How to Complete Supply Chain Integration and Improve Supply Chain Performance Through Relationship Governance in the Digital Age

Introduction

As the competitive environment has become more complex, enterprises have come to rely on the supply chain as a primary driver of their competitive advantage (Feizabadi et al., 2019; Walker et al., 2000). Within the supply chain, various partners, such as suppliers, manufacturers, distributors, retailers, and customers, assume distinct roles to collectively contribute to its functioning. To effectively and efficiently maintain normal supply chain operations, it is imperative to establish several stable relationships and sustainable cooperation patterns among supply chain enterprises (Govindan et al., 2016) to increase the competitive advantage of the supply chain. Therefore, to manage such relationships and collaborations, organizations need to develop numerous effective governance mechanisms (Gimenez & Tachizawa, 2012; Formentini & Taticchi, 2016). Sound governance mechanisms can reduce the risk of opportunistic behavior, eliminate the uncertainty associated with conflict (Dolci et al., 2017; Govindan et al., 2016), help gain competitive advantages, and improve organizational performance (Dolci et al., 2017; Lee & Choi, 2021). Different from supply chain management, which focuses on direct activities, supply chain governance places a stronger emphasis on implementing mechanisms and rules to minimize uncertainty and guarantee the smooth operation of supply chain activities (Dolci et al., 2017).

Embedded within corporate structures and processes, governance is a multidimensional phenomenon, and it is a fundamental approach to analyzing interorganizational relationships. In recent years, scholars have focused on how to enhance the competitive edge within supply chains, and a wide range of definitions and concepts have been proposed (Ahola et al., 2014; Bonatto et al., 2020; Poppo & Zenger, 2002; Roehrich et al., 2020). Governance is mainly categorized into contractual governance and relational governance (Poppo & Zenger, 2002). Contractual governance essentially consists of written contractual terms that set out the roles, obligations and responsibilities between the parties involved in a collaborative relationship (Roehrich et al., 2020; Schepker et al., 2014). Relationship governance pertains to less formal and spontaneous mechanisms that rely on trust and collaborative arrangements derived from social interactions. This approach emphasizes the establishment and maintenance of trust, cooperation, and long-term relationships between partners to enable collective action and effectively respond to unexpected circumstances (Poppo & Zenger, 2002; Bonatto et al., 2020). Unlike contractual governance, relationship governance focuses more on building cooperative relationships based on mutual trust and synergy rather than just relying on explicit contractual terms to regulate cooperation. The two are complementary, not mutually exclusive (Cao & Lumineau, 2015).