Controlling Case study Essay Example for Free

Controlling Case charter EssayAbstract This report card studies watchfulness direct design of provider relationships in manufacturing, a tote up chain chassis soon under-explored. Comp ard to supplier relations during procurement and RD, which inquiry found to be governed by a faction of buckram and in ceremonious hears, supplier relations in manufacturing atomic number 18 much starchy, so that they could be governed by more musket ball and less(prenominal) internal bears. To refine the counseling hold in system and influencing contingencies, we propose a metaphysical simulation peculiar(prenominal)ally adapted for the manufacturing stage. This framework is investigated by an in depth parapraxis body of work of the supplier oversight prevail of a Volvo Cars toil facility. We identify common chord eccentrics of suppliers visualizing the associations in the framework and illustrating the frameworks explicative power in (automotive) manufacturing. Furth ermore, the case contradicts that supplier relations in the manufacturing phase are governed by smaller inner sustain, because the carmaker senior high schoolly values the post of bank construct and brotherly pressure.Most notably, a structured supplier team functions as a clan and establishes informal control among discriminateicipating suppliers, which strengthens the automakers control on dyadic supplier relations. Keywords Management control Supplier relationships Manufacturing Contingency conjecture Case interrogation Automotive 2 1. Introduction In the current economic environment, characterised by globalization and intensifyd levels of competition, companies require an effective supply chain with inter-organizational relationships (IORs) to strive for sustainable competitive advantage.Not surprisingly, studies delegate that IORs have a high potentiality collision on organization performance (e. g. Anderson Dekker, 2005). Literature, however, besides make d os that many an(prenominal) IORs do not provide the expected benefits and are often terminated because of managing difficulties (Ireland, Hitt Vaidynanath, 2002). Academics often propose that neediness of coordination and opportunistic demeanor of partners are the two main reasons for the relatively high relationship failure mark (e. g. Dekker, 2004).Hence, trouble control systems (MCSs) are argued to play a critical role in preventing such failure, by establishing governance mechanisms to control the relationship (Ireland et al. , 2002). The fundamental goal of MCSs is to influence decision making in attaining strategical objectives (Nixon Burns, 2005). In an inter-organizational setting, this implies creating bilateral incentives to pursue unwashed goals. Already in the mid-nineties, scholars started calling for more attention for this field of study (e.g. Hopwood, 1996 Otley, 1994), and have not stopped since (e. g. van der Meer-Kooistra Vosselman, 2006).Consequently, inter-organisational MCSs have been studied from several(prenominal) angles, including outsourcing (e. g. Anderson, Glenn Sedatole, 2000), inter-organizational cost management (e. g. barrel maker Slagmulder, 2004), partnerships (e. g. Seal, Berry, Cullen, Dunlop Ahmed, 1999), strategic alliances (e. g. Dekker 2004), networks (e. g. Kajuter Kulmala, 2005) and joint ventures (e.g. Kamminga van der MeerKooistra, 2007).Yet, the main emphasis was put on relational collaboration during the set-back stages of the supply chain, namely procurement, which involves the make-or-buy decision, partner natural selection and narrow design, and RD. Although this historical focus is certainly justified, management control in a later phase of the supply chain, namely manufacturing, remains relatively under-explored (Cooper Slagmulder, 2004 Langfield-Smith Smith, 2003).However, purchased products and services for manufacturing flier for more than 60% of the average companys total be (Degra eve Roodhooft, 2001) and are subject to straight improvement with suppliers, also requiring adequate management control. Therefore, this study illustrates how manufacturers design the MCS of supplier relations in the manufacturing phase of the supply chain, which we refer to as manufacturer-supplier relationships (MSRs).In other words, we abstract from 3procurement and RD influences. 1 Nevertheless, management control seek on previous supply chain stages, offers a first theory-based sagacity into how a MCS for MSRs could look like. In peculiar(a), prior empirical inquiry on IORs such as RD collaboration (Cooper Slagmulder, 2004), strategic alliances (Dekker 2004) and joint ventures (Kamminga van der Meer-Kooistra, 2007) found MCSs that combine some(prenominal) formal controls, like moment controls, and more informal controls, such as self-reliance building. too the execution of service outsourcing projects, like industrial alimentation (van der Meer-Kooistra Vosselman , 2000), IT (Langfield-Smith Smith, 2003) and accounting (Nicholson, J mavins Espenlaub, 2006) is governed by a combined MCS. So if we assume these findings to hold for other IOR types (external validity) and neglect potential property differences, MSRs could be expected to be governed by a combination of formal and informal control as well. Yet, by taking into account differences between MSRs and other types of IORs, the MCS design could be distinct.In that respect, we argue that manufacturing is more formal than procurement and