Journal of Supply Chain Management

ORIGINAL ARTICLE OPEN ACCESS

Justice and Contracts as Double-­Edged Swords:

Collaborative Product Innovation in Hub-­and-­Spoke Supply
Chain Networks
Gordon Liu1 | Yantai Chen2 | Wai Wai Ko3

1MarketingStrategy, Department of Strategy and Marketing, The Open University Business School, The Open University, Milton Keynes, UK | 2Innovation
Management and Strategic Management, Research Centre for Digital Innovation and Global Value Chain Upgrading, Zhejiang Gongshang University,
Hangzhou, P.R. China | 3Reader in Strategic Entrepreneurship Brunel University Brunel Business School Uxbridge, Middlesex, UK

Correspondence: Gordon Liu ([email protected]) | Yantai Chen ([email protected])

Received: 7 December 2023 | Revised: 23 January 2025 | Accepted: 27 January 2025

Funding: This work was supported by National Natural Science Foundation of China, 72032008.

Keywords: formal contracts | inter-­organizational justice | new product development | supply chain relationship | transaction cost economics

ABSTRACT
This study explores how inter-­organizational justice, and formal contracts influence new product development (NPD) collabora-
tion in supply chain networks. Challenging traditional transaction cost economics (TCE), the research focuses on collaborative
NPD in hub-­and-­spoke supply chain structures. Data from 183 Chinese suppliers and 22 executive interviews reveal unexpected
patterns in NPD collaboration. Procedural justice exhibits an inverted U-­shaped relationship with NPD collaboration, linking
higher fairness to improved collaboration up to a point, beyond which further increases may associate with diminishing returns.
In contrast, distributive justice shows a U-­shaped relationship with NPD collaboration, where higher equity initially relates to
reduced collaboration but later correlates with renewed engagement. Notably, formal contracts amplify the negative interactions
between these justice dimensions. This contradicts the conventional view of their complementary roles. These findings contrib-
ute to theoretical advancements by illustrating how inter-­organizational justice mechanisms function differently in complex
network structures compared to simple dyadic relationships. Careful calibration of inter-­organizational justice dimensions and
formal contracts proves essential for fostering productive NPD collaboration. These governance insights offer directions for en-
hancing supply chain relationship management.

1   |   Introduction have shown that firms adjust their supply chain structures in
order to achieve specific objectives, such as innovation, while
Supply chain partners increasingly collaborate on new product maintaining control and flexibility in the face of environmen-
development (NPD) to sustain competitive advantages (Peng, tal uncertainty (Namdar, Modi, and Blackhurst 2025). The con-
Heim, and Mallick 2014). While traditional supply chain col- sumer electronics and automotive sectors exemplify this trend,
laboration focuses on process improvements in logistics and as electric vehicle development demands intensive collaboration
inventory, collaborative NPD enhances market responsiveness between manufacturers and suppliers (Ding, Ye, and Wu 2019).
by creating new revenue streams. Industries experiencing rapid The growing complexity of products and the need for specialized
technological changes particularly benefit from this cross-­supply expertise beyond organizational boundaries underscore NPD's
chain product innovation (Liu and Rong 2015). Researchers critical role in supply chain collaboration (Davis 2016).

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is
properly cited.

© 2025 The Author(s). Journal of Supply Chain Management published by Wiley Periodicals LLC.

Journal of Supply Chain Management, 2025; 0:1–20 1 of 20

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Inter-­organizational justice,1 conceptualized as fair prac- require extension to explain inter-­organizational justice dy-
tices within inter-­organizational dynamics, serves as a criti- namics in these networks. The implementation of standard-
cal foundation for collaborative relationships (Narasimhan, ized procedures by hub-­f irms adds complexity to procedural
Narayanan, and Srinivasan 2013). Transaction cost economics justice dynamics (Liu, Aroean, and Ko 2022). Hub-­f irms' cen-
(TCE) demonstrates how inter-­organizational justice reduces tralized approaches generate varying supplier perceptions of
opportunistic behavior in supply chain collaborations (Huo, procedural fairness. This variation produces an inverted U-­
Wang, and Tian 2016). Contemporary market opportunities shaped relationship between procedural justice and NPD col-
have transformed business collaboration patterns from dyadic laboration. This relationship arises as decreasing monitoring
partnerships to sophisticated interfirm networks, particularly costs are offset by escalating adaptation costs. Information
the hub-­and-­spoke model (Liu and Rong 2015). The consumer asymmetry significantly affects distributive justice dynamics,
electronics and automotive manufacturing sectors exemplify particularly regarding monetary and non-­monetary rewards
this evolution, where hub-­f irms coordinate relationships and al- (Luo 2007). This asymmetry creates a U-­shaped relationship
locate resources effectively (Liu, Aroean, and Ko 2022). between distributive justice and collaboration outcomes.
The U-­ shape reflects the interaction between increasing
This paradigmatic shift poses profound challenges to estab- information-­ gathering costs and decreasing safeguarding
lished theoretical frameworks—particularly TCE—because costs as fairness perceptions improve.
TCE traditionally focuses on dyadic relationships (Poppo
and Zhou 2014). The inherent complexity of hub-­a nd-­spoke Furthermore, in hub-­and-­spoke networks, procedural and dis-
supply chain networks challenges several core TCE assump- tributive justice function as substitutes, where high distribu-
tions in significant ways. The multilateral nature of these tive justice overshadows procedural justice in shaping supplier
networks creates intricate relationships between multiple participation. Suppliers prefer costs associated with distributive
suppliers (spoke-­firms) and a central hub-­firm (Chae, Choi, justice due to their direct connection with tangible outcomes
and Hoetker 2024). This complexity exceeds TCE's typical an- (Che, Jiang, and Pei 2024; Poppo and Zhou 2014). The dominant
alytical scope (Fang et al. 2016; Liu, Aroean, and Ko 2022). position of hub-­firms increases suppliers' transaction costs in
A substantial information asymmetry exists, with hub-­f irms navigating imposed decision-­making processes. High distribu-
possessing superior network intelligence compared to in- tive justice mitigates these risks and aligns with outcome-­based
dividual suppliers. This asymmetry challenges TCE's pre- performance metrics, leading suppliers to prioritize fair out-
sumption of balanced information access for decision-­making comes over procedural engagement. Formal contracts moderate
(Dhanaraj and Parkhe 2006; Mascarenhas, Kesavan, and this substitution effect between justice types in hub-­and-­spoke
Bernacchi 2008). Additionally, the varied scale and scope supply chain networks by fostering stable partnerships and bal-
of transactions within these networks influence the percep- ancing power dynamics through explicit outcome specifications
tion and management of transaction costs (Chae, Choi, and and risk allocation clauses (Li, Poppo, and Zhou 2010). By reduc-
Hoetker 2024), particularly regarding network-­level efficien- ing uncertainty and emphasizing measurable outcomes, formal
cies. The dynamic character of these networks, marked by the contracts diminish suppliers' need for procedural involvement,
potential entry and exit of suppliers, further challenges TCE's thus reinforcing the primacy of distributive justice in supplier
assumptions about relationship stability (Cropanzano, Prehar, decision-­making.
and Chen 2002). Hub-­firms frequently implement standard-
ized procedures unilaterally in hub-­a nd-­spoke supply chain The analysis combines dyadic, time-­lagged survey data from
networks. This practice contradicts TCE's traditional assump- a hub-­firm and 183 Chinese suppliers with insights from 22
tion of bilateral procedure negotiation (Williamson and De executive interviews, revealing three key theoretical implica-
Meyer 2012). tions. First, the study extends the applicability of TCE (Poppo
and Zhou 2014; Williamson 2008) to hub-­a nd-­spoke supply
Within these hub-­and-­spoke supply chain networks, the dy- chain networks. This extension demonstrates how procedural
namics of procedural and distributive justice2 assume particu- and distributive justice influence NPD collaboration through
lar significance. These two dimensions of justice merit specific different transaction cost effects. Procedural justice shows an
examination due to their alignment with inter-­organizational inverted U-­shaped effect on NPD collaboration, while distrib-
dynamics within supply chain networks (Griffith, Harvey, and utive justice exhibits a U-­shaped effect. This framework en-
Lusch 2006; Poppo and Zhou 2014). Procedural justice, which hances the understanding of justice perceptions, transaction
emphasizes perceived fairness in decision-­ making processes costs, and NPD collaboration within these networks. Second,
(Narasimhan, Narayanan, and Srinivasan 2013), is closely re- the findings reveal a substitution pattern between procedural
lated to arrangement efficiency and monitoring cost reduction. and distributive justice in supply chain relationships, chal-
Distributive justice, concerning fair outcome allocation based lenging the established complementarity perspective (Brown,
on inputs (Fang et al. 2016), aligns with TCE principles by safe- Cobb, and Lusch 2006; Luo 2007). This pattern provides a
guarding against opportunism and ensuring equitable benefit new analytical framework for examining how firms balance
distribution. transaction costs within hub-­and-­spoke supply chain rela-
tionships. Third, formal contracts strengthen the substitution
This study proposes distinct curvilinear effects of proce- effect, enhancing TCE's contract conceptualization. While
dural and distributive justice on NPD collaboration within formal contracts reduce certain transaction costs (Poppo
hub-­a nd-­spoke supply chain networks. These nonlinear pat- and Zenger 2002), they also alter the balance between justice
terns emerge from the opposing forces of benefits and costs3 types, offering new insights into contract management within
(Haans, Pieters, and He 2015). Traditional TCE frameworks hub-­a nd-­spoke supply chain networks.

