Understanding the Generation of Value along Supply Chains: Balancing Control Information and Relational Governance Mechanisms in Downstream and Upstream Relationships

• Main Authors: Juan Manuel Ramon-Jeronimo, Raquel Florez-Lopez, Maria Angeles Ramon-Jeronimo
• Format: Article
• Language: English
• Published: MDPI AG 2017-08-01
• Series: Sustainability
• Subjects: supply chain relationships; value creation; value capture; information sharing; trust; supply chain flexibility; information visibility; corporate sustainability
• Online Access: https://www.mdpi.com/2071-1050/9/8/1487

Firms are involved in supply chains to achieve operative efficiency, develop strategic advantages, and generate financial profits. However, there is limited evidence regarding how governance mechanisms influence the generation of value from collaboration. Furthermore, how a particular buyer or supplier position provides benefits to partners is unclear. In this paper, we examine the roles of management control information as both a governance mechanism and a source of dynamic capabilities, and its interaction with relational variables to create and capture value following a demand-side perspective. Two separate studies are developed using multigroup structural equation modelling, which analyse buyer and supplier positions played by the firm as a complex supply chain node. The results demonstrate that the characteristics of information sharing have different impacts on value, depending on the role played in the relationship. Although timely information sharing appears to be the key source of operative and financial value in downstream relationships, disaggregated information sharing generates additional strategic advantages in upstream relationships. The presence of different control-trust frameworks mediates the process of value generation, leading to different managerial and theoretical implications.