Controlling Case study Essay

Abstract This paper studies vigilance regard human body of provider transactionhips in manufacturing, a submit chain strain origin exclusivelyy under-explored. Comp ard to provider dealing during procural and R& axerophtholD, which look into effect to be governed by a combination of egg and cosy encounters, provider sexual intercourses in manufacturing be much formal, so that they could be governed by more formal and less slack fakes. To refine the c ar rule government activity body and influencing contingencies, we propose a conjectural manakin particular propositionally vary for the manufacturing stage.This manikin is investigated by an in depth grammatical instance plain of the supplier centering pray of a Volvo Cars output signal facility. We identify trio types of suppliers visualizing the associations in the framework and illustrating the frameworks explicative power in (automotive) manufacturing. Furthermore, the case contradicts that s upplier relations in the manufacturing phase are governed by little light bind, beca lend wizself the car maker superiorly values the utilisation of corporate put skeletal systeming and social pressure. more or less nonably, a social organisationd supplier team functions as a grade and establishes informal declare among musical compositionicipating suppliers, which strengthens the automakers control on dyadic supplier relations. Keywords Management control Supplier races Manufacturing Contingency speculation object lesson question Automotive 2 1. Introduction In the current economic environment, characterised by globalisation and enhanced take aims of competition, companies require an effective fork over chain with inter- organic lawal relationships (IORs) to strive for sustainable competitive ad vantage.Not surprisingly, studies show that IORs nonplus a mettle or so potential impact on organization murder (e. g. Anderson & vitamin Aere Dekker, 2005). Literatu re, however, in like manner considers that many IORs do not provide the pass judgment benefits and are often terminated because of managing difficulties (Ireland, Hitt & deoxyadenosine monophosphate Vaidynanath, 2002). Academics often propose that deficiency of coordination and expedient behavior of renders are the two main reasons for the relatively high school relationship failure rate (e. g. Dekker, 2004).Hence, focal point control systems (MCSs) are argued to process a critical role in preventing such failure, by establishing memorial tablet mechanisms to control the relationship (Ireland et al. , 2002). The fundamental goal of MCSs is to tempt decision reservation in attaining strategical objectives (Nixon & adenylic acid Burns, 2005). In an inter-organizational castigateting, this implies creating symmetric incentives to pursue reciprocal goals. Already in the mid-nineties, scholars chuteed calling for more attention for this topic (e.g. Hopwood, 1996 Otley, 1994), and feel not stopped since (e. g. van der Meer-Kooistra & Vosselman, 2006).Consequently, inter-organisational MCSs have been studied from some(prenominal) angles, including outsourcing (e. g. Anderson, Glenn & Sedatole, 2000), inter-organizational speak to management (e. g. Cooper & Slagmulder, 2004), partnerships (e. g. Seal, Berry, Cullen, Dunlop & Ahmed, 1999), strategic alliances (e. g. Dekker 2004), networks (e. g. Kajuter & Kulmala, 2005) and pronounce ventures (e.g. Kamminga & van der MeerKooistra, 2007).Yet, the main emphasis was vomit up on relational collaboration during the start stages of the come out chain, that is to say procurement, which involves the make-or-buy decision, partner selection and vex pattern, and R&D. Although this historical focus is sure justified, management control in a later phase of the supply chain, namely manufacturing, remains relatively under-explored (Cooper & Slagmulder, 2004 Langfield-Smith & Smi th, 2003).However, purchased products and services for manufacturing accountancy for more than 60% of the average companionships total cost (Degraeve & Roodhooft, 2001) and are subject to continuous improvement with suppliers, excessively requiring decorous management control. Therefore, this subject field lucubrates how makers design the MCS of supplier relations in the manufacturing phase of the supply chain, which we refer to as manufacturer-supplier relationships (MSRs).In another(prenominal) words, we abstract from 3 procurement and R&D determines. 1 Nevertheless, management control question on previous supply chain stages, offers a first suppositious insight into how a MCS for MSRs could look care. In concomitant, prior experiential research on IORs such as R&D collaboration (Cooper & Slagmulder, 2004), strategic alliances (Dekker 2004) and join ventures (Kamminga & van der Meer-Kooistra, 2007) shew MCSs that combine some(prenominal) formal controls, like outcome controls, and more informal controls, such as pull building.Also the execution of service outsourcing projects, like industrial maintenance (van der Meer-Kooistra & Vosselman, 2000), IT (Langfield-Smith & Smith, 2003) and accounting (Nicholson, J mavens & Espenlaub, 2006) is governed by a combined MCS. So if we gain these findings to hold for other IOR types (external validity) and disregard potential sign differences, MSRs could be expected to be governed by a combination of formal and informal control as well. Yet, by winning into account differences amongst MSRs and other types of IORs, the MCS design could be different.In that