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2   |   Theory and Hypothesis supply chain networks (Liu, Aroean, and Ko 2019; Williamson
and De Meyer 2012). Existing frameworks often overlook the
2.1   |   Literature Background nonlinear relationships between justice dimensions and col-
laboration outcomes, interactions between justice types, and
Researchers have increasingly focused on inter-­organizational the role of formal contracts. Applying TCE to these networks
justice in supply chain relationships, categorizing it into three represents a significant theoretical advancement, as modern
key streams. The first stream conceptually explains how fair- business networks surpass the scope of traditional dyadic re-
ness influences the behavior of parties in supply chain rela- lationships (Poppo and Zhou 2014; Williamson 2008). This
tionships (e.g., Boyd et al. 2007). Building on this foundation, study examines the nonlinear effects of justice dimensions,
researchers have developed scales to measure the different their interactions, and the moderating role of formal con-
types of inter-­ organizational justice (e.g., Kashyap, Manolis, tracts, offering novel insights into justice dynamics in contem-
and Brashear 2008) and conducted qualitative studies to explore porary supply chain relationships. It also lays the foundation
how these types influence supply chain firms' behavior (e.g., for a conceptual framework on supply chain-­ based NPD
Karaosman, Marshall, and Villena 2023). This research has es- collaboration.
tablished a foundation for understanding inter-­organizational
justice's critical role in shaping firms' behavior within supply
chain relationships. 2.2   |   TCE Perspective of Supply Chain-­Based NPD
Collaboration
The second research stream examines inter-­ organizational
justice as a moderating factor in how specific supply chain Collaboration on NPD projects among firms within the supply
factors influence firm behavior and performance. This body chain has become increasingly crucial for capturing complex
of literature investigates the moderating effects of individual market opportunities. This shift toward collaborative innovation
types of justice and compares the distinct impacts of various reflects the increasing need for diverse expertise and resources
forms of inter-­organizational justice. For example, Wei, Yin, to develop more sophisticated products (Liu and Rong 2015). By
and Chen (2021) demonstrated that distributive justice weak- leveraging the resources and knowledge of supply chain part-
ened the effect of internal–external integration on perfor- ners, firms can achieve superior results compared to operating
mance while strengthening the impact of external integration. in isolation (Cao and Zhang 2010; Wei, Yin, and Chen 2021).
Procedural justice enhanced the performance effects of inter- This collaborative approach enables firms within supply chain
nal–external integration but showed no significant influence s to pool their strengths, overcome individual limitations, and
on external integration. Additional studies have compared create synergies that drive innovation.
the moderating effects of procedural and interactional justice
(Liu, Aroean, and Ko 2019) and procedural versus distributive TCE provides a foundational framework for analyzing supply
justice (Kaynak et al. 2015). chain collaboration in NPD projects. This framework illumi-
nates organizational collaboration drivers and management
The third research stream explores the antecedents and im- methods. TCE aims to reduce transaction costs that emerge
pacts of inter-­organizational justice. Regarding these an- from opportunistic behavior among parties (Williamson 2008).
tecedents, Lund, Scheer, and Kozlenkova (2013) revealed that Innovation uncertainty in NPD projects creates substantial
national cultural traits like uncertainty avoidance and long-­ transaction costs. Supply chain partnerships help firms decrease
term orientation enhance fairness perceptions, while power these costs in joint NPD activities. More specifically, supply
distance reduces procedural fairness. Researchers have ex- chain partnerships achieve cost reduction through three pri-
amined the influence of inter-­organizational justice on two mary mechanisms: integrated systems that lower coordination
primary outcomes. Performance-­related outcomes include fi- expenses, trust-­based relationships that minimize monitoring
nancial performance (e.g., Griffith, Harvey, and Lusch 2006), needs through aligned goals, and shared access to resources and
market performance (e.g., Qiu 2018), growth (e.g., Zaefarian expertise that decreases acquisition costs (Cao and Zhang 2010;
et al. 2016), and innovation (e.g., Kim, Lee, and Lee 2017; Peng, Heim, and Mallick 2014).
Zhou, Govindan, and Xie 2020). Relationship outcomes in-
clude opportunistic behavior (e.g., Huo, Wang, and Tian 2016) According to TCE, inter-­organizational justice mechanisms
and supply chain cooperation (e.g., Wei, Yin, and Chen 2021). reduce transaction costs in supply chain partnerships through
Several studies have also examined the combined effects of distinct pathways. Procedural justice establishes fair decision-­
different types of inter-­organizational justice on various out- making processes between collaborating organizations. These
comes (e.g., Brown, Cobb, and Lusch 2006; Narasimhan, clear procedures decrease both monitoring costs and adapta-
Narayanan, and Srinivasan 2013). Other studies have investi- tion expenses, encouraging ongoing partnership development
gated inter-­organizational justice as a mediator, exploring its (Che, Jiang, and Pei 2024; Luo 2008). Distributive justice
antecedents and consequences concurrently (e.g., Malagueño, ensures fair outcome sharing among supply chain partners.
Gölgeci, and Fearne 2019; Mir et al. 2022). This equitable distribution minimizes the need for exten-
sive information-­gathering and safeguarding measures (Che,
This research extends the third stream of inter-­organizational Jiang, and Pei 2024; Poppo and Zhou 2014). Research confirms
justice literature by addressing limitations and advancing that these types of justice work together to strengthen collab-
TCE's application to complex supply chain network structures. orative behavior (Brown, Cobb, and Lusch 2006; Luo 2007).
The predominant focus on dyadic relationships has restricted While these studies do not always use TCE terminology di-
the understanding of justice mechanisms in hub-­a nd-­spoke rectly, their findings support core TCE principles. Both justice

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forms reduce uncertainty, opportunistic behavior, and re- understanding. TCE suggests that suppliers base supply chain
source conflicts, thereby lowering transaction costs in supply collaboration decisions for joint NPD projects on transaction
chain partnerships. costs related to managing partners' self-­interest and opportu-
nistic behavior (Cao and Zhang 2010). Procedural justice serves
However, TCE's explanatory power regarding procedural and as a crucial factor, reflecting suppliers' fairness perceptions in
distributive justice in dyadic supply chain relationships faces supply chain decision-­making processes and influencing trans-
limitations when applied to complex hub-­ and-­spoke supply action cost calculations regarding partners' potential opportu-
chain networks. In these networks, hub-­firms maintain sig- nistic behavior (Che, Jiang, and Pei 2024; Poppo and Zhou 2014).
nificant influence through centralized control and resource In dyadic supply chain relationships, direct partner interactions
concentration (Liu, Aroean, and Ko 2022; Williamson and De shape procedural justice perceptions (Griffith, Harvey, and
Meyer 2012). This influence shapes how procedural and dis- Lusch 2006; Narasimhan, Narayanan, and Srinivasan 2013).
tributive justice functions, affecting suppliers' perceptions of When suppliers perceive decision-­ making processes as fair,
justice's role in mitigating transaction costs and encouraging adaptation becomes simpler, and monitoring requirements de-
participation in joint NPD projects with supply chain network crease in joint NPD projects, suggesting perceived procedural
members. This study extends TCE to enhance its explanatory justice's positive association with supplier NPD collaboration
capacity regarding justice types in facilitating NPD collabora- engagement.
tive behavior. The extension requires evaluating how hub-­f irms'
centralized control affects procedural justice's capacity to reduce In hub-­a nd-­
spoke supply chain networks, hub-­ f irms' cen-
specific transaction costs while potentially increasing others. In tralized control significantly shapes the nature and imple-
addition, the study examines how hub-­firms' resource concen- mentation of procedural justice (Liu, Aroean, and Ko 2019).
tration influences distributive justice's role in transaction cost This centralization leads to standardized procedures across
mitigation and potential exacerbation. the supply chain network (Fang et al. 2016). Standardized
decision-­making processes strengthen suppliers' procedural
Furthermore, these dynamics within hub-­ and-­
spoke supply justice perceptions by fostering beliefs about fair network-­
chain networks highlight the need to consider formal con- wide treatment. As perceived procedural justice increases,
tracts as a moderating factor. TCE scholars emphasize the role suppliers' monitoring costs initially decrease, thus encourag-
of formal contracts in mitigating transaction costs and pro- ing NPD collaboration with network members. Clear and fair
moting supply chain partners' collaborative behavior (Cao and decision-­making processes reduce uncertainty and vigilance
Lumineau 2015; Poppo and Zenger 2002). Previous studies also requirements, enhancing collaboration appeal (Williamson
suggest that formal contracts facilitate the development of pro- and De Meyer 2012). However, beyond a threshold, high pro-
cedural and distributive justice (Poppo and Zhou 2014; Song cedural justice levels increase adaptation costs. Hub-­firms'
et al. 2018). However, research lacks an examination of how detailed procedural requirements may demand significant
formal contracts moderate these justice dimensions' influence supplier investments in internal process alignment (Liu,
on supply chain -­based NPD collaboration. Formal contracts Aroean, and Ko 2022), potentially offsetting reduced monitor-
hold particular significance in hub-­ and-­
spoke supply chain ing costs.
networks where hub-­firms possess stronger bargaining power
(Williamson and De Meyer 2012). Integrating TCE principles The relationship between perceived procedural justice and adap-
with justice concepts and the role of formal contracts provides tation costs follows a nonlinear pattern. Low-­to-­medium proce-
a robust framework for understanding supply chain collabora- dural justice perceptions maintain manageable adaptation costs.
tion in NPD projects. Figure 1 presents this study's conceptual However, beyond a threshold, adaptation costs escalate rapidly
framework, with the related arguments discussed in the follow- as suppliers exhaust simple adjustments and require substantial
ing sections. changes to meet stringent requirements (Serdarasan 2013). This
creates an inverted U-­shaped relationship between perceived
procedural justice and NPD collaboration. Initially, reduced
2.3   |   The Influence of Procedural and Distributive monitoring cost benefits dominate, but excessive procedural
Justice on NPD Collaboration justice leads to escalating adaptation costs that outweigh ben-
efits, potentially deterring supplier collaboration in hub-­and-­
Recent research has demonstrated the complex relationship be- spoke supply chain network NPD projects. This pattern emerges
tween procedural justice perceptions and NPD collaboration in from the interplay of two countervailing forces, as suggested by
hub-­and-­spoke supply chain networks, challenging traditional Haans, Pieters, and He (2015). Rising procedural justice percep-
tions steadily reduce monitoring costs, encouraging NPD collab-
oration. However, adaptation costs increase slowly at first before
escalating rapidly beyond an optimal threshold, ultimately ex-
ceeding the benefits of monitoring cost reduction. Thus,

