2015 factors that influence interorgani

technology in relationship-based supply chains: evidence from the Macedonian and American wine industries Abstract Purpose: The purpose of this research is to better understand how int

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technology in relationship-based supply chains: evidence from the Macedonian and

American wine industries

Abstract

Purpose: The purpose of this research is to better understand how interorganizational relationships

influence information and communications technology (ICT)-enabled supply chain (SC) interactions of small-to-medium enterprises (SMEs) in developed versus developing economies through the theoretical lens of transaction cost economics (TCE) and social exchange theory (SET)

Design/methodology/approach: The paper uses case study data to study SMEs operating in both a

developing economy, the Republic of Macedonia, and a developed economy, the United States

Findings: Insights reveal that the institutional context (i.e., environmental uncertainty) has significant

indirect influence on ICT use by SMEs from rule-based and relationship-based supply SCs in the wine industry through contractual and relational mechanisms (i.e., contracts and social bonds)

Research implications/limitations: This study contributes to the body of SC knowledge by providing a

comparative qualitative analysis of interorganizational factors (e.g., information sharing, collaboration, trust, contractual governance, relational governance, environmental uncertainty) that influence ICT use by SMEs in upstream wine SC from developing (i.e., Macedonia) and developed economies (i.e., the US)

Practical implications: This paper provides valuable implications for the SC participants (e.g., grape

farmers, wineries and other suppliers) and industries (e.g., Macedonian and American wine industries) related to ICT use and non-use

Originality/value: This study makes a novel contribution by being the first to qualitatively explore the

ICT use in SMEs from the wine industry and identify the importance of legal institutional environment in buyer–supplier exchanges from developed and developing economies

Keywords: Supply chain integration, Developed economies, Developing economies, ICT use, SMEs,

Wine industry

Article Classification: Research paper

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Introduction

Since the 1990s, manufacturers have significantly improved productivity by implementing lean production procedures (Wee and Wu, 2009) Accordingly, achieving further operational efficiencies for most manufacturers is difficult nowadays However, much can still be done to address the inefficiencies caused by suppliers’ poor performance, customers’ volatile demand, and environmental uncertainty An integrated supply chain (SC) with smooth information, material, and financial flows can considerably improve the individual manufacturer’s performance (So and Sun, 2010)

A particularly promising context to improve SCs is through integration of small and sized enterprises (SMEs) SMEs comprise 95% of the enterprises around the world and account for 60%

medium-of the private-sector employment (ACCA, 2010) Integrating SMEs into SCs medium-of larger organizations enhances the productivity and performance along the entire value chain (Quayle, 2003) However, the integration and management of SCs is a major challenge for SMEs

Enterprise-level communication and collaboration technologies (e.g., email, VoIP, content

management systems, web conferencing, business process management) and SC management (SCM) technologies (e.g., EDI, bar codes, RFID) support the integration of SC information between upstream and downstream partners through timely information sharing and effective collaboration (Devaraj et al., 2007)

Despite the benefits of information and communication technologies (ICTs), SMEs experience difficulties with ICT adoption and use Dholakia and Kshetri (2004) found that employees’ low IT

knowledge, lack of CEO’s innovativeness, perceived productivity decrease and high costs, and lack of visible return on investment are the most common barriers to ICT adoption and use among SMEs in Australia and Denmark ICT adoption and use inhibitors have been studied both in developed economies (Dwivedi et al., 2009) and in developing economies (Kurnia et al., 2015), confirming that findings from developed economies are not directly applicable to developing economies due to differences in

infrastructure and culture

industry

By contrast to manufacturing firms, wineries have a high dependency on natural resources and specific tacit know-how (e.g., local recipes) to produce wine (Dries et al., 2013) They have to transform unlike and uneven raw materials flow (e.g., each harvest being different from the previous in terms of quantity and quality, and each influenced by uncontrollable events like weather) to marketable products Moreover, the wine industry is quite fragmented and its key SC actors are operating under incompatible operational standards such as measurements of sugar units in fresh grapes vary across regions Therefore, trust, is a crucial mechanism in the wine industry; it facilitates buyer–supplier transactions in this

fragmented and artisan-oriented industry (Bordonaba-Juste and Cambra-Fierro, 2009) Hence, looking at the trust antecedents might be key to overcoming the SC challenges (even malfunctions) in the wine industry related to the heterogeneous and discontinuous raw materials flow, and differences in operational standards between partners