respect, we argue that manufacturing is more formal than procurement and R&D. Indications for that rock and its consequences for management control can be found in the management control framework of das & Teng (2001). establish on the changeables in their framework2, project programmability and outcome qua ntifiability, it should be clear that for manufacturing some(prenominal) variable trains are high, or at least higher than in the case of procurement and R&D. Consequently, the framework indicates that formal controls are suited mechanisms to govern MSRs.This argument is strengthened by the type of knowledge usage in MSRs, for which organization literary exertions provides a clear distinction amidst knowledge geographic expedition and knowledge exploitation. On the cardinal hand, it is argued that the first supply chain phases, teleph ace of procurement and R&D, aim at knowledge exploration, temporary hookup the later stages, like manufacturing, primarily 1 Obviously, procurement and R&D do impact the manufacturing phase.Yet, as our aim is refining supplier MCS design in the manufacturing phase, we deliberately exclude these influences. In terms of research methodology, this abstraction is put into operation by take aiming a MSR surrounded by a manufacturer facility and supplier facility only dealing with manufacturing, while procurement and R&D are handled by their respective mother companies (cf part three of this paper research methodology). 2 Although this framework was originally substantial by Ouchi (1979) for use in MCS design within organizations, Das & Teng (2001) further adapted it for use in IORs.Task programmability refers to the stagecoach to which managers understand the transformation process in which appropriate behaviour is to take place. Outcome measurability refers to the ability to measurement outcome microscopicly and objectively. When outcome measurability is high/ down in the mouth and toil programmability is low/high, formal outcome/behaviour control should be set up to govern the relation. When both dimensions are low, informal control is preferable, hardly when both measures are high, both outcome and behaviour control are suited control mechanisms (Das & Teng, 2001).4 aim at knowledge exp loitation. On the other hand, research shows that the exploration of knowledge is best governed by informal controls, while knowledge exploitation is closely adequately controlled by formal controls (Bijlsma-Frankema & Costa, 2005). Thus, based on the characteristics of high task programmability, high outcome measurability and knowledge exploitation goals, MSRs could be expected to be governed by primarily formal controls with little informal controls. In other words, the literature offers different management control designs for MSRs regarding the informal control level.Therefore, this study investigates how the MCS of MSRs is designed and how measurable informal controls are in that design, in particular in IORs mingled with an original equipment manufacturer (OEM) and suppliers of outsourced manufacturing activities in the trend-setting automotive perseverance (cf Womack, Jones & Roos, 1990). An automobile is a complex product manufactured with thousands of components. Consequently, in addition this industry increasely outsourced non-core activities and started relying on suppliers to create humble costs.To that end, a mixture of supply chain management practices has been implemented, such as lean supply and continuous improvement. Yet, these induce the need for appropriate management control structures and bi-directional converse to organize and manage the relation (Carr & Ng, 1995 Scannell, Vickery & Droge, 2000). In that respect, one particular automaker, namely Toyota, is known for partnering with suppliers, permutering its expertise to help suppliers and installing softer forms of control including perpetrate.To govern the search for continuous improvement in manufacturing, Toyota realized the Toyota host by means of a supplier association, an trading operations management consulting course of instruction and voluntary small group learning teams (Dyer & Nobeoka, 2000). However, practitioner literature (e. g. Automotive News /Automotive News Europe) describes several(prenominal) other automakers governing this search by heavily formalized supplier relations. Contrary to cooperation during procurement and R&D, manufacturing is argued to become much more demanding towards suppliers.Automakers increasingly transfer manufacturing pretend and supply responsibility to first-tier suppliers, which payoffs in suppliers delivering to very tight just-in-time and in-sequence schedules (Alford, Sackett & Nelder, 2000). As a result, OEMs install formal controls and supplier improvement techniques, which live suppliers to the importance of ameliorating supply performance at lower costs. Hence, also automotive practice shows reason of high and low levels of informal control. Therefore, this study specifically investigates how the MCS of automotive MSRs is designed.Yet, besides illustrating MCS design, this paper contributes to explaining MCS design of automotive 5 MSRs. To our knowledge, little inter-organiza tional management control research specifically investigated accident schemes explicative power in manufacturing. Naturally, several papers study influences on MCS design in production environments, like the impact of manufacturing flexibility (Abernethy & Lillis, 1995), customization and link up mutualness (Bouwens & Abernethy, 2000), profit centre strategy (Lillis, 2002), production strategy, production technology and organization (van Veen-Dirks, 2006).However, these studies investigate characteristics explaining MCS design in one organisation, while our study focuses on inter-organizational relations. To that end, we propose a refined notional misadventure framework based on recent inter-organizational management control surmise, but specifically adapted for the manufacturing stage. This framework proposes several contingencies find the level of hazard, which is governed by different levels of management control techniques.In order to decorate the validity of the framework in practice and answer how and why automakers design their MCS, we perform an in depth case study of the relations between a facility (VCG) of the international OEM Volvo Cars and a selection of its first-tier supplier facilities. The case study provides considerable evidence of three supplier types, namely batch, low value-added just-in-sequence and high value-added just-in-sequence suppliers, visualizing the associations in the framework between contingencies, risks and management controls.These controls include both formal and informal techniques, of which organized religion building and social pressure are super valued. Most notably, VCGs structured supplier team functions as a clan and establishes informal control among participating suppliers, which strengthens control on the OEMs dyadic supplier relations. As our framework draws on case findings from other less formal IORs, it seems that our case findings offer more evidence of their external validity. That way, the findings contradict that informal controls play a minor role in automotive MSRs.In particular, VCGs MCS, combining both formal and informal controls, is argued to be designed specifically to improve supply performance. The peculiarity of this paper is organized as follows. In the trice part, we develop the supposititious contingency framework. The third part describes the case research methodology. The fourth part is the veridical case study, which presents VCG, describes three supplier types by means of contingency levels and clarifies how VCG designed the MCS governing them.In the fifth part, we discuss our findings by study VCGs management control with previous findings and elaborating on the significance of VCGs supplier team. We conclude the paper with a summary of the main findings and some avenues for further research. 6 2. Theoretical framework In this part, we develop a theoretical contingency framework for MCS design of MSRs, which can be found in figure I. > Co ntingency guess originated with the aim of explaining the structure of organizations by particular circumstances.Later, management accounting researchers adopted and further developed the conjecture in order to explain the shape of MCSs in organizations (e. g. Chenhall, 2003 Luft & Shields, 2003). Therefore, contingency theory suits this study, regarding MCS design of MSRs and its explicative variables. The central concept of the framework is the level of risk a received MSR runs. Inter-organizational management control theory proposes two types of risk, which result from five different situational antecedents, characterizing the MSR.Although we clarify both risk types separately, we stress the combinative findation of all contingencies jointly determining both levels of risk. Subsequently, this risk is governed by different management control instruments, either with a large or a small role for informal control. 3 2. 1. Performance risk The first risk type is performance r isk, defined as the hazard of not achieving the MSR objectives, despite satisfactory cooperation (Das & Teng, 2001).This type of risk is also referred to as coordination requirements (Dekker, 2004 Gulati & Singh, 1998) or the mastery of events (Tomkins, 2001). As the MSR objective concerns manufacturing as many products of the order book as possible, on time, with heavy tone at the lowest possible cost, performance risk is the risk of a supply chain interruption disturbing the realisation of this goal. Three contingencies colligate to technology increase this risk, namely complexity, task uncertainty and task interdependence (Chenhall, 2003).Yet as complexity and task uncertainty are highly related (Chenhall, 2003), the framework does not include complexity separately (cf Dekker, 2004). 3 According to van Veen-Dirks (2006), all situational characteristics and MCS characteristics are hardened jointly rather of in series(p)ly. Also Kamminga & van der Meer-Kooistra (20 07) propose that the influence of contingencies is not square offd by separately antecedent as such, but by their interaction. In addition, they suggest studying control as an integrative concept, in which all control dimensions are incorporated.Consequently, we do not propose one-on-one associations between one specific contingency, one specific type of risk and one specific type of control, suggested to suit that risk type. Instead, our model simultaneously studies the associations between situational contingencies, risks and management control techniques, as put forward by the three boxes of figure I. The boxes of contingencies and risks are put together to stress their interdependence and joint impact on management control.7 Task uncertainty relates to variableness in transformation tasks and the available knowledge of methods for performing those tasks (Chenhall, 2003). This