Controlling Case study Essay

Abstract This base studies focus retain plan of provider coitionships in manufacturing, a supply image build currently under-explored. Comp ard to provider relations during procurement and R&D, which enquiry found to be governed by a combination of black-tie and unaffixed influences, supplier relations in manufacturing ar more prescribed, so that they could be governed by more imposing and less admitledgeable inhibits. To refine the counsel realize system and influencing contingencies, we evoke a suppositional manikin particular(prenominal) completelyy fit for the manufacturing stage.This fabric is investigated by an in prudence showcase deliberate of the supplier c atomic number 18 control of a Volvo Cars proceedsion knack. We identify triple emblems of suppliers visualizing the associations in the example and illustrating the textiles explicative power in ( automotive) manufacturing. Furthermore, the case contradicts that supplier relations in the manufacturing phase argon governed by itty-bitty unceremonial control, beca subroutine the automaker super values the image of depose edifice and cordial pressure.Most notably, a anatomical structured supplier team functions as a clan and establishes in semi-formal control among vocalismicipating suppliers, which strengthens the automakers control on dyadic supplier relations. Keywords Management control Supplier relationships Manufacturing fortuity theory incase search Automotive 2 1. Introduction In the current scotch environment, characterised by globalisation and enhanced levels of competition, companies require an effective supply chain with inter- formational relationships (IORs) to strive for sustainable competitive adforefronttage.Not surprisingly, studies show that IORs present a high authority impact on organization exercise (e. g. Anderson & Dekker, 2005). Literature, however, bidwise betokens that many IORs do not provide the expected benefits and ar lots terminated beca do of managing difficulties (Ireland, Hitt & Vaidynanath, 2002). Academics often drive that lack of coordination and opportunistic demeanor of partners ar the cardinal main reasons for the relatively high relationship failure post (e. g. Dekker, 2004).Hence, counselling control systems (MCSs) atomic number 18 mootd to play a critical role in preventing such failure, by establishing governance mechanisms to control the relationship (Ireland et al. , 2002). The inherent goal of MCSs is to influence decision making in attaining strategic accusatorys (Nixon & Burns, 2005). In an inter-organizational delimitateting, this implies creating bilateral motivators to pursue mutual goals. Already in the mid-nineties, scholars started c every last(predicate)ing for more attention for this topic (e.g. Hopwood, 1996 Otley, 1994), and have not stopped since (e. g. van der Meer-Kooistra & Vosselman, 2006).Consequently, inter-organisational MCSs have been studie d from several angles, including outsourcing (e. g. Anderson, Glenn & Sedatole, 2000), inter-organizational cost counseling (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 pin ventures (e.g. Kamminga & van der MeerKooistra, 2007).Yet, the main emphasis was put on relative quislingism during the first stages of the supply chain, namely procurement, which involves the make-or-buy decision, partner survival of the fittest and contract number, and R&D. Although this historical focus is truely justified, circumspection control in a later phase of the supply chain, namely manufacturing, remains relatively under-explored (Cooper & Slagmulder, 2004 Langfield-Smith & Smith, 2003).However, purchased products and serve for manufacturing account for more than 60% of the average companys marrow cost (Degraeve & Roodhooft, 2001) and ar subject to cont inuous improvement with suppliers, withal requiring satisfactory counsel control. Therefore, this study illustrates how manufacturers design the MCS of supplier relations in the manufacturing phase of the supply chain, which we refer to as manufacturer-supplier relationships (MSRs).In separate words, we abstract from 3procurement and R&D influences. 1 Nevertheless, management control investigate on previous supply chain stages, offers a first abstractive insight into how a MCS for MSRs could look like. In particular, prior empirical research on IORs such as R&D coaction (Cooper & Slagmulder, 2004), strategic alliances (Dekker 2004) and common ventures (Kamminga & van der Meer-Kooistra, 2007) found MCSs that combine some(prenominal) formal controls, like outcome controls, and more snug controls, such as charge building. withal the execution of service outsourcing projects, like industrial maintenance (van der Meer-Kooistra & Vosselman, 2000), IT (Langfield-Smith & Smith, 2003) and explanation (Nicholson, J angiotensin-converting enzymes & Espenlaub, 2006) is governed by a combined MCS. So if we assume these findings to hold for early(a) IOR tokens (external validity) and default potential characteristic differences, MSRs could be expected to be governed by a combination of formal and open control as well. Yet, by winning into account differences among MSRs and other types of IORs, the MCS design could be antithetic.In that respect, we argue that manufacturing is more formal than procurement and R&D. Indications for that argument and its consequences for management control shadow be found in the management control framework of Das & Teng (2001). Based on the variables in their framework2, toil programmability and outcome quantifiability, it should be assoil that for manufacturing some(prenominal) variable levels are high, or at least(prenominal) 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 employ in MSRs, for which organization literature provides a clear distinction mingled with knowledge exploration and knowledge exploitation. On the champion hand, it is argued that the first supply chain phases, think of procurement and R&D, pack at knowledge exploration, while the later stages, like manufacturing, principally 1 Obviously, procurement and R&D do impact the manufacturing phase.Yet, as our designate is refining supplier MCS design in themanufacturing phase, we deliberately exclude these influences. In terms of research methodology, this abstraction is put into operation by canvass a MSR amidst a manufacturer facility and supplier facility totally dealing with manufacturing, while procurement and R&D are handled by their respective mother companies (cf part iii of this study research methodology). 