Impact of Culture in Contractual Buyer-Supplier Relationship
Speaker
Abstract
| In today’s economy, an ever-increasing number of companies are dealing with partners from across the world giving rise to a growing need to understand the impact of cultural differences on business interactions. This study researches the effect of culture in contractual buyer supplier agreements using transaction cost as a theoretic lens. A large number of relationships translate into contracts between partners, but very few studies have investigated the effect of cultural differences on these written agreements. Contracts are adjusted based on the needs and requirements of specific partners in the relationship. The current study takes contractual data from a European multinational company and investigates the impact of culture on buyer-supplier relationships using Hofstede’s four culture dimensions: power distance, masculinity, individuality and uncertainty avoidance. The main finding is that contract completeness increases as the cultural gap between the buyer and supplier widens. The results for individual culture dimensions, measured cumulatively per buyer-supplier pair, are mixed. Finally, asset specificity has the expected positive effect on the level of contract completeness, while more frequent transactions result in lower levels of contract completeness. This implies that cultural background is a factor in contractual buyer supplier relationships and need to be taken into account in global supply chain management. |
| Contact information: |
| Dr. K.J. Roodbergen |