Hypothesis 1. The effect of procedural justice on NPD collab-

oration has an inverted U-­shape in a hub-­and-­spoke supply chain
network.

FIGURE 1    |    Conceptual framework. [Colour figure can be viewed at In dyadic supply chain relationships, perceptions of distribu-
wileyonlinelibrary.com] tive justice also arise from direct partner interactions (Griffith,

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Harvey, and Lusch 2006; Narasimhan, Narayanan, and costs associated with distributive justice over procedural justice
Srinivasan 2013). Perceived fair outcomes reduce safeguarding due to hub-­and-­spoke supply chain dynamics.
needs and transaction costs, making NPD collaboration more
attractive. However, in hub-­and-­spoke supply chain networks, More specifically, hub-­ f irms' superior decision-­making au-
hub-­firms orchestrate supplier collaboration in NPD projects thority in hub-­and-­spoke supply chain networks (Liu, Aroean,
(Dhanaraj and Parkhe 2006), using concentrated resources and Ko 2022; Williamson and De Meyer 2012) shapes supplier
to deploy sophisticated network monitoring systems (Fang perceptions and behavior significantly. This authority causes
et al. 2016). This creates information asymmetry between hub-­ suppliers to evaluate transaction costs differently across jus-
firms and suppliers, limiting suppliers' visibility into others' tice types, particularly in joint NPD projects. Transaction costs
contributions (Mascarenhas, Kesavan, and Bernacchi 2008). linked to procedural justice, such as comprehending complex
Rising distributive justice perceptions increase suppliers' decision-­making processes (Che, Jiang, and Pei 2024), yield less
input–reward balance awareness, intensifying competitiveness. predictable returns due to suppliers' limited network power. This
Limited visibility into others' contributions complicates “fair” unpredictability affects smaller, resource-­constrained suppliers
distribution determination, particularly regarding monetary most significantly. The costs of managing procedural justice in
and non-­monetary rewards (Luo 2007). This compels initial supply chain collaboration are particularly high in hub-­firm–
supplier investment in information gathering, increasing trans- administered joint NPD projects, where suppliers must navi-
action costs. gate complex and uncertain decision-­making processes. This
dynamic makes it particularly challenging for smaller suppli-
However, the sophisticated monitoring systems implemented ers to participate effectively in the decision-­making process.
by hub-­firms enhance suppliers' trust by providing transpar- Conversely, transaction costs related to distributive justice, such
ency and reliability in tracking performance metrics across as negotiating fair prices, are more directly tied to tangible out-
the network (Dhanaraj and Parkhe 2006). Such trust cultivates comes (Poppo and Zhou 2014). Suppliers can more easily justify
distributive justice perceptions. Suppliers link accurate mon- these costs because they directly impact their bottom line. When
itoring with fair reward distribution, creating a paradoxical suppliers perceive rewards as fairly allocated, they feel more se-
effect. The growing confidence in fair outcome distributions cure in their relationship with the hub-­f irm, which validates the
diminishes the perceived need for safeguarding measures. At costs of maintaining distributive justice.
a specific threshold, positive network effects become evident
(Davis 2016). The growing trust in the system makes it advan- This preference for distributive justice aligns with typical sup-
tageous for all suppliers to rely on hub-­f irms' reward distribu- plier performance evaluations, which emphasize outcomes
tion decisions. This reliance leads to decreased safeguarding such as cost, quality, and delivery time (Malagueño, Gölgeci,
efforts and associated costs, which encourages collaborative and Fearne 2019; Matopoulos et al. 2007). This alignment
NPD projects. Furthermore, as suppliers reduce safeguarding drives suppliers to prioritize distributive justice–related trans-
efforts, they can redirect resources to other activities, such as action costs. High distributive justice levels lead suppliers to
innovation. The combination of reduced transaction costs and de-­emphasize aspects of procedural justice. Fair outcome distri-
increased innovation potential significantly enhances the ben- bution benefits outweigh the perceived value of engaging with
efits associated with higher levels of distributive justice, en- hub-­firm decision-­making processes (Poppo and Zhou 2014).
couraging suppliers to participate in joint NPD projects within Consequently, high distributive justice weakens procedural
hub-­and-­spoke supply chain networks. This pattern aligns with justice's impact on NPD collaboration willingness. Suppliers
Haans, Pieters, and He (2015) framework of countervailing prioritize fair outcomes over understanding decision-­making
forces, producing a U-­shaped relationship between distributive processes, favoring distributive over procedural justice. This
justice and NPD collaboration. Initial increases in distributive substitution departs from traditional dyadic relationships, where
justice raise information costs due to the complexity of fair dis- these justice types complement each other. Thus,
tribution. Beyond a certain threshold, the benefits of increased
trust, reduced safeguarding costs, and innovation potential Hypothesis 3. Distributive justice reduces the effects of pro-
outweigh these initial challenges, driving a resurgence in NPD cedural justice on NPD collaboration in a hub-­and-­spoke supply
collaboration. Thus, chain network.

Hypothesis 2. The effect of distributive justice on NPD collab-

oration has a U-­shape in a hub-­and-­spoke supply chain network. 2.4   |   Moderating Role of Formal Contracts

Research has demonstrated that procedural and distributive TCE establishes formal contracts as fundamental to inter-­
justice perceptions create complementary effects in fostering organizational relationships. These legally binding agree-
collaborative behavior within dyadic inter-­organizational rela- ments outline exchange terms and conditions, mitigating
tionships (Brown, Cobb, and Lusch 2006; Luo 2007). These types uncertainty and opportunistic behavior (Poppo and Zenger 2002;
of inter-­organizational justice reduce uncertainty, perceived Williamson 2008). By defining the rights and obligations of
opportunism risks, and resource allocation conflicts, thereby parties, formal contracts help establish stable partnerships,
lowering transaction costs. However, they can function as sub- set expectations, and curb potential opportunism (Cao and
stitutes within hub-­and-­spoke supply chain networks. High dis- Zhang 2010). This formalization proves crucial in non-­equity-­
tributive justice levels diminish procedural justice's impact on based supply chain relationships (Brown, Cobb, and Lusch 2006;
supplier participation in collaborative NPD projects. Both justice Poppo and Zhou 2014). In hub-­ and-­
spoke supply chain net-
types impose transaction costs on suppliers, yet suppliers favor works, formal contracts balance power dynamics by providing

