Journal of Business Research 63 (2010) 863–869

Contents lists available at ScienceDirect

Journal of Business Research

Inter-organizational cooperation in buyer–supplier relationships: Both perspectives

Kyung Kyu Kim a,1, Seung-Hoon Park b, Sung Yul Ryoo a,⁎, Sung Kook Park a
a
Graduate School of Information, Yonsei University, Republic of Korea
b
Backbone Network Purchasing Department, Purchasing Strategy Office, KT, Republic of Korea

a r t i c l e i n f o a b s t r a c t

Article history: Most empirical investigations of inter-organizational cooperation within channel dyads investigate the
Received 1 February 2008 phenomenon from the perspective of only one partner. However, because investigating from both partners'
Received in revised form 1 February 2009 perspectives is important especially when interdependencies exist between the channel partners, this study
Accepted 1 April 2009
attempts to examine both perspectives in buyer–supplier relationships and explain why differences, if any,
arise. The data that this study requires were collected from buyers responsible for supplier relationships in a
Keywords:
Supply chain management
Korean telecommunication service provider and from their partners. The results show that switching costs
Inter-organizational cooperation and inter-organizational trust are significant determinants of cooperation for buyers; technological
Buyer–supplier relationship uncertainty and the reciprocity of the relationship are significant determinants for the suppliers. In both
Telecommunication industry sample sets, goal consistency significantly affects inter-firm cooperation.
© 2009 Elsevier Inc. All rights reserved.

1. Introduction
In the new economy, as firms become more dependent on outside
partners to meet sophisticated customer needs, managing inter-
organizational relationships effectively becomes important to gaining
a competitive advantage. Consequently, inter-organizational coopera-
tion receives considerable research attention. However, most empiri-
cal investigations of inter-organizational cooperation within channel
dyads have investigated the phenomenon from the perspective of only
one partner (e.g., Bensaou, 1997; Kim and Umanath, 2005). Investi-
gating inter-organizational cooperation from the perspective of both
partners is important, especially when channel partners depend on
each other. Channel relationships that are asymmetric in dependence
and power are more dysfunctional and less stable than symmetric
relationships (Kumar and van Dissel, 1996). When dependence
asymmetries occur, factors that influence the partner's cooperative
actions differ according to the partner's status in the channel, that is,
whether they have relative power or relative dependence.
While the buyer's perspective in buyer–supplier relationships
receives much attention (for exceptions, see Helper (1991) who
focuses on the supplier's perspective), prior studies have shown a
discrepancy in the perspectives between buyers and suppliers. For
example, Forker et al. (1999) report that both parties have different
views on the buyer's implementation of the supplier's development
⁎ Corresponding author. Tel.: +82 10 5309 9105.
E-mail addresses: kyu.kim@yonsei.ac.kr (K.K. Kim), eworld@paran.com (S.-H. Park),
ryusr@yonsei.ac.kr (S.Y. Ryoo), skpark@yonsei.ac.kr (S.K. Park).
1
Tel.: +82 2 2123 4525.
activities. Arkader (2001) has found that buyers' perspectives are
different from suppliers' in regard to both the facilitators and the
barriers of buyer–supplier relationships. For instance, buyers identify
“problems due to environmental factors (especially, adverse logistics
and tax systems)” as important barriers to cooperative relationships,
while suppliers identify “organizational barriers (mainly, the exis-
tence of functional resistance and the loss of power by buyers in the
purchasing departments)” (p. 92). Therefore, this study attempts to
accommodate both partners' perspectives in the buyer–supplier rela-
tionships to determine whether the perspectives differ, and, if so, to
explain why.
This study develops a comprehensive model of the determinants of
inter-organizational cooperation by synthesizing various theories
relevant to inter-organizational relationships. The study then tests
this research model by using matched samples from a buyer and
supplier in the Korean telecommunication industry. The telecommu-
nication industry includes the telecommunication equipment manu-
facturing industry as well as the telecommunication service industry.
The manufactures of telecommunication equipment produce compo-
nents that can be integrated into a whole system based on a certain
agreed-upon protocol. Meanwhile, telecommunication service provi-
ders deliver services through an integrated system with these
components. Effective service delivery requires mutual adjustments
and cooperation between the telecommunication service providers
and their equipment manufacturers, because modular technologies
must be integrated. Further, customer needs are constantly evolving in
this industry, as is the technology required to meet customer needs. In
this type of environment, both trading partners benefit from
cooperation because of the considerable interdependence between
the buyers and suppliers.

