THE MISSING LINK -- AN EXPLORATORY
CASE STUDY ON BUYER-BUYER-SUPPLIER
TRIAD DYNAMICS
Master Thesis
MSc Supply Chain Management
University of Groningen, Faculty of Economics and Business
29 January 2018 by Lisa Rensink Noorderstationsstraat 1B 9716AN Groningen Student number: 3003469 Email: l.rensink@student.rug.nl Word count: 12.772
ACKNOWLEDGEMENTS
ABSTRACT
Due to globalization, firms increasingly need to compete based upon their supply chains. Often linkages are formed that stretches multiple tiers. In literature, dyadic linkages and networks have been explored, however triadic linkages lack understanding. This holds specifically for buyer-buyer-supplier linkages. This study aims to explore triadic buyer-buyer-buyer-supplier linkages and sheds light on the first emerging patterns to better comprehend network dynamics. The paper builds on the research performed by Choi and Wu (2009b), which looked at the relational postures in buyer-supplier-supplier triads. Also, we built on Kim and Choi's (2015) relational postures and intensities for dyadic linkages. To formulate propositions, this exploratory research was conducted through semi-structured interviews with the suppliers of ten different supplier triads. The results show interesting patterns between members of buyer-buyer-supplier triads. Also, at the different stages for the triad (input, modus operandi and output) the conducted research raised fascinating outcomes. Triadic linkages could be a mixture of relational postures and intensities. These relational postures and intensities could affect all stages of the triadic linkages. The supplier is the driver of the triad’s innovation and often bears all the risks. However, findings show that buyer-buyer-supplier triads favored applying formal governance mechanisms to mitigate these risks. Additionally, when more physical knowledge transfer and development techniques are applied, the triad becomes more cooperative. The findings show that knowledge sharing holds major benefits to increase performance of the output. Moreover, to mitigate other risks and adversarial behavior, the companies rely on cooperative knowledge development. The research established a framework and propositions for better comprehension of buyer-buyer-supplier triads and its dynamics. Better understanding these triadic linkages and dynamics (in other words; the missing link) helps organizations and their network to gain a competitive advantage.
Keywords:
CONTENT
1 INTRODUCTION ... 6 2 THEORETICAL FRAMEWORK ... 8 2.1 Triads ... 8 2.2 Input ... 9 2.3 Modus Operandi ... 12 2.4 Output ... 132.5 Manufacturing versus Services ... 14
2.6 Conceptual Framework ... 15 3 METHODOLOGY ... 17 3.1 Research Design ... 17 3.2 Research Setting ... 17 3.3 Measurement ... 18 3.4 Data Collection ... 18 3.5 Data Analysis ... 20 4 FINDINGS ... 22 4.1 Case Description ... 22 4.2 Stage Description ... 26 4.2.1 Input ... 26 4.2.2 Modus operandi ... 28 4.2.3 Output ... 31 4.3 Stage Patterns ... 32
4.3.1 Input and modus operandi ... 32
4.3.2 Modus operandi and output ... 35
4.3.3 Input on output ... 36
4.4 Manufacturing versus Services ... 37
5.3 Output ... 42
6 CONCLUSION ... 44
6.1 Conclusion ... 44
6.2 Theoretical Implications ... 45
6.3 Managerial Implications ... 46
6.4 Limitations and Suggestions for Future Research ... 47
REFERENCES ... 49
APPENDIX A INTERVIEW PROTOCOL ... 55
APPENDIX B ANALYSIS FINDINGS ... 60
1 INTRODUCTION
Firms need to innovate to survive in a competitive market (Choi & Kim, 2008; Gunasekaran, 1998; Mentzer, 2001; Munksgaard, Stentoft, & Paulraj, 2014; Rossetti & Choi, 2008; Yongjiang & Gregory, 2005). Firms compete based upon their supply chains due to increasing global competition (Sengupta, Heiser, & Cook, 2006). To be innovative, firms need to have a reliable supplier base. That is why buyers often form linkages with multiple suppliers (Lawson, Cousins, Handfield, & Petersen, 2009; Leuschner, Rogers, & Charvet, 2013; Rose-Anderssen, Baldwin, Ridgway, Allen, & Varga, 2008; Wang, Xiao, & Yang, 2014). Choi and Wu (2009a) state that it is essential to capture the essence of a network by examining how firms affect each other and how linkages affect other linkages. The smallest unit of analysis in a network where both phenomena occur is a triad. An example of such a linkage is a buyer-supplier-supplier (BSS) triad (Choi & Wu, 2009a); three firms extending two tiers where there are two suppliers and one buyer. Another form is a buyer-buyer-supplier (BBS) triad; a linkage between one supplier and two buyers. In researching supply networks, studies in the past have focused on dyadic linkages (two firms), while there is a lack of understanding triadic linkages (Bastl, Johnson, & Choi, 2013; Choi & Wu, 2009a, 2009b; Huo, Flynn, & Zhao, 2017; Madhavan, Gnyawali, & Jinyu, 2004). Since triads are fundamental for supply networks, it is crucial to understand how triadic linkages affect each other (Bastl et al., 2013; Choi & Kim, 2008; Choi & Wu, 2009a; Madhavan et al., 2004).
Recent research focused on managing bigger networks. However, researchers discovered that a network is more difficult to manage and they were unsure how and what could be managed beyond dyadic linkages (Choi & Wu, 2009b). “Simply, dyads are inadequate in capturing the interactive nature inherent in a network” (Choi & Wu, 2009a: 265). Therefore, the motives for and the effects of triadic linkages between two buyers and their supplier are yet undiscovered. Current research displays a lack of understanding BBS-triads (Bastl et al., 2013; Choi & Wu, 2009b). It remains unclear what the dynamics of BBS-triads are.
It is imperative to understand BBS-triads to further understand the network dynamics to survive in the competitive market (Choi & Kim, 2008; Choi & Wu, 2009a). Additionally, the service sector is rising and attention is required to understand its supply network dynamics (Sengupta et al., 2006). Sengupta et al. (2006) state that it is imperative to understand the dynamics of the linkages and their effect on the network, for both services and manufacturing, since it could lead to earlier adopting beneficial strategies in the different stages of BBS-triads.
Therefore, this exploratory study aims to answer the following research question: “What
kind of patterns could be detected in BBS-triads when it comes to input, modus operandi and output?” Also, it tries to answer the following sub question, which is: “How do manufacturing and service BBS-triads' dynamics differ on its input, modus operandi and output?”
In this qualitative case study, ten triads are compared within the manufacturing and service sector to answer the research questions. The dynamics are studied based on input, modus operandi and output. Input is based upon the type of relationships that linkages have, the power asymmetry between firms and the motives to link with each other. Modus operandi comprises the dynamics of the triad. These consist of; how organizations communicate with each other, what kind of tensions and risks arise and how triads govern these. Lastly the output of the triad is studied. We delimit ourselves to innovational benefits and performance outcomes. A framework will be presented to get insight in the dynamics of BBS-triads. Additionally, this study will formulate and elaborate propositions. Managers could take the framework and managerial implications into account when determining future strategic steps for their organizations.
