Bridging Asset Specificity and Supply Chain Performance: Why Is Contractual Governance Superior to Relational Ties in Indonesia's Upstream Oil and Gas Sector?
DOI:
https://doi.org/10.38035/dijefa.v7i3.7278Keywords:
Asset Specificity, Contractual Governance, Relational Governance, Supply Chain Performance, Upstream Oil and GasAbstract
The main focus of this research is to identify the relationship between asset specificity, contractual and relational governance, and supply chain performance. Transaction Cost Economics and Social Exchange Theory are the theoretical foundations of this research, which aims to investigate the mediating effect of contractual and relational governance on human and physical asset specificity. This study involved 162 supporting vendors in the oil and gas industry. Furthermore, PLS-SEM was used to analyze the data, which showed that physical asset specificity positively affected supply chain performance, but human asset specificity did not. Contractual governance also positively mediated the relationship between asset specificity and supply chain performance, but relational governance had no effect. The companies are expected to have policies focused on business contracts that serve as guidelines for conducting business. Managers, production sharing contractors, and supporting vendors should develop a framework based on contractual governance. This allows them to maintain occupational safety, improve company quality, and address business challenges, particularly costs, energy, and time in operational systems within the oil and gas industry.
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