Mitigating risk perception in imbalanced supply chain relationships: roles of contract framing and IT integration

Abstract

PurposeThis paper aims to investigate that how to mitigate the weaker party's risk perception in imbalanced supply chain relationships by framing contracts according to complexity and recurrence. The level of information technology (IT) integration is considered as the moderator influencing the effectuation of contract framing.Design/methodology/approachThe authors conducted a questionnaire survey with 229 firms involved in imbalanced supply chains. Hierarchical regression analysis was used to test the hypotheses.FindingsThe authors found contractual complexity positively influenced performance and relational risk, while contractual recurrence negatively impacted performance and relational risk. This study further reveals the positive moderating effect of IT integration in influencing contractual complexity on relational risk and performance risk and the negative impact of IT integration in influencing contractual recurrence on relational risk and performance risk.Research limitations/implicationsOverall, this study posits the coordinating role of contracts in reducing the weaker party's risk perception in imbalanced supply chain relationships.Practical implicationsThe authors concluded by illustrating how to customize contracts based on the level of IT integration to maximize their role in reducing risk perception.Originality/valueThis study is embedded in imbalanced supply chain relationship, aiming to solve the problem of high-risk perception held by the weaker party, which is a salient threat to the sustainability of collaboration. Contract framing is proposed as an effective approach for mitigating risk perception, which should be carefully designed based on the level of IT integration of the relationship. The authors found that contractual complexity has a positive influence on performance and relational risk, but contractual recurrence has a negative impact on performance and relational risk. This study further reveals the moderating effect of IT integration on the effectuation of contractual framing.