Shaping supply chain governance. The production process is becoming more complex and involving multiple companies and countries. A lot of research has focused on how these activities are coordinated and how inter- firm transactions are governed. | Journal of Economics and Development, , , December 2016, pp. 87-107 ISSN 1859 0020 Shaping Supply Chain Governance Nguyen Trung Kien Institute of Policy and Strategy for Agriculture and Rural Development, Vietnam Email: Pham Thi Song Hanh Sheffield Business School, the United Kingdom Email: Abstract: The production process is becoming more complex and involving multiple companies and countries. A lot of research has focused on how these activities are coordinated and how interfirm transactions are governed. However, the existing literature is neither complete nor clear enough to understand how external and internal factors influence the shaping of a firm’s choice of mechanisms to govern transactions along the supply chain. Building from the existing literature, this paper proposes a conceptual model with two dimensions. The dimension of determinants includes three components: institution environment, industry structure and transaction characteristics. The dimension of governance patterns consists of five mechanisms a firm may use to govern its economic transactions along the supply chain: market contract, production contract, relational contract, relational production contract, and hierarchy. The paper provides prescriptions for the firm’s choice among five supply chain governance patterns under different conditions of the above three components of determinants. Keywords: Governance pattern; determinant; supply chain; transaction cost. Journal of Economics and Development 87 Vol. 18, , December 2016 1. Introduction and industrial structure Meanwhile, there has been no study on interfirm relationships which either examines all three perspectives in a single framework or develops a comprehensive understanding of their comparative proficiencies in relation to each other. As a consequence, explanations of how transactions between firms might be organized remain incomplete, particularly .