0148-2963/$ – see front matter © 2009 Elsevier Inc. All rights reserved.
doi:10.1016/j.jbusres.2009.04.028
864 K.K. Kim et al. / Journal of Business Research 63 (2010) 863–869
2. Literature review
2.1. Resource Dependence Theory (RDT)
According to the RDT, few firms can internally control all the
resources required to function effectively (Reid et al. 2001). Sourcing
inputs from the market makes the firm dependent on other firms for
critical resources and thus increases the likelihood of unpredictable
events. This resource dependence perspective suggests that bilateral
relationships emerge as individual organizations attempt to secure
necessary resources (Pfeffer and Salancik, 1978). If a firm is deficient in
a particular resource domain and possession of that resource is
deemed essential for gaining a competitive advantage, then the firm
will take purposive actions to acquire the resource (Reid et al., 2001).
Alliances are more likely to form for firms with a mutual need to
exchange resources (Eisenhardt and Schoonhoven, 1996).
Supply relations are crucial for any organization that subcontracts
portions of component design and production. Telecommunication
equipment manufacturing, for example, involves a number of complex
production activities that require capital-intensive investments as
well as the development of an extensive sector of smaller firms that
are devoted to component manufacturing. Existing studies based on
RDT perspectives identify antecedents for the successful cooperation
between firms and their partners such as a firm's dependence on its
partner (e.g., Kumar et al., 1995) and the governance mechanisms of
these relationships (e.g., Dyer and Singh, 1998).
2.2. Transaction Cost Economics (TCE)
TCE provides important theoretical background for decisions about
whether the activities of a firm's value chain should be placed within
the corporation or outsourced in a contractual relationship. Coase
(1937) asserts that the most efficient governance mechanism for an
exchange interaction is determined by minimizing the sum of the
production and transaction costs. Williamson (1991) also explains
why transaction costs occur by using a model of market failure. Two
factors, human factors and environmental factors, may contribute to
market failure. Human factors include limited rationality and
opportunistic behavior, while environmental factors consist of
uncertainty resulting from technological changes and the complexity
of external markets.
TCE explains that inter-firm cooperation can overcome the
limitations of restricted rationality, secure economic efficiency with
reduced transaction costs, and realize transaction stability from
opportunistic threats. That is, a hybrid form of inter-organizational
governance, such as a mixture of complete market transactions and
hierarchy transactions, leads to efficient transaction costs or resolves
uncertainty. In buyer–supplier relationships, TCE asserts that uncer-
tainty can arise from the environment and/or from the trading partner
(Bensaou, 1997). Uncertainty in regard to the environment results
from factors that are outside the inter-firm relationship. Uncertainty in
regard to the trading partner occurs from the structural–economical
features of the relationship and consists of two dimensions: the
governance structure of the relationship and the state of the relation-
ship originating from the climate of socio-political behavior.
2.3. Social capital theory
Social capital theory asserts that relationship networks are a
valuable resource for social interactions (Bourdieu, 1986). Social
capital is defined as “the sum of the actual and potential resources
embedded within, available through, and derived from the network of
relationships possessed by an individual or social unit” (Nahapiet and
Ghoshal, 1998, p. 243). Social capital perspectives encourage coop-
erative behavior such as inter-firm alliances. Specifically, a desire to
access valuable partner-held resources motivates inter-organizational
exchange.
Social capital theorists have focused much attention on the struc-
tural properties of these relationships (Adler and Kwon, 2002), such
as the tie strength at the dyadic level (Granovetter, 1973). While
strong ties are important conduits of resource exchange, Levin and
Cross (2004) assert that the relational dimension of social capital, for
example, organizational trust, mediates the relationship between tie
strength and resource exchange. Tsai and Ghoshal (1998) likewise find
that at the department level the structural dimension of social capital
stimulates trust and the perceived fairness of the relationship, which,
in turn, leads to the exchange of more resources between depart-
ments. In high-trust relationships, organizations tend to be more open
to the potential for value creation through exchanging and combining
resources. Social capital enables supply chain participants to become
more engaged in social exchange and to take actions that would
otherwise be considered risky (Putnam, 1993). Furthermore, the
relational dimension of social capital refers to resources that provide
shared representations, interpretations, and systems of meaning
among the parties (Nahapiet and Ghoshal, 1998). When the
participants in a dyad have the same goals and values, they are
more likely to form a cooperative relationship. Social capital theory
identifies the antecedents for cooperative relationships such as inter-
organizational trust, goal consistency, and reciprocity.
