Abstract
How supply chain actors manage their exposure to both supply‐ and demand‐side risks is a topic that has been insufficiently examined within the transaction cost economics (TCE) literature. TCE studies often only examine transaction risks in the context of bilateral exchanges. This study aims to contribute to a shift within the TCE literature from a focus on bilateral transactions, to examining transactions within a supply chain context. In this article, various models are constructed that examine how supply chain actors' usage of contracts to manage their exposure to supply (demand)‐side transaction risks can affect their exposure to demand (supply)‐side transaction risks. The models show that when supply chain actors follow the recommendations from the traditional TCE model regarding the use of contracts, it may increase rather than decrease their exposure to transaction risks. However, when supply chain actors take into account simultaneously both supply‐ and demand‐side transactions when making their contract decisions, as is recommended in this article, a reduction in exposure to transaction risks is more likely. This study offers managers’ various strategies for taking a supply chain‐wide approach to reduce transaction risk exposure.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