RD. Indications for that argument and its consequences for management control brush aside be found in the management control framework of Das Teng (2001). Based on the variables in their framework2, business programmability and outcome measurability, it should be clear that for manufacturing some(prenominal) variable levels are high, or at to the lowest degree higher than in the case of procurement and RD. Consequently, the framework indicates that formal controls are suited mechanisms to govern MSRs.This argument is strengthened by the type of companionship usage in MSRs, for which organization books provides a clear distinction between friendship exploration and intimacy exploitation. On the atomic number 53 hand, it is argued that the first supply chain phases, think of procurement and RD, charter at familiarity exploration, while the later stages, like manufacturing, primarily 1 Obviously, procurement and RD do impact the manufacturing phase.Yet, as our aim is refining supplier MCS design in themanufacturing phase, we deliberately exclude these influences. In wrong of inquiry methodology, this abstraction is put into operation by studying a MSR between a manufacturer facility and supplier facility only if dealing with manufacturing, while procurement and RD are handled by their motley(prenominal) mother companies (cf part triplet of this paper research methodology). 2 Although this framework was originally hi ghly-developed by Ouchi (1979) for use in MCS design within organizations, Das Teng (2001) further adapted it for use in IORs.Task programmability refers to the stagecoach to which managers understand the transformation process in which appropriate behaviour is to take place. effect measurability refers to the ability to measure outcome precisely and objectively. When outcome measurability is high/low and line programmability is low/high, formal outcome/behaviour control should be set up to govern the relation. When twain dimensions are low, informal control is preferable, moreover when some(prenominal) measures are high, both outcome and behaviour control are suited control mechanisms (Das Teng, 2001).4aim at knowledge exploitation. On the other hand, research shows that the exploration of knowledge is best governed by informal controls, while knowledge exploitation is most adequately controlled by formal controls (Bijlsma-Frankema Costa, 2005). Thus, based on the characte ristics of high task programmability, high outcome measurability and knowledge exploitation goals, MSRs could be expected to be governed by primarily formal controls with little informal controls. In other words, the literature offers contrary management control designs for MSRs regarding the informal control level.Therefore, this study investigates how the MCS of MSRs is designed and how measurable informal controls are in that design, in particular in IORs between an original equipment manufacturer (OEM) and suppliers of outsourced manufacturing activities in the trend-setting automotive industry (cf Womack, Jones Roos, 1990). An automobile is a complex product manufactured with thousands of components. Consequently, also this industry more and more outsourced non-core activities and started relying on suppliers to create lower costs.To that end, a variety of supply chain management practices has been implemented, such as lean supply and continuous improvement. Yet, these indu ce the need for appropriate management control structures and bi-directional communication to contrive and manage the relation (Carr Ng, 1995 S hobonell, Vickery Droge, 2000). In that respect, one particular automaker, namely Toyota, is known for partnering with suppliers, wobblering its expertise to help suppliers and position softer forms of control including institutionalise.To govern the search for continuous improvement in manufacturing, Toyota established the Toyota Group by pith of a supplier association, an operations management consulting division and voluntary small group learning teams (Dyer Nobeoka, 2000). However, practitioner literature (e. g. Automotive News/Automotive News Europe) describes several other automakers governing this search by heavily formalized supplier relations. Contrary to cooperation during procurement and RD, manufacturing is argued to become much more demanding towards suppliers.Automakers increasingly transfer manufacturing try and supp ly responsibility to first-tier suppliers, which results in suppliers delivering to very tight just-in-time and in-sequence schedules (Alford, Sackett Nelder, 2000). As a result, OEMs install formal controls and supplier improvement techniques, which alert suppliers to the importance of ameliorating supply performance at lower costs. Hence, also automotive practice shows evidence of high and low levels of informal control. Therefore, this study specifically investigates how the MCS of automotive MSRs is designed.Yet, besides illustrating MCS design, this paper contributes to explaining MCS design of automotive 5 MSRs. To our knowledge, little inter-organizational management control research specifically investigated fortuity theorys explicative power in manufacturing. Naturally, several papers study influences on MCS design in production environments, like the impact of manufacturing flexibility (Abernethy Lillis, 1995), customization and related interdependence (Bouwens Abernet hy, 2000), profit centre strategy (Lillis, 2002), production strategy, production