Despite these opportunities, little research has been conducted on the factors influencing ICT use

by SMEs from an interorganizational perspective The purpose of this research is to better understand how interorganizational relationships influence ICT-enabled SC interactions of SMEs in developed versus developing economies We provide a comparative analysis of the role that institutional context plays on the ICT use by SMEs in the Macedonian and American wine industries We attempt to explain the

relationships between institutional context (i.e., environmental uncertainty), governance (i.e., contractual and relational governance), and ICT-enabled SC practices of information sharing and collaboration Transaction cost economics (TCE) and social exchange theory (SET) are deployed to shed light on the

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explanatory mechanisms (i.e., contracts and social bonds) in the relationship between the institutional context and ICT use by SMEs in the developed versus developing world Finally, we provide valuable implications for the SC actors and subsequent industries related to ICT use and non-use

Literature review

ICT adoption and use in SMEs

Several studies have investigated the factors that influence ICT adoption and use among SMEs in developed and developing economies Most of these studies focus on a single country and test only well-documented factors from TOE (Tornatzky and Fleischer, 1990) and DOI (Rogers Everett, 1995)

frameworks Previous single-country studies on ICT adoption and use by SMEs in developed economies

have adopted TOE and DOI frameworks to empirically identify and classify the adoption factors into three categories: technological, organizational, and environmental (see Table A1 in Appendix A)

Previous single-country studies on ICT adoption and use by SMEs in developing economies have

used several perspectives in their investigations: managerial, technological, organizational, and

environmental (see Table A2 in Appendix A) To date, few studies have compared ICT adoption behavior

by SMEs in developed and developing economies (see Table A3 in Appendix A)

We address this literature gap by conducting a comparative study on ICT use by SMEs in the Macedonian (developing economy) and American (developed economy) wine industries from the

perspective of interorganizational relationships We provide a comparative study of the influence of institutional context on governance, which influences trust, information sharing, collaboration, and ICT use

Relationship-based SCM

Sako (2004) identified two ideal contracting relationships between suppliers and customers in

SCs: arms’ length contractual relationships (ACRs) and obligational contractual relationships (OCRs)

ACRs are associated with rule-based economies and characterized by low mutual dependence—numerous partners, short-term commitments, price orientation, written and comprehensive contract governance,

in distribution channels and government authorities are critical activities for firms in developing

economies (Zhou and Xu, 2012) Hence, firms in developing economies are more likely to establish

relationship-based SCs that operate based on personal trust rather than on legally enforceable rules Liu et

al (2009) found that trust and relational norms, which are key constituents of relational governance and relationship-based SCs, are important for reducing opportunism and improving relationship performance

in buyer–supplier dyads in China

Our study examines how the influence of contracts and social bonds on trust varies between a relationship-based SC from a developing economy and a conventional SC from a developed economy

We explore how the institutional context contributes to this variation, which influences trust, information sharing, collaboration and, ultimately, ICT use

Theoretical development and propositions

Here, we explain and apply two theories to our research context: TCE and SET Our research model and propositions are developed by incorporating arguments on six core elements of

interorganizational relationships in wine SCs

TCE and SET

TCE is theoretical framework that defines the conditions under which firms should perform their internal and external value chain activities (Williamson, 1975) TCE proposes two fundamental modes—

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market and hierarchy—for organizational governance and material flows coordination Market refers to

the outsourcing activities where material flow is coordinated by supply and demand forces through

external transactions between firms Hierarchy defines the internal production where material flow is

coordinated by managerial decisions

Additionally, MacNeil (1980) introduced a relational model of organizational governance that has tighter interorganizational links at the integrated stages in the value-adding process Contemporary firms have decentralized their value-adding activities throughout their SCs to attain business agility Despite reducing production costs, the management of such distributed operations increases transaction costs, which are associated with resource procurement, exchange partner monitoring, and interorganizational coordination of production processes (Das and Teng, 2000)