2 THEORETICAL FRAMEWORK
2.1 TriadsFirms could be linked with each other on many levels, see Figure 1. The most common form is a dyadic linkage (buyer-supplier). However, when analyzing supply networks the triadic form is relevant, because the relational dynamics in triadic linkages influence supply networks (Bastl et al., 2013; Bengtsson, Kock, Lundgren-Henriksson, & Näsholm, 2016; Bouncken, Gast, Kraus, & Bogers, 2015; Choi & Wu, 2009b; Friedl & Wagner, 2016; Gnyawali & Park, 2011; Wang et al., 2014).
FIGURE 1 Dyad and Triads
This research focuses on buyer-buyer-supplier (BBS) triads (Choi & Wu, 2009b). Since there is a lack of understanding, there is not an existing framework to build upon. The following framework is proposed, see Figure 2. The dotted line indicates that a linkage could be present or not. The framework is derived from dyadic supplier, dyadic buyer and triadic buyer-supplier-supplier (BSS) research. It is reframed in terms of their input, modus operandi and output, to fit BBS-triads:
1. Input, the intensity plus posture of linkages, motivation and power asymmetry of the triad; 2. Modus operandi, the process during the triad;
FIGURE 2 Framework BBS-Triad
2.2 Input
Posture and intensity of the linkage. As mentioned earlier, relational posture (which is having a
cooperative or adversarial linkage) is the foundation of the balance theory in triads (Bastl et al., 2013; Choi & Wu, 2009b; Madhavan et al., 2004). The balance theory enhances the
Wu, 2009b). Accordingly, the linkage between these two is cooperative. It is assumed that the linkage of buyer2 will contradict the other two linkages, resulting in an adversarial linkage.
Unbalanced states have three adversarial linkages or an adversarial and two cooperative linkages. An unbalanced state is a state where inequity and instability arise. “To the extent that relational uncertainty is posed on the firms in the triad, which costs additional resources when dealing with the other firms, the pressure is there to reduce such uncertainty and move toward a balanced state” (Choi & Wu, 2009b: 13). An imbalance in the triad is created when one
adversarial and two cooperative linkages occur. When the supplier has a cooperative linkage with both buyers, but the buyers have an adversarial linkage with each other, this is called unbalanced state #1. The buyers may have the feeling that they have to compete with each other for their supplier (Choi & Wu, 2009b). In unbalanced state #2, tension between the supplier and buyer2 could bring buyer1 in an advantageous position. It is possible that buyer1 considers buyer2 is
mistreated and subsequently, values their linkage more than its cooperative linkage with the supplier. Which results in a cooperative linkage between the buyers. For unbalanced state #3 the whole triad is adversarial, as buyers and supplier do not trust each other. They will express their lack of trust via negative actions like confrontation or high rivalry (Hong & Hartley, 2011).
FIGURE 3
Additionally, Kim and Choi (2015) value intensity as an important aspect to reflect the strength of the linkages. The intensity of the linkages between the organizations could be close or at arms-length. Kim and Choi (2015) contradict the study of Choi and Wu (2009b) stating that linkages are not only cooperative and close or adversarial and at arms-length, but could also be cooperative and at arms-length or adversarial and close. In an adversarial and close linkage, members do not perceive each other as good friends, but have to deal each other out of necessity (Kim & Choi, 2015). They consider being evil to each other as a means to keep the present tie functional. On the other hand, “parties retain autonomy in their respective operations, while remaining positive toward each other” (Kim & Choi, 2015: 64) for cooperative and at arms-length linkages.
Motivation. Looking at the relational posture and intensity, buyer and supplier could
become closer and/or more cooperative when they see the benefits of joint problem solving and joint product development1. This happens, because the buyer and supplier together are more
likely to identify and address the problems that exist in components and processes. Leading to solutions that could be integrated into their own processes (Carter, Kosmol, & Kaufmann, 2017; Gunasekaran, 1998; Hong & Hartley, 2011; Mentzer, 2001; Rossetti & Choi, 2008). For buyer-buyer linkages, often the motivation is to innovate, share risks, divide costs, gain technological improvements, increase power, or to expand knowledge and create value (Ritala & Sainio, 2014; Rose-Anderssen et al., 2008). Other researchers (partly) support these motivations (e.g., see Akpinar & Vincze, 2016; Bengtsson, Raza-Ullah, & Vanyushyn, 2016; Gnyawali & Park, 2011). How this works in (BBS-)triads is currently unknown.
Power asymmetry. Organization’s power is embedded in the amount of resources they
(2013). However, the paper of Bastl et al. (2013) is conceptual (lacking empirical support) since triads have not been studied extensively.
2.3 Modus Operandi
Knowledge transfer and development. The sharing of information is crucial for supply chain
competitiveness and could be improved if the members’ systems are integrated with each other (Asare, Brashear, Yang, & Kang, 2013; Chae, Olson, & Sheu, 2013; Gunasekaran, 1998; Leuschner et al., 2013; Munksgaard et al., 2014). Organizations could integrate and transfer knowledge on an operational, a tactical and/or strategic level (Leuschner et al., 2013). Sometimes members of the triad, specifically (adversarial) buyers, find it hard to share information. When the buyers recognize the benefits, the incentives to share information increases, making
organizations less inclined to withhold information for their own use (Huo et al., 2017).
Knowledge flows are important to increase organization's competitiveness. External knowledge transfer could add to internal knowledge of a member, resulting in novel knowledge creation. With this novel knowledge, the triad’s competitiveness could be increased (Tippmann, Sharkey Scott, & Mangematin, 2014).
Tensions and risks. Several authors discovered that tensions and risks arise in
supplier and buyer linkages. Currently these are unexplored for BBS-triads. In a buyer-supplier linkage the tensions and risks are; unwanted knowledge spillover towards another buyer, having an opportunistic partner, having a conflict with the partner, selective knowledge sharing of the partner and a lack of integration (De Bondt, 1997; Majchrzak, Jarvenpaa, & Bagherzadeh, 2015; Revilla & Knoppen, 2015; Ritala, Huizingh, Almpanopoulou, & Wijbenga, 2017; Rossetti & Choi, 2008; Tangpong, Michalisin, Traub, & Melcher, 2015). Between two buyers, the balance between competition and collaboration could be missing and could result in the same tensions and risks that buyer-supplier linkages face (Bakshi & Kleindorfer, 2009; Bengtsson, Raza-Ullah, et al., 2016; Fernandez, Le Roy, & Gnyawali, 2014; Gnyawali & Park, 2011; Ilvonen & Vuori, 2013; Peng et al., 2012; Raza-Ullah, Bengtsson, & Kock, 2014; Ritala & Sainio, 2014; Tidström, 2009, 2014; Veldman & Gaalman, 2015; Walley, 2007).
Governance. When organizations collaborate, the amount of trust, showing commitment,
2001; Pulles, Veldman, & Schiele, 2016; Rose-Anderssen et al., 2008; Skjøtt-Larsen, Schary, Mikkola, & Kotzab, 2007). When trust is applied as an informal governing mechanism in buyer-supplier linkages, internal resources could shift from compliance to sharing knowledge and creating common goals (Revilla & Knoppen, 2015; Rossetti & Choi, 2008). “If monitoring is expensive, it may cost more to enforce the contract than it would to use incentives to promote the desired behavior” (Rossetti & Choi, 2008: 529). Being jointly dependent on each other will enforce the moral control against opportunism in buyer-buyer linkages (Huo et al., 2017). In addition to that, joint action will increase the level of empathy between buyers and they will develop opportunities to benefit from (Huo et al., 2017). Sometimes trust is also substituted with formal contractual control to monitor and properly deal with competitors or when a linkage is adversarial (Rose-Anderssen et al., 2008). A contract could be applied to mitigate risks. For example the knowledge spillover risk in buyer-supplier linkages or buyer-buyer linkages (Bastl et al., 2013). What kind of governing mechanisms could be applied in (BBS-)triads are yet to be discovered.