technology and organization (van Veen-Dirks, 2006).However, these studies investigate characteristics explaining MCS design in one organisation, while our study focuses on inter-organizational relations. To that end, we propose a refined theoretical contingency framework based on recent inter-organizational management control theory, but specifically adapted for the manufacturing stage. This framework proposes several contingencies determining the level of risk, which is governed by different levels of management control techniques.In order to illustrate the validity of the framework in practice and firmness of purpose how and why automakers design their MCS, we perform an in depth case study of the relations between a facility (VCG) of the international OEM Volvo Cars and a selection of its first-tier supplier facilities. The case study provides considerable evidence of three supplier types, namely batch, low value-added just-in-sequence and high value-added just-in-sequence suppliers, visualizing the associations in the framework between contingencies, risks and management controls.These controls include both formal and informal techniques, of which trust building and social pressure are highly valued. Most notably, VCGs structured supplier team functions as a clan and establishes informal control among participating suppliers, which strengthens control on the OEMs dyadic supplier relations. As our framework draws on case findings from other less formal IORs, it seems that our case findings offer more evidence of their external validity. That way, the findings contradict that informal controls play a minor role in automotive MSRs.In particular, VCGs MCS, combining both formal and informal controls, is argued to be designed specifically to improve supply performance. The remainder of this paper is organized as follows. In the second part, we develop the theoretical contingency framework. The third part describes the case research methodology. The fourth part is the actual case study, which presents VCG, describes three supplier types by means of contingency levels and clarifies how VCG designed the MCS governing them.In the fifth part, we discuss our findings by comparing VCGs management control with previous findings and elaborating on the moment of VCGs supplier team. We conclude the paper with a summary of the main findings and some avenues for further research. 6 2. Theoretical framework In this part, we develop a theoretical contingency framework for MCS design of MSRs, which can be found in figure I. Contingency theory originated with the aim of explaining the structure of organizations by particular circumstances.Later, management accounting researchers adopted and further developed the theory in order to explain the mould of MCSs in organizations (e. g. Chenhall, 2003 Luft Shields, 2003). Therefore, contingency theory suits this study, regard ing MCS design of MSRs and its explicative variables. The central concept of the framework is the level of risk a certain MSR runs. Inter-organizational management control theory proposes two types of risk, which result from five different situational antecedents, characterizing the MSR.Although we clarify both risk types separately, we stress the integrative interpretation of all contingencies jointly determining both levels of risk. Subsequently, this risk is governed by different management control instruments, either with a large or a small role for informal control. 3 2. 1. Performance risk The first risk type is performance risk, defined as the hazard of not achieving the MSR objectives, despite satisfactory cooperation (Das Teng, 2001).This type of risk is also referred to as coordination requirements (Dekker, 2004 Gulati Singh, 1998) or the ascendence of events (Tomkins, 2001). As the MSR objective concerns manufacturing as many products of the order book as possible, o n time, with good fiber at the lowest possible cost, performance risk is the risk of a supply chain flutter disturbing the realisation of this goal. Three contingencies related to technology increase this risk, namely complexity, task dubiety and task interdependence (Chenhall, 2003).Yet as complexity and task uncertainty are highly related (Chenhall, 2003), the framework does not include complexity separately (cf Dekker, 2004). 3 According to van Veen-Dirks (2006), all situational characteristics and MCS characteristics are set(p) jointly instead of sequentially. Also Kamminga van der Meer-Kooistra (2007) propose that the influence of contingencies is not determined by to from each one one antecedent as such, but by their interaction. In addition, they suggest studying control as an integrative concept, in which all control dimensions are incorporated.Consequently, we do not propose one-on-one associations between one specific contingency, one specific type of risk and one s pecific type of control, suggested to suit that risk type. Instead, our model simultaneously studies the associations between situational contingencies, risks and management control techniques, as put forward by the three boxes of figure I. The boxes of contingencies and risks are put together to stress their interdependence and joint impact on management control.7 Task uncertainty relates to variability in transformation tasks and the available knowledge of methods for performing those tasks (Chenhall, 2003). This situational characteristic determines the measurability