SET was developed to explain exchange mechanisms in interpersonal relationships within a social context (Emerson, 1976) SET considers the interaction processes between parties to be the center

of their social exchange relationships in which one participant’s behavior is influential and evokes

responses from other participants Considering the dyadic relationship as an exchange relationship

sustained by interaction processes through the prism of SET, researchers have proposed that the

consequences of specific actions taken by a firm are largely dependent on the reactions of the other firms

in the exchange relationship (Anderson and Narus, 1990)

Proposed research model

Based on the theories in use and prior literature, we identified six factors—information sharing, collaboration, trust, contractual governance, relational governance, and environmental uncertainty—as core to interorganizational relationships in buyer–supplier exchanges, which influence ICT use by SMEs

in wine SCs They are integrated into our proposed research model (see Figure 1) Propositions are only provided for the relationships between trust, contractual governance, relational governance, and

environmental uncertainty (i.e., propositions 1, 2, 3a, and 3b) The relationships between information sharing, collaboration, trust, and ICT use are supported by prior literature

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- INSERT FIGURE 1 ABOUT HERE -

Information sharing

Information sharing is defined in terms of communication frequency and information quality

(Fischer, 2013) That is, “information flows are reflected in the quality of information and the amount of information” (Spekman et al., 2002, pp 44) Low and Mohr (2001) suggested that information quality is composed of four dimensions: relevance, accuracy, reliability, and timeliness It is also important that the information exchange has adequate frequency (Fischer, 2013) We focus on information sharing in three wine SC processes: initial negotiations, delivery dates and product availability exchange, and technical

product specification exchange

Information sharing is one of the most important factors for successful SCM (Zhou and Benton, 2007) Efficient SC operations and successful buyer–supplier relationships require dissemination of relevant, accurate, and comprehensible information (Zhao et al., 2002) Effective communication provides relevant information to a truster with which he/she is in a better position to assess a trustee’s activities; thus improving the transparency and positively affecting trust in buyer–supplier dyads (Fischer, 2013)

Research has shown that information sharing has positive impact on collaboration and trust in buyer–supplier relationships Fischer (2013) found that successful information sharing has significant influence on trust between SC partners Buyers and suppliers achieve an effective level of communication when relevant information is exchanged at an adequate frequency Kwon and Suh (2004) revealed that information sharing has a positive relationship with trust and mediates the relationship between

behavioral uncertainty and trust in SCs Wiengarten et al (2010) showed that joint decision making has a stronger positive effect on operational performance when the exchanged information is characterized by high quality compared to low quality information

Clemons et al (1993) emphasized the importance of ICT in SCM and its ability to reduce

coordination costs, operational risk, and opportunism associated with external transactions The ICT use

Collaboration is defined as the joint work between two or more SC partners to plan or execute

operations together with greater success rather than in isolation (Simatupang and Sridharan, 2002) Matopoulos et al (2007) proposed a conceptual framework for SC collaboration, which is composed of two pillars: (1) design and government of SC activities (e.g., selecting techniques and technologies for information exchange, collaboration partner, collaboration width and depth); (2) establishment and maintenance of SC activities (e.g., management of power, trust, dependence) Collaboration can happen horizontally with competitors, universities or collaboration intermediaries or vertically with supplier or customers, and over operational, tactical, or strategic SC activities (Barratt, 2004) We focus only on the vertical collaboration between wineries and their supplier for new product development and introduction

Cao and Zhang (2011) showed that SC collaboration improves collaborative advantage and indeed has a bottom-line influence on firms’ performance by reducing purchasing costs and improving technical cooperation Previous studies found that collaboration is positively associated with information sharing and trust Fischer (2013) found that positive past collaboration increases successful information sharing and improves trust in buyer–supplier relationships Scholten et al (2015) revealed that

collaboration increases SC resilience through increased visibility, velocity, and flexibility The more collaboration between buyers and suppliers, the better the extent to which SC actors have access to timely information about SC operations Narayanan et al (2015) discovered that trust mediates the impact of collaboration on agility performance An increase in collaboration in buyer–supplier relationships

positively influences trust, which improves the SC performance agility

Fawcett et al (2011) argued that ICT can enhance collaboration activities between SC partners

