Intertwined Coordination Mechanisms in Interorganizational Relationships with Dominated Suppliers

Abstract

Contemporary business society shows many examples of industrial customers that manage their smaller, dependent suppliers by using bureaucratic mechanisms. The restrictions these control processes put on the suppliers´ freedom to act have not been recognized in most studies within the field. The purpose of this article is to provide an understanding of how bureaucratic mechanisms interrelate with social mechanisms in coordinating interorganizational processes where the customer has a dominating role in the market. The article is based on observations with complementary interviews of relationships between an industrial customer and two of its suppliers. Dominated suppliers in power-based business relations may see the role of bureaucratic mechanisms as primarily protecting the relationship. A strong argument for interorganizational coordination lies in the need for different capabilities to manage dissimilar activities. However, if the dominated actors prioritize protecting the relationship over striving for efficiency, the dominating organization will be alone in deciding on the agenda for interorganizational control. Social coordination mechanisms may to some extent create flexibility in rigid bureaucratic control mechanisms. However, although social mechanisms may have the potential to enable bureaucratic mechanisms to be shunned temporarily, they are less helpful in changing the agenda of bureaucratic control. Further research is suggested on how local concerns can be included in dominating actors´ process of setting agendas for interorganizational control.