Hybrid governance complementary to contract manufacturing: a study case

Cruz, Valcir de Jesus Sousa da; Paulillo, Luiz Fernando

doi:10.1590/0104-530X3363-16

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Articles • Gest. Prod. 23 (04) • Oct-Dec 2016 • https://doi.org/10.1590/0104-530X3363-16 copy

Hybrid governance complementary to contract manufacturing: a study case

Authorship SCIMAGO INSTITUTIONS RANKINGS

Abstract:

This work aims to present governance forms complementary to contracts in the transactions of a brand-owner company (OEM) using the conceptual framework of hybrid governance according to the theoretical approach of the New Institutional Economics. This case study was conducted through interviews with product development, procurement, and manufacturing managers. We measured their perceptions on the coordination of eletronic manufaturing service (EMS) suppliers through complementary mechanisms to contracts. We found that the agreed-upon contracts have proven insufficient to govern the transactions due to the uncertain business environment and high investments in specific intellectual property assets and brand. The analyses conducted show that the electronics manufacturing service transactions are coordinated by mechanisms complementary to contracts through a hybrid governance structure of relations of trust, mutual influence, and leadership.

Keywords:
Contract manufacturing; Hybrid governance; Consumer electronics industry; Transaction cost economics; Supply chain management

Unit of analysis			Measured factors
Unit of analysis	Governance modes	Determinant parameter	Attributes
Contract manufacturing transaction	Trust	Reciprocity	• Reputation • Loyalty • Communication • Negociation • Responsiveness • Incentive • Informality • Confidenciality
	Mutualism	Cooperation	• Relatedness • Sharing • Collaboration • Compensation • Agreement • Complementarity • Adequacy • Availability
	Leadership	Authority	• Imposition • Centralization • Coercion • Control • Coordenation • Dirigisme • Complexity • Prescription

Contractor	Transaction	Contractee
OEM (Owns brands of printers, notebooks and PCs)	cabinets, keyboards and peripherals ←———————————→ (Acessories) motherboard and hard disk assembly ←———————————→ (Subsystems) Mounting of notebooks/tablets/smartphones ←———————————→ (complete systems)	A B C

Company	Locational	Physical	Knowledge	Dedicated	Brand	Temporal
OEM	+	++	+++	+	+++	+++

Uncertainty factors	OEM
Demand	+++
Development of required competence	++
Time to reach market volume	+++
Time to reach lauching point	+++
Logistics and delivery deadline	++
Achievement of product and process reguirements	++

Company	Type of Contract	Average frequency of transactions
A	Formal Contract	15 days
B	Formal Contract	30 days
C	Formal Contract	30 days

		Trust Dimensions																								Dominant Perception
	Contracted Product	Dominant Perception			Loyalty			Communication			Negotiation			Reciprocity			Incentive			Informality			Confidenciality
	Contracted Product	E	P	M	E	P	M	E	P	M	E	P	M	E	P	M	E	P	M	E	P	M	E	P	M
A	Cabinet Keyboard Peripherals	+ + +	+ + +	+ + +	+	+ +	+ + +	+ + +	+ + +	+ + +	+ + +	+ + +	+ +	+ + +	+	+ + +	+ + +	+ + +	+ + +	+ + +	+ + +	+ + +	+ + +	+ +	+ +	+ + +
B	Motherboard and Hard disc	+ + +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ + +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +
C	Notebook Tablet Smartphone	+ + +	+ +	+ +	+ + +	+ +	+ +	+ + +	+ + +	+ + +	+ +	+ +	+ +	+ + +	+ +	+ +	+ +	+	+	+ +	+ +	+ +	+ +	+ +	+ + +	+ +

		Mutualism dimensions																								Dominant Perception
	Contracted product	Relatedness			Sharing			Collaboration			Compensation			Aggreement			Complementarity			Adequacy			Availability
	Contracted product	E	P	M	E	P	M	E	P	M	E	P	M	E	P	M	E	P	M	E	P	M	E	P	M
A	Cabinets, keyboards & periferals	+ + +	+ + +	+ +	+	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+	+ +	+ + +	+ +	+ +	+ + +	+ +	+ +	+ + +	+ +	+ +	+ +
B	Motherboards and hard discs	+ + +	+ +	+ + +	+ +	+ + +	+ +	+ + +	+ +	+ + +	+ + +	+ +	+ + +	+ +	+ + +	+ +	+ + +	+ +	+ + +	+ + +	+ + +	+ +	+ +	+ + +	+ + +	+ + +
C	Notebooks tablets & smartphones	+ + +	+ + +	+ + +	+ + +	+ +	+ + +	+ + +	+ + +	+ + +	+ +	+ + +	+ +	+ + +	+ +	+ +	+ +	+ + +	+ + +	+	+	+ +	+ + +	+ +	+ + +	+ + +

		Leadership dimension																								Dominant Perception
	Contracted product	Imposition			Centralization			Coersão			Control			Coordination			Dirigism			Complexity			Prescription
	Contracted product	E	P	M	E	P	M	E	P	M	E	P	M	E	P	M	E	P	M	E	P	M	E	P	M
A	Cabinet, keyboard & peripheraalss	+ + +	+ +	+ +	+	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+	+ +	+ +	+ +	+ +	+ + +	+ +	+ +	+ + +	+ +	+ +	+ +
B	Motherboards and hard discs	+ + +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ + +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +	+ +
C	Notebooks, tablets e smartphones	+ + +	+ + +	+ + +	+ + +	+ + +	+ +	+ + +	+ + +	+ + +	+ +	+ +	+ + +	+ + +	+ +	+ +	+ +	+ + +	+ + +	+ + +	+ + +	+ +	+ + +	+ +	+ + +	+ + +

	OEM’s perception
EMS	Trust	Mutualism	Leadership
(A) Acessories	Strong	Moderate	Weak
(B) Subsystems	Moderate	Strong	Moderate
(C) Complete systems	Moderate	Strong	Strong

Universidade Federal de São Carlos Departamento de Engenharia de Produção , Caixa Postal 676 , 13.565-905 São Carlos SP Brazil, Tel.: +55 16 3351 8471 - São Carlos - SP - Brazil
E-mail: gp@dep.ufscar.br

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