Article
Agency theory and quality fade in buyer-supplier relationships
The purpose of this paper is to propose using agency theory for assessing the likelihood of quality fade in buyer-supplier relationships and prescribing contractual mechanisms for reducing quality fade. In this paper, quality fade, an element of supply chain vulnerability, is defined as the unforeseen deterioration of agreed to or expected quality levels with respect to product and/or service requirements. The use of outcome-based, behavior-based, or mix contracts can be used to reduce the likelihood of quality fade and illustrate preferred scenarios for buyer and suppliers.
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