In summary, RDT suggests that firms seek to reduce uncertainty
and manage dependence by structuring their exchange relationships
through various governance mechanisms. Thus, switching costs are
considered a proxy for dependence, and technological uncertainty is
considered a proxy for uncertainty. TCE asserts that opportunistic
trading partners could exploit relationship-specific investments, since
these investments increase the firm's dependence. To protect these
investments, TCE maintains that hierarchies such as vertical integra-
tion and/or goal alignment with proper incentive mechanisms can
serve as safeguards. Thus, in addition to the RDT variables, equity
ownership and goal consistency are considered determinants of inter-
firm cooperation. Social capital theory identifies inter-organizational
trust, reciprocity, and continuity as essential for inter-organizational
relationships.
3. Hypotheses formulation
3.1. Technological uncertainty
Environmental uncertainty refers to (1) the degree of change that
is unpredictable in the external environment (Huber and Daft, 1987)
and (2) the lack of information about environmental factors that affect
decision-making. Among the many environmental factors that
contribute to uncertainty in the telecommunication industry, techno-
logical change is the most significant. In the telecommunication
device market, predicting which technology standards or services will
dominate in the future is not easy. Rapid change in technology
requires companies to process more information, which increases
uncertainty for a company (Guimaraes et al., 2002).
The literature contains opposing views of the relationship between
technological uncertainty and inter-organizational cooperation. Ben-
saou (1997), for example, expects a negative relationship between the
two variables for the following reasons: “The inability to forecast
accurately new technical or design requirements for the parts and
components exchanged within the relationship may be managed more
efficiently through no or loose coupling…and therefore less investment
in joint efforts, such as joint planning and development. By not engaging
in such expensive cooperation, firms retain the flexibility to terminate a
relationship and switch to partners with more appropriate technological
capabilities” (p. 110). Perry et al. (2004) also expect that technological
uncertainty has a negative effect on investment commitment. Mean-
while, Paulraj and Chen (2007) predict a positive relationship between
 K.K. Kim et al. / Journal of Business Research 63 (2010) 863–869
technological uncertainty and inter-organizational cooperation because
recognizing resource dependence and promoting collective strategies to
strengthen collaborative coordination between supply chain partners
can alleviate technological uncertainty.
When facing high technological uncertainty, firms may choose to
either strengthen or weaken the collaborative coordination depending on
several factors, such as the availability of alternative suppliers, existing
investments into the inter-organizational relationship, expected supply
channel benefits from tight coupling, and firm-specific situations (e.g.,
criticality of the partner input to the operation of purchasing organiza-
tion). From another perspective, Dyer and Ouchi (1993) state that when
two firms are mutually dependent, they will prefer tight coupling
because each organization is dependent on the other organization to
successfully cope with high technological uncertainty. For example,
Japanese automakers are renowned for their long-term tight relation-
ships with their supplier partners despite environmental turbulence.
Japanese automakers are significantly dependent on their suppliers; the
automaker provides only general specifications, while the supplier takes
care of all the detailed functional specifications. The suppliers are also
dependent on the automaker because of both their businesses and their
specialized investment in the relationship.
Telecommunication equipment manufacturers and service provi-
ders are mutually dependent for similar reasons to those of Japanese
automaker partnerships. Telecommunication service providers rely on
a few suppliers for specific parts and components because supplier's
products have limited external demands and thus a limited number of
suppliers. The incompatibility of technology among telecomm service
providers intensifies this situation. Therefore, this study expects a
positive relationship between technological uncertainty and inter-
organizational cooperation in the telecomm industry.
H1. Technological uncertainty relates positively to buyer–supplier
cooperation.
3.2. Switching costs
This study focuses on the switching costs among many aspects of
dependence by considering the incompatibility of technology among
telecomm service providers. A firm creates and modifies its assets to use
for specific purposes, and as a result, their value may be diminished in a
different context. Thus, the unavailability of substitutes in a transaction
with another company creates dependence between partners (Mentzer
et al., 2001). If a transaction-specific investment is converted into another
transaction, the value may be lost, forcing the trading partner to depend on
existing investments (Parkhe, 1993). Therefore, a company tends to fix its
direction of behavior once certain assets are invested (Yeh, 2005).
Because of the specificity of a company's assets, switching costs occur
when a company attempts to engage in opportunistic behavior. Switching
