Determinants of vertical coordination in buyer-seller relations: Exploratory findings from a developing economy

Abstract

This study aims at understanding determinants of vertical coordination for firms in developing economies by conducting exploratory study in Tanzania. The study is centred on business - to business buyer -seller relations. Primary data were collected from buying side of the relationship. The main supplier of each firm was identified and used for answering the questionnaire. Findings suggest contractual flexibility to have higher significant positive effect in determining vertical coordination. The interaction effect between buyer asset specificity and contractual flexibility was also significant, while asset specificity by itself was not found to be significant. These prelimenary findings suggest the strength of vertical coordination relies to extent onwhether parties in relationship agree to be flexible in their contracts.