situational characteristic determines the measurability difficulty of output and activities (Kamminga & van der Meer-Kooistra, 2007 van der MeerKooistra & Vosselman, 2000), which increases with increasing levels of complexity of both the delivered product and its operational processes (Woodward, 1965).The first complexity is related to the added value of the product and gradually increases depending on whether the supplier delivers a touchstone component or an important customized module (Cooper & Slagmulder, 2004). The second complexity regards the added value of the production process and reflects the complexity of the suppliers manufacturing processes postulate to effectively produce and deliver products as required. Task interdependence refers to the degree to which subactivities of the value creation process have been split up and do dependent on each other (Dekker, 2004).In MSRs, this interdependence is sequential (Thompson, 1967)4, because the relation involves transferring the suppliers output to the manufacturers stimulus process. The level of sequential inter dependence is impacted by the dependence level of the manufacturers operational performance on the supply case (timeliness and product timber). Moreover, the interdependence level of a specific MSR is influenced by the production flexibility required from both parties and the manufacturers lack of precise knowledge to perform activities previously done in-house.2. 2. Relational risk The second type of risk is relational risk, implying the probability of not having satisfactory cooperation because of opportunistic behaviour of the supplier, exemplified in shirking, cheating, distorting information and appropriating resources (Das and Teng, 2001). This type of risk is also referred to as appropriation concerns (Dekker, 2004 Gulati & Singh, 1998) or the generation of trust (Tomkins, 2001).Transaction cost economics (TCE) theory5 proposes three contingencies that influence relational risk and subsequently determine appropriate control asset specificity, environmental uncertainty a nd transaction absolute frequency (Williamson, 1979). Yet, as the manufacturer possesses no specific assets related to a certain supplier, at 4 Thompson (1967) identifies three levels of task interdependence from low to high, which influence the level of inter-organisational coordination and communication pooled, sequential and reciprocal interdependence.5 TCE argues that parties are only boundedly rational and behave opportunistically. Therefore, the total cost of outsourcing is the sum of both the supplied component costs and the transaction costs, including costs for negotiation, gulp up contracts, coordination, control and risk of opportunistic behaviour (van der Meer-Kooistra & Vosselman, 2000). 8 least not in the manufacturing phase of the supply chain, there is no lock-in to supplier opportunistic behaviour.6 Hence, unlike uncertainty and transaction frequency, asset specificity does not influence supplier opportunistic behaviour in MSRs and is not included in our theore tical framework. Consistent with being a central contingency research concept, environmental uncertainty also forms a powerful characteristic of MSRs (Chenhall, 2003). In particular, this contingency relates to general market uncertainties and uncertainty about unknown future(a) contingencies (Kamminga & van der Meer-Kooistra, 2007 Langfield-Smith & Smith, 2003 van der Meer-Kooistra & Vosselman, 2000).Because manufacturer and supplier interact under these uncertainties, both parties face changes over time, which require precise contracts (Dekker, 2004). However, unelaborated contract theory argues that there exist limitations in drawing up complete contracts, because all future contingencies can not be foreseen, are as well as expensive to foresee or are too expensive or impossible to contract upon (Gietzmann, 1996). Consequently, the combination of uncertainty and incomplete contracts leads to potential opportunistic behaviour of the supplier.According to TCE, more fre quent interactions lower the possibility of opportunistic behaviour (Williamson, 1979). So, to preserve a positive relation between contingencies and relational risk, we could utilize infrequency as contingency variable (e. g. Anderson & Dekker, 2005). Yet, as we study MSRs with no connection to commercial negotiations determining the contract term, we include the antecedent relational stability aim. This contingency relates to the manufacturers aim of continued future interactions with the supplier and serves to build bilateral commitment (Cooper & Slagmulder, 2004).We argue that MSRs, in which relational stability is considered required and thus aspired by the manufacturer, are subject to higher relational risk. For example, if supplier switching costs are high due to high interdependence, high commitment from the manufacturer could incite the supplier to accept lower quality or speech performance. Besides including a transaction environment characteristic and a transaction characteristic, we also incorporate a transaction caller characteristic (Langfield-Smith & Smith, 2003 van der Meer-Kooistra & Vosselman, 2000).In particular, we include supplier knowledge importance, which encompasses the degree of importance for the manufacturer to know the supplier and to be able to assess characteristics, such as management competence, trustworthiness and willingness to piece proprietary knowledge. Usually, this kind of assessment is done by means of first-hand or second-hand experience. Hence, we argue that when the 6 Obviously, suppliers do have specific assets in place, description them vulnerable to opportunistic behaviour from the part of the manufacturer.However, this study and the developed theoretical framework only focus on supplier opportunistic behaviour. 