2.4 Output
Innovation. Innovation is often the desired output of a triad (Carter et al., 2017; Choi & Kim,
2008; Gunasekaran, 1998; Hong & Hartley, 2011; Mentzer, 2001; Munksgaard et al., 2014; Peng et al., 2012; Pulles et al., 2016; Ritala & Sainio, 2014; Rossetti & Choi, 2008; Skjøtt-Larsen et al., 2007; Yongjiang & Gregory, 2005). A buyer could improve its supplier’s innovation level by investing in the supplier to improve its capabilities or resources (Mesquita, Anand, & Brush, 2008; Nagati & Rebolledo, 2013). When two buyers separately do not have sufficient resources, they could collaborate to innovate together (Ritala & Sainio, 2014).
Performance indicators. Slack and Lewis (2011) characterize performance aims as
cooperative linkages often focus on the performance of the linkages. The cooperative players who focus on the supply network may achieve greater performances (Choi & Kim, 2008; Slack & Lewis, 2011). What the output is for (BBS-)triads is currently undiscovered.
2.5 Manufacturing versus Services
Since the study is conducted in both the manufacturing and services sector, it is important to know the differences between them. Several authors note the following characteristics per sector (Ellram, Tate, & Billington, 2004; Frohlich & Westbrook, 2002; Hipp & Grupp, 2005; Maglio & Spohrer, 2008; Sengupta et al., 2006):
TABLE 1
Characteristics Manufacturing and Services
Sector Manufacturing Services
Production By supplier By supplier and buyer (co-creation)
Value delivery Machines Human labor
Physicality Tangible Intangible
Product Inventory possible Perishable
Variability Homogeneous Heterogeneous
View Product Process
Performance Objective Subjective
Further, these differences influence the dynamics per stage. To answer the sub question, these differences are explained below.
Input. To co-create value in services; the competences, knowledge and assets between
members are shared (Maglio & Spohrer, 2008). Looking at the intensity of linkages, it is important for service networks to have high levels of collaboration and transparency since they reduce disruptions (Sengupta et al., 2006).
Modus Operandi. Sharing information is the foundation of an effective triad to reduce
co-creation has shifted towards less face-to-face contact (Maglio & Spohrer, 2008). Due to the same reasons, the manufacturing sector shares information by adopting integration strategies (Cao & Zhang, 2011; Chae et al., 2013; Frohlich & Westbrook, 2002; Kim, 2009).
Governing metrics in service supply chains are created together because supplier and buyer need to work together to create the service itself (Maglio & Spohrer, 2008). It is crucial to understand what the customer desires and how to meet these needs (Ellram et al., 2004).
Output. The performance of manufacturers is positively impacted by the use of inventory.
Services cannot hold inventories, since its perishability, to deal with uncertain demand. This makes them less flexible (Ellram et al., 2004; Frohlich & Westbrook, 2002). When service supply chains want to improve the performance or innovate, members often invest in human labor and expertise (Ellram et al., 2004; Maglio & Spohrer, 2008).
To understand the differences between manufacturing and services, and its implications on the dynamics per stage, it is important to keep these differences in mind. In the manufacturing sector, all goods are tangible, homogeneous and objective which makes them easier to analyze. The output of the service sector is intangible, heterogeneous and subjective. Being subjected to human interaction, this sector is harder to comprehend.
2.6 Conceptual Framework
A conceptual framework is developed to understand the dynamics of BBS-triads. See Figure 4. The assumed sequence of the stages starts at input, through modus operandi to ultimately output. While there is a lack of understanding BBS-triads, it could also be possible that the stages influence each other reciprocally. With this framework the research will answer the following research question: “What kind of patterns could be detected in BBS-triads when it comes to input,
3 METHODOLOGY
3.1 Research DesignFor explorative studies, where explanations are undiscovered, qualitative research is
recommended to apply (Blumberg, Cooper, & Schindler, 2011; Ellram, 1996; Karlsson, 2016; Yin, 2009). For this study, BBS-triads’ dynamics is lacking explanations, which makes qualitative inductive research a good choice (Handfield & Melnyk, 1998; Karlsson, 2016). Qualitative research includes; in-depth interviews, observations of participants or videos, projective techniques and psychological testing, case studies, street ethnography, elite interviewing and document and content analysis (Blumberg et al., 2011). Using this type of research, the researcher could go in-depth, understand the full nature of the phenomenon and uncover areas for theory development (Handfield & Melnyk, 1998; Karlsson, 2016). This study is about theory building and a theory “may be viewed as a system of constructs and variables in which constructs are related to each other by propositions” (Bacharach, 1989; in Karlsson, 2016: 168).
Inductive research could be done by an in-depth case study with interviews or a
longitudinal field study (Handfield & Melnyk, 1998; Karlsson, 2016). Since there is a set time frame and longitudinal research is conducted over a long period of time, the in-depth case study with interviews is the best option (Handfield & Melnyk, 1998; Karlsson, 2016). Additionally, case studies are very useful when there is uncertainty in the definition of the constructs based on theory (Karlsson, 2016).
3.2 Research Setting
To research triad dynamics, an innovative environment needs to be present where buyer-supplier linkages are present and at least two buyers.
The case selection criteria were:
1. Organizations develop innovative products or have innovation projects. 2. Supplier linkage with buyers needs to be on a business to business level. 3. Supplier has a minimum of two buyers.
Differentiation between manufacturing and services was done by the article
recommendations of Ellram et al. (2004) and Frohlich and Westbrook (2002). Ellram et al. (2004: 18) classifies services as “transportation, communication, utilities, wholesale trade, retail trade, finance, insurance, real estate, public administration”.
3.3 Measurement
A method of qualitative research is conducting interviews. Interviews could be structured, structured or open. Since the subject is completely unexplored, the researcher opted for a semi-structured interview because you could go into depth with known factors and also create a broader picture (Blumberg et al., 2011). According to Blumberg et al. (2011) semi-structured interviews are interviews where the questions are formulated beforehand, but the answers are left open and the researcher has the opportunity to ask more questions to deepen the answer.
Asking the triads the same questions gives a clear picture on input, modus operandi and output. Also, you could compare the given answers, since they are asked the same questions. All interviewees were asked questions based on the proposed framework.
3.4 Data Collection
To conduct this study, ten triads were selected to explore. Therefore, the triad is the unit of analysis. For each triad the supplier was asked to give information about the triad dynamics. The triad’s suppliers are located in The Netherlands. The researcher contacted companies via already established contacts, LinkedIn and directly visiting companies.