costs include the costs of abandoning existing assets specific to a
partnership when a company terminates a transaction with an existing
partner and seeks a new partner. When switching costs are low, an
organization may change its partner without incurring significant costs
and is hence less inclined to cooperate with its partners. However, as a
company bears more costs to establish a new relationship with another
partner, the tendency to maintain the existing relationship intensifies. This
factor restricts opportunistic behavior and promotes a more cooperative
relationship among existing partners. In the case of mutual dependence
when switching costs from both partners' perspectives are high, firms may
have strong motivations to cooperate. Thus, the following hypothesis:
H2. Switching costs relate positively to buyer–supplier cooperation.
3.3. Equity ownership
TCE classifies the governance structure of inter-firm relationships
in terms of equity ownership. Firms can cooperate either with or
865
without capital participation (Kogut, 1988). Gulati (1995) asserts that
a form of alliance with equity sharing should be seriously considered
as an alternative because the alliance may reduce the time needed for
negotiation. Pisano (1989) also finds that as the risk from an inter-firm
alliance increases, companies tend to prefer to have a relationship
based on equity sharing. This type of relationship implies that as the
equity of ownership increases, the relationship between the two
companies becomes closer. As such, this study considers equity
ownership as a dimension of the governance structure that affects
buyer–supplier cooperation. Thus, the following hypothesis:
H3. The focal firm's equity ownership relates positively to buyer–
supplier cooperation.
3.4. Continuity
An inter-firm relationship adjusts over time. Accordingly, as the
transaction period between partners increases, firms must adapt to
one another, which increases the chances of future transactions. As
the transaction period becomes longer, the expectation that the
transaction relationship will continue in the future becomes more
certain (Anderson and Narus, 1990). This expectation motivates a
partner to promote a cooperative relationship (Lusch and Brown,
1996). This point also implies that a longer transaction period may
enhance the level and range of cooperation to improve transaction
efficiency. Interaction over time may lead to commitment and to
relationship-specific assets such as partners' knowledge of each
other's procedures and values (Karande et al., 2008). According to
Young-Ybarra and Wiersema (1999), shared experiences between
firms can foster trust and commitment, resulting in closer ties
between the firms. Thus, the following hypothesis:
H4. The continuity of transactions relates positively to buyer–supplier
cooperation.
3.5. Goal consistency
Goal consistency refers to the consistency between partners in
organizational goals, agreed-upon priorities, and a mutual under-
standing of their relationship (Bensaou, 1997; Krause et al., 2007).
Companies participating in an inter-firm relationship may have dif-
ferent goals, and these goals may come into conflict. Inconsistent goals
may lead to opportunistic behaviors that may cause suboptimal
performances in the supply channel. To avoid opportunistic behaviors,
companies and trading partners should share their goals and
priorities. If the goals of the companies are compatible with one
another, then their roles become clear and the acceptable range of
collaborative activities becomes more defined. Thus, the activities that
arise from anxiety about mutual trust would be reduced.
Furthermore, if a company is concerned that a partner may
opportunistically use information acquired from a cooperative
relationship, cooperation becomes difficult. In this particular case,
making goals consistent may help to set the norms of acceptable
behaviors and reduce the uncertainty of a trading partner's opportu-
nism. Therefore, the following hypothesis:
H5. Goal consistency relates positively to buyer–supplier cooperation.
3.6. Reciprocity of the relationship
Reciprocity of the relationship refers to the degree of fairness that
the participating companies perceive about sharing risk, burdens, and
benefits (Bensaou, 1997). Companies often accept a temporary loss if
that loss will be fairly distributed in the long run. If companies
perceive that risk sharing, cost sharing and profit distribution are
reciprocal, each partner seeks to maintain the cooperative
866 K.K. Kim et al. / Journal of Business Research 63 (2010) 863–869
relationship. As such, the reciprocity of the relationship could affect
the level of buyer–supplier cooperation. Therefore, the following
hypothesis:
H6. The reciprocity of the relationship relates positively to buyer–
supplier cooperation.
3.7. Inter-organizational trust
Morgan and Hunt (1994) define trust as conviction about the
certainty and honesty of a trading partner, while Zaheer et al. (1998)
define trust as the collective trust that every member of an
organization puts into another trading partner. Trust between two
partners affects the relationship in three ways: (1) a reduction of
perceived risk regarding opportunistic behavior; (2) expectations that
short-term unfairness would be solved in the long-term; and (3) a
reduction in the transaction costs inherent to exchange relationships.
Further, inter-organizational trust is necessary to dissolve potential
