Title: Contract complexity and contract administration costs in small supplier alliances in the Norwegian offshore market

Authors: Arnt Buvik; Øyvind Halskau

Addresses: Department of Economics, Molde University College, Servicebox 2110, 6402 Molde, Norway ' Department of Economics, Molde University College, Servicebox 2110, 6402 Molde, Norway

Abstract: This research focuses on the problem of perceived contract administration costs among small service suppliers in the Norwegian offshore market. Based on transaction cost economics (TCE), resource-dependence theory (RDT) and supply chain management literature, the authors analyse the association between several contract administration issues and perceived contract administration costs, and in particular in service supplier alliances. A mail survey among 109 Norwegian service suppliers makes the research design of this study, and the empirical findings demonstrate that when the contract complexity becomes substantial, the small contractors face substantial contract administration costs. This problem enlarges significantly for small service contractors with preference for participation in supplier alliances with other service suppliers, and sub suppliers. The reason is that such cooperative arrangements have to deal with a broader set of contracting partners, contract issues in the regulation and enforcement of contractual terms related to division of work, payment clauses, service performance and project fulfilment.

Keywords: offshore procurement; outsourcing; supply chain management; SCM; supplier alliances; contract administration costs; contract complexity; Norway; offshore industry; small service suppliers; small contractors; transaction cost economics; TCE; resource dependence theory; RDT; division of work; payment clauses; service performance; project fulfilment.

DOI: 10.1504/IJPM.2016.073383

International Journal of Procurement Management, 2016 Vol.9 No.1, pp.1 - 14

Received: 03 May 2014
Accepted: 12 Sep 2014

Published online: 01 Dec 2015 *

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