TABLE 2
Overview of Selected Companies
Triad nickname
Supplier’s
product/service Buyers’ nickname
Function participant
Duration interview (h:m:s) Water Water purification
(chlorine dioxide)
1 Dealer Malaysia 2 Dealer Australia
Managing Director 1:04:51
Aerospace Aerostructures 1 Aircraft
2 Helicopter Sr. Program Manager & Integrated Program Team leader 57:00 Light Technical wholesale (LED light) 1 Installation Company 2 Dealer Light Head Marketing 47:43 Truck Semi-trailers trucks 1 Transporter 2 Trailer Leasing Sales Director 52:11
Labels Printed labels 1 Intermediary
2 Intermediary
Operations Manager 1:04:24
Transport1 Transport 1 Construction Material
2 Supermarket Chain Location Manager 54:56 Electricity1 Technical infrastructures 1 Utility Company 2 Utility Company Trainee Operations 49:28 Electricity2 Technical electricity services 1 Insurer 2 Insurer Segment Manager 45:36
Transport2 Transport 1 Technical Wholesaler
2 Decorative Material
Sales Manager 31:32
Gas Technical gas services
1 Manufacturer Gas 2 Manufacturer Gas
To look at the differences between the sectors, the triads are also grouped per sector. See Table 3. This is based on the primary process of the supplier. However, the buyer’s
characteristics nuance this division.
TABLE 3 Triad Sector
Sector Triads
Manufacturing Water, Aerospace, Light, Truck and Labels
Services Transport1, Electricity1, Electricity2, Transport2 and Gas 3.5 Data Analysis
To ensure the quality of the research, the validity and reliability are addressed. For the construct validity and to reduce observer bias, the interviewees checked their transcripts (Ellram, 1996; Yin, 2009). Additionally, multiple sources of evidence, ten triads, are used. Internal validity is achieved by transcribing the interviews thoroughly and apply pattern matching wherever possible to obtain knowledge (Ellram, 1996; Karlsson, 2016). However, since the research is exploratory, internal validity is less of an issue, because the research is not concerned with justifying causal relationships (Ellram, 1996; Yin, 2009). External validity is addressed by framing the research by existing theory and using multiple cases (Karlsson, 2016). To enhance the generalizability of the study, cross-case patterns were drawn from the cases (Karlsson, 2016). A limitation that could arise is the lack of systematic handling of data. To counteract this, the researcher will
systematically report all evidence as elaborated on in the data collection paragraph (Yin, 2009). The reliability is encountered by setting up an interview protocol and questions, transcripts of the interviews and methodology chapter to replicate this study (Karlsson, 2016). The last limitation could be that the input (and output) could not be answered during the interviews because this is unknown or invisible at the supplier or for the employee. The researcher counteracts this by sending the interview questions to the interviewees in advance.
The input for the coding process were the answers on the interview questions. The
Ellram, 1996). Then the second process, axial coding, was conducted. The categories were summarized into themes to provide insight into the data, interactions and conditions (Ellram, 1996). Selective coding is not conducted, since the research is exploratory and not explanatory (Ellram, 1996; Karlsson, 2016).
To analyze the coding outcomes, a within-case analysis was performed per stage. It is important to become familiar with each case to see the unique patterns and to be useful to do the cross-case analysis (Eisenhardt, 1986; in Karlsson, 2016). To see the differences and similarities between the triads and stages, the cross-case analysis was performed (Blumberg et al., 2011). This is an essential step in case research to enhance the generalizability of conclusions drawn from these cases (Karlsson, 2016). Additionally, the researcher looked at the influences that the characteristics of the sector may have had on the dynamics per stage.
4 FINDINGS
The following section discusses the findings of the within-case analysis and the cross-case analysis on the stages input, modus operandi and output. First a case description is provided of the triads’ classification as discussed by the balance theory (relational posture) of Choi and Wu (2009b) and relational intensity of Kim and Choi (2015). The coding outcomes provided the information for these analyses. Appendix B provides a clear overview of the data that was generated by the coding procedure for the within-case and cross-case analysis. Further validation of the findings can be found in the coding scheme itself, in Appendix C. Due to the extensive found data, we chose to highlight outstanding discoveries and patterns. As mentioned in the methodology, nicknames are used for the BBS-triad and its members. Ergo, no articles are used for the nicknames.
4.1 Case Description
Water’s triad distributes chlorine dioxide for water purification all over the world. The buyers are the dealer of the product and have an adversarial and at arms-length linkage because they are direct competitors. Resulting in “a lot of competition [between the buyers]. We had to give them their own product to sell on the same market [to reduce tensions].” [Water] Water’s supplier is the most powerful and has an adversarial but close linkage with Dealer Malaysia and a
cooperative and at arms-length linkage with Dealer Australia. However, the supplier favored Dealer Australia because they are more independent and showed better performances.
This is the same for Truck. Truck’s supplier produces semi-trailers for trucks. The supplier and buyers have a cooperative and close linkage. Additionally, “[Transporter] has its own means of transports, but they also lease [extra] towing capacity, for example at Trailer Leasing.” [Truck] Hence, Trailer Leasing is the most powerful in this triad. The buyers have a cooperative linkage, which is at arms-length.
For Labels the supplier, a label printer, is the most powerful. With Intermediairy1 the supplier has a cooperative and close linkage, with Intermediairy2 this is cooperative but at arms-length. The buyers do not have a linkage because they “both make the same products for the same retailer2. They are competitors but they will not score points against each other.” [Labels] This
competition makes the triad unbalanced.
Transport1 delivers transport services to Construction Material and Supermarket Chain. “A lot is possible in coordination with Construction Material. You cannot do that with
Supermarket Chain. That does not exist, they are very rigid.” [Transport1] Based on that, the supplier has a cooperative and close linkage with Construction Material, but an adversarial and at arms-length linkage with Supermarket Chain. No linkage is present between the buyers because they operate in different markets and do not work with each other. Supermarket Chain is the most powerful in this triad. The supplier favors one buyer over the other, since Supermarket Chain is the most powerful. This is clear for all members, and all members of the triad accept this division, making this triad balanced.
Electricity1’s supplier builds technical infrastructures and applies maintenance to them. “The linkage is pretty distant [for both utility companies]. [...] If you win the buyers after the tender, the contact is limited. Only when there is work coming in, other materials should come or the safety regulations are increased [then you consult each other].” [Electricity1] Hence, the linkages between the supplier and both utility companies are cooperative but at arms-length. Utility Company2 is the most powerful. However, no linkage is present between the buyers since they are direct competitors and do not want to collaborate with each other. This rivalry makes the triad unbalanced.
negotiations or they do not want to be dependent on one company.” [Electricity2] Here the supplier is the most powerful and has adversarial linkages with the insurance companies. With Insurer2 the linkage is at arms-length, however with Insurer1 the linkage is close because “we have purchased a collective health insurance at Insurer1, in exchange we will interpret the maintenance contract differently.” [Electricity2] No linkage is present between the buyers because of the high rivalry. This rivalry makes the triad unbalanced.