conflicts easily (Anderson and Weitz, 1992) and reinforce long-term
orientations with partners (Ryu et al., 2007). Therefore, the following
hypothesis:
H7. Inter-organizational trust between buyers and suppliers relates
positively to buyer–supplier cooperation.
4. Methodology
4.1. Sample and data collection
Since a supply channel is a dyadic environment, this research
examines the phenomenon from the perspectives of both the buyer
and supplier in a dyad. The data required for this study were collected
(1) from the buyers responsible for the supplier relationships in a
major telecommunication service company headquartered in Korea;
and (2) from the suppliers that provide the telecommunication
devices to the buyer. At the time the data were collected, the annual
sales of the central organization for the year 2006 was U$12.6 billion,
and 132 buyers were in the purchasing division. The buyers were
organized around the devices and services (i.e., Switching, Terminal,
Line Materials, etc.) that they were procuring for the company.
Typically, most of the buyers are responsible for multiple components,
and they often use multiple suppliers to obtain each component. Thus,
the buyers selected an important component and a major supplier for
the component and then responded to the questionnaire in the
context of an ongoing relationship with the supplier. Information
about the chosen supplier was also solicited in order to collect data
about the supplier's view of the relationship. The annual sales of
suppliers for the year 2006 were as follows: 56.1% made less than U
$10 million, 15.3% made between U$10 million and U$100 million, and
28.6% made over U$100 million.
Table 1
Operationalization of the variables.
Variables Operational definitions
Technological The likelihood of changes in four areas (i.e., functionality improvements, price/performance
uncertainty improvements, major product innovations, major manufacturing innovations) during the next three years
Switching costs Degree of the lost benefit or cost in four dimensions (i.e. time, economic costs, cognitive costs, cognitive
effort to search for alternatives) by the termination of inter-organizational relationships
Equity ownership Extent of shared equity between partners
Continuity Continuity of transactions between partners
Goal consistency Extent of reciprocal understanding between partners
Reciprocity of Extent of reciprocity between partners
the relationship
Inter-organizational Degree of the firm's aggregate level of trust
trust
Cooperation Degree of cooperation between partners
All of the buyers and their counterpart suppliers were invited to
participate in the study. Two follow-up emails were sent five and ten
days, respectively, after the initial contact. Respondents sent the
completed questionnaires to the primary author. A total of 100
responses from buyers (response rate of 75.7%) and 98 responses from
suppliers (response rate of 74.2%) were received within 14 days. Of
those responses, 69 cases were paired responses. To evaluate any
systematic differences between paired responses and non-paired
responses in the sample, ANOVAs were performed on all independent
variables. No statistically significant differences occur among the
companies at the 0.05 level of significance.
4.2. Measures
All measures used in this study were drawn from previous studies
and adapted to serve the purposes of this study. Table 1 describes the
operational definitions of the research variables and their sources.
Pretests were performed to ensure that the target informants
understood the wording that the authors used. The respondents
were asked to indicate their responses to each of the survey questions,
which have a seven-point scale anchored with “Strongly Disagree”
and “Strongly Agree.” Multiple-choice questions measured the equity
ownership ratio and the continuity of the relationship.
4.3. Data analysis
Since the original questions underwent minor wording changes to
customize the questionnaire to a supply channel setting, this study
performed principal components analysis on the data to ascertain the
integrity of the dimensionality sought. The analysis with Varimax
rotation provided preliminary validation of the conceptualized
constructs.
Table 2 provides the standardized parameter estimates (factor
loadings) of the items over the underlying dimensions for both the
buyer and supplier samples. The frequently cited standard of 0.60 was
applied as the cut off value for the factor loadings. As a result, one
question for inter-organizational trust was eliminated.
Tables 3 and 4 present the descriptive statistics and bi-variate
correlations among the research variables. The internal reliability tests
using Cronbach's Alpha showed that all measures for the constructs
exceeded Nunnally and Bernstein's (1994) threshold value of 0.70.
4.4. Testing of the hypotheses
Table 5 summarizes the results of the regression analyses that were
used for testing the hypotheses. In the buyer sample set, contrary to
expectations, technological uncertainty (H1, t = − 0.04, p = 0.97) was
not significant, while the switching costs (H2, t = 2.55, p = 0.01)
significantly influenced inter-organizational cooperation. Neither the
equity ownership ratio (H3, t = 0.90, p = 0.37) nor the continuity of
Sources
Bensaou, 1997
Morgan and Hunt, 1994; Whitten and Wakefield,
2006
Kim and Umanath, 2005
Kim and Umanath, 2005
Bensaou, 1997
Bensaou, 1997
Moorman et al., 1993
Bensaou, 1997
 K.K. Kim et al. / Journal of Business Research 63 (2010) 863–869 867

