allows for greater flexibility to
respond to changing market conditions (Dore, 1983; Sako, 1991; Barney & Hansen, 1995; Dyer,
forthcoming), (2) facilitates investments in special purpose assets and technologies which enhance
productivity (Asanuma, 1989; Lorenz, 1988; Dyer, 1994), and (3) leads to superior information
sharing routines which improve coordination and joint efforts to minimize inefficiencies (Fruin,
1992; Clark & Fujimoto, 1991; Nishiguchi, 1994). Moreover, some scholars claim that national
economic efficiency is highly correlated with the existence of a high trust institutional environment
(North, 1990; Casson, 1991; Hill, 1995; Fukuyama, 1995). For example, Fukuyama (1995:7)
argues that the economic success of a nation, "as well as its ability to compete, is conditioned by
the level of trust inherent in the society." The findings from these, and other, studies have
increased our attention on the important role of trust in economic exchanges.
A natural response to these studies has been to exhort companies to build trust with their trading
partners (Business Week, 1986, 1992) and to call for increased research on the role of trust in
coordinating economic activity (Smith, Carroll, and Ashford, 1995). However, before an explicit
strategy for developing trust can be developed, or considered feasible, the determinants of trust
must be identified. Despite considerable academic and managerial interest in trust between trading
partners, to date there has been little empirical research on the antecedents or determinants of
interorganizational trust (i.e. between supplier buyer). Further, there has been little research on
whether the determinants of trust differ in different institutional (i.e. country) environments.
The purpose of this paper is to examine the determinants of supplier trust in a sample of
supplier/automaker relationships in the United States, Japan, and Korea. Given the recent attention
on the importance of trust in exchange relationships, an examination of the determinants of trust is,
by itself, a valuable undertaking. However, due to the globalization of industries and a dramatic
increase in international joint ventures, a study of the determinants of trust in different institutional
environments is particularly valuable. Such a study is useful because it allows for an examination
of those factors that are important determinants of trust both within, as well as across, countries.The International Motor Vehicle Program at MI
Strategic Supplier Segmentation: The Next "Best Practice" In Supply Chain Management
No Abstract Provide
Project Report to International Motor Vehicle Program (IMVP), M.I.T.International Assembly Plant Study
INTRODUCTION:
During the past fiscal year, we have worked closely with a number of researchers from around
the world to develop a questionnaire that will provide us with a fuller understanding of the value-chain
issues that surround current automobile manufacturing. While centered on the assembly plant, we are
also looking at the interface between the plants and their suppliers, as well as the plants and their
distributors. We will summarize these efforts, as well as our timetable for data collection. In this writeup
we are focusing only on the work undertaken in relation to assembly plants. We have also done
extensive work in the Modularization/Outsourcing project that is helping to pave the way for some of the
assembly plant work; please refer to the separate report on that project
International Assembly Plant Study: " Management of the Extended Enterprise" Research Team
During the past fiscal year, we have worked closely with a number of researchers from around
the world to develop a questionnaire that will provide us with a fuller understanding of the value-chain
issues that surround current automobile manufacturing. While centered on the assembly plant, we are
also looking at the interface between the plants and their suppliers, as well as the plants and their
distributors. We will summarize these efforts, as well as our timetable for data collection. In this writeup
we are focusing only on the work undertaken in relation to assembly plants. We have also done
extensive work in the Modularization/Outsourcing project that is helping to pave the way for some of the
assembly plant work; please refer to the separate report on that project
Product Proliferation and the Determination of Slotting and Renewal Allowances
We examine the roles of slotting and renewal allowances in the allocation
of scarce retail shelf space. Several contrasting features of the two shelf
allocational mechanisms are shown.
With slotting allowances, manufacturers can signal the profitability of new
products and retailers can screen out the least profitable products. With renewal
allowances in a full information context, manufacturers can induce
retailers to carry their less profitable products, illustrating a "push" approach
to attaining shelf placement: manufacturers of product that enjoy
strong consumer "pull* obtain shelf placement without paying renewal
allowances. In both cases, product proliferation results in higher slotting and
renewal allowances by raising the opportunity cost of shelf space. However,
as countervailing leverage against retailers, manufacturers of successful
product lines can use their successful products to help attain placement for
their relatively weak products
Partial Refunds or Money-Back Guarantees ?
A partial-refund policy is superior to a "full money-back policy when
a seller faces a significant amount of opportunistic return behavior-i.e.,
consumers order a product for short term usage only to return it for a
refund later. In a partial-refund policy, the seller charges a rent (the
nonrefundable portion of price) to those who return the product; this
discourages opportunistism, but also penalizes consumers who only
return because merchandise is unsatisfactory. The optimal partial
refund policy balances this tradeoff. Profit is higher under the partial
refund policy because of a lower number of returns and because a
higher price can be charged. Mail-order clothing and personal computer
industries demonstrate that catalogers typically offer only partial
refunds
Optimal Timing of Collaborative Alliances in Technology Commercialization
1999-09As the need for time-to-market becomes an imperative in high-tech industries.
more and more firms find that they can get to market quicker by collaborating with partners. However. more collaboration also engenders an environment where there will be intellectual property rights infringements and appropriation issues. In this paper. we show that in addition to patents and contracts. a firm can protect its innovation by finding the optimal time for releasing information to a potential partner. Our model. which derives the optimal timing function. balances the trade-off between the benefits of minimizing delay cost in commercialization with the risk of having the information appropriated by the potential partner. We show that firms should release information early when the cost of delay is high and when the salvage value of the idea after being rejected is high. We also show that the optimal timing approach mitigates the negative effects of increases in delay cost and exaggerates the positive effects of increases in the salvage valu