Supply chain disintermediation: An agency perspective on buyer-supplier relationships under incongruent goals

Aftermarket sales and profits are often an important part of an original equipment manufacturer's (OEM) business model. Since replacement parts often do not require further manufacturing, OEMs act as an intermediary in the aftermarket. As with any intermediary, the OEM must concern itself with suppliers disintermediating its supply chain-selling replacement parts directly to the OEM's customers. Using the extant literature, supply chain disintermediation (SCD) is framed as an agency problem. This theory is used to develop six hypotheses relating causal and moderating factors in the buyer-supplier relationship to SCD: (a) contractual mismanagement, (b) divergent strategies, (c) aftermarket opportunities, (d) goal incongruence, (e) contractual enforcement, and (f) supplier's capabilities. The first three factors are hypothesized to increase goal incongruence. Goal incongruence then causes supply chain disintermediation. Contractual enforcement and supplier's capabilities negatively and positively moderate this relationship respectively.; An Internet-based survey was administered to aerospace executives as the primary data source, and secondary data was collected for triangulation. Construct validity was tested and causal modeling with structural equation modeling (SEM) was used to test the six hypotheses across both data sets. The results from both data sets generally support the proposed agency perspective on supply chain disintermediation. Hypotheses one through four were widely supported, and hypotheses five and six were moderately supported.; In general, the tested agency model relating goal incongruence to SCD was supported. This model offers a unique perspective in which the causes of interorganizational discord are related to an opportunistic action. The results also indicate that managers of OEMs with a lucrative aftermarket may wish to focus on aligning goals in the relationship as opposed to enforcing non-compete clauses.