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due to their common interests to work on mutual concerns An empirical study conducted in the

telecommunication industry showed that managers developed positive attitudes toward ICT due to its collaborative nature and capacity to facilitate innovation (Cassivi, 2006) Accordingly, collaboration on the development and introduction of new products through ICT mitigates opportunism and reduces transaction costs associated with control and monitoring activities, which encourages a winery to use ICT for collaboration over other channels such as face-to-face (FtF)

Trust

Trust “is exhibited when a truster displays a willingness to be vulnerable to the trustee based on

the expectation that the trustee will perform as desired by the trustee” (Moody et al., 2014, p 266)

Interorganizational trust in our context describes the probability of a partner’s behavior toward a

vulnerable focal firm in a SC When a partner has positive expectations, the focal firm becomes more confident in the partnership, mitigating future concerns about opportunism (Gulati and Nickerson, 2008)

Trust is an essential element of the social capital that is directly linked to supplier performance (Johnston et al., 2004) and competitive advantage (Cheng et al., 2008) Prior literature suggests that trust enhances information sharing and collaboration Cai et al (2010) looked at the influence of institutional forces (i.e., legal protection, government support, and guanxi) on information integration in SCs from China Results showed that trust increases information sharing and collaborative planning in buyer–supplier dyads Anastasiadis et al (2015) showed that low trust levels inhibit information flows between buyers and suppliers in Greek agri-food SCs

Sharing vital information makes SC partners vulnerable to opportunistic behaviors However, trust increases the confidence of trading partners that each will use the provided information appropriately without engaging in opportunistic behaviors Trust mitigates the inherent information asymmetry between

SC partners by allowing more open and honest information sharing (Zaheer et al., 1998) Croom et al (2007) revealed that a manufacturer with a higher level of perceived benevolence of suppliers’ interests about its welfare is less likely to be apprehensive about suppliers’ opportunistic behaviors Frequent

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information exchange, which is a trait of a trustworthy exchange relationship, enables a winery to

understand its suppliers and the business environment better Moreover, trustworthy collaborations improve business transactions and reduce opportunism in buyer–supplier exchanges (Barratt, 2004) Thus,

a winery that has trustful relationships is less likely to expect suppliers to fail to meet the expected

performance levels and willing to more freely share crucial information and collaborate, which

encourages ICT use

Contractual governance

Contracts are a set of legal institutions and rules with obligational force, which are supported by a

legal system and enforced by judicial and dispute resolution procedures They serve as governance

mechanisms for economic and social exchanges (Crawford, 2003) Contractual governance refers to the

extent to which an interorganizational relationship is governed by a formal and written agreement that specifies the responsibilities and obligations of SC partners (Ryall and Sampson, 2009) Contractual governance occurs via explicitly written and formally legal agreements, which are precondition for successful execution of economic transactions as they define set of rules, procedures, and responsibilities (Li et al., 2010)

The two major TCE assumptions are bounded rationality (i.e., a firm is unable to fully process all available market information due to limited access and time) and opportunism (i.e., a firm will pursue

self-seeking behavior) Bounded rationality and opportunism together contribute to governance

inefficiency due to free market failures, whereby firms select suboptimal forms for governance

(Williamson, 1975) Under environmental uncertainty, both bounded rationality and opportunism are amplified, which requires managers to closely monitor and control their exchange partners’ opportunistic behaviors such as ignorance of responsibilities, price inflation, late deliveries, partial information

disclosure (Noordewier et al., 1990) Such uncertainty-driven activities increase transaction costs where firms impose preventive mechanisms (e.g., information search, negotiation, contract, monitoring,

assurance, inspection) to reduce transactional uncertainty associated with outsourcing (Hobbs, 1996)