Transport2’s supplier delivers transport services to Technical Wholesaler and Decorative Material. Here the supplier is the most powerful and with both buyers the linkage is cooperative and close. Both buyers have a cooperative linkage, but at arms-length. The supplier shows commitment and encourages the buyers to engage in cooperation, making the triad balanced. “For [Technical Wholesaler] we realize cost savings because we combine shipments [with Decorative Material, and vice versa]. That is no problem for them.” [Transport2]
Gas’ supplier delivers the technical gas infrastructures and applies maintenance for Manufacturer Gas1 and Manufacturer Gas2. The supplier of Gas has a cooperative and close linkage with
Manufacturer Gas1. This buyer is also the most powerful in the triad. Manufacturer Gas2 has an
adversarial and at arms-length linkage with Manufacturer Gas1 and the supplier, because “the Canadians keep flying in. They do not stay longer than two years. It is hard building a linkage that way.” [Gas] The supplier favors one buyer over the other. Since Manufacturer Gas1 is more powerful, all members accept this preference and that makes the triad’s dynamics balanced.
Looking at the triads, they show four different dyadic linkage levels that transform into the balanced or unbalanced state for a triad. If a linkage was close and cooperative, this is called level 1, since that is the state where members have the most intense linkage. Level 2 is when a linkage is cooperative, however at arms-length. When members perceive the linkage as close but adversarial, this is level 3. The lowest level is level 4, here the linkage is at arms-length and adversarial. For classification purposes based upon the balance theory of Choi and Wu (2009b), it was assumed that there was an adversarial (and at arms-length) linkage between the buyers if a linkage did not exist or was unknown (level 4).
is found in most of the cases. Whereas unbalanced #1 (all cooperative linkages, majority at arms-length) and unbalanced #3 (all adversarial, close or at arms-arms-length) has been found in minority of the cases.
FIGURE 5
4.2 Stage Description
First the within-case is discussed per stage. Only remarkable different findings of triads will be highlighted in this part.
4.2.1 Input
Posture and intensity of the linkage. The triads displayed a mixture of different postures;
cooperative or adversarial. At least one linkage was cooperative per triad. However, one triad, Electricity2, only had adversarial linkages. Four different states were found; balanced #1 and #3 and unbalanced #1 and #3. The triads also displayed a mixture of intensities; being close or at arms-length. Only for Aerospace all existing linkages were close, making the triad balanced. However, for Electricity1 they were all at arms-length. Combined with the high rivalry, these triad’s dynamics are unbalanced. For Aerospace and Light the mother company of the supplier acquired one buyer of the triad. “Our mother company bought a number of the factories from Aircraft.” [Aerospace] This makes the triads’ dynamics tenser because the other buyer feels that the acquired buyer is preferred and therefore feels left out. That buyer may become more distant and less likely to engage in cooperation.
Power asymmetry. For the majority of the triads the supplier was the most powerful as
noted for Water, Aerospace, Light, Labels, Electricity2 and Transport2. However, when a buyer was the strongest, they often exploited their power to get the supplier to favor them as seen in the cases Truck, Transport1, Electricity1 and Gas. Most interesting was that for Transport1 one buyer had an adversarial and at arms-length linkage with the supplier and the other buyer had a close and cooperative linkage with the supplier. However, the supplier still favored the first buyer over the other because that buyer was using its power position. “Supermarket Chain is of course a very large organization. They have a dictating attitude. With respect to Supermarket Chain we are a relatively small player.” [Transport1] If buyers abuse their power position, pressure on the linkages in the triad increase. When the supplier cannot survive without their strongest buyer, the whole triad has to suffer the buyer’s abuse of their power position.
Motivation. An abundance of factors were mentioned as motivation for the triads. Joint
majority of the triads lowering or sharing costs and risks are seen as additional motivations. Nonetheless, only the buyer benefits in Transport1 and Light. “[Supermarket Chain] tries to help and to steer but only for their own wallet.” [Transport1] Further recorded motivations are
transferring and expanding knowledge, expanding value creation and joint or solo product development. Also, to innovate together and to share knowledge or assets. The last recorded motivation is remarkable since Gas’ buyers are competitors on the same market. “They have to use each other's installations every now and then.” [Gas]
Table 4 summarizes the main input findings for these triads. TABLE 4
Summarized Findings Input
Dynamic Triads Posture an d in te n sity li n k age
Posture (Mostly) adversarial; Water, Aerospace, Transport1, Electricity2, Gas
(Mostly) cooperative; Light, Truck, Labels, Electricity1, Transport2
Intensity (Mostly) at arms-length; Water, Labels, Transport1, Electricity1, Electricity2, Gas
(Mostly) close; Aerospace, Light, Truck, Transport2
Pow
er
asymm
et
ry
Supplier; Water, Aerospace, Light, Labels, Electricity2, Transport2
M
otivat
ion
Joint problem solving; Water, Aerospace, Light, Truck, Labels, Transport1, Electricity1, Electricity2, Transport2, Gas
Share/reduce risks; Light, Truck, Gas
Divide/lower costs; Aerospace, Labels, Transport1, Electricity1, Transport2
Transfer/expand knowledge; Water, Light, Truck, Labels, Electricity1, Electricity2, Gas
Expand value creation; Water, Light
Joint product development; Aerospace, Light, Truck, Transport1 Solo product development; Electricity1, Transport2
Innovate together; Aerospace, Electricity2 Sharing knowledge/assets; Aerospace, Gas
4.2.2 Modus operandi
Knowledge transfer and development. In most of the cases, knowledge was transferred or
developed between linkages on a daily or weekly basis. However, for Water this contact was monthly and mostly non-physical. “Every two years we visit Dealer Australia, we Skype four times a year, email once every two weeks or month. With Dealer Malaysia we only WhatsApp a lot.” [Water] Light only uses physical transfer methods, namely visiting or having meetings. All other triads use both physical and non-physical (email, telephone or IT-system) methods to transfer information or develop knowledge on an operational or tactical level. Transport2 is the only one who uses all the methods for physical and non-physical contact.
