Pricing and Quality Provision in a Supply Relationship: A Model of Efficient Relational Contracts

Nistor, Cristina; Selove, Matthew

doi:10.2139/ssrn.3123844

Cited by 2 publications

(5 citation statements)

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“…The partners' main goal is to maximize the joint value of the alliance (e.g., Hagedoorn, 1993; Hamel, Doz, & Prahalad, 1989; Teece, 1992). Therefore, potential alliance partners compete for the partner most capable of providing the highest quality inputs (Das & Teng, 2000; Hennart & Reddy, 1997; Mindruta, 2013; Nistor & Selove, 2020) and more generally, for desirable partners (Chatain & Plaksenkova, 2019; Honoré & Ganco, 2020). Furthermore, each partner might bring different levels of contributions to the alliance.…”

Section: Alliance Performance Information Diffusion and Network Cenmentioning

confidence: 99%

When the weak are mighty: A two‐sided matching approach to alliance performance

Kamal

Honoré

Nistor

2021

Strategic Management Journal

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s Research Summary Network centrality is an important determinant of alliance performance. However, estimating how each alliance member's centrality affects alliance performance is challenging because the end market might value each partner's contribution differently. We solve this empirical question with a two‐sided matching model that accounts for the partners' endogenous selection and estimates the effect of each side's centrality and input quality on performance. We implement the method in the novel context of the Thoroughbred horse industry, in foal‐sharing alliances between buyers and suppliers. We find that buyer centrality has a larger marginal effect on the alliance performance than the supplier centrality because buyers, who on average are less central in our context, are more likely to diffuse valuable information to the end market. Managerial Summary Alliance partners often struggle with identifying what their contributions and their partner's contribution are to the alliance performance. We use a new method to identify each side's contribution to their alliance. Our findings offer a few recommendations to firms forming similar alliances. First, we find that the less central partner in the business network has greater impact on the alliance performance due to their ability to diffuse more valuable information to the market. Second, our results suggest that product input quality that is relatively unknown impacts alliance performance more than low and average quality. Alliance partners may benefit more from experimenting with unknown inputs. Third, more central actors may reduce spending on mass communications if valuable information comes to the market through their less central partners.

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Section: Alliance Performance Information Diffusion and Network Cenmentioning

confidence: 99%

When the weak are mighty: A two‐sided matching approach to alliance performance

Kamal

Honoré

Nistor

2021

Strategic Management Journal

Self Cite

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“…In each period, the buyer can buy either from the seller or from the outside market, but not from both. , 2020, vol. 39, no.…”

Section: Theoretical Modelmentioning

confidence: 99%

“…Note that the maximum sustainable effort during high demand is decreasing in the adjustment cost d and increasing the strength of product quantity correlation ρ. , 2020, vol. 39, no.…”

Section: Model Extension: Payment Adjustment Costsmentioning

confidence: 99%

“…To derive an efficient contract for this case, we extend the demand distribution used in Proposition 2 to include three possible demand states. In particular, , 2020, vol. 39, no.…”

Section: Model Extension: Two-part Tariffsmentioning

confidence: 99%

“…Section 4 concludes with implications for channel management and directions for future research. Online Appendix A contains an , 2020, vol. 39, no.…”

Section: Introductionmentioning

confidence: 99%

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