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In dyadic exchanges, contracts represent a key governance mechanism for protection against exchange hazards (Wang, 2002) Institutions also play an essential role in developed economies by reducing the risks and costs of market transactions (Peng et al., 2008) Exchanges in developed economies with effective market mechanisms are rule-based, impersonal, and contractually reinforced In economies with sound institutional mechanisms, formal contracts define the cooperation level, conformance, and interorganizational integration using a written document that is legally enforceable In such

circumstances, written contracts create a set of homogeneous expectations in both simple and complex buyer–supplier transactions through legally enforceable terms, which reduce inefficient renegotiations and associated strategic activities (Hoskisson et al., 2000)

High levels of contractual detail and specificity about market exchanges make it more difficult for buyer and suppliers to pursue opportunistic activities (Shelanski and Klein, 1995), which have positive influence on interorganizational trust Khalfan et al (2007) revealed that formal contracts positively influence buyers’ and suppliers’ abilities to form trusting relationships Contracts are mechanism for delineating buyer and suppliers’ needs that are essential for achieving their joint goals in SCs Cao and Lumineau (2015) found that contracts have a positive impact on interorganizational trust and relational norms, which further improve buyer–supplier satisfaction, relational performance, and reduce

opportunism Consequently, a winery that has tight contractual ties with its suppliers is more likely to have higher trust levels in market exchanges because of reduced opportunism

Proposition 1: An increase in the contractual governance use increases trust, which positively influences information sharing and collaboration, and indirectly increases ICT use

Relational governance

Social bonds are ”the degree of mutual personal friendship and liking shared by the buyer and

seller” (Wilson, 1995, p.339) They are described as “investments of time and energy that produce

positive interpersonal relationships between the partners” (Perry et al., 2002, pp.76) Relational

governance refers to the extent to which an interorganizational relationship is governed by social relations

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and shared norms such as informal structures and self-enforcement (Zhou and Xu, 2012)

Although TCE emphasizes the dyadic exchanges between partners, SET proposes that social ties

in a buyer-supplier network are likely to impact their mutual interactions (Provan, 1994) Per SET,

relational governance focuses on the roles of social interactions and socially embedded relationships in economic activities (Granovetter, 1985) SET proposes that relational mechanisms govern buyer–supplier exchanges since the embeddedness of social connections creates standards of expected behavior that reduce the need for, and are even superior, to pure authoritative relationships in minimizing opportunism (Granovetter, 1985) Buyers and suppliers often overlook the technically correct legal implications of their signed contracts, which are modified, supplements or even completely substituted by the norms of their ongoing interactions and relationships (Williamson, 1975)

SET complements TCE by focusing on how social relationships transform market-based

relationships and exchange governance (Nooteboom, 1996) Developing economies lack rule-based systems and are dominated by relationship-based personalized exchanges Institutional structures in developing economies are susceptible to relational contracting rather than arms-length transactions and formal rules are substituted by informal ones (North, 1990) Such interpersonal developments are evident

in developing economies from Eastern Europe such as Poland (Spicer et al., 2000) The remnants of state socialism in Central Europe have left prevalent mistrust in formal institutions and exchange regulatory mechanisms, deficiency in the formal intermediaries responsible for enforcing commitments between individuals and the state, and substantial vertical dependence on the state These behaviors have

constrained the institutionalization of long-term obligational linkages between firms and encouraged managers to develop informal relationships with governmental agencies and other non-governmental institutions to ensure availability of supplies (Whitley et al., 1996)

With a similar post-socialism transition trajectory, Republic of Macedonia (a.k.a., Macedonia)

has experienced the rise of networks and relationships Vrski refers to contact networks or social capital

that can be accessed and used by individuals to obtain favors or services performed by others (Stiftung,

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2014) Vrski is so essential within the Macedonian business society that it can be seen as a corporate asset

in the interorganizational context, where the majority of the Macedonian society functions through social capital use The development of interpersonal relationships as supportive mechanisms for exchanges can

be partly attributed to the urbanization process in Macedonia since the late 1950s Forging of voluntary relations between citizens for self-assistance, rather than for the advancement of political objectives, rarely occurs in Macedonia (Stiftung, 2014)

