Vassal or lord buyers: How to exert management control in asymmetric interfirm transactional relationships?

This paper examines how buyers control their suppliers in asymmetric interfirm transactional relationships. The conceptual framework is based on two perspectives—transaction cost economics and relational exchange view. The empirical research analyses three case studies of buyer firms: one in a situation of favorable asymmetric dependence (lordship) and two in a situation of unfavorable asymmetric dependence (vassalage). Three major findings stem from this research. First, the lord buyer mainly exerts a market-based control. This pattern is blended with a bureaucracy-based control to take maximum advantage of interfirm transactional relationships and with a social-based control to strengthen over time cooperation at the operational level. Second, the vassal buyer can only exert social-based control to reduce its transaction risk. Third, the relational behaviors of the most dependent partners seem to be strategies to moderate the negative effects of their dependence.