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suppliers with legally binding assurances, reducing vulnerability $500 million, providing an ideal setting for examining inter-­
to exploitation by hub-­f irms (Liu, Aroean, and Ko 2022). organizational justice, formal contracts, and NPD collaboration
dynamics. The supply chain management literature supports
Drawing on TCE, formal contracts within hub-­and-­spoke sup- the use of single network analysis for deriving generalizable
ply chain networks strengthen distributive justice by substitut- conclusions about network structures (e.g., Duffy et al. 2013;
ing procedural justice's role in NPD collaboration through three Luo et al. 2011). This approach enables a focused analysis of
mechanisms. First, explicit outcome specifications in formal con- power relationships and provides deeper insights into collabo-
tracts provide benchmarks for equitable resource allocation (Li, ration behavior within hub-­and-­spoke supply chain structures
Poppo, and Zhou 2010). Second, risk allocation clauses distribute (Liu, Aroean, and Ko 2022). By concentrating on a single net-
gains and losses between parties, reinforcing distributive justice work, the study achieves tighter control over external factors,
(Cao and Lumineau 2015; Poppo and Zhou 2014). Third, enforce- producing more reliable insights into NPD partnerships within
ment mechanisms and dispute resolution provisions ensure re- hub-­and-­spoke supply chain structures and revealing nuanced
course if outcomes fail, enhancing the reliability of distributive patterns that multi-­network studies might overlook.
justice. By reducing uncertainty with clear specifications and
risk allocation (Poppo and Zenger 2002), formal contracts lower The study employed five-­point Likert scales across two dyadic
the need for supplier involvement in procedural decision-­making surveys (see Appendix 1). The “hub-­firm survey” measured
and focus attention on measurable outcomes, prioritizing dis- NPD collaboration using scales developed by Peng, Heim, and
tributive over procedural justice. Additionally, formal contracts Mallick (2014) to assess supplier involvement in joint NPD proj-
also enhance resource allocation efficiency (Williamson and De ects. The “supplier survey” captured inter-­organizational justice
Meyer 2012). Clear contractual terms allow suppliers to focus using items from Narasimhan, Narayanan, and Srinivasan (2013)
resources on meeting specified outcomes rather than engaging and Griffith, Harvey, and Lusch (2006), examining fairness in
in time-­intensive procedural processes. This efficiency gain is governance decisions and reward distribution. Formal contracts
particularly significant in NPD collaboration, where streamlined were assessed by adapting items from Li, Poppo, and Zhou (2010)
processes can accelerate collaborative cycles. Thus, to evaluate supply chain relationship arrangements. To control
for the influence of supplier resources on NPD collaboration
Hypothesis 4. Formal contracts further enhance the mod- (Büyüközkan and Arsenyan 2012), the study included firm size
erating effect of distributive justice in reducing the effects of pro- (number of employees) and firm age (years since establishment)
cedural justice on NPD collaboration in a hub-­and-­spoke supply (Li, Poppo, and Zhou 2010). It also accounted for relationship
chain network. length (years of relationship with the hub-­firm) because ex-
tended partnerships may lead to over-­dependence (Narasimhan
et al. 2009). Log transformations of firm size, age, and relation-
3   |   Research Method ship length were applied to ensure robustness. Additionally,
the analysis controlled for market turbulence and competitive
3.1   |   Empirical Setting intensity—factors that create uncertainty and hinder joint NPD
efforts (Büyüközkan and Arsenyan 2012)—using measures
This study examined collaborative NPD within a Chinese man- adapted from Liu, Aroean, and Ko (2022). The study also incor-
ufacturing hub-­and-­spoke supply chain network, employing dy- porated product development human capital, which influences
adic, time-­lagged survey data from a hub-­f irm and 183 suppliers, collaborative NPD ability (Büyüközkan and Arsenyan 2012),
complemented by 22 executive interviews. This mixed-­methods with a modified metric based on Zhang and Wu (2017). All these
approach (Creswell and Creswell 2017) integrates quantitative control variables were included in the “supplier survey.”
surveys with qualitative interviews to examine hub-­firm–ad-
ministered supply chain collaboration for joint innovation proj- The survey development involved English-­to-­Mandarin transla-
ects, where supplier selection rests on expertise for joint product tion, with hub-­f irm managers ensuring accurate sector-­specific
development (Ding, Ye, and Wu 2019). China, known as the terminology. Pilot testing by hub-­firm and supplier represen-
“world's factory,” generates 28.7% of global manufacturing out- tatives verified translation clarity. The hub-­
f irm distributed
put (Richter 2021). As Chinese manufacturers transition from surveys to 220 NPD-­active suppliers, achieving 183 responses
producing for foreign brands to designing their own products, (83.1% response rate). The methodology implements a dyadic,
many large firms coordinate with multiple suppliers in collab- time-­lagged design with a three-­month interval between sup-
orative NPD (Ding, Ye, and Wu 2019). This transformation in plier and hub-­firm surveys. This approach reduces common
Chinese manufacturing practices creates an ideal setting for method bias through separate perspectives and enables causal
studying supplier engagement in NPD collaboration within hub-­ inference examination (Hair et al. 2010; Williams, Hartman,
and-­spoke supply chain networks. and Cavazotte 2010). One author administered and matched
the survey responses to maintain confidentiality. Early and late
respondent comparisons revealed no significant differences in
3.2   |   Quantitative Survey firm characteristics, indicating minimal nonresponse bias risk.

The research context employs a hub-­and-­spoke supply chain

network that aligns with the study objectives and enhances 3.3   |   Qualitative Interviews
the generalizability of the findings. This network encompasses
a large outdoor product design and manufacturing company Qualitative interviews supplemented survey findings on justice
(hub-­f irm) with 800 active suppliers and annual sales exceeding perceptions and NPD collaboration in hub-­and-­spoke supply

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chain networks. The interviews explored transaction costs from The interviews illuminated nuanced aspects of the jus-
procedural and distributive justice considerations, their effects tice–transaction cost relationship, including how perceived
on NPD collaboration decisions, and formal contracts' moder- fairness levels led suppliers to reconfigure transaction cost
ating role. Through purposive snowballing, the research en- structures. Furthermore, the data clarified how justice-­
gaged three supplier executives outside the surveyed network influenced transaction cost allocations shape NPD collabo-
and expanded to 22 executives via professional networks. This ration decisions within supply chains. This mixed-­methods
approach enabled access to hard-­ to-­
reach populations while approach strengthens both the theoretical rigor and practical
mitigating single-­ network bias (Miles and Huberman 1999). relevance of the findings (Creswell and Creswell 2017; Miles
The broader scope facilitated theoretical saturation through and Huberman 1999).
diverse perspectives and enhanced external validity through
cross-­ network triangulation (Creswell and Creswell 2017).
Semi-­structured interviews of 60–90 min used a protocol with 4   |   Analysis and Results
four core questions and follow-­ups (see Appendix 2), ensuring
consistency in data collection and analysis. Prior to interviews, 4.1   |   Validity and Reliability
participants received briefings on firm background and key aca-
demic concepts. The interviews examined justice perceptions in The validity and reliability of the quantitative data were estab-
hub-­f irm relationships and formal contracts' influence on sup- lished through the following steps. First, a confirmatory factor
plier NPD engagement. analysis was performed. The model, consisting of four hypothe-
sized factors, exhibited an adequate fit (chi-­square [X2] = 97.110,
The analysis followed the six-­phase framework of Braun and degree of freedom [df] = 57, p value < 0.001, comparative fit
Clarke (2006). In Phase 1, data familiarization occurred through index [CFI] = 0.982, normed fit index [NFI] = 0.958, Tucker–
immersion in 22 executive interview transcripts and documen- Lewis index [TLI] = 0.975, root-­mean-­square error of approxi-
tation of supply chain collaboration cost dynamics. Phase 2 mation [RMSEA] = 0.062). A significant chi-­square result could
implemented a two-­stage coding approach where one author indicate misspecifications, but further examination revealed no
developed systematic coding templates across the dataset, while major issues. Only 2 of the 91 standardized residuals exceeded
another validated these independently. The coding captured ele- 2.58, and only 1 modification index exceeded 10, indicating an
ments revealing how procedural and distributive justice shaped adequate fit.
supplier and hub-­f irm relationships, including transaction costs.
Detailed records documented suppliers' responses to perceived The second step involved assessing the average variance ex-
fairness and formal contracts in relationship management. For tracted (AVE), composite reliability (CR), and variance inflation
example, the code “trust-­enhanced safeguarding reduction” ap- factor (VIF). The AVE exceeded 0.5, and the square roots of AVE
plied to statements like “our reliance on trust has significantly were greater than the inter-­construct correlations, thus demon-
reduced the need for extensive safeguarding measures, allow- strating validity (Table 1). The CR exceeded 0.7, indicating reli-
ing us to allocate resources more efficiently” (Supply Chain ability (Table 1). Procedural and distributive justice were highly
Manager #4). correlated (r = 0.573), as expected (Narasimhan, Narayanan,
and Srinivasan 2013; Poppo and Zhou 2014). They still achieved
In Phase 3, both authors independently reviewed and agreed a VIF of 1.226, below 10, which indicates no evidence of multi-
upon emerging themes from validated codes. This process re- collinearity (Hair et al. 2010). A third step assessed “common
vealed patterns in supplier–hub-­ f irm relationship evolution method variance” (CMV). Respondent confidentiality was en-
under varying justice perceptions and formal contracts, focus- sured to reduce CMV. Harman's single-­factor analysis showed
ing on transaction cost implications. Related codes grouped no single factor explained most variance. The CFA marker
under broader themes, such as “trust-­enhanced safeguarding technique, using “adaptability” (De Clercq, Thongpapanl,
reduction” and “efficiency-­driven resource optimisation” con- and Dimov 2014), showed non-­significant results between the
solidated under “accelerated reduction in safeguarding costs models (CFA Baseline, Method-­C, Method-­U, and Method-­R),
due to increasing trust.” Phase 4 encompassed a comprehensive indicating an absence of CMV bias (Williams, Hartman, and
theme review comparing themes against coded extracts and the Cavazotte 2010). Thus, there was no evidence of a significant
dataset, confirming themes such as “streamlined governance CMV risk.
costs through distributive justice prioritisation” and “reduced
coordination costs through contractual specification.” Phase 5 The qualitative data validation employed a rigorous, multi-­
refined theme definitions and selected illustrative examples, ex- step process. Two authors independently coded interview find-
amining transaction cost emergence within these relationships ings following the thematic analysis approach of Braun and
until theoretical saturation was reached. Clarke (2006). The authors discussed coding discrepancies until
they reached agreement. This collaborative coding enhanced in-
Phase 6 presented findings revealing how inter-­organizational ternal consistency and reduced single-­coder bias. The analysis
justice influences transaction cost configuration in hub-­a nd-­ calculated Cohen's κ to assess interrater reliability (MacPhail
spoke supply chain networks. The identification of specific et al. 2016). The κ value of 0.8948 demonstrated almost perfect
transaction costs through interviews supplements quanti- agreement between coders, indicating reliable coding decisions.
tative findings by revealing the mechanisms through which Furthermore, the validation process included member-­checking
procedural and distributive justice determine cost allocation. with five interviewees, representing 27% of the interview sam-
The analysis identified patterns in suppliers' fairness percep- ple. External validation ensured that analytical interpreta-
tions shaping transaction cost investment and management. tions accurately reflected participants' experiences. Consensus

