Ex post problems in buyer-supplier transactions: Effects of transaction characteristics, social embeddedness, and contractual governance

This paper focuses on ex post governance of inter-firm transactions. We develop and test hypotheses on the occurrence of ex post problems like delivery delays, inferior quality, and insufficient service in buyer-supplier transactions. Our hypotheses address effects of transaction characteristics, of social embeddedness, and of contractual governance on the occurrence of problems. Other than earlier research on embeddedness effects in this field, we consider not only effects of dyadic embeddedness but also effects of network embeddedness. We test hypotheses using rich survey data on more than 1200 purchases of information technology (IT) products: hardware and software, both standard and complex. We find evidence for effects of transaction characteristics on the occurrence of problems, while our data do not support hypotheses on effects of contractual governance. Our data provide rather consistent support for hypotheses on the effects of embeddedness. Specifically, we find evidence that network embeddedness reduces problems. © Springer Science+Business Media, LLC 2006.