All triads transfer information about orders on an operational level. Developing
Tensions and risks. Selective knowledge sharing or opportunistic behavior was noted as
most common tension or risk for the triads. Looking at the reported tensions and risks, these only had a negative impact on the supplier. “Sometimes we have to do business at cost prices to keep the flow in our factory. That is a special power position [the buyers] have.” [Truck] Other reported tensions and risks are underperformance of a member, lack of integration, unwanted knowledge or asset spillover and a conflict with a member. “One of our buyers said that we agreed upon a working installation upfront. Then we said that the buyer did not enclose that there was a pole we had to build around, so we had to weld extra. Then the buyer said that we could have seen it during our visit. […] Leading to even more discussion.” [Gas] However, these reported tensions and risks only harm dyadic linkages, they do not influence the whole triad. Only Light shared that they did not encounter or foresee tensions or risks in the triad, however “Installation Company is also a dealer of Dealer Light’s LED lights. Let’s suppose that
Installation Company has a project and they do not put LED lights there from Dealer Light. That could cause tension [between Installation Company and Dealer Light]. [...] Though this has never happened before. Actually, we are now looking for a problem that is not there.” [Light]
Governance. All triads use informal and formal mechanisms to govern the tensions and
Table 5 summarizes the key findings per triad in the modus operandi stage. TABLE 5
Summarized Findings Modus Operandi
Dynamic Triads Kn o wle d ge tr an sfe r an d d eve lop m en t
Operational; Water, Aerospace, Light, Truck, Labels, Transport1, Electricity1, Electricity2, Transport2, Gas
Tactical; Aerospace, Truck, Labels, Transport1, Electricity1, Electricity2, Transport2, Gas
Strategic; Electricity2, Gas
T en sion s an d r isk s
Selective knowledge sharing; Water, Aerospace, Truck, Labels, Transport1, Electricity1, Electricity2, Gas
Opportunistic behavior; Water, Aerospace, Truck, Transport1, Electricity1, Electricity2, Transport2, Gas
Underperformance; Water
Lack of integration; Aerospace, Truck, Electricity1 Unwanted knowledge/asset spillover; Truck, Transport1, Electricity1, Transport2
Conflict; Aerospace, Transport1, Electricity1, Gas
Gover
n
an
ce
Informal Trust; Water, Light, Truck, Labels, Transport1, Electricity2, Gas Transparency; Labels, Transport1, Electricity1, Electricity2, Transport2, Gas
Commitment; Water, Electricity2
Joint dependence; Labels, Transport2, Gas
Formal Contract; Water, Aerospace, Light, Truck, Transport1, Electricity1, Electricity2, Gas
4.2.3 Output
Innovation. The supplier, for all triads, is the driver of innovation. Sometimes a buyer requested
the supplier to innovate. “The wish to innovate came from Utility Company2. This wish to innovate, demanded by the clients, is shared within our company.” [Electricity1] “With
Supermarket Chain. They want us to work with silent trailers3. You are forced to do those things. We also want to do new things, we like to be in the lead.” [Transport1] The minority of the triads indicated that the level of innovation is positively impacted by the use of the buyer’s knowledge. However, when a buyer requested an innovation, only Electricity2 thought using their buyer’s knowledge has a positive impact on the triad’s innovation level. “But Insurer1 and Insurer2 also ask for innovation. We do not [put Insurer1 and Insurer2 together at the same table at the same time]. However, we did do a symposium with Insurer2 and invited Insurer1 to come and to share the generated knowledge with them.” [Electricity2]
Performance indicators. All triads stated that quality is a crucial performance indicator,
Table 6 summarizes the main findings in these triads for output. TABLE 6
Summarized Findings Output
Dynamic Triads
In
n
ovation
Supplier drives innovation; Water, Aerospace, Light, Truck, Labels, Transport1, Electricity1, Electricity2, Transport2, Gas By buyer request/demand; Water, Aerospace, Transport1, Electricity1, Electricity2
Use buyer’s knowledge to increase innovation level; Light, Truck, Electricity2, Gas
M ost im p or tant per for m an ce in d icat or
Shared Quality; Light, Truck, Labels Dependability; Aerospace Costs; Electricity2 Shared by majority triad members Quality; Gas
Dependability; Transport1, Transport2 Costs; Electricity1 Differentiated (weak performance) Quality; Water 4.3 Stage Patterns
Following the within-case analysis, a cross-case analysis was performed to see if the triad’s dynamics of one stage had an impact on another stage.
4.3.1 Input and modus operandi
Light’s supplier has cooperative and close linkages with their buyers. Also, the supplier and buyer visit each other often. Light’s buyers also see each other often during visits. This could aid the triad to become more cooperative (and closer), preventing tensions and risks. Water’s
members have contact once a month on an operational level only. This could result in
due to the generated tension. Shifting the linkages with this buyer to an adversarial state. Both Aerospace and Electricity2 encounter opportunistic behavior that harms only the supplier of the triad. They are the most powerful members of their triad. Aerospace and Electricity2 rely mostly on formal governance methods, probably to govern the opportunism in the triad.
Truck, Transport2 and Gas have noted opportunism as their major risk. For the triads Truck and Gas, the risk is probably related to the power position of the buyer. Despite this, the triads rely mostly on informal governance mechanisms. However, for Transport2 the supplier has the strongest position. Additionally, Transport2’s supplier does not make use of contracts but relies mostly on transparency, joint dependency and monitoring. “We are a family company and very transparent in what we do. Actually, we are quite vulnerable because of that.” [Transport2]
Electricity1 noted most tensions and risks compared to all the triads. Reason may be that Utility Company2 is the most powerful, not the supplier. Subsequently, the triad is at arms-length
and thus unbalanced. However, the triad is cooperative. Electricity1’s future focus is to lower its costs and to jointly solve problems. “Now the engineer from Utility Company1 calculated
everything and our own engineer has to check that and re-engineer it.” [Electricity1] The risk of lack of integration seems to negatively influence the ability to lower the costs and jointly solve problems.
Aerospace’s and Labels’ supplier is the most powerful member and its triad members have shared motivations. Labels noted only one risk; the selective knowledge sharing. However, that relates back to the simultaneous growth of the companies and affected the linkage’s intensity. “Both organizations have grown a lot. It has become more complex. We and Intermediary1 had the same size in the past. The directors had direct contact with each other, no layers between them. […] When the members grew, the structure changes relationship-wise.” [Labels]
One clear pattern has been found between motivation and governance. When a triad’s aim is to lower or divide costs, they mostly rely on transparency and monitoring as governing
also prefer formal mechanisms for joint product developments or innovations. However,
Aerospace did not note knowledge spillover as risk, what is contradicting to their motivation and governing mechanisms. It could be possible that the governing mechanisms work so well, that the risk is not there or noted.
