Interpartner Legitimacy Building in the Formation Process of a Multiparty Alliance

Abstract

This paper investigates how a buyer builds interpartner legitimacy during the formation of a supply chain alliance. Prior research on supply chain collaboration has focused almost exclusively on already established collaborations, neglecting the importance of the formation stage for the path-dependent nature of such long-term relationships. Alliance research found that the building of interpartner legitimacy during the formation stage is particularly important to ensure alliance success. However, we know very little about how a buyer can purposefully build interpartner legitimacy with several suppliers in the formation stage. To explore this gap, we used a longitudinal, in-depth case study to dissect the activities and processes through which a buyer forms a multiparty alliance with five suppliers to deliver substantial mechanical and electrical services with a combined value of over $1 billion for the construction of a new nuclear power station in the UK. We collected a rich dyadic data set derived from over 159 hours of meeting observations, 20 interviews and numerous company reports. Our findings demonstrate a range of actions a buyer undertakes to build interpartner legitimacy over time. We can show that these actions follow a sequence starting with the building of moral interpartner legitimacy before addressing pragmatic concerns. We find that while interpartner legitimacy building is predominantly driven by the buyer during the early phase of the formation process, suppliers drive interpartner legitimacy building during the late phase. Overall, our findings contribute to the emergent research on interpartner legitimacy building and offer insights into the underexplored area of collaboration formation.