difficulty of output and activities (Kamminga van der Meer-Kooistra, 2007 van der MeerKooistra Vosselman, 2000), which increases with increasing levels of complexity of both the delivered product and its functional processes (Woodward, 1965).The first complexity is related to the added value of the product and gradually increases depending on whether the supplier delivers a measurement component or an important c ustomized module (Cooper Slagmulder, 2004). The second complexity regards the added value of the production process and reflects the complexity of the suppliers manufacturing processes needed to effectively produce and deliver products as required. Task interdependence refers to the degree to which subactivities of the value creation process have been split up and made dependent on each other (Dekker, 2004).In MSRs, this interdependence is sequential (Thompson, 1967)4, because the relation involves transferring the suppliers output to the manufacturers input process. The level of sequential interdependence is impacted by the dependence level of the manufacturers operational performance on the supply superior (timeliness and product quality). Moreover, the interdependence level of a specific MSR is influenced by the production flexibility required from both parties and the manufacturers lack of precise knowledge to perform activities previously done in-house.2. 2. Relational risk T he second type of risk is relational risk, implying the probability of not having satisfactory cooperation because of opportunistic behaviour of the supplier, exemplified in shirking, cheating, distorting information and appropriating resources (Das and Teng, 2001). This type of risk is also referred to as appropriation concerns (Dekker, 2004 Gulati Singh, 1998) or the generation of trust (Tomkins, 2001).Transaction cost economics (trichloroethane) theory5 proposes three contingencies that influence relational risk and attendantly determine appropriate control asset specificity, environmental uncertainty and act frequence (Williamson, 1979). Yet, as the manufacturer possesses no specific assets related to a certain supplier, at 4 Thompson (1967) identifies three levels of task interdependence from low to high, which influence the level of inter-organisational coordination and communication pooled, sequential and reciprocal interdependence.5 TCE argues that parties are only bound edly rational and behave opportunistically. Therefore, the total cost of outsourcing is the sum of both the supplied component costs and the transaction costs, including costs for negotiation, drawing up contracts, coordination, control and risk of opportunistic behaviour (van der Meer-Kooistra Vosselman, 2000). 8 least not in the manufacturing phase of the supply chain, there is no lock-in to supplier opportunistic behaviour.6 Hence, foreign uncertainty and transaction frequency, asset specificity does not influence supplier opportunistic behaviour in MSRs and is not include in our theoretical framework. Consistent with being a central contingency research concept, environmental uncertainty also forms a powerful characteristic of MSRs (Chenhall, 2003). In particular, this contingency relates to general market uncertainties and uncertainty about unknown next contingencies (Kamminga van der Meer-Kooistra, 2007 Langfield-Smith Smith, 2003 van der Meer-Kooistra Vosselman, 2000).B ecause manufacturer and supplier interact under these uncertainties, both parties face changes over time, which require detailed contracts (Dekker, 2004). However, incomplete contract theory argues that there exist limitations in drawing up complete contracts, because all future contingencies can not be foreseen, are in like manner expensive to foresee or are too expensive or impossible to contract upon (Gietzmann, 1996). Consequently, the combination of uncertainty and incomplete contracts leads to potential opportunistic behaviour of the supplier.According to TCE, more frequent interactions lower the surmise of opportunistic behaviour (Williamson, 1979). So, to preserve a haughty relation between contingencies and relational risk, we could utilize infrequency as contingency variable (e. g. Anderson Dekker, 2005). Yet, as we study MSRs with no connection to commercial negotiations determining the contract term, we include the antecedent relational stability aim. This contingen cy relates to the manufacturers aim of continued future interactions with the supplier and serves to build bilateral commitment (Cooper Slagmulder, 2004).We argue that MSRs, in which relational stability is considered necessary and gum olibanum aspired by the manufacturer, are subject to higher relational risk. For example, if supplier switching costs are high due to high interdependence, high commitment from the manufacturer could incite the supplier to accept lower quality or delivery performance. Besides including a transaction environment characteristic and a transaction characteristic, we also incorporate a transaction party characteristic (Langfield-Smith Smith, 2003 van der Meer-Kooistra Vosselman, 2000).In particular, we include supplier knowledge importance, which encompasses the degree of importance for the manufacturer to know the supplier and to be able to assess characteristics, such as management competence, trustiness and willingness to share proprietary knowledg e. Usually, this kind of assessment is done by means of first-hand or second-hand experience. Hence, we argue that when the 6 Obviously, suppliers do have specific assets in place, translateing them vulnerable to opportunistic behaviour from the part of the manufacturer.However, this study and the developed theoretical framework only focus on supplier opportunistic behaviour. 