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TABLE 1    |    Descriptive statistics.

1 2 3 4 5 6 7 8 9 10
1. Firm size —
2. Firm age 0.394* —
3. Relationship length 0.185* 0.395* —
4. Competitive intensity 0.002 −0.061 0.133 —
5. Market turbulence 0.062 −0.071 0.171* 0.551* —
6. Product development 0.048 0.012 0.067 0.218* 0.380* —
human capital
7. Procedural justice 0.077 −0.048 0.169* 0.341* 0.424* 0.590* 0.870
8. Distributive justice 0.037 −0.066 0.085 0.411* 0.510* 0.584* 0.573* 0.915
9. Formal contracts −0.010 −0.057 0.101 0.264* 0.522* 0.465* 0.398* 0.458* 0.956
10. New product −0.050 0.031 −0.163* −0.189* −0.164* 0.136 −0.073 0.071 −0.040 0.849
development
collaboration
Mean 1.942 1.132 0.829 4.250 4.108 4.555 3.713 4.299 4.638 4.548
Standard deviation 0.507 0.335 0.361 0.838 0.928 0.669 0.829 1.082 0.528 0.695
Composite reliability — — — — — — 0.846 0.939 0.969 0.910
Average variance — — — — — — 0.651 0.837 0.914 0.721
extracted
Note: N = 183. Average variance extracted (AVE) square roots are shown in bold on the correlation matrix diagonal;
*p < 0.05.

discussions resolved disagreements. A robust foundation for Model 1 demonstrates that procedural justice (β = −0.728,
data analysis reliability was established with independent cod- p < 0.001; 95% CI: −1.541, −0.746) and its quadratic term
ing, collaboration, external validation, and consensus-­building. (β = −0.585, p < 0.001; 95% CI: −1.088, −0.501) negatively relate
Thus, qualitative insights accurately reflect interviewees' to NPD collaboration, with a substantial effect size (Cohen's
perspectives. f2 = 0.208). This satisfies the first condition of significant coef-
ficients with the expected signs. The analysis confirmed steep
curve slopes at both data range ends, with significant slopes
4.2   |   Analysis and Results at the low-­end point (t = 3.493, p = 0.001) and high-­end point
(t = −4.010, p < 0.001), satisfying the second condition. The turn-
Prior to the regression analysis, the variables of procedural ing point calculation yielded −0.622, falling within the Fieller
justice, distributive justice, and formal contracts were mean-­ method's 95% interval of −1.130 to −0.114, meeting the third
centered to create quadratic and interaction terms (Hair condition. These results support Hypothesis 1, with Figure 2a
et al. 2010). Table 2 presents the regression results across the illustrating this inverted U-­shaped relationship.
four models. Model 1 includes the control variables, procedural
justice, distributive justice, and their quadratic terms. Model 2 The relationship between procedural justice and NPD collabora-
incorporates the control variables, procedural justice, distribu- tion emerges through monitoring efficiency and adaptation de-
tive justice, and their interaction terms. Model 3 builds on Model mands in hub-­and-­spoke supply chain networks. The qualitative
2 by adding formal contracts, their interaction terms with pro- analysis revealed three distinct themes, with supporting quotes
cedural justice and distributive justice, and a three-­way interac- in Table 3. The first theme demonstrates how standardized pro-
tion among procedural justice, distributive justice, and formal tocols minimize monitoring costs, as Firm #6's CEO explained:
contracts. Model 4 represents the full model.
“When we work on joint NPD projects, we follow
the guidelines from HUB-­ F IRM,4 it leads our
4.2.1   |   Inverted U-­Shaped Impact of Procedural Justice
collaboration. We make decisions in an open way,
on NPD Collaboration
which builds trust. Instead of wasting time and energy
Hypothesis 1 proposes an inverted U-­shaped effect of procedural trying to track everyone's movements, it simplifies
justice on NPD collaboration in hub-­and-­spoke supply chain things significantly, allowing us to concentrate on
networks. Following Haans, Pieters, and He (2015) guidelines, what really matters.”

8 of 20 Journal of Supply Chain Management, 2025

 TABLE 2    |    Results.

Model 1 Model 2 Model 3 Model 4

Coeff t p CI (95%) Coeff t p CI (95%) Coeff t p CI (95%) Coeff t p CI (95%)

Controls

Firm size −0.069 −0.967 0.335 [−0.341; −0.024 −0.337 0.737 [−0.274; −0.040 −0.556 0.579 [−0.298; −0.072 −1.029 0.305 [−0.345;
0.117] 0.194] 0.167] 0.109]

Firm age 0.123 1.615 0.108 [−0.068; 0.113 1.438 0.152 [−0.104; 0.098 1.261 0.209 [−0.137; 0.110 1.467 0.144 [−0.094;
0.677] 0.664] 0.622] 0.636]

Relationship length −0.150 −2.076 0.039 [−0.672; −0.131† −1.764 0.079 [−0.640; −0.154* −2.086 0.038 [−0.689; −0.160* −2.223 0.028 [−0.696;
−0.017] 0.036] −0.019] −0.041]

Competitive intensity −0.099 −1.255 0.211 [−0.253; −0.106 −1.297 0.196 [−0.264; −0.079 −0.960 0.338 [−0.239; −0.069 −0.852 0.395 [−0.225;
0.056] 0.055] 0.083] 0.090]

Market turbulence −0.170 −2.007 0.046 [−0.302; −0.137 −1.565 0.119 [−0.276; −0.124 −1.335 0.184 [−0.275; −0.146 −1.624 0.106 [−0.288;
−0.003] 0.032] 0.053] 0.028]

Product development 0.129 1.451 0.148 [−0.058; 0.192* 2.147 0.033 [0.019; 0.184* 2.010 0.046 [0.004; 0.121 1.349 0.179 [−0.070;
human capital 0.377] 0.456] 0.452] 0.370]

Main effects

Procedural justice −0.728*** −5.679 <0.001 [−1.541; −0.586*** −4.791 <0.001 [−1.300; −0.700*** −5.387 <0.001 [−1.501; −0.876*** −6.583 <0.001 [−1.788;
−0.746] −0.541] −0.696] −0.963]

Procedural justicea −0.585*** −5.346 <0.001 [−1.088; −0.419* −2.111 0.036 [−1.103;
−0.501] −0.037]

Distributive justice 0.641*** 4.563 <0.001 [0.413; 0.257** 2.753 0.007 [0.083; 0.366*** 3.484 <0.001 [0.180; 0.723*** 4.988 <0.001 [0.496;
1.043] 0.502] 0.651] 1.146]

Distributive justice2 0.481*** 4.433 <0.001 [0.197; 0.403*** 3.664 <0.001 [0.138;
0.513] 0.459]

