How do governance and relational rents evolve during the maturity stages of supply chains?

Abstract

Purpose The purpose of this paper is to analyse how the use of governance mechanisms in buyer-supplier relationships in the supply chain (SC) are related to the maturity of relationships and the generation of relational rents. Design/methodology/approach Several studies have analysed interorganisational governance in SCs. However, to the best of the knowledge, no study has focussed on the use of different types of governance mechanisms through maturity stages in buyer-supplier relationships and as a consequence, its relational rents. The aim of this paper is to analyse how the use of governance mechanisms in buyer-supplier relationships in the SC are related to the maturity of relationships and the generation of relational rents. To achieve this goal, this paper carried out multiple case studies. Findings The results show that changes in the use of formal and informal governance mechanisms contribute to the generation of relational rents and relationship continuity. This paper identified that a reduction in power asymmetry by the buyer may allow for the greater use of informal governance mechanisms and greater relational rents. Moreover, the paper highlights that a relationship might advance or regress throughout the maturity stages, according to the commitment of the buyer to maintain the relationship with the supplier. Research limitations/implications The study has the limitation of having chosen polar case studies in the organic sector in Brazil to illustrate the theoretical discussion and propose a model to be tested via further research. This study considered institutional factors in the analysis that might not affect dyadic relationships in other sectors and countries. Practical implications As a managerial contribution, the results indicate that when the buyer uses both kinds of mechanisms complementarily and encourages the utilisation of informal mechanisms, relationships become more resilient to adverse events. Social implications The study also contributes towards valuing the role of organic farmers and encourages the government and business community to reflect on the challenges and opportunities in the sector. Originality/value Based on four propositions created by evaluating both the empirical data and previous literature, this paper proposes a buyer-supplier relationship maturity model rather than an overall SC maturity model. This paper also elaborated on the arguments of Dyer et al. (2018), proposing a causal explanation of how a relationship might advance or regress throughout the maturity stages, according to the commitment of the buyer to maintain the relationship with the supplier using governance mechanisms. This change in maturity stages, in turn, affects relational rents for the dyad.