Table 2 organizational cooperation. The reciprocity of the relationship (H6,

Factor loadings of the measures. t = 1.59, p = 0.12) did not significantly influence cooperation.
Factor Item Factor loading In the supplier sample set, the results were quite different from
Buyer Supplier those of the buyer sample set. Technological uncertainty (H1, t =
Technological TU1: How likely will major changes occur in 0.79 0.86 −2.97, p = 0.00) had a significant negative association with inter-
uncertainty regards to functionality improvements organizational cooperation (contrary to expectations), while the
during the next three years impact of switching costs (H2, t = − 1.85, p = 0.07) was not
TU2: How likely will major changes occur in 0.81 0.89 significant. As in the buyer sample set, neither the equity ownership
regards to price/performance improvements
during the next three years
ratio (H3, t = 1.20, p = 0.23) nor the continuity of the relationship
TU3: How likely will major changes occur in 0.84 0.68 (H4, t = 0.46, p = 0.65) was significant. Both goal consistency (H5,
regards to major product innovations during t = 4.34, p = 0.00) and the reciprocity of the relationship (H6,
the next three years t = 3.58, p = 0.00) had significant associations with cooperation,
TU4: How likely will major changes occur in 0.86 0.62
while inter-organizational trust (H5, t = 0.53, p = 0.60) did not.
regards to major manufacturing innovations
during the next three years As the differences in the results show, switching costs and inter-
Switching costs SC1: Switching to another partner takes a 0.88 0.92 organizational trust are significant determinants of cooperation from
long time the perspective of the buyers, but not for suppliers. In addition,
SC2: Switching to another partner results in 0.86 0.88 technological uncertainty (although negatively related to inter-firm
significant economic costs
SC3: Switching to another partner results in 0.83 0.90
cooperation) and the reciprocity of the relationship are significant
significant cognitive costs from the perspective of suppliers, but not from that of buyers.
SC4: Switching to another partner results in 0.79 0.82
significant search costs 5. Discussion
Goal consistency GC1: We and our partner understand each 0.77 0.68
other's goals
GC2: We and our partner understand each 0.66 0.57 This paper contributes in two ways to the existing literature. First, a
other's priorities comprehensive general model of inter-organizational cooperation in
GC3: We and our partner understand each 0.84 0.64 buyer–supplier relationships is developed by synthesizing three
other's products and processes relevant theories, that is, RDT, TCE, and social capital theory. Second,
GC4: We and our partner understand each 0.74 0.74
other's roles and responsibilities
by comparing the perspectives of both the buyer and supplier, this
Reciprocity of RR1: We share risks with the partner 0.88 0.78 paper identifies differences in the determinants of inter-organiza-
the relationship RR2: We share burdens with the partner 0.90 0.84 tional cooperation. The results of this study demonstrate that striking
RR3: We share benefits with the partner 0.86 0.77 differences exist between the two perspectives. These differences can
Inter- OT2: Even if we are unable to monitor our 0.86 0.77
be explained by the dependence asymmetry in the supply channel in
organizational trust partners, we trust that they are fulfilling
their obligations which buyers enjoy relative power over their suppliers (Kumar et al.,
OT3: We trust our partners to do things we 0.86 0.73 1995).
cannot do ourselves The majority of suppliers of components of telecommunication
OT4: We trust our partners to carry out 0.79 0.74 equipment face more restricted markets for materials, capital, and
important project-related activities
OT5: We generally trust our partners 0.80 0.72
labor. Dependence on a central organization (i.e., the buyer in this
Cooperation CO1: We generally cooperate with partners 0.73 0.76 study) with broader exchange capabilities poses a troublesome
in long-range planning problem for organizations with narrower exchange possibilities
CO2: We generally cooperate with partners 0.86 0.74 operating exclusively in a well-defined segment of a producer's
in product planning
market (Pfeffer and Salancik, 1978). Since the supplier is in a
CO3: We generally cooperate with partners 0.88 0.79
in product engineering dependent relationship with a powerful partner, the reciprocity of
CO4: We generally cooperate with partners 0.75 0.83 the relationship is important to ensuring voluntary cooperation with
in process engineering the buyer. However, reciprocity is less important to buyers, because
CO5: We generally cooperate with partners 0.84 0.79 buyers can exercise direct control over dependent suppliers whenever
in tooling development
CO6: We generally cooperate with partners 0.67 0.66
necessary.
in technical assistance A central organization has to develop a higher level of architectural
CO7: We generally cooperate with partners 0.64 0.76 knowledge of the equipment and to transfer part of its knowledge to
in training/education the supplier for production. This situation requires a significant
investment of time and effort from the buyer. If a supplier behaves
opportunistically after the buyer has made these investments, then
the relationship (H4, t = −0.02, p = 0.98) was significant. By contrast, the buyer would have to bear significant switching costs to develop a
goal consistency (H5, t = 4.98, p = 0.00) and inter-organizational new supplier relation. Thus, switching costs are an important factor in
trust (H7, t = 3.96, p = 0.00) had significant relationships with inter- determining a buyer's cooperation. In addition, if the buyer does