Formal contracts 0.083*** 0.925 0.356 [−0.072; 0.040 0.462 0.645 [−0.101;
0.198] 0.162]

Interactions

Procedural −0.511*** −5.059 <0.001 [−1.084; −0.824*** −4.738 <0.001 [−1.782; −0.588** −3.292 0.001 [−1.436;
justice × distributive −0.476] −0.734] −0.359]
justice

Procedural −0.278* −2.155 0.033 [−0.724; −0.200 −1.505 0.134 [−0.627;

justice × formal −0.032] 0.085]
contracts

(Continues)

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 TABLE 2    |    (Continued)

Model 1 Model 2 Model 3 Model 4

10 of 20
Coeff t p CI (95%) Coeff t p CI (95%) Coeff t p CI (95%) Coeff t p CI (95%)

Distributive 0.172† 1.906 0.058 [−0.005; 0.180* 2.051 0.042 [0.006;

justice × formal 0.299] 0.303]
contracts

Procedural −0.514** −2.850 0.005 [−0.865; −0.484* −2.577 0.011 [−0.850;

justice × distributive −0.157] −0.113]
justice × formal
contracts

Model summary

F-­value 7.464*** 6.465*** 5.292*** 6.081***

p value <0.001 <0.001 <0.001 <0.001

R-­square 0.303 0.252 0.289 0.353

Adjusted R-­square 0.262 0.213 0.235 0.295

Note: N = 183. Dependent variable = new product development collaboration. t = t value; p = p value. confidence intervals (CI) report as [lower bound; upper bound].
aCohen's f 2 is an effect size measure used in the context of multiple regression to assess the impact of an independent variable on the dependent variable. It is particularly useful for evaluating the practical significance of predictors

beyond statistical significance.

***p < 0.001;
**p < 0.010;
*p < 0.050;
†p < 0.100.

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FIGURE 2    |    Graphical representation. (a and b) On the x axis, units are based on mean-­centered data ranges: Procedural justice ranged from −2.03
to 0.36; distributive justice ranged from −3.51 to 0.49. (c and d) To maintain consistency, the moderating effect was calculated using the 16th and
84th percentiles of the data points rather than the usual ±1 standard deviation (Hayes 2022). [Colour figure can be viewed at wileyonlinelibrary.com]

This observation aligns with TCE principles, where initial adaptation costs. A supply chain manager from Firm #17 de-
procedural justice reduces transaction costs by minimizing scribed this challenge:
monitoring efforts (Che, Jiang, and Pei 2024). Hub-­f irms'
standardized procedures facilitate NPD collaboration leader- “We sometimes find it difficult to accommodate the
ship (Williamson and De Meyer 2012), enhancing operational procedures from HUB-­ F IRM when participating
efficiency. in complex joint [NPD] projects. Each additional
procedural requirement appears to increase our costs
However, as procedural justice requirements become more
exponentially. The rapid increase in compliance
stringent, a tipping point emerges. The second theme reveals
costs is straining our operations and bottom line,
that while initial standardization facilitates collaboration by re-
ducing monitoring efforts, incremental rises in adaptation costs even though I agree that having a complex procedure
remain manageable through structured procedures. Firm #11's covering all steps in our collaboration feels fair and
CEO described this balance: appreciate the drive for consistency and quality. I
do not feel comfortable about becoming involved in
“It was quite manageable to adapt to HUB-­F IRM's such a project because of this.”
requirements [the standardised procedure] when
they were less rigorous. Consistency across projects This progression illustrates how excessive procedural re-
quirements create operational and financial challenges
was present, but not overwhelming. In the joint
(Serdarasan 2013). While hub-­firms' centralized control ini-
[NPD] project, we were able to adjust our processes
tially promotes efficiency through standardization, it even-
incrementally without significant effort, while tually leads to adaptation challenges as suppliers attempt to
gradually aligning with our partners' expectations.” meet complex requirements. These dynamics explain the in-
verted U-­shaped relationship between procedural justice and
As procedural justice requirements intensify further, the third NPD collaboration, where initial monitoring cost benefits be-
theme emerges, where complex procedures trigger escalating come outweighed by rising adaptation costs.

11 of 20
 TABLE 3    |    Qualitative findings.

Context Theme Additional quotes

12 of 20
Inverted u-­shaped impact of Reduced monitoring costs • “With HUB-­F IRM's clear processes, the new product development project proceeded smoothly. By assigning specific roles and
procedural justice on NPD through standardized protocols. timelines, it reduced confusion and the need for constant monitoring. This approach fostered trust and enabled us to concentrate
collaboration on innovation and delivery.” (CEO, Firm #20).
• “With HUB-­F IRM's established protocols, seamless coordination was assured in a recent new [joint NPD] project. With their
controlled approach, redundancies, such as overlapping design reviews, were eliminated, giving us more resources for critical
work.” (Supply Chain Manager, Firm #4).

Incremental rises in adaptation • “We modified our internal procedures to meet the needs of HUB-­F IRM while developing a new product. Standardising our
costs stay manageable through reporting style, for example, made it possible to share data without interfering with our daily business. We were able to successfully
structured procedures. balance the new processes with our continuing activity since the demands were substantial but reasonable.” (CEO, Firm #11).
• “The standardisation of design review phases in a recent joint project reduced the need for stringent control and facilitated easier
collaboration. Despite the increasing complexity of the procedural requirements [established by the hub-­f irm], consistency
was still manageable. As a result, we could align our processes without disrupting day-­to-­day operations or overburdening our
workforce.” (CEO, Firm #6)

Complex procedures trigger • “We had to work through multiple rounds of product testing to meet HUB-­F IRM's increasingly demanding procedural
escalating adaptation costs. requirements in one of our recent joint NPD projects. While this ensures high standards, it consumes a lot of resources.”
(Operations Manager, Firm #9).
• “Our latest NPD collaboration has become increasingly difficult because of HUB-­F IRM's requirements. For example, meeting its
documentation and audit standards took a lot of effort. While I appreciate its commitment to quality, compliance costs are rising.”
(CEO, Firm #21).
• “It has gotten harder because of the procedures that HUB-­F IRM enforced in a recent NPD campaign. For example, to satisfy
their procedural requirements, we had to make a significant investment in specialist equipment. Despite the noble goals of these
actions, the cost is preventing us from making a meaningful contribution to the project.” (General Manager, Firm #18).

U-­shaped impact of Rising information costs in • “When we learned another supplier negotiated better terms for similar innovations, we started investing heavily in market
distributive justice on NPD seeking fair value assessment. intelligence. As a tier-­2 supplier, we accepted the reward structure at first. Due to competitor partnerships, we have had to pull
collaboration two engineers from R&D, which slows down our [joint NPD] project.” (Operations Manager, Firm #17)
• “Understanding other suppliers' reward arrangements became crucial when we collaborated. Instead of hiring an additional
design engineer, we have created a new position for this purpose. This has impacted our ability to meet the hub-­f irm's targets for
the new product development.” (CEO, Firm #22).

Declining safeguarding costs • “Previously, we had an individual assigned to monitor contracts, but now that we have consistent fair treatment from the hub-­
enable resource reallocation. firm, we can allocate that staff member to developing innovative materials for future projects.” (CEO, Firm #12).
• “As soon as we started providing HUB-­F IRM with electronic control devices, we devoted several hours to recording every
conversation. Since it has shown that it follows fair profit-­sharing procedures, we have moved our compliance staff to concentrate
on the collaborative project.” (CEO, Firm #6).
• “We have changed our focus entirely from focusing on reward allocation to collaborative innovation after seeing consistent fair
treatment in reward allocation. We just contributed a lot to HUB-­F IRM's new initiative without hesitation last month.” (CEO,
Firm #14).

(Continues)

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 TABLE 3    |    (Continued)

Context Theme Additional quotes

Accelerated reduction in • “We used to spend considerable time validating profit-­sharing calculations. Now, with established fair profit sharing, we have
safeguarding costs due reallocated more people positions from compliance to R&D. This shift enabled us to co-­develop an innovative minimally invasive
to increasing trust. surgical tool with the hub-­f irm, something we could not have achieved while operating in a defensive mode.” (General Manager,
Firm #2)
• “Previously, we devoted a lot of our project management resources to protecting our interests. Due to the hub-­f irm's consistent
fair treatment, we were able to reinvest that into collaborative innovation. We contributed to their new project because we trust
their reward system.” (CEO, Firm #15).

