Management control design in long-term buyer-supplier relationships: Unpacking the learning process

Abstract

Management control (MC) design is crucial to the success of buyer-supplier relationships, yet we know little about how a buying company designs the management controls (MCs) of such relationships over time. In this paper, we use data collected in a six-year field study on the design of the MCs of a new facilities management (FM) outsourcing relationship. We find that boundary spanners learn to control in multiple ways, including trial and error, advice from third parties, experimentation, cross-level learning (i.e., corporate boundary spanners learning from operating boundary spanners), and advice from the partner. Moreover, the role of boundary spanners influences their focus of learning attention, with corporate boundary spanners focusing more on strategic aspects of the relationship (such as reducing appropriation concerns), and operating boundary spanners focusing more on FM activities and the coordination problems related to these activities. The lessons learned by both types of boundary spanners lead to the design of different types of control.