Table 3
Descriptive statistics for the buyer sample.

Factor No. of item Mean (Strd. Dev.) Cronbach's Alpha TU SC EO CO GC RR IT

Technological uncertainty (TU) 4 4.5 (1.4) 0.88 1
Switching costs (SC) 4 4.3 (1.4) 0.88 .09 1
Equity ownership (EO) 1 1.1 (0.1) N.A. − .05 .04 1
Continuity (CO) 1 4.7 (1.6) N.A. − .08 .08 .07 1
Goal consistency (GC) 4 5.4 (1.1) 0.91 .45** .20* .03 .06 1
Reciprocity of the relationship (RR) 3 4.0 (1.2) 0.89 .23* − .07 .03 .00 .29** 1
Inter-organizational trust (IT) 4 4.8 (1.2) 0.93 .24* .24* .01 − .03 .57** .17 1
Inter-organizational cooperation (IC) 7 4.9 (1.2) 0.95 .31* .33** .09 .03 .69** .28** .63**

Notes: **p b 0.05, ***p b 0.01.

868 K.K. Kim et al. / Journal of Business Research 63 (2010) 863–869

Table 4
Descriptive statistics for the supplier sample.

Factor No. of item Mean (Strd. Dev.) Cronbach's Alpha TU SC EO CO GC RR IT

Technological uncertainty (TU) 4 3.9 (1.3) 0.83 1
Switching costs (SC) 4 5.1 (1.5) 0.92 .31** 1
Equity ownership (EO) 1 1.0 (0.1) N.A. .16 .10 1
Continuity (CO) 1 5.1 (1.8) N.A. − .05 .09 − .00 1
Goal consistency (GC) 4 5.2 (0.9) 0.86 − .38** − .24* − .04 .10 1
Reciprocity of the relationship (RR) 3 5.0 (1.1) 0.88 − .27** − .15 .03 .08 .69** 1
Inter-organizational trust (IT) 4 3.7 (1.3) 0.89 − .22* − .13 − .11 − .04 .45** .58** 1
Inter-organizational Cooperation (IC) 7 4.9 (1.1) 0.95 − .48** − .33** − .01 .07 .69** .59** .56**