Macedonia has a rather complex network of interethnic relations due to the large number of minority groups and their variations in size Main ethnic groups are Macedonians 1,297,981 (64%), Albanians 509,083 (25%), Turks 77,959 (3.9%), and Roma 53,879 (2.66%) (Mantsu, 2005) Although the national legislation does not distinguish between ethnic groups, in everyday life individuals belonging to large minority groups are likely to practice easier their rights in terms of education, employment, and business opportunities The difference in experience between the majority and the minorities is directly reflected in their attitude towards the state and its institutions, and in their evaluation of the country’s legislation and policies (Simoska, 1997) Consequently, Macedonians prevalently disbelieve in the

independence and prudency of the regulatory institutions and intermediaries, leading to emergence of vrski

As SET proposes, firms voluntarily consider adjustments essential for interorganizational

relationships, invoking reciprocal obligations (Hailén et al., 1991) The social ties embedded in

interorganizational networks prevent opportunistic behaviors in dyadic exchanges that contributes to trust establishment (Kirchler et al., 1996) That is, social bonds are relational mechanisms in the form of unwritten agreements between buyers and suppliers that are not enforceable by formal authority and power but rather by the aspiration to establish and nurture a reputation of integrity and trust They are alternatives to contractual mechanism and promote mutual interest without any written and enforceable obligations Liu et al (2009) suggested that social bonds are useful governance instruments to control opportunism and to develop cooperation in buyer–supplier dyads Personal interactions are helpful in

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understanding each other’s values, norms and behaviors, which reduces the uncertainty associated with potential opportunistic actions When parties interact regularly, opportunistic activities by suppliers and/or buyers are less likely Hence, it is assumed that social bonds, such as vrski development, between a winery and its suppliers, will lead to the development of trustworthy relationships

Proposition 2: An increase in the relational governance use increases trust, which positively influences information sharing and collaboration, and indirectly increases ICT use

Environmental uncertainty

Environmental uncertainty is the degree of change and instability in the business environment

(Dess and Beard, 1984) In our context, a turbulent environment is characterized by high levels of

uncertainty for the product availability, product manufacture, product quality, product supply, product demand, and product price volatility of supplies (i.e., fresh grapes, corks, glass bottles, yeast, labels, and capsules) in the wine industry Under such uncertain conditions, the exchange coordination between buyers and suppliers is challenged by the need to continually reexamine operations and strategies due to incomplete and asymmetric information (Krishnan et al., 2006)

Institutional environment refers to the set of “political, social, and legal ground rules that

establish the basis for production, exchange, and distribution” (Davis et al., 1971, p 6) As such, it has been assumed that institutional environments affects the effectiveness of interorganizational governance (Handley and Angst, 2014) Grewal and Dharwadkar (2002) suggested that the regulatory pillar of

institutional environment affects the choice of exchange governance Regulatory pillars, such legal

systems, can influence contract effectiveness and impose constraints on cooperative behaviors in buyer–supplier dyads

TCE asserts that buyers and suppliers are rarely in a position to fully anticipate all possible contingencies during the course of their relationship because of bounded rationality This implied contract incompleteness makes contractual governance vulnerable to opportunistic behavior in areas such as performance levels, non-conformance punishments, conflict resolution, and termination (Williamson,

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1985) Environmental uncertainty creates two problems for contractual governance: adaptation and

evaluation Adaption problem is the inability to precisely specify certain contractual aspects and

evaluation problem is the difficulty in determining contract enforceability, which increase the transaction

costs of contract renegotiation and adjustment (Rindfleisch and Heide, 1997) Moreover, incomplete contracts may not contain appropriate contingency clauses and are less likely to effectively govern buyers and suppliers’ behaviors in unexpected occurrences; thus reducing the flexibility of interorganizational relationships (Cavusgil et al., 2004) Contractual governance, which has a short-term, adversarial

approach to transactions, does not provide any incentives for the parties involved to resolve disputes and

is considered as inefficient for exchange regulation Under environmental uncertainty in which

unexpected contingencies continually arise, a winery is more likely to avoid establishing contractual governance with suppliers due to the surpassed roles of the contract as a preventive mechanism against opportunistic activities

Proposition 3a: An increase in environmental uncertainty decreases contractual governance use, which decreases the influence on the trust, information sharing, collaboration, and ICT use