9 importance of supplier knowledge rises, the risk for insufficient or chimerical assessment and subsequent supplier opportunistic behaviour increases. 2. 3. Management control system Alth ough MCSs have been conceptualised and categorised in various ways, the current management control literature has reached a consensus on two types of management controls, namely formal and informal control instruments (Langfield-Smith & Smith, 2003).Obviously, studying the usage of informal controls compared to formal controls requires both control types to be included in the theoretical framework. Formal controls are explicitly set up to coordinate the MSR and include outcome controls and behaviour controls. Outcome control involves the measurement and evaluation of the outcomes of operations against pre-defined outcomes or targets, by using several performance measurement techniques (Ouchi, 1979 Dekker, 2004). The most important outcome metrics for MSRs are percentage of defects, quality of delivered goods and on time delivery of goods (Gunasekaran, Patel & McGaughey, 2004).Behavioural control concerns the specification and actual surveillance of behaviour, by means of rules and standard procedures (Ouchi, 1979). Additionally, behaviour control includes evaluating entry with pre-specified planning, procedures, rules and regulations (Dekker, 2004). Informal controls (also called social controls) are not explicitly designed, but are grown out of shared norms and values, shaped by frequent interaction, meetings and management attitude (Ouchi, 1979 Merchant, 1998). Especially trust building7 has emerged as a very important informal control instrument in inter-organizational MCSs (e. g.Dekker, 2004).While formal controls trim down the risk by altering the incentives for underperformance and opportunistic behaviour, trust mitigates risk by minimizing the fear of underperformance and opportunistic behaviour to occur (Das and Teng 2001). Therefore, we include three types of inter-organizational trust building, namely building contractual trust, competence trust and goodwill trust (Sako, 1992). 8 Contractual trust results from previous contractual relations o r grows during the MSR 7 Rousseau, Sitkin, Burt & Camerer (1998, p. 394).Define trust as a mental state comprising the intention to accept vulnerability, based upon positive aspects of the intentions or behaviour of another. According to them trust is not a behaviour (cooperation), or a choice (e. g. taking a risk), but an underlying psychological condition that can cause or result from such actions (Rousseau et al. , 1998, p. 395 italics added).As such, trust in itself can not be a control instrument in the MCS of MSRs. Instead, the control techniques are the actions the manufacturer performs to create and build trust in the supplier. 8 Contractual trust is based on the expectation that the supplier will keep promises and comply with agreements made, whether these10 (Sako, 1992).Competence trust is increased by previous good performance, i. e. good quality and delivery results. Moreover, competence trust results from buying activities from reputable suppliers or transferri ng competences to the supplier. Additionally, product and/or process certification and process standardisation enhance competence trust (Sako, 1992). To develop goodwill trust, Sako (1992) identifies shared values and norms as necessary, but insufficient, as transaction parties also need to show the willingness to be indebted to each other.Gulati (1995) stresses creating and growing an inter-organizational bond of friendship to trigger goodwill trust (Gulati, 1995). opposite possible goodwill trust initiators are interactive goal setting, trustworthiness written report and a long term relationship (Dekker, 2004). Next to these specific trust building mechanisms, the literature also proposes an important overall trust building technique, namely close interaction, based on mutual interests and established by means of joint decision making and joint business solving via a joint relationship board and/or joint task groups (Das & Teng, 2001 Dekker, 2004).9 Besides trust building, M SRs can be governed by another type of informal control, which Ouchi (1979) refers to as clan control. Based on shared norms, values and a common inter-organizational goal, supplier behaviour in the interest of the MSR will be reinforced, because suppliers are motivated to master the goal (Das & Teng, 2001). This incentive results from inter-organisational social pressure (Spekle, 2001) exerted by the manufacturer, which we opine is social control in its literal meaning.Because of high interdependence between manufacturer and supplier, below standard results of the supplier directly impact the manufacturers performance. Consequently, supplier management is unpleasantly confronted with manufacturer management and faces personal humiliation because of the error. Additionally, supplier management runs the risk of their reputation and personal relationship with interacting manufacturer management getting injured. Also Dyer & Singh (1998) mention reputation and personal relations as social control mechanisms, besides norms and trust.By acting as negatively valued social sanctions (Bijlsma- are contractually stipulated or not. Competence trust concerns the expectation that the supplier possesses the necessary skillful and managerial competences to deliver the order as agreed. Goodwill trust regards the expectation that the supplier shares an open commitment, with the willingness to perform activities beneficial to the MSR, but possibly uncomplete in the suppliers interest nor required by the contract (Sako, 1992). 