Performance implications of peer monitoring among suppliers

Abstract

PurposeWhat are the performance implications of peer monitoring in a multiple-supplier context? Grounded in agency and social exchange theories, this study aims to examine how, when, and why peer monitoring works as a crucial control mechanism to reduce opportunism among suppliers.Design/methodology/approachA conceptual model and research hypotheses are tested using survey data from 246 respondents in 82 supplier groups.FindingsResults suggest that peer monitoring is related positively to perceived deterrence (as mediator) and negatively to opportunism, whereas the mediated relationship is moderated negatively by generalized reciprocity and positively by balanced reciprocity and negative reciprocity.Originality/valueThis study introduces the application of peer monitoring into business-to-business research and shows how it reduces opportunism. Its findings have implications for manufacturers on how to use peer monitoring to control opportunism among multiple suppliers.