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Risk, partner selection and contractual control in interfirm relationships

Risk, partner selection and contractual control in interfirm relationships
Risk, partner selection and contractual control in interfirm relationships
This study examines firms’ use of partner selection and formal contracts as key approaches to manage transaction risk in interfirm relationships. We specifically examine the impact of transaction characteristics that generate transaction risk on (1) the importance placed on different selection criteria in the choice of collaboration partner, and (2) the complexity of contracts used to manage the collaboration. Survey data support that when confronted with greater risk from the transaction context, firms place more emphasis on trust-based and reputation-based selection criteria for partner choice and develop more complex (i.e., more inclusive and specific) contracts to manage the collaboration. Furthermore, our results show that partner selection mediates the effects of transaction characteristics on contract complexity, consistent with the argument that the information acquired during the partner selection process in response to risk facilitates the design of contracts to manage risk.
1044-5005
140-155
Ding, Rong
ca23647f-00f4-42d4-a308-6570c8e370b5
Henri, Dekker
66117d32-13c5-4663-9b1a-38a8fbc9a6c4
Tom, Groot
966a679d-47ac-46b8-8800-00084727b90a
Ding, Rong
ca23647f-00f4-42d4-a308-6570c8e370b5
Henri, Dekker
66117d32-13c5-4663-9b1a-38a8fbc9a6c4
Tom, Groot
966a679d-47ac-46b8-8800-00084727b90a

Ding, Rong, Henri, Dekker and Tom, Groot (2013) Risk, partner selection and contractual control in interfirm relationships. Management Accounting Research, 24 (2), 140-155. (doi:10.1016/j.mar.2013.04.007).

Record type: Article

Abstract

This study examines firms’ use of partner selection and formal contracts as key approaches to manage transaction risk in interfirm relationships. We specifically examine the impact of transaction characteristics that generate transaction risk on (1) the importance placed on different selection criteria in the choice of collaboration partner, and (2) the complexity of contracts used to manage the collaboration. Survey data support that when confronted with greater risk from the transaction context, firms place more emphasis on trust-based and reputation-based selection criteria for partner choice and develop more complex (i.e., more inclusive and specific) contracts to manage the collaboration. Furthermore, our results show that partner selection mediates the effects of transaction characteristics on contract complexity, consistent with the argument that the information acquired during the partner selection process in response to risk facilitates the design of contracts to manage risk.

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More information

Published date: June 2013
Organisations: Southampton Business School

Identifiers

Local EPrints ID: 358520
URI: http://eprints.soton.ac.uk/id/eprint/358520
ISSN: 1044-5005
PURE UUID: b6ae9202-563f-42d3-ac03-2c318f9a5e9e

Catalogue record

Date deposited: 11 Oct 2013 12:47
Last modified: 14 Mar 2024 15:05

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Contributors

Author: Rong Ding
Author: Dekker Henri
Author: Groot Tom

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