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The transaction costs of intra-organizational captive buying and selling relationships

The transaction costs of intra-organizational captive buying and selling relationships PurposeA typical governance challenge that has emerged with the introduction of shared service centers and other forms of service-related centralization within organizations is how to balance horizontal integration with vertical accountability. From a transaction costs perspective, this study aims to analyze the relationship between intra-organizational demand and supply linkages, asset specificity and coordination costs.Design/methodology/approachFor this purpose, a case study has been conducted within a European military organization that has undergone major budget cuts, forcing it to start following a strategy of functional concentration with captive buying and selling relationships between internal customers and suppliers.FindingsThe research findings clarify that organizational hybridity may be the result. In a supplier role, the organizational elements are primarily concerned with efficiency, while operational effectiveness predominates when they are in the customer position. Also, the results show that focusing on standardized service delivery may sometime carry too far. When services are treated as being standard, while in reality, they ask for a more tailored approach, productive internal demand and supply collaboration will be put at risk. Moreover, the organizational actions needed to restore the internal supply chain’s efficacy will seriously increase transaction costs.Originality/valueDespite being mentioned as a key governance category, actual research on the practicalities of internal captive buying and selling, in relation to the functioning of SSCs, is still lacking. To advance on this topic, the present research introduces knowledge from supply chain management theory, where dedicated inter-organizational buyer–supplier interaction in the automotive industry has already received academic attention. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting & Organizational Change Emerald Publishing

The transaction costs of intra-organizational captive buying and selling relationships

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References (48)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1832-5912
DOI
10.1108/JAOC-07-2018-0058
Publisher site
See Article on Publisher Site

Abstract

PurposeA typical governance challenge that has emerged with the introduction of shared service centers and other forms of service-related centralization within organizations is how to balance horizontal integration with vertical accountability. From a transaction costs perspective, this study aims to analyze the relationship between intra-organizational demand and supply linkages, asset specificity and coordination costs.Design/methodology/approachFor this purpose, a case study has been conducted within a European military organization that has undergone major budget cuts, forcing it to start following a strategy of functional concentration with captive buying and selling relationships between internal customers and suppliers.FindingsThe research findings clarify that organizational hybridity may be the result. In a supplier role, the organizational elements are primarily concerned with efficiency, while operational effectiveness predominates when they are in the customer position. Also, the results show that focusing on standardized service delivery may sometime carry too far. When services are treated as being standard, while in reality, they ask for a more tailored approach, productive internal demand and supply collaboration will be put at risk. Moreover, the organizational actions needed to restore the internal supply chain’s efficacy will seriously increase transaction costs.Originality/valueDespite being mentioned as a key governance category, actual research on the practicalities of internal captive buying and selling, in relation to the functioning of SSCs, is still lacking. To advance on this topic, the present research introduces knowledge from supply chain management theory, where dedicated inter-organizational buyer–supplier interaction in the automotive industry has already received academic attention.

Journal

Journal of Accounting & Organizational ChangeEmerald Publishing

Published: Jun 3, 2019

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