Role hazard between supply chain partners in an institutionally fragmented market

• Date: 01 September 2016
• Published date: 01 September 2016
• Author: Yulin Fang,Min Ju,Maggie Chuoyan Dong
• DOI: http://doi.org/10.1016/j.jom.2016.07.006

Role hazard between supply chain partners in an institutionally

fragmented market

Maggie Chuoyan Dong

a

,

*

, Min Ju

b

, Yulin Fang

c

a

Department of Marketing, College of Business, City University of Hong Kong, Tat Chee Avenue,Kowloon, Hong Kong

b

Department of Marketing, University of Missouri-St. Louis, One University Blvd, St. Louis, MO, 63021, USA

c

Department of Information Systems, College of Business, City University of Hong Kong, Tat Chee Avenue,Kowloon, Hong Kong

article info

Article history:

Accepted 25 July 2016

Accepted by: Mikko Ketokivi

Keywords:

Role hazard

Sub-national institutional distance

Buyeresupplier relationship

Relational coordination

Action alignment mechanism

Emerging markets

abstract

A major challenge to supply chain management in emerging markets is the relational coordination

problem arising from variations in sub-national institutions in which partners are situated. This study

investigates role hazard, a critical yet understudied relational coordination problem. Drawing on role and

institutional theories, we examine role ambiguity and role conflict as two facets of role hazard between

buyer and supplier, their institutional source, performance outcomes, and firms’action alignment

mechanisms as potential remedies. A dyadic survey of buyers and suppliers in China reveals that both

role ambiguity and role conflict can result from sub-national institutional distance and jeopardize supply

chain performance. The results also suggest that supply chain partners in different sub-natio nal in-

stitutions can mitigate role hazard through continuous information sharing and dynamic adaptation.

This study provides novel insights into how buyers and suppliers can enhance their relational coordi-

nation in emerging markets by reducing role hazard ca used by sub-national institutional distance.

©2016 Published by Elsevier B.V.

1. Introduction

Building and managing effective supply chain partner relation-

ships is increasingly critical for firms (Craighead et al., 2009;

Homburg et al., 2002; Hoopes and Postrel, 1999; Kabadayi et al.,

2007; Kotabe et al., 2003). Yet many partner relationships fail to

achieve their intended goals, due to relational coordination prob-

lems driven by misalignment of actions (Dyer and Hatch, 2006;

Gulati et al., 2005; MacDuffie and Helper, 2006; Yan and Dooley,

2013). This problem is particularly prevalent and challenging in

emerging markets, where sub-national institutions exhibit large

divergence and are constantly evolving (Meyer and Gelbuda, 2006;

Shi et al., 2012). In these emerging markets, institutional transition

induces fundamental, uneven changes across regions, leading to

great variations in sub-national institutions (Wright et al., 2005;

Yang et al., 2012). When firms encounter supply chain partners

with different regulatory frameworks, social norms, or business

practices in such institutionally fragmented markets, relational

coordination problems can easily surface between partners, due to

differences in firms’embedded knowledge and values acquired

from their different institutional environments (Grayson, 2007).

Sub-national institutional distance creates confusion about partner

responsibilities, as well as compatibility issues between partners

(Yang et al., 2012). Thus, it is imperative to examine relational co-

ordination problems in supply chain relationships and particularly

the impact of sub-national institutional distance in emerging

markets.

Relational coordination problems of ten arise despite partners'

best cooperative intentions. For example, a supplier perceives “a

sales lead”simply as a possible future sale, but the buyer migh t

assume it is a qualified lead, in the final acquisit ion stage, that

deserves immediate attention (Narus, 20 05). This inconsistent

information interpretation, due to dif ferent roles in the relation-

ship, can result in misaligned acti ons. As Williamson (1991,p. 278)

notes, a “failure of coordination may arise because a utonomous

parties read and react to signals differently, even though thei r

purpose is to achieve a timely and compatible combined

response”. This study aims to address the relationa l coordination

problem by focusing on role hazard, a social con dition in which

partners’role obligations and respon sibilities are vague,

discrepant, and difficult to meet (Beeh r et al., 1976; Nygaard and

*Corresponding author.

E-mail addresses: mcdong@cityu.edu.hk (M.C. Dong), jum@umsl.edu (M. Ju),

ylfang@cityu.edu.hk (Y. Fang).

Contents lists available at ScienceDirect

Journal of Operations Management

journal homepage: www.elsevier.com/locate/jom

http://dx.doi.org/10.1016/j.jom.2016.07.006

0272-6963/©2016 Published by Elsevier B.V.

Journal of Operations Management 46 (2016) 5e18