Table 7 summarizes the main patterns that were found for input and modus operandi. TABLE 7
Patterns Input and Modus Operandi
Input Modus operandi Triads
Cooperative and close linkages + visits prevent tensions and risks closer and more cooperative triad
Light
Adversarial linkage + low intensity contact underperformance more adversarial triad
Water
Supplier most powerful rely mostly upon informal governance methods
Transport2
Supplier most powerful opportunistic behavior harms supplier rely upon formal governance methods
Aerospace, Electricity2
Buyer most powerful + rely mostly upon informal governance methods risk opportunism from buyer(s)
Truck, Gas
Buyer most powerful + at arms-length increased tensions and risks in triad
Electricity1
Tensions and risks negatively influences activities to achieve motivations
Electricity1
Supplier most powerful shared motivations among triad Aerospace, Labels Lower or divide costs aim transparency and monitoring as
governing mechanisms
Labels, Transport1, Electricity1, Transport2 Innovate together or joint product development formal
governing mechanisms preferred
4.3.2 Modus operandi and output
Triads that are confronted by selective knowledge sharing encounter weaker performances or differentiated performance aims, as seen for Water, Transport1, Electricity1, Transport2 and Gas. Water has the lowest intensity of transferring and developing knowledge. The triad performs the weakest on performance aims that do not fit the scope of the supplier. Probably one member has different views and because of the lack of communication, this could result in differentiated performance aims and realized performances of the triad. Additionally, Water’s performance differed vastly. Dealer Malaysia has a different performance aim than the triad and its
performance is weak. Water’s supplier and Dealer Malaysia have a close but adversarial linkage and claim that commitment is their informal governing mechanism. Dealer Malaysia did not show that commitment. Aerospace and Electricity2 also have a similar linkage with one buyer, but they mostly rely on formal governing mechanisms. Water has contracts, but does not actively enforce them. “Dealer Malaysia has never lived up to what they said. [In the exclusive dealer contract] a minimum annual purchase quantity is specified to keep the contract. Often members sign it, but can’t live up to its expectations, for example Dealer Malaysia. As long as we have [no alternatives], we let them struggle.” [Water] Aerospace, Light, Truck, Labels, Electricity2, Transport2 and Gas pointed out that one of their main focuses is to increase the quality, when transferring and developing knowledge techniques are applied. However, quality is not
Aerospace’s, Electricity2’s and Transport2’s main performance focus for the triad. “Every day one employee from Decorative Material comes to supervise the order picking [and quality.][…] Most important aim for Decorative Material is cost control.” [Transport2]
Table 8 summarizes the found patterns for modus operandi and output. TABLE 8
Patterns Modus Operandi and Output
Modus operandi Output Triads
Low intensity transferring and developing knowledge + adversarial and close linkage + use informal mechanism (commitment) weak performance on aims that are not shared in the triad
Water
Selective knowledge sharing + opportunistic behavior weaker performance/differentiated performance aims triad
Water, Transport1, Electricity1, Transport2, Gas
Need for triad’s knowledge to innovate + high intensity transferring and developing knowledge shared performance aims
Electricity2
Developing and transferring knowledge increased quality product/service
Aerospace, Light, Truck, Labels, Electricity2, Transport2, Gas
4.3.3 Input on output
Often for innovation projects, which are demanded by the buyer(s) of the triad, the supplier is the most powerful. This is illustrated by the triads Water, Aerospace and Electricity2 and often resulted in a closer or more cooperative linkage. However, Transport1 and Electricity1 are forced to do innovations because the buyer is the strongest member of the triad. This made the linkage shift towards at arms-length. “With retail distribution the prices are very competitive and Supermarket Chain wants to pay even less. If our rate is minimal, how can we even lower those costs.” [Transport1]
experienced, but they use the manpower of their buyer(s). “We can develop that ourselves, but we cannot build it. We hire them to build it here in our warehouse.” [Light]
Table 9 summarizes the main patterns that were found between input and output. TABLE 9
Patterns Input and Output
Input Output Triads
Supplier most powerful + innovation demanded by buyer(s) often closer/more cooperative triad
Water, Aerospace, Electricity2 Buyer most powerful + innovation forced by buyer(s) triad more
cooperative and at arms-length
Transport1, Electricity1 Increased level of innovation by use of buyer’s knowledge closer
triad
Light, Truck, Electricity2, Gas
4.4 Manufacturing versus Services
To highlight the differences per sector, each stage will be explained by the characteristics and its implications per stage these characteristics have.
4.4.1 Input
Manufacturing shows more cooperative and close triads than services. For services the buyer(s) often were most powerful in the triad, this could be because services are co-created and are influenced by human interaction. Also, service triads acknowledged motivations that were more focused upon one member of the triad, not the whole triad.
4.4.2 Modus operandi
4.4.3 Output
5 DISCUSSION
Researchers believe supply networks will gain more importance due to rising competition. The following section discusses the interpretation of the findings and will state propositions. The objective of this study was to answer the following research question: “What kind of patterns
could be detected in BBS-triads when it comes to input, modus operandi and output?” and
following sub question: “How do manufacturing and service BBS-triads' dynamics differ on its
input, modus operandi and output?”
5.1 Input
Most triads are predominantly cooperative. Surprisingly, one triad only records adversarial linkages but still functions, despite the high rivalry and competition. Triads recorded a mixture of intensities. However, it is striking that one triad was completely at arms-length. More
surprisingly, linkages could be cooperative and at arms-length or adversarial and close,
contradicting the balance theory of Choi and Wu (2009b). They stated that linkages could only be cooperative and close or adversarial and at arms-length. However, findings show functioning triads where a mixture of these relational postures and intensities exist. Remarkable is that manufacturing has more cooperative linkages than services. This is especially distinctive since services are co-created by buyer and supplier and cooperation could reduce disruptions (Ellram et al., 2004; Maglio & Spohrer, 2008; Sengupta et al., 2006). You would expect services
collaborating more, but they do not according to the data. This leads to the first proposition: Proposition 1: BBS-triads linkages could be a mixture of cooperative or adversarial and close or at arms-length.
behavior (Choi & Wu, 2009b). Sometimes buyers will force their supplier into doing innovation projects just for them. Considering this, the following proposition is formulated:
Proposition 2: In BBS-triads, when one buyer is the most powerful, they often abuse their position to favor them; this harms the BBS-triad’s cooperative attitude and linkages’ closeness.
What all triads have in common is the motivation for joint problem solving (Carter et al., 2017; Gunasekaran, 1998; Hong & Hartley, 2011; Mentzer, 2001; Rossetti & Choi, 2008). What is odd is that for some triads the supplier, not in co-creation with buyer(s), does the product development. What is even more striking is that the triads that do product developments solo are services. Manufacturing triads also noted more knowledge enhancing motivations than service triads. According to researchers, services are co-created and benefit from higher information sharing (Ellram et al., 2004; Maglio & Spohrer, 2008; Sengupta et al., 2006). This leads to the next proposition:
Proposition 3: BBS-triads’ (collaborative) activities are driven by a myriad of motivations; the dominant motivation factor is joint problem solving.
5.2 Modus Operandi
Almost all triads use both non-physical or physical methods for knowledge transfer and
development (Asare et al., 2013; Chae et al., 2013; Gunasekaran, 1998; Leuschner et al., 2013; Munksgaard et al., 2014). Service triads have the highest intensity when it comes to knowledge transfer. This could aid in co-creating services (Ellram et al., 2004; Maglio & Spohrer, 2008). Visiting each other could be the reason that some triads are more cooperative and closer, preventing tensions and risks. Service triads also show more use of IT systems compared to manufacturing (Maglio & Spohrer, 2008). This most likely has to do with the globalization and shift to less face-to-face contact (Evangelista et al., 2015; Maglio & Spohrer, 2008). In
Knoppen, 2015; Ritala et al., 2017; Walley, 2007). The next proposition is formulated based upon this:
Proposition 4: BBS-triads become more cooperative (and closer) when more physical knowledge transfer and development techniques are used.
Tensions and risks also arise in these triads. One triad that had daily physical interactions with each other did not encounter tensions or risks. Hence, we state that the intensity of contact could aid in lowering these tensions and risks (Huo et al., 2017). What was especially striking is that most tensions and risks were reported for predominantly cooperative and/or close triads. Selective knowledge sharing or opportunistic behavior are most reported (Majchrzak et al., 2015; Revilla & Knoppen, 2015; Ritala et al., 2017; Rossetti & Choi, 2008; Tangpong et al., 2015). This influences the postures and intensities of the triad. Leading to the following proposition: Proposition 5: Selective knowledge sharing, opportunistic behavior and lack of integration in BBS-triads may shift the triad towards more adversarial and/or arms-length status.
One service triad reported the most tensions and risks compared to the other triads. The buyer was the most powerful and the whole triad was at arms-length. The triad only benefits the buyer and the supplier has to bear all the tensions and risks. Ergo, this triad has a major lack of integration and alignment what influences the intensity of the triad negatively (Ritala et al., 2017; Tangpong et al., 2015; Tidström, 2014; Walley, 2007). There were no significant differences between the manufacturing and service sector regarding tensions and risks. This leads to the following proposition:
Proposition 6: Tensions and risks usually only have a negative impact on the supplier of the BBS-triad, even when the supplier is the most powerful.
