Title: Resource Dependence, Alternative Supply Sources, and the Design of Formal Contracts
Abstract:Employing a resource dependence theoretical framework, the authors analyze a set of recently awarded contracts between the Environmental Protection Agency and its suppliers to determine how joint depe...Employing a resource dependence theoretical framework, the authors analyze a set of recently awarded contracts between the Environmental Protection Agency and its suppliers to determine how joint dependence, supplier dependence, and government dependence affect contract design—specifically, the decision to use a cost‐plus (flexible) contract. Findings provide evidence that organizations choose contract designs that will reduce uncertainty related to securing critical resources. However, different dimensions of dependence have different effects: (1) higher levels of joint dependence lead to more flexible governance forms; (2) the lack of alternative suppliers is a more important factor than high levels of financial dependence; and (3) the parties involved in government procurement are likely to perceive government as a unique type of organization, which, in turn, has implications for contract design choices. The authors conclude with managerial strategies for restructuring power/dependence relationships to achieve the contract design most likely to yield a surplus in the exchange.Read More
Publication Year: 2011
Publication Date: 2011-07-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 50
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