What do you know and how much does it matter? A QCA/NCA study of knowledge and supplier performance

Abstract

While interorganizational research has emphasized the role of governance mechanisms in managing the performance of suppliers that provide critical input components, scholarship consistently assumes that these governance mechanisms work independent of how much the supplier knows or how much the buyer knows. Contributing to this body of work, we explore two important boundary conditions to the association between governance mechanisms and supplier performance: the buyer’s knowledge of the outsourced component and the supplier’s technical expertise. In doing so, our theory integrates recent insights from the literature on concurrent sourcing, which acknowledges that firms often make and buy the same input. Methodologically, we draw on configurational methods of fuzzy set Qualitative Comparative Analysis (fsQCA) and Necessary Conditional Analysis (NCA), given that conventional regression techniques fall short in analyzing the complex interrelationships predicted by our theory. Our analysis provides interesting and novel insights. Broadly, we find that deploying concurrent sourcing in conjunction with formal and relational governance mechanisms leads to high supplier performance, even when the supplier himself is less technical capable. However, concurrent sourcing is no guarantee for high performance, as a concurrent sourcing firm who deals with a non-expert supplier is doomed to low performance when relational governance mechanisms are absent. Overall, our analysis of firm and supplier knowledge in orchestration with established governance mechanisms underscores the value of configurational approaches to management research.