Notes: **p b 0.05, ***p b 0.01.

not trust a supplier and is concerned that the supplier will be indicates that capital investment or joint venture was not a popular
opportunistic, the buyer may not cooperate with the supplier. The inter-firm governance structure in the Korean telecommunication
supplier's trust in the buyer is not important, however, because the industry. The continuity of the relationship resulted in two clusters;
supplier has no choice but to cooperate when the buyer exercises one short-term cluster of 2–3 years for service-specific products (e.g.,
coercive power. Internet, new services) and one long-term cluster of 7 years or more
Technological uncertainty poses an important threat to all for technology-specific products (e.g., cables, switches). Buyers prefer
participants in the telecommunication industry, but such uncertainty year-by-year short-term contracts to maintain bargaining leverage
has different implications according to the firm's status in the supply and to hedge against sudden shifts in customer preferences.
channel. For a smaller supplier who has to deal with powerful
partners, any changes in technology may lead to a termination of the 6. Conclusions
contract if the supplier's technical expertise becomes obsolete and if
the buyer is not mutually dependent on the supplier. This fear can be This paper attempts to explain the differences in the antecedents
intensified when alternative suppliers are available and the buyer's to the buyer–supplier cooperation in terms of dependence asymmetry
existing investments in the inter-organizational relationship are not between the buyer and the supplier. Increasing interdependence
large. Thus, suppliers, under conditions of high technological asymmetries may lead to higher levels of suspicion and conflict in the
uncertainty, may hesitate to fully cooperate with the buyer since the relationship. However, interdependence asymmetry does not neces-
relationship itself may be in danger. However, technological uncer- sarily cause irreversible and damaging conflict. Firms in a supply
tainty has a different implication for buyers with relative power. channel may behave differently because their strategic positions and
Although telecommunication service providers are responsible for market situations are different. Future research should explore the
adapting to major technological changes (e.g., from analog to digital or extent to which the interdependence structure influences the
from a 2G network to a 3G network) by themselves, they can pass the behaviors of firms.
risk of uncertainty in component technologies to smaller suppliers. Additional researches need to incorporate various control mechan-
When an existing supplier does not have the required technological isms without equity ownership. Dyer and Ouchi (1993) point out
capabilities to provide new services, the buyer can find or develop potential negative consequences of equity ownership: “The autonomy
another one. This point may explain why technological uncertainty and incentives that keep the company innovating and focused on
was not significant in the buyers' sample set. continuous improvement are lost” (p. 56). Thus, future research needs
Goal consistency turns out to be a significant determinant of inter- to look into various control mechanisms with or without equity
firm cooperation in both sample sets. Contrary to expectations, ownership.
however, neither the ownership ratio nor the continuity of the This study has limitations. First, this study's sample consists of one
relationship was a significant determinant. One possible explanation buyer organization and its multiple suppliers in a single industry
for this result is that the data do not have enough variation to (telecommunication industry), all of which were located in Korea. In
determine the influences of these two variables. Further scrutiny of addition, the supplier sample is skewed toward smaller firms in a
the data reveals that the average equity ownership ratio in the sample monopsonistic situation. Therefore, the results are characteristic of
was approximately 9%, which implies a relatively independent only a single company in a single country. To increase the external
relationship between the partners. Consequently, this analysis validity of the findings of this study, future research that incorporates
a sample from multiple companies in non-monopsonistic situations is
needed.
Table 5
Results of regression analyses.
Acknowledgement
Hypothesis Buyer (N = 100) Supplier (N = 98)
variables Standardized ß Probability Standardized ß Probability This research is supported by the Ubiquitous Computing and
value value Network (UCN) Project, Knowledge and Economy Frontier R&D
Technological − 0.00 0.97 − 0.22*** 0.00 Program of the Ministry of Knowledge Economy (MKE) in Korea as
uncertainty
a result of UCN's subproject 09C1-C2-10 M.
Switching costs 0.18** 0.01 − 0.13 0.07
Equity ownership 0.06 0.37 0.08 0.23
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