Substitution effect of Streamlined governance • “We were not sure if we were going to be in value assessment meetings as a supplier. After seeing that we contributed to the hub-­
procedural and distributive costs through distributive firm's initiative accurately, we are comfortable with their internal evaluation process. It is more important to get fair results than
justice on NPD collaboration justice prioritization for to figure out how they got them.” (CEO, Firm #19).
outcome assurance. • “Despite the fact that we are not part of the hub-­f irm's innovation rewards committee, we accept their consistent fair allocation of
benefits for our material developments. Despite not understanding their detailed assessment methodology, we got a fair deal on
our recent innovation project.” (CEO, Firm #10).
• “We used to make sure we were involved in evaluations. We let HUB-­F IRM handle the assessment process now, seeing that our
revenue share reflects our contribution to the joint project. There is less need for procedural transparency now since benefits are
distributed fairly.” (CEO, Firm #7)

Moderating role of formal Reduced coordination • “We have a contract with HUB-­F IRM that includes performance metrics and benchmarks for rewards. We knew exactly what
contracts costs through contractual technical achievements would earn what rewards when we developed the new technology, so we did not have to watch their
outcome specification. decision-­making when we developed the new technology.” (CEO, Firm #16)
• “A contract with HUB-­F IRM details outcome-­based incentives. This clarity allowed us to focus on improving our manufacturing
process instead of fighting over reward allocation. The coatings breakthrough happened because we did not have to worry about
monitoring.” (Operations Manager, Firm #20)

Decreased governance • “Since our contract specifies clear compensation for development failures, we could fully commit to the hub-­f irm's project
costs through contractual without worrying about potential losses. Even when initial prototypes failed, we knew exactly how costs would be allocated.”
risk allocation. (General Manager, Firm #2).
• “A detailed risk allocation mechanism is in our contract. Since the contract clearly outlined how any development setbacks would
be shared, we were confident when we collaborated on developing new materials for the hub-­f irm-­led NPD project.” (CEO, Firm
#21).
• “Having explicit risk-­sharing clauses in our parts contract changed our innovation approach. Due to the clear definition of
how R&D risks would be distributed in the contract, we felt comfortable with their technical direction, so we agreed to explore
unproven manufacturing techniques for their NPD program.” (Supply Chain Manager, Firm #5).

Reduced verification • “Having measurable targets eliminated ambiguity and allowed us to focus purely on technology. We got certified three weeks
costs through measurable early because everyone knew exactly what success looked like.” (Operation Manager, Firm #9)
contractual targets. • “The hub-­f irm contract specifies clear metrics for our new system. Having such defined targets transformed our development
approach. Rather than attending coordination meetings, our engineers focused exclusively on achieving these parameters,
leading to successful validation in the first round.” (CEO, Firm #14).

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4.2.2   |   U-­Shaped Impact of Distributive Justice on NPD on hub-­f irms' reward distribution decisions (Dhanaraj and
Collaboration Parkhe 2006). A supply chain planning manager in Firm #20
described this shift:
Hypothesis 2 proposes a U-­shaped effect of distributive justice
on NPD collaboration in hub-­and-­spoke supply chain networks. “Our way of working with our partners within the
Following Haans, Pieters, and He (2015) guidelines, Model 1 network's changed because many of them believe
shows that distributive justice (β = 0.641, p < 0.001; 95% CI: that HUB-­F IRM behaves fairly when deciding who
0.413, 1.043) and its quadratic term (β = 0.481, p = 0.001; 95% CI:
should receive what for their efforts. As a result,
0.197, 0.513) positively relate to NPD collaboration, with a nota-
our resources for safeguarding have been reduced
ble effect size (Cohen's f2 = 0.133), satisfying the first condition.
The analysis confirmed steep curve slopes at both data range because we rely on the established system rather
ends, with significant slopes at the low-­end point (t = −6.116, than constantly questioning it. This trust has
p < 0.001) and high-­end point (t = 4.861, p < 0.001), meeting the allowed us to channel that energy into collaborative
second condition. The turning point calculation yielded −0.667, projects.”
falling within the Fieller method's (Fieller 1954) 95% interval of
−1.186 to −0.148, satisfying the third condition. These results This highlights how greater trust in the hub-­firm's fairness
support Hypothesis 2, with Figure 2b illustrating this U-­shaped translates into tangible resource reallocation. A client manager
relationship. from Firm #1 captured this sentiment:

The qualitative analysis reveals three themes explaining the U-­ “You can focus on so many things that really matter
shaped relationship between distributive justice and NPD collab- when you feel like a weight's lifted off your shoulders,
oration. The first theme demonstrates rising information costs as
when you feel that you are getting what is fair. It was a
suppliers seek fair value assessments. Firm #10's CEO noted:
collaborative effort between the hub-­f irm and supply
chain firm to refine the technology.”
“We do not expect to receive our fair share of the
rewards when we work with HUB-­F IRM on NPD but This reveals how fair distribution cultivates trust and en-
accept that is the way it is. However, we discover all ables suppliers to focus resources on productive activities.
the ways to get our fair share. It makes us wonder, Collaborative innovation emerges when suppliers experience
‘Hmm, can we get a bigger share?’ […]. We invest equitable treatment (Kim, Lee, and Lee 2017).
more resources in securing it. Our focus on survival
distracts us from creating innovative products by
4.2.3   |   Substitution Effect of Procedural
collecting evidence about what others have done to
and Distributive Justice on NPD Collaboration
protect our interests.”
Hypothesis 3 suggests that distributive justice moderates pro-
This illustrates suppliers' changing approach to distributive jus-
cedural justice's effect on NPD collaboration in hub-­and-­spoke
tice in NPD collaboration, shifting from accepting uneven re-
supply chain networks. Model 2 demonstrates a significant neg-
wards to active pursuit of fair shares, consequently increasing
ative interaction between procedural and distributive justice
information-­gathering investments at the expense of innovation
(β = −0.511, p < 0.001; 95% CI: −1.084, −0.476), with a substantial
focus (Melander and Tell 2019).
effect size (Cohen's f2 = 0.148). These results support Hypothesis 3,
with Figure 2c illustrating this two-­way interaction.
The second theme reveals that declining safeguarding costs en-
able resource reallocation. A logistics manager in Firm #2 artic-
The evidence demonstrates how distributive and procedural
ulated this evolution:
justice interact within hub-­and-­spoke supply chain networks.
Streamlined governance costs emerge through prioritizing dis-
“At first, we had to constantly check and double-­ tributive justice for outcome assurance. A supply chain man-
check everything, but now we've an increasing ager from Firm #8 explained the primacy of distributive justice
sense of trust in the fair division of our gains. As during NPD collaboration:
the world becomes fairer, our need to defend our
position lessens. We become less concerned about “Honestly, if we are satisfied with the results [their
safeguarding our interests as the world gets fairer. share of the profits] and feel that the distribution's
Instead of looking over our shoulder, we are focusing fair, we do not care so much about how they [the
on what we can do.” hub-­f irm] make the decisions. Their decision-­making
process can remain confidential.”
This reveals how improved distributive justice cultivates a
more trusting environment. Declining safeguarding costs en- This underscores a key finding: Suppliers may prioritize fair out-
ables suppliers to redirect resources from defensive strategies comes (distributive justice) over involvement in decision-­making
to productive activities. As trust accumulates, safeguarding processes (procedural justice) within these networks. From a TCE
costs decrease more rapidly. Suppliers place greater reliance perspective, suppliers appear to accept the potential transaction

