Strong contracts: the relationship between power and action

Morgan, Royston, Doran, Desmond and Morgan, Stephanie (2017) Strong contracts: the relationship between power and action. International Journal of Operations and Production Management, 38 (1). pp. 272-294. ISSN 0144-3577

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Purpose – There is a view that strong preventative contracts are essential to control supplier
opportunism and delivery during an outsourcing implementation. This paper tests the
proposition that contractual environments, typical of outsourcing engagements, are
essentially conflictual and that context and circumstance can act to overwhelm formal
contractual and project control and lead to poor outcomes.

Design/methodology/approach – The paper reports on a supply case study focused on the
outsourced delivery of an application development in the defence sector. Data was
gathered by a participant observation in situ for a period of three years. A grounded analysis
from observations, diaries, semi-structured interviews, focus groups, documentary analysis,
and emails was carried out with six case organisations within the extended supply chain.

Findings – Collaboration between suppliers and buyers can be blocked by preventative fixed
price contracts and as a result when requirements are incomplete or vague this adversely
impacts success.

Implications for practice
Strong contractual control focused on compliance may actually impede the potential
success of outsourcing contracts especially when collaborative approaches are needed to
cope with variability in demand.

The research raises the important practical and conceptual notion that an outsourcing can
be a conflictual inter-firm phenomenon, especially where multiple actors are involved and
business uncertainty is present.

Item Type: Article
Keywords: Outsourcing, collaboration, power, conflict
Schools and Departments: University of Sussex Business School > Business and Management
Subjects: T Technology > TS Manufactures > TS0155 Production management. Operations management
Depositing User: Royston Morgan
Date Deposited: 15 Aug 2017 09:17
Last Modified: 02 Jul 2019 13:05

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