9 importance of supplier knowledge rises, the risk for insufficient or erroneous assessment and subsequent supplier opportunistic behaviour increases. 2. 3. Management control system Although MCSs have been conceptualised and categorised in various ways, the current management control literature has reached a consensus on two types of management controls, namely formal and informal control instruments (Langfield-Smith Smith, 2003).Obviously, studying the usage of informal controls compared to formal controls requires both control types to be included in the theoretical framework. Formal controls are explicitl y set up to coordinate the MSR and include outcome controls and behaviour controls. Outcome control involves the measurement and evaluation of the outcomes of operations against pre-defined outcomes or targets, by using several performance measurement techniques (Ouchi, 1979 Dekker, 2004). The most important outcome metrics for MSRs are percentage of defects, quality of delivered goods and on time delivery of goods (Gunasekaran, Patel McGaughey, 2004).Behavioural control concerns the specification and actual surveillance of behaviour, by means of rules and received procedures (Ouchi, 1979). Additionally, behaviour control includes evaluating compliance with pre-specified planning, procedures, rules and regulations (Dekker, 2004). Informal controls (also called social controls) are not explicitly designed, but are grown out of divided up norms and values, shaped by frequent interaction, meetings and management attitude (Ouchi, 1979 Merchant, 1998). Especially trust building7 has em erged as a very important informal control instrument in inter-organizational MCSs (e. g.Dekker, 2004).While formal controls reduce the risk by altering the incentives for underperformance and opportunistic behaviour, trust mitigates risk by minimizing the fear of underperformance and opportunistic behaviour to occur (Das and Teng 2001). Therefore, we include three types of inter-organizational trust building, namely building contractual trust, competence trust and goodwill trust (Sako, 1992). 8 Contractual trust results from previous contractual relations or grows during the MSR 7 Rousseau, Sitkin, Burt Camerer (1998, p. 394).Define trust as a psychological state comprising the intention to acceptvulnerability, based upon positive forebodings of the intentions or behaviour of another. According to them trust is not a behaviour (cooperation), or a choice (e. g. taking a risk), but an underlying psychological condition that can cause or result from such actions (Rousseau et al. , 1 998, p. 395 italics added).As such, trust in itself can not be a control instrument in the MCS of MSRs. Instead, the control techniques are the actions the manufacturer performs to create and build trust in the supplier. 8 Contractual trust is based on the foreboding that the supplier will keep promises and comply with agreements made, whether these10 (Sako, 1992).competency trust is increased by previous good performance, i. e. good quality and delivery results. Moreover, competence trust results from buying activities from reputable suppliers or transferring competences to the supplier. Additionally, product and/or process certification and process standardisation enhance competence trust (Sako, 1992). To develop goodwill trust, Sako (1992) identifies shared values and norms as necessary, but insufficient, as transaction parties also need to show the willingness to be indebted to each other.Gulati (1995) stresses creating and growing an inter-organizational bond of friendship to bring out goodwill trust (Gulati, 1995). Other possible goodwill trust initiators are interactive goal setting, trustworthiness reputation and a long term relationship (Dekker, 2004). Next to these specific trust building mechanisms, the literature also proposes an important overall trust building technique, namely close interaction, based on mutual interests and established by means of joint decision making and joint line of work solving via a joint relationship board and/or joint task groups (Das Teng, 2001 Dekker, 2004).9 Besides trust building, MSRs can be governed by another type of informal control, which Ouchi (1979) refers to as clan control. Based on shared norms, values and a common inter-organizational goal, supplier behaviour in the interest of the MSR will be reinforced, because suppliers are motivated to achieve the goal (Das Teng, 2001). This incentive results from inter-organisational social pressure (Spekle, 2001) exerted by the manufacturer, which we believe is social control in its literal meaning.Because of high interdependence between manufacturer and supplier, below standard results of the supplier at a time impact the manufacturers performance. Consequently, supplier management is unpleasantly confronted with manufacturer management and faces personal abjection because of the error. Additionally, supplier management runs the risk of their reputation and personal relationship with interperforming manufacturer management getting injured. Also Dyer Singh (1998) mention reputation and personal relations as social control mechanisms, besides norms and trust.By acting as negatively valued social sanctions (Bijlsma- are contractually stipulated or not. Competence trust concerns the expectation that the supplier possesses the necessary technical and managerial competences to deliver the order as agreed. Goodwill trust regards the expectation that the supplier shares an open commitment, with the willingness to perform activities beneficial to the MSR, but possibly neither in the suppliers interest nor required by the contract (Sako, 1992). 