In rapidly changing environments, such as the ones of developing economies, it is difficult and costly for buyers to create contracts that attempt to take into consideration all possible contingencies In developing economies unexpected contingencies commonly arise after the contract is signed, where suppliers may engage in opportunistic activities and take advantage of buyers by interpreting unspecified contractual clauses to their own benefit (Liu et al., 2009)

Conversely, relational governance encourages partners to take initiatives for value creation that are beyond contract specifics Relational mechanisms, such as social bonds, are more adaptive to

changing environments due to their inherited flexibility In developing economies with immense

environmental uncertainty and high regulatory variability, relational mechanisms provide SC partners with the needed flexibility (Paulraj et al., 2008) Relying on relational governance, partners will be more prone to take initiatives outside the contract and will be more willing to seize opportunities in emerging

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economies (Liu et al., 2009)

To prevent such opportunistic behavior, buyers and suppliers should consider governance

structures that focus on long-term business relationships rather than short-term contractual transactions Accordingly, social bond development and cultivation with suppliers may prevail over contractual

governance shortcomings Social ties are predominantly based on mutual commitment and shared values among partners, which makes them more efficient than formal contracts in turbulent environments They provide mutual adaptability for both buyers and suppliers to the uncertainties that come about in long-term exchange relationships (Liu et al., 2009) Thus, we assume that in uncertain environments, a winery

is more likely to establish and cultivate tight social bonds with its suppliers to achieve the necessary flexibility for mitigating contingencies

Proposition 3b: An increase in environmental uncertainty increases the relational governance use, which increases the influence on the trust, information sharing, collaboration, and ICT use

Research methodology

We have adopted a case study methodology based on multiple cases with a rigorous positivist approach The positivist approach is used to develop this research model We use prior literature and theories (i.e., TCE and SET) to propose causal relationships that we test with data from multiple case studies and relying on several evidence sources: interviews, organizational documents, and on-site and participative observations (Yin, 2009)

Data were collected from five Macedonian wineries (located in Skopje, Tikves, and Ovce Pole), four Washington wineries (located in Seattle), and one Ohio winery (located in Columbus) FtF and online interviews were conducted with general or operational managers and owners who had extensive knowledge of SC operations and buyer–supplier relationships Interviews, as a primary data collection tool, were effective for analyzing issues related to SMEs because of the tight schedules of the managers and their weak understanding of academic research

The interviews were conducted in two rounds with an average duration of 1 hour and 30 minutes

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Observation notes were written after each interview to capture fresh impressions about each winery’s operating environment On-site observations included informal conversations with operations staff that revealed important aspects of a companies’ background and operations Additionally, one of the

researchers participated in several private-label development projects in two of the selected wineries, which provided rich information on the dynamics of buyer–supplier exchanges

The template analysis technique (King et al., 2004) was adopted for a thematic analysis of the transcribed interviews, interview and observation notes, researcher thoughts, and other types of

communication records with the respondents The analysis began by developing a coding template that identified the themes relevant for data analysis The coding template was composed of a priori codes based on prior literature These codes were modified several times throughout the analysis based on their usefulness and suitability to the research Although the analysis began with preconceived ideas, the researchers were not fully constrained and allowed for several additional codes to emerge; these codes contributed to the modification of several themes The final coding template included seven themes related to interorganizational relationships and ICT use Statements corresponding to these themes were selected, coded, analyzed, and visualized by using the comprehensive qualitative data analysis package NVivo 10 (see Table B1 in Appendix 2)

Analyses of cases

Here, we analyze the relationships between trust, contractual governance, relational governance, and environmental uncertainty (i.e., propositions 1, 2, 3a, and 3b) We also look at the relationships between information sharing, collaboration, trust, and ICT However, we do not test the latter

relationships because we have provided enough support from previous studies

Macedonian winery case

Macedonia is a landlocked country in southeast Europe It has 55,000 acres of vineyards and the wine industry has a significant impact on the country’s macro-economy in terms of export value and employment by directly and indirectly creating 25,000 jobs Currently, 86 licensed wineries bottle around