A contingency approach to investigating governance forms in global sourcing: The case of emerging economies

There is considerable confusion surrounding the adoption of governance mechanisms in managing international buyer-supplier relationships. This confusion has led scholars to contend that the nature as well as the type of governance mechanisms adopted in international buyer-supplier relationships must be driven by numerous contingency factors. Following this contention, in this study we use two key contingencies – sourcing complexity and internationalization strategy for sourcing – to explicate the adoption of diverse transactional and relational governance mechanisms in the successful management of international buyer-supplier relationships. We use an in-depth case study approach to collect rich data from six different Italian companies operating in China. Specifically, we involve multiple respondents from the headquarters as well as the Chinese subsidiary of these case companies. A careful analysis of the cases brings forth interesting findings into the successful combination of transactional and relational governance mechanisms. We develop as well as present propositions based on the insights gleaned from the case analysis. We also offer theoretical implications of our results along with suggestions for future research on this complex phenomenon.