Designing relational sanctions in buyer–supplier relationships

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• dc.contributor.author Ganuza, Juan-José
• dc.contributor.author Gómez Pomar, Fernando
• dc.date.accessioned 2022-05-24T09:38:52Z
• dc.date.available 2022-05-24T09:38:52Z
• dc.date.issued 2022
• dc.description.abstract This paper explores the role of supplier performance measures (scorecards and others) in the internal design of relational contracts. We analyze a simple supplier–buyer repeated interaction in which incentives arise by the threat of terminating the relationship—temporarily or permanently. As the periods with no‐trade reduce the value of the relationship, the optimal relational contract minimizes the equilibrium punishment while preserving the supplier's incentives. We show that making the relational penalties conditional on additional supplier's performance measures increases total surplus. We also provide a rationale for “forgiveness” in relational contracting. The buyer may optimally forgive (decide not to sanction at all or to impose a lesser sanction) the supplier despite a bad outcome when some additional information is positive. We start with a binary performance measure, but we extend our analysis to more complex performance measures such as scorecards. Finally, we rank the scorecards in terms of their informativeness and we characterize the optimal investment in the design and improvement of these performance measures.
• dc.description.sponsorship Juan‐José Ganuza gratefully acknowledges the support of the Barcelona GSE Research, the government of Catalonia, and the project PID2020‐115044GB‐I00//AEI/10.13039/501100011033 of the AEI, Spanish Ministry of Science and Innovation. Fernando Gomez acknowledges the financial support of the Spanish Ministry of Science and Innovation under project DER 2017‐82673‐R.
• dc.format.mimetype application/pdf
• dc.identifier.citation Ganuza JJ, Gómez F. Designing relational sanctions in buyer–supplier relationships. J Econ Manage Strat. 2022 Summer;31(2):470-91. DOI: 10.1111/jems.12464
• dc.identifier.doi http://dx.doi.org/10.1111/jems.12464
• dc.identifier.issn 1058-6407
• dc.identifier.uri http://hdl.handle.net/10230/53222
• dc.language.iso eng
• dc.publisher Wiley
• dc.relation.ispartof Journal of Economics & Management Strategy. 2022 Summer;31(2):470-91
• dc.relation.projectID info:eu/repo/GrantAgreement/ES/2PE/DER2017‐82673‐R
• dc.relation.projectID info:eu/repo/GrantAgreement/ES/2PE/PID2020-115044GB-I00
• dc.rights © 2021 The Authors. Journal of Economics & Management Strategy published by Wiley Periodicals LLC. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/4.0/
• dc.subject.other Contractes -- Disseny
• dc.subject.other Comerç
• dc.subject.other Venedors
• dc.title Designing relational sanctions in buyer–supplier relationships
• dc.type info:eu-repo/semantics/article
• dc.type.version info:eu-repo/semantics/publishedVersion