Role hazard between supply chain partners in an institutionally fragmented market

Abstract

A major challenge to supply chain management in emerging markets is the relational coordination problem arising from variations in sub-national institutions in which partners are situated. This study investigates role hazard, a critical yet understudied relational coordination problem. Drawing on role and institutional theories, we examine role ambiguity and role conflict as two facets of role hazard between buyer and supplier, their institutional source, performance outcomes, and firms’ action alignment mechanisms as potential remedies. A dyadic survey of buyers and suppliers in China reveals that both role ambiguity and role conflict can result from sub-national institutional distance and jeopardize supply chain performance. The results also suggest that supply chain partners in different sub-national institutions can mitigate role hazard through continuous information sharing and dynamic adaptation. This study provides novel insights into how buyers and suppliers can enhance their relational coordination in emerging markets by reducing role hazard caused by sub-national institutional distance.