THE IMPACT OF CULTURAL DIFFERENCES ON BUYER-SUPPLIER RELATIONSHIPS.

In today's economy, an ever-increasing number of companies are dealing with partners from across the world giving rise to the need to understand the impact of cultural differences on business interactions. This dissertation uses two different approaches to investigate the impact of culture in buyer supplier relationships. The first study researches the effect of cultural differences in contractual buyer-supplier agreements using transaction cost as a theoretic lens. A large number of relationships translate into contracts between partners, but very few studies have investigated the effect of cultural differences on these written agreements: This research looks at the level of contract completeness and the option to renegotiate the contract as outcome variables. The study investigates the impact of cultural difference in buyer-supplier relationships using Hofstede's cultural dimensions. The main finding is that contract completeness increases as the cultural gap between the buyer and supplier widens. The results for individual culture dimensions on contract completeness are mixed. Cultural distance impacts the option of renegotiation but the individual dimensions fail to have an effect. Finally, asset specificity has the expected positive effect on the level of contract completeness and the option to renegotiate, while more frequent transactions result in lower levels of contract completeness and fewer options to renegotiate. Overall, these findings emphasize that cultural background is a factor in contractual buyer supplier relationships and need to be taken into account in global supply chain management. The second essay investigates the impact of cultural differences in the context of dyadic buyer-supplier negotiations. It looks at the moderating effect of culture. The study uses an experimental design to investigate these issues. In the simulation negotiation, participants, classified by their country of origin, are asked to take on the role of either a buyer or a seller. They negotiate prices and quality levels for three products. This study finds that cultural differences within the negotiation dyad reduce joint profits when compared to dyads of participants with similar cultural backgrounds. Cultural differences weaken the effect of trust and opportunism on joint profits. Overall, this study concludes that cultural differences as encountered in day-to-day business interactions in global supply chains impose greater challenges

Transportation Policy and the Effects on Modal Choice in the EU

This study addresses the question of how trans-national regulations could stimulate environmentally friendly transportation. Effects of capacity limitations, costs and transit time requirements on the attractiveness of different containerized transportation modes are modeled for a representative freight corridor in the European Union. Multiple legislative scenarios are developed for 2010, taking into account various characteristics of road, rail and inland waterway transportation, including costs to society and environmental costs. Analysis of the scenarios reveals that under the current legislation environmentally friendly transportation modes are already very attractive, but lack sufficient capacity to deal with demand. Further legislative interventions, such as increased taxation, would only lead to increased transportation costs, and render containerized transportation less effective and more costly to society. For a more favorable modal split, it appears that important investments are to be made in dedicated cargo rail and inland waterways.Economics ;

Effectiveness of bonus and penalty incentive contracts in supply chain exchanges: Does national culture matter?

In this study, we investigate the impact of national culture on the effectiveness of bonus and penalty incentive contracts in supply chain exchanges. We conducted laboratory experiments in Canada, China, and South Korea, involving transactional exchanges in which suppliers were presented with either bonus or penalty contracts. Then we compared suppliers’ contract acceptance, level of effort, and shirking across national cultures. Our findings reveal critical cultural influences on contract effectiveness. We show that although acceptance of bonus contracts is comparable across cultures, suppliers from Canada, a national culture considered low in power distance and high in humane orientation, exhibit lower acceptance rates of penalty contracts. In addition, we find evidence that suppliers associated with collectivist cultures exert more effort and shirk less in bonus contracts but these relationships also are more complex. When we compare contract effectiveness across bonus and penalty contracts within a given cultural setting, we find in all three countries greater acceptance of bonus contracts than penalty contracts. Also, after contracts are accepted, bonus contracts are more successful in China because suppliers exert greater effort and shirk less under bonus contracts than penalty contracts. However, in Canada and South Korea, the results of accepted contracts for both penalty and bonus contracts are nearly indistinguishable

Airline Financial Distress and Customer Satisfaction

An investigation is conducted on the effect of financial distress on customer service levels in the U.S. airline industry. Using data from the first quarter of 1998 to the third quarter of 2006, we employ a seemingly unrelated regressions (SUR) model to analyze the impact of financial distress on three measures of customer service. We find that higher financial distress is associated with better on-time performance of airlines and fewer lost bags. The relationship of airline financial distress to the number of bumped customers, however, is insignificant

Food Aid Procurement and Transportation Decision-making in Governmental Agencies: The United Nations/EU versus the United States Approach

This paper conceptually and empirically examines sourcing food aid, comparing the approaches promoted by the U.S. with those of the United Nations (UN) and the European Union (EU). In the recipient country approach (RCA) promoted by the UN and the EU, Transaction Cost Economics (TCE) suggests that RCA provides faster aid with less transaction costs. In the donor country approach (DCA) practiced by the U.S., the Resource-Based View (RBV) suggests that the superior resources of a donor country assure higher quality, safer, and a plentiful food supply. Using a comparative case analysis with actual data provided by the United States Agency for International Development (USAID), we provide evidence that RCA and DCA as practiced in reality are both sub-optimal. Improved sourcing and transportation options computed through quantitative methods can offer significant benefits over both approaches. We propose a contingency approach that reduces landed costs of food aid by giving governmental relief organizations more flexibility in RCA vs. DCA sourcing, which can be justified by Resource Dependency Theory (RDT). Our findings contribute to the decision-making and policy discussion about the efficiency of governmental food aid programs

Airline Financial Distress and Customer Satisfaction

An investigation is conducted on the effect of financial distress on customer service levels in the U.S. airline industry. Using data from the first quarter of 1998 to the third quarter of 2006, we employ a seemingly unrelated regressions (SUR) model to analyze the impact of financial distress on three measures of customer service. We find that higher financial distress is associated with better on-time performance of airlines and fewer lost bags. The relationship of airline financial distress to the number of bumped customers, however, is insignificant

Policy decisions and modal choice: An example from the European Union

This study addresses the question of how trans-national regulations could stimulate environmentally friendly and socially responsible transportation. Three scenarios are developed for 2010, taking into account various costs related to road, rail, and inland waterway transportation, including costs to society and environmental costs. The attractiveness of different containerized transport modes is calculated for a representative freight corridor in the European Union. The modal split is adjusted for the capacity limitations of the different modes. Analysis of the results reveals that dedicated cargo rail and inland waterways, the two more socially responsible transportation modes, are already relatively attractive to shippers, but lack sufficient capacity to deal with forecasted demand. Further legislative interventions, such as increased taxation, would therefore only increase the financial burden to shippers and society. Important investments appear necessary for the further development of dedicated cargo rail and inland waterways