All triads use at least one formal governing mechanism. Service triads attach more
prevent knowledge spillovers (Bengtsson, Raza-Ullah, et al., 2016; Fernandez et al., 2014; Ilvonen & Vuori, 2013; Ritala et al., 2017; Tidström, 2014). Following this thought, the following proposition is stated:
Proposition 7: At least one formal governing mechanism is used in BBS-triads as a back-up when the BBS-triads rely on informal governing mechanisms.
What was remarkable is that in one completely adversarial (service) triad, all members used trust as an informal governing mechanism (Hong & Hartley, 2011). When trust is applied, the intensity of sharing knowledge and creating common goals in the triad should increase (Revilla & Knoppen, 2015; Rossetti & Choi, 2008). Contradictory, trust did not increase
knowledge transfer. Using commitment or being jointly dependent on each other was not noted as an important informal mechanism for BBS-triads (Huo et al., 2017). Transparency is the most important informal governing mechanism for services. This aligns with the theory of Sengupta et al. (2006) who believe that disruptions could be prevented by being more transparent. For the triads that are motivated most by cost reduction, often rely on transparency as well. For manufacturing the most noted governing mechanism was applying trust. However, suppliers choose to apply an additional formal mechanism for linkages that possess high risks and have a more adversarial posture. Usually in the form of a contract. This is in line with the study of Rose-Anderssen et al. (2008). Leading to the following proposition:
Proposition 8: When BBS-triads are more adversarial and possess high risks, formal mechanisms are preferred as governing mechanisms.
5.3 Output
In all triads innovation is driven by the supplier and was often noted as the desired output (Carter et al., 2017; Choi & Kim, 2008; Gunasekaran, 1998; Hong & Hartley, 2011; Mentzer, 2001; Munksgaard et al., 2014; Peng et al., 2012; Pulles et al., 2016; Ritala & Sainio, 2014; Rossetti & Choi, 2008; Skjøtt-Larsen et al., 2007; Yongjiang & Gregory, 2005). This leads to the following proposition:
Proposition 8: For BBS-triads, the supplier is the driver of innovation.
level or collaborations between buyers to innovate together (Mesquita et al., 2008; Nagati & Rebolledo, 2013; Ritala & Sainio, 2014). Usually the innovation level is positively impacted by generating ideas from buyers and subtracting knowledge from them (Ellram et al., 2004; Maglio & Spohrer, 2008; Tippmann et al., 2014). Following this thought, the following proposition was generated:
Proposition 9: In BBS-triads usually only the supplier invests in innovation with tangible resources (money or assets) and the supplier uses the intangible resources (knowledge) from their buyer(s) to increase the level of innovation.
One manufacturing triad had the most differentiated performance aims and also
performed the weakest. In addition, they had the lowest intensity of transferring and developing knowledge (Choi & Kim, 2008; Choi & Wu, 2009a; Slack & Lewis, 2011). What was most surprising is that one buyer underperformed, leading to differentiated performance aims and performance outcomes. The supplier or other buyer did not force to use the formal governing mechanism. The lack of information sharing negatively impacted the performance. This is also the case for other triads (Choi & Kim, 2008; Slack & Lewis, 2011). Considering this, the following proposition was formulated:
Proposition 10: Tensions and risks – especially selective knowledge sharing and development – negatively impact the (perception of the) performance of the BBS-triad and the alignment of the BBS-triad’s goals.
The main output aim, for the majority of the triads when applying knowledge transfer and development techniques, is to improve the quality of the product or service. Even when they state quality is not the main performance aim for the triad. Knowledge is combined to complement the quality and thus the performance outcome of buyer-supplier linkages (Asare et al., 2013; Chae et al., 2013; Gunasekaran, 1998; Leuschner et al., 2013; Munksgaard et al., 2014; Tippmann et al., 2014) and buyer-buyer linkages (Peng et al., 2012). Quality is, next to innovation, the most sought-after output of BBS-triads. Leading to the following, and last, proposition:
6 CONCLUSION
This research adds to the balance theory and enhances its applicability for BBS-triads. It combines the theory of Choi and Wu (2009b) regarding relational posture, as well as the relational intensity as defined by Kim and Choi (2015). In addition, the research identifies patterns between different stages for BBS-triads; input, modus operandi and output. 6.1 Conclusion
The objective of this study was to answer the research question: “What kind of patterns could be
detected in BBS-triads when it comes to input, modus operandi and output?” Additionally,
answering its sub question: “How do manufacturing and service BBS-triads' dynamics differ on
its input, modus operandi and output?” Looking at the input of BBS-triads – consisting of
relational posture and intensity, power asymmetry and the motivation to link – triads could display a mixture of different relational postures and intensities; cooperative, adversarial, close or at arms-length. Regarding the power position of the triad, no distinct pattern was found. Either suppliers or the buyers were most powerful. Buyers often abused their power position, to force suppliers into innovations. This could drive the linkage towards a more adversarial and at arms-length status. However, suppliers are always the driver of triad innovations. Often the service triads’ buyers are more powerful, this might have to do with the element of co-creation.
However, services noted less cooperative triads. Expected was that they would cooperate more. Despite this, the data showed otherwise. Triads noted multiple reasons for their linkages; sharing or reducing risks, expanding knowledge or creating value, transferring knowledge, (solo or joint) development of products/services, innovating together, sharing knowledge or assets and dividing or lowering costs. Most important, they all noted a focus upon joint problem solving. Looking at service triads, buyers usually relied on their supplier regarding product development.
conflicts and unwanted knowledge or asset spillover. However, most noted risks were selective knowledge sharing, opportunistic behavior and lack of integration. These risks, when present, shift the triad towards adversarial and/or arms-length states. Notwithstanding, the tensions and risks usually only negatively affect the supplier, even when suppliers are most powerful. To govern these risks, BBS-triads use at least one type of formal mechanism (a contract or
monitoring), based upon the relational postures and intensities that exist in the triad. When the linkage is adversarial or when the risks are high, formal mechanisms are preferred (Rose-Anderssen et al., 2008). Service triads preferred formal mechanisms, most likely caused due to the heterogeneity and risk of knowledge spillover (Ellram et al., 2004; Fernandez et al., 2014; Maglio & Spohrer, 2008; Sengupta et al., 2006; Tidström, 2014). Informal mechanisms are also used in BBS-triads; showing commitment, joint dependency, transparency or trust. The latter two are most preferred since transparency helps BBS-triads to be more competitive with other triads as it reduces disruptions (Sengupta et al., 2006). In addition, trust aids to create common
performance aims.
Regarding the output of BBS-triads, often the supplier is the driver of innovation. The supplier invests with money, assets and/or knowledge whereas the buyers only deliver knowledge to innovate. The tensions and risks in the modus operandi stage negatively affect the (perception of the) performance. To create common goals in BBS-triads, sharing knowledge would increase this alignment. Findings suggest when BBS-triads engage in sharing and developing knowledge, their desired output is to increase quality of their product or service. Quality is, next to
innovation, the most sought-after output of BBS-triads. BBS-triad members should therefore stimulate the use of knowledge transfer and development mechanisms, promoting integration. There were no significant differences between the manufacturing and services sector regarding output of BBS-triads.
6.2 Theoretical Implications
