Management Controls for Effective Inter-firm (Buyer-Supplier) Relationships: Bangladesh RMG Industry

Abstract

A large proportion of inter-firm relationships (IFRs) in the outsourcing industry fail globally to achieve their intended objectives. As such, the right management controls are required in order to support these relationships. There is however, limited empirical research on effective inter-firm (buyer-supplier) relationships (EIFRs) and management controls for specific industries. This study extends the literature by examining EIFRs and their relevant management controls in the ready-made garments (RMG) industry in Bangladesh. The RMG industry in Bangladesh is highly dependent on international buyers as they contribute significantly to the country’s economy. Thus, the purpose of this study is to examine the relevant management control models to support EFIFs in the RMG industry. Accordingly, a cross-sectional survey was conducted with senior managers of RMG suppliers in Dhaka City. The results highlight the importance of market-based and trust-based control models in supporting EIFRs in Bangladesh’s RMG industry.

Keywords: Management control models; effective inter-firm (buyer-supplier) relationships; transaction cost economics; ready-made garment (RMG) industry; Bangladesh