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costs of being excluded from decision-­making procedures in re- asymmetry, which is a key concern in TCE. Specifying outcomes
turn for the perceived benefits of fair distributive outcomes. High in contracts minimizes the need for costly monitoring, thereby
distributive justice diminishes the perceived importance of pro- lowering transaction costs. The second theme demonstrates de-
cedural justice, suggesting a substitution effect between justice creased governance costs through contractual risk allocation,
types. This contrasts with their complementary role in dyadic addressing TCE's emphasis on risk and uncertainty (Poppo and
relationships (Brown, Cobb, and Lusch 2006; Luo 2007). Zenger 2002). An operations manager in Firm #7 highlighted
this aspect:
However, this does not entirely negate the value of procedural
justice. As evidenced by the contrasting views of other indus- “When we started the [joint] NPD project, we were
try professionals, some suppliers still value transparency in initially concerned about potential risks. However,
decision-­making. For example, the CEO of Firm #15 stated: we are comfortable with HUB-­ F IRM taking the
lead when it comes to project decisions because
“Whenever HUB-­F IRM is honest about how it makes
of the risk-­sharing clauses in our contract. These
decisions about our [joint] NPD project, we feel this
contractual arrangements have significantly reduced
sense of trust. If we feel like it is not hiding anything
our concerns about potential development failures.”
from us, we are more relaxed about it getting a larger
share of the profits. It puts in so much effort, so I Furthermore, the third theme shows reduced verification costs
guess it deserves it.” through measurable contractual targets. The presence of formal
contracts shifts the focus toward measurable outcomes (Cao and
In general, the preference for distributive justice derives from Lumineau 2015). A project manager in Firm #19 observed:
the power dynamics of hub-­and-­spoke supply chain networks,
where suppliers possess limited decision-­making authority (Liu, “Our business is ultimately driven by the outcomes
Aroean, and Ko 2022). Suppliers focus on gaining fair rewards stipulated in the contract, so we focus our energy on
rather than shaping complex decisions. achieving those outcomes. As a result of the formal
contract, we can focus on innovating and meeting
4.2.4   |   Moderating Role of Formal Contracts our deliverables instead of trying to influence every
decision. Our NPD process has become much more
Hypothesis 4 proposes that formal contracts strengthen distrib- efficient.”
utive justice's moderating effect on the procedural justice–NPD
collaboration relationship in hub-­and-­spoke supply chain net- These interviewees' insights collectively reinforce how for-
works. Model 3 reveals a significant negative three-­way interac- mal contracts strengthen distributive justice's role while re-
tion among procedural justice, distributive justice, and formal ducing suppliers' perceived need for procedural involvement
contracts (β = −0.514, p = 0.005; 95% CI: −0.865, −0.157), with in hub-­and-­spoke supply chain networks engaged in NPD
a substantial effect size (Cohen's f2 = 0.203). These findings sup- collaboration.
port Hypothesis 4, with Figure 2d illustrating this three-­way
interaction.
4.3   |   Endogeneity
The analysis reveals how formal contracts in hub-­ spoke
supply chain networks enhance the substitution of distribu- Prior research has identified formal contracts, relationship
tive justice for procedural justice in NPD collaboration. The length, and environmental dynamism as key influencers of sup-
first theme reveals how formal contracts in hub-­spoke sup- ply chain justice perceptions (Luo 2008; Song et al. 2018). To
ply chain networks enhance distributive justice's substitu- address potential endogeneity concerns, a two-­stage residual
tion of procedural justice in NPD collaboration. Reduced inclusion model was employed, following Saboo, Kumar, and
coordination costs emerge through explicit outcome speci- Anand (2017). In the first stage, justice variables were regressed
fications (Li, Poppo, and Zhou 2010), lowering transaction on these influencing factors to obtain residuals. In the second
costs (Williamson 2008). A supply chain manager in Firm stage, Models 1–4 were reanalyzed with these residuals included
#12 noted: as controls. The results validated the initial findings and effec-
tively addressed endogeneity concerns.
“In our joint product development projects, having
a clear understanding of what we should deliver
5   |   Discussion and Conclusion
and what we will receive allows us to focus more on
our goals rather than worrying about how decisions
5.1   |   Theoretical Implications
are made. The contract specifications have really
simplified our coordination with other suppliers in This study provides three important contributions to the litera-
the supply chain network.” ture. First, it extends the traditional TCE framework by address-
ing hub-­and-­spoke supply chain network dynamics. TCE theory
This highlights how concrete benchmarks for resource allocation suggests that transaction costs drive firms' collaborative deci-
align with distributive justice principles and reduce information sions (Cao and Zhang 2010), while procedural and distributive

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justice mitigate these costs and encourage collaboration (Huo, behavior in supply chain networks. This perspective provides a
Wang, and Tian 2016; Poppo and Zhou 2014). Although scholars holistic view of governance within complex structures, consis-
have primarily examined this theoretical argument within dy- tent with the TCE framework (Cao and Lumineau 2015; Poppo
adic supply chain relationships (Che, Jiang, and Pei 2024), hub-­ and Zenger 2002).
and-­spoke supply chain networks create a distinct environment
where hub-­f irms exercise centralized control over concentrated
resources, significantly influencing suppliers' justice percep- 5.2   |   Managerial Implications
tions (Liu, Aroean, and Ko 2022). The findings demonstrate
nonlinear patterns in procedural and distributive justice regard- This study offers key implications for managers in hub-­and-­
ing NPD collaboration. Fair procedures are associated with re- spoke supply chain networks engaged in NPD collaboration. It
duced monitoring efforts and lower transaction costs. However, provides guidance for both hub-­f irms and suppliers in optimiz-
excessive procedural requirements increase adaptation costs ing collaboration and managing justice perceptions. First, the
beyond an optimal point, potentially impeding NPD collabora- research identifies an inverted U-­shaped relationship between
tion. Distributive justice exhibits a U-­shaped effect: Suppliers procedural justice and NPD collaboration, where hub-­ f irms'
face high safeguarding costs at low levels due to fairness con- centralized control shapes procedural justice implementation.
cerns, while the benefits of reduced conflict outweigh increased Low procedural justice involves minimal transparency, me-
information costs at high levels. These nonlinear relationships dium levels include partial explanations, and high levels ensure
extend TCE (Che, Jiang, and Pei 2024; Williamson 2008) by il- full transparency and consistency. While increased procedural
lustrating how justice dimensions influence transaction costs justice initially enhances consistency and reduces monitoring
within hub-­and-­spoke supply chain networks and foster effec- costs, excessive levels create adaptation challenges. Hub-­firms
tive NPD collaboration. should implement clear, consistent procedures without bureau-
cratic burdens. A tiered system of procedural requirements,
Second, the study challenges the existing literature on proce- tailored to project complexity and regularly reviewed, can help
dural and distributive justice's complementary roles in collab- maintain optimal procedural justice levels for improved NPD
orative behavior (Brown, Cobb, and Lusch 2006; Luo 2007). collaboration.
Prior research suggests that both inter-­organizational justice
forms reduce overall transaction costs by minimizing uncer- Second, this research identified a U-­shaped relationship be-
tainty, opportunism risk, and resource allocation conflicts. tween distributive justice and NPD collaboration. Initial in-
However, within hub-­a nd-­spoke supply chain networks, pro- creases in distributive justice do not yield favorable outcomes
cedural and distributive justice function as substitutes. The until surpassing a critical threshold. Low distributive justice
analysis reveals that suppliers prefer addressing transaction involves minimal profit-­sharing or recognition of supplier con-
costs associated with distributive rather than procedural tributions, while medium levels include partial profit-­sharing
justice, reflecting their strategic calculations for managing and risk distribution, often perceived as insufficient. High dis-
overall transaction costs. This finding extends TCE (Che, tributive justice entails transparent, substantial profit-­sharing
Jiang, and Pei 2024; Williamson 2008) by demonstrating how aligned with contributions, fair risk distribution, and strong
different inter-­organizational justice forms interact within hub-­firm support. Hub-­firm managers should aim to exceed
transaction cost minimization. Firms must consider both ab- this threshold, as it reduces costly monitoring and enhances
solute transaction cost levels and the interactions of justice collaboration appeal. Transparent profit-­sharing models tied
forms within hub-­ a nd-­
spoke supply chain networks. This to project outcomes and performance-­based bonuses can help
understanding provides a sophisticated application of TCE achieve this stage.
(Poppo and Zhou 2014; Williamson 2008) for explaining inter-­
organizational justice dimensions' influence on collaborative Third, the study's findings on the substitution effect between
dynamics in supply chain relationships. procedural and distributive justice provide critical insights into
supplier relationship management. Hub-­firm managers should
Third, the study reveals formal contracts' nuanced role beyond recognize that suppliers may prioritize fair outcomes over in-
TCE's traditional view of reducing transaction costs and miti- volvement in decision-­making processes. In situations where
gating opportunism (Williamson 2008). Formal contracts mod- enhancing both forms of inter-­organizational justice is chal-
erate the interplay between dimensions of inter-­organizational lenging, focusing on improving distributive justice may yield
justice, clarifying how fairness perceptions influence collab- better results for NPD collaboration. Nonetheless, maintaining
oration. This finding extends beyond dyadic relationships to a baseline level of procedural justice remains essential to ensure
hub-­and-­spoke supply chain networks, where power asymme- fairness practices.
tries and resource dependencies create unique challenges (Liu,
Aroean, and Ko 2022). Previous research has shown that con- Fourth, this study emphasizes formal contracts' strategic role in
tracts facilitate perceptions of procedural and distributive jus- moderating justice perceptions and NPD collaboration within
tice (Poppo and Zhou 2014; Song et al. 2018). This study expands hub-­and-­spoke supply chain networks. Managers should utilize
on these insights by illustrating how contracts amplify the sub- contracts to shape collaboration and reinforce substitution be-
stitution effect of distributive justice on procedural justice in tween procedural and distributive justice. Effective contracts
governing NPD collaboration. Contracts align supplier efforts should specify outcomes, allocate risks, and reduce uncertainty.
with defined deliverables and results, encouraging outcome-­ Detailed performance metrics, balanced risk distribution, and
focused collaboration. Beyond reducing transaction costs, con- flexible adjustment mechanisms enhance distributive justice
tracts strategically manage justice perceptions and collaborative while compensating for reduced procedural involvement. These

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contractual elements create a framework promoting collabora- understanding of their role in inter-­organizational justice and
tion and innovation in NPD. collaboration. Fourth, the supplementary interviews had meth-
odological limitations. The small sample size (22 interviews)
and snowball sampling restricted generalizability and may have
5.3   |   Societal Implications introduced bias. Future studies should use larger, more diverse
samples with probability sampling to improve reliability and
This study highlights the societal implications of hub-­and-­spoke generalizability. Fifth, this study focused on how supply chain
supply chain networks during NPD collaboration. First, it em- firms perceive hub-­ f irm justice implementation. However,
phasizes the need for these networks to balance procedural and other firms' perceptions may also influence focal firms' views