Management of a supplier collaboration - The usage of control and coordination mechanisms

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School of Business | Master's thesis
MSc program in Management and International Business
MSc program in Management and International Business
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The objective of this study was to understand how in a buyer-supplier relationship the collaboration of a buyer and a supplier is managed from the buyer's perspective, in terms of what kind of control and coordination mechanisms are used for it and why. This objective was selected due to an interest to the contemporary business landscape, where various kinds of alliances and inter-firm relationships are increasingly common, and thus the understanding how alliances are, or should be, managed is a key capability in today's business world. The study was conducted as a qualitative case study, in which it was studied how a large Finnish MNC manages the collaboration with one of its Chinese suppliers. Three theoretical frameworks were used: two higher level frameworks and one detailed framework. The first higher level framework consisted of the coordination mechanisms from Bartlett and Ghoshal (2002), while the second one comprised higher level control typologies, often divided into market, hierarchical and some alternative patterns. The third, detailed framework was an inter-firm management control systems (MCS) package, which was constructed by utilizing MCS control package from Malmi and Brown (2008) as a basis. It can be concluded that there was a clear benefit from utilizing several theoretical frameworks, since they supported each other in discovering the main findings. The results of the study show that almost all of the detailed control mechanisms included in the inter-firm MCS package were found to be in use in the studied case. This finding is new in the sense that this kind of inter-firm MCS package has not been used earlier for analyzing inter-firm relationships. It was also discovered, that it depends on whether the relationship is looked at as a whole, or only some subarea of it, how large portfolio of control and coordination mechanisms is in use. Finally, based on the finding showing that all control typologies were present simultaneously for managing the collaboration, it is suggested to extend the inter-firm MCS package constructed based on the model from Malmi and Brown (2008) by adding market control into it. This makes it more applicable in inter-firm settings. For the reasons why all the control typologies - hierarchy, market and relationship control - were present simultaneously, the argument from Van Der Meer-Kooistra and Scapens (2008) claiming that in an inter-firm setting there may be several paradoxes that need to be managed, was supported by the findings. While the different characteristics of the subareas of the relationship were the reason for utilizing different portfolio of control mechanisms for them.
buyer-supplier relationship, supplier collaboration, inter-firm relationship, coordination, control, control patterns, management control systems
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