Abstract:
This study draws on the tenets of transaction cost economics to examine the moderating effect of supply chain complexity on the relationship between formal control and social control mechanisms, and operational performance. The study argues that under conditions of increased supply chain complexity, the effect of formal control mechanism on operational performance is weakened while the effect of social control mechanism on operational performance is strengthened. These propositions are tested on a sample of 331 firms in a sub-Saharan Africa market, Ghana. Findings from the study show that at higher levels of supply chain complexity, formal control and social control have negative and positive effects on operational performance, respectively. These findings provide nuanced perspectives on how the performance consequences of formal and social controls vary under the same organizational circumstance. Theoretical and managerial implications are discussed.