9 Other potential overall trust building techniques in a MSR are communication via regular inter-organizational meetings (Chalos OConnor, 2004 Das Teng, 2001), information sharing of problem areas (Chalos OConnor, 2004), supplier development activities (Carr Ng, 1995), networking (Das Teng, 2001), training (Chalos OConnor, 2004) and the extent to which the employees of both parties understand the factors ensuring the collaborations future success (Chalos OConnor, 2004). 11 Frankema Costa, 2005), these social consequences create incentives for satisfactory supplier performance and render supplier opportunism hard to sustain (Spekle, 2001).If we assume operational snags to be day-today business in MSRs, this social pressure creates an informal means to mitigate risk in MSRs. 3. Research methodology 3. 1. Case study research The empirical part of this paper is based on an in de pth case study, which is an investigation of a real liveliness phenomenon, relying on multiple sources of evidence and benefiting from prior development of theoretical propositions (Yin, 1994). This research method suits our research that concerns refining existing interorganizational management control theory for the relatively under-explored manufacturing phase of the supply chain.10 According to Keating (1995), such theory refinement needs a clear theoretical commencement point, supplemented with openness to the discovery of unexpected findings. To balance these theory attachment and detachment requirements, we developed a theoretical framework to guide the data disposition, but at the same time used data collection techniques admiting sufficient openness. Furthermore, several interorganizational management control case studies (e. g. Cooper Slagmulder, 2004 Dekker, 2004 Kamminga van der Meer-Kooistra, 2007Nicholson et al. , 2006) strengthen the argument that cases allow in vestigating in detail the structure and influencing variables of IORs (Sartorius Kirsten, 2005). These studies show that theory refinement of MCS design can be adequately investigated by means of qualitative research. The social meaning of inter-organizational MCSs, especially regarding the use and interpretation of informal controls, and the subsequent behaviour of companies and employees is very complex.So if we only skim the surface, we will never discover how different parties interpret certain IORs and whether the MCS is designed accordingly. This argument not only justifies the choice for a case study, but also forms the reason 10 Our research corresponds to investigating a complex phenomenon within its real life context of which empirical evidence is rather limited, and answering how and why questions about this phenomenon, for which case study research is most suited (Eisenhardt, 1989 Yin, 1994).Furthermore, Keating (1995) argues that case studies suit three goals and that our theory refinement goal represents the middle institute between theory discovery (describing novel phenomena) and theory refutation (disconfirming well specified theories by legal transfer in negative evidence). More specifically, our case research is of the theory illustration type, documenting previously unappreciated aspects of management accounting practice and identifying aspects of the illustrated theory that require reformulation or more rigorous specification (Keating, 1995, p.71).Indeed, the goal of this study is to illustrate how manufacturers design supplier MCSs, to what extent this design differs from designs in other IORs and how the design can be explained by means of a specifically adapted theoretical framework. 12 why more of this research is requested (e. g. Langfield-Smith Smith, 2003 Dekker, 2004 van der MeerKooistra Vosselman, 2006). 3. 2. Unit of analysis In most inter-organizational studies, the unit of analysis is one dyadic relation between two indepe ndent parties (van der Meer-Kooistra Vosselman, 2006).Since there exist different dyadic MSRs within one manufacturer and we study MCSs dependence on relationship contingencies, our unit of analysis consists of specific MSRs. Dyer Singh (1998) explicitly propose the relational dupe, focusing on the buyer-supplier dyad, as opposed to the industry structure view and resource based view, when analyzing cooperative strategy and sources of inter-organizational competitive advantage. In order to answer the proposed research questions concerning MSR MCS design, we analyzed all relations after the manufacturer had decided to outsource the manufacturing activities.In other words, we turn to neither the make-or-buy decision nor related commercial negotiations, but collected data from the start of production onwards. Furthermore, we only gathered data on standard MCSs for MSRs with good operational performance. 3. 3. Case company selection The selection of the case company and its supplier s was influenced by two selection concerns theoretical sampling (Eisenhardt, 1989), and open and flexible ingress to.