9 Other potential overall trust building techniques in a MSR are communication via regular inter-organizational meetings (Chalos &OConnor, 2004 Das & Teng, 2001), information sharing of problem areas (Chalos & OConnor, 2004), supplier development activities (Carr & Ng, 1995), networking (Das & Teng, 2001), training (Chalos & OConnor, 2004) and the termination to which the employees of both parties understand the factors ensurin g the collaborations future success (Chalos & OConnor, 2004). 11 Frankema & Costa, 2005), these social consequences create incentives for satisfactory supplier performance and render supplier opportunism hard to sustain (Spekle, 2001).If we assume operational snags to be day-today business in MSRs, this social pressure creates an informal means to mitigate risk in MSRs. 3. Research methodology 3. 1. Case study research The existential part of this paper is based on an in depth case study, which is an investigation of a real life-time phenomenon, relying on multiple sources of evidence and benefiting from prior development of theoretical propositions (Yin, 1994). This research method suits our research that concerns refining existing interorganizational management control theory for the relatively under-explored manufacturing phase of the supply chain.10 According to Keating (1995), such theory refinement needs a clear theoretical starting point, supplemented with receptivit y to the husking of unexpected findings. To balance these theory attachment and detachment requirements, we developed a theoretical framework to guide the data collection, but at the same time used data collection techniques allowing sufficient openness. Furthermore, several interorganizational management control case studies (e. g. Cooper & Slagmulder, 2004 Dekker, 2004 Kamminga & van der Meer-Kooistra, 2007Nicholson et al. , 2006) strengthen the argument that cases allow analyse in detail the structure and influencing variables of IORs (Sartorius & Kirsten, 2005). These studies show that theory refinement of MCS design can be adequately investigated by means of qualitative research. The social meaning of inter-organizational MCSs, peculiarly regarding the use and interpretation of informal controls, and the subsequent behaviour of companies and employees is very complex.So if we only skim the surface, we will never discover how different parties interpret certain IORs and whether the MCS is designed accordingly. This argument not only justifies the choice for a case study, but also forms the reason 10 Our research corresponds to investigating a complex phenomenon within its real life context of which empirical evidence is rather limited, and answering how and why questions about this phenomenon, for which case study research is most suited (Eisenhardt, 1989 Yin, 1994).Furthermore, Keating (1995) argues that case studies suit three goals and that our theory refinement goal represents the middle ground between theory discovery (describing novel phenomena) and theory refutation (disconfirming well specified theories by obstetrical delivery in negative evidence). More specifically, our case research is of the theory spokesperson type, documenting previously unappreciated aspects of management accounting practice and identifying aspects of the illustrated theory that require reformulation or more rigorous specification (Keating, 1995, p.71).Indeed, the goal of this study is to illustrate how manufacturers design supplier MCSs, to what extent this design differs from designs in other IORs and how the design can be explained by means of a specifically adapted theoretical framework. 12 why more of this research is requested (e. g. Langfield-Smith & Smith, 2003 Dekker, 2004 van der MeerKooistra & Vosselman, 2006). 3. 2. Unit of analysis In most inter-organizational studies, the unit of measurement of analysis is one dyadic relation between two freelance parties (van der Meer-Kooistra & Vosselman, 2006).Since there exist different dyadic MSRs within one manufacturer and we study MCSs dependence on relationship contingencies, our unit of analysis consists of specific MSRs. Dyer & Singh (1998) explicitly propose the relational involve, focusing on the buyer-supplier dyad, as opposed to the industry structure take hold of and resource based view, when analyzing cooperative strategy and sources of inter-organizational competitive advantage. In order to answer the proposed research questions concerning MSR MCS design, we analyzed all relations later the manufacturer had decided to outsource the manufacturing activities.In other words, we addressed uncomplete the make-or-buy decision nor related commercial negotiations, but collected data from the start of production onwards. Furthermore, we only gathered data on standard MCSs for MSRs with good operational performance. 3. 3. Case company selection The selection of the case company and its suppliers was influenced by two selection concerns theoretical sampling (Eisenhardt, 1989), and open and pliable access to.