2 Although this framework was originally get downed b y Ouchi (1979) for part in MCS design within organizations, Das & Teng (2001) further adapted it for use in IORs.Task programmability refers to the degree to which managers understand the transformation mathematical serve well in which appropriate behaviour is to take place. Outcome quantifiability refers to the ability to bank note outcome precisely and objectively. When outcome measurability is high/low and confinement 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, still when both measures are high, both outcome and behaviour control are suited control mechanisms (Das & Teng, 2001).4 charter at knowledge exploitation. On the other hand, research shows that the exploration of knowledge is best governed by informal controls, while knowledge exploitation is most adequately controlled by formal controls (Bijlsma-Frankema & Costa, 2005). Thus, found on the chara cteristics of high proletariat 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 divers(prenominal) management control designs for MSRs regarding the informal control level.Therefore, this study investigates how the MCS of MSRs is intentional and how authorised informal controls are in that design, in particular in IORs amidst an original equipment manufacturer (OEM) and suppliers of outsourced manufacturing activities in the trend-setting automotive patience (cf Womack, Jones & Roos, 1990). An automobile is a complex product manufactured with thousands of components. Consequently, also this industry increasingly outsourced non-core activities and started relying on suppliers to hit lower costs.To that end, a variety of supply chain management practices has been implemented, such as lean supply and continuous impro vement. Yet, these induce the fate for appropriate management control structures and bi-directional communication 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, takering its expertise to booster suppliers and installing softer forms of control including en aver.To govern the search for continuous improvement in manufacturing, Toyota established the Toyota Group by means of a supplier association, an trading operations management consulting division and voluntary small group learning teams (Dyer & Nobeoka, 2000). However, practician literature (e. g. Automotive News/Automotive News Europe) describes several other automakers governing this search by heavily formalized supplier relations. inappropriate to cooperation during procurement and R&D, manufacturing is argued to become much more demanding towards suppliers.Automakers increasingly trans fer manufacturing stake and supply responsibility to first-tier suppliers, which results in suppliers confronting 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 alert suppliers to the immenseness of ameliorating supply performance at lower costs. Hence, also automotive practice shows evince 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 beg offing MCS design of automotive 5 MSRs. To our knowledge, little inter-organizational management control research specifically investigated contingency theorys 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 related interdependence (Bouwens & Abernethy, 2000), profit centre system (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 theoretic contingency framework based on recent inter-organizational management control theory, but specifically adapted for the manufacturing stage. This framework proposes several contingencies determine the level of risk, which is governed by different levels of management control techniques.In order to illustrate 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 worldwide OEM Volvo Cars and a selection of its first-tier supplier facilities. The case study provides considerable tell of three suppl ier 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 accept both formal and informal techniques, of which in assurance building and kindly pressure are highly cherished. 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 remainder of this paper is organized as follows. In the second part, we deve lop the theoretical contingency framework. The third part describes the case research methodology. The fourth part is the tangible 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 comparing 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. supposititious framework In this part, we develop a theoretical contingency framework for MCS design of MSRs, which can be found in figure I. Contingency theory originated with the aim of explaining the structure of organizations by particular circumstances.Later, management accounting researchers adopted and further developed the theory 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 primordial plan of the framework is the level of risk a certain 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 independently, we stress the integrative interpretation of all contingencies conjointly determining both levels of risk. Subsequently, this risk is governed by different management control movers, every with a large or a small role for informal control. 3 2. 1. Performance risk The first risk type is performance risk, defined as the probability 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 thinkable, on time, with practiced woodland at the lowest possible cost, performance risk is the risk of a supply chain interruption disturbing the realisation of this goal. troika contingencies related to technology increase this risk, namely complexity, confinement 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 match to van Veen-Dirks (2006), all situational characteristics and MCS characteristics are compulsive jointly instead of sequentially. Also Kamminga & van der Meer-Kooistra (2007) propose that the influence of contingencies is not determined by apiece antecedent as such, but by their moveion. 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 on e 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 operable servicees (Woodward, 1965).The first complexity is related to the added value of the product and gradually increases depending on whether th e supplier delivers a measurement component or an all-important(prenominal) 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 needed 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 made 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 input process. The level of sequential interdependence is impacted by the dependence level of the manufacturers operational performance on the supply quality (timeliness and product quality). Moreover, the interdependence level of a specific MSR is influenced by the production flexibility required from both parties and the manufacturers lack of precise kn owledge to perform activities antecedently 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 teaching 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 propagation 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 and operation 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, sequent ial and reciprocal interdependence.5 TCE argues that parties are only boundedly rational and behave opportunistically. Therefore, the radical cost of outsourcing is the sum of both the supplied component costs and the transaction costs, including costs for negotiation, drawing 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 theoretical framework. Consistent with being a central contingency research concept, environmental uncertainty also forms a regnant characteristic of MSRs (Chenhall, 2003). In particular, this contingency relates to general market uncertainties and uncertainty virtually unknown future 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 detailed contracts (Dekker, 2004). However, fractional contract theory argues that there exist limitations in drawing up complete contracts, because all future contingencies can not be foreseen, are too costly 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 frequent interactions lower the adventure 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 contr act 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 necessary 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 dig the supplier to accept lower quality or delivery performance. in addition including a transaction environment characteristic and a transaction characteristic, we also incorporate a transaction party 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 managem ent competence, trustworthiness and willingness to share 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, rendering 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 lacking(p) or erroneous assessment and subsequent supplier opportunistic behaviour increases. 2. 3. Management control system Although MCSs have been conceptualised and categorised in sundry(a) 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 typ es to be included in the theoretical framework. Formal controls are explicitly set up to co-ordinate the MSR and include outcome controls and behaviour controls. Outcome control involves the measuring 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 configuration 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 divided up 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 or grows during the MSR 7 Rousseau, Sitkin, Burt & Camerer (1998, p. 394).Define trust as a psychological democracy comprising the intention to acceptvulnerability, based upon positive antepasts of the intentions or behaviour of some other(prenominal). According to them trust is not a behaviour (cooperation), or a choice (e. g. taking a risk) , but an underlying psychological creator 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 increase by previous good performance, i. e. good quality and delivery results. Moreover, competence trust results from buying activities from reputable suppliers or transferring 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 indebte d to each other.Gulati (1995) stresses creating and outgrowth an inter-organizational bond of friendship to trigger goodwill trust (Gulati, 1995). Other possible goodwill trust initiators are interactive goal setting, trustworthiness report card and a long term relationship (Dekker, 2004). Next to these specific trust building mechanisms, the literature also proposes an important boilers suit trust building technique, namely close interaction, based on mutual vexs and established by means of joint decision making and joint problem closure via a joint relationship board and/or joint task groups (Das & Teng, 2001 Dekker, 2004).9 Besides trust building, MSRs 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 divert of the MSR will be reinforced, because suppliers are motivated to achieve the goal (Das & Teng, 2001). This incentive results from inter-organisational social pressure (Spekle, 2001) exerted by the manufacturer, which we believe 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 technical and managerial competences to deliver the order as agreed. Goodwill trust regards the expecta tion that the supplier shares an open commitment, with the willingness to perform activities in force(p) to the MSR, but possibly neither in the suppliers interest nor required by the contract (Sako, 1992). 9 Other potential overall trust building techniques in a MSR are communication via unconstipated inter-organizational meetings (Chalos &OConnor, 2004 Das & Teng, 2001), information sharing of problem areas (Chalos & OConnor, 2004), supplier culture activities (Carr & Ng, 1995), networking (Das & Teng, 2001), training (Chalos & OConnor, 2004) and the extent to which the employees of both parties understand the factors ensuring the collaborations future success (Chalos & OConnor, 2004). 11 Frankema & Costa, 2005), these social consequences create incentives for satisfactory supplier performance and render supplier opportunism onerous to sustain (Spekle, 2001).If we assume operational snags to be day-today business in MSRs, this social pressure creates an informal means to mitig ate risk in MSRs. 3. look for methodology 3. 1. Case study research The empirical part of this paper is based on an in depth case study, which is an investigation of a real life 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 shade needs a clear theoretical starting point, supplemented with openness to the discovery of unexpected findings. To balance these theory fastener and detachment requirements, we developed a theoretical framework to guide the information hookup, 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, 20 04 Kamminga & van der Meer-Kooistra, 2007Nicholson et al. , 2006) strengthen the argument that cases allow investigating 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, especially 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 suite d (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 reinvigorated phenomena) and theory refutation (disconfirming well specified theories by bringing in negative evidence). More specifically, our case research is of the theory illustration type, documenting antecedently 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 analysis is one dyadic relation between two independent 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 view, focusing on the buyer-supplier dyad, as opposed to the industry structure view 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 after the manufacturer had decided to outsource the manufacturing activities.In other words, we addressed neither the make-or-buy decision nor related commercial negotiations, but smooth data from the start of production onwards. Furthermore, we only gathered data on standard MCSs for MSRs w ith good operational performance. 3. 3. Case company selection The selection of the case company and its suppliers was influenced by two selection concerns theoretical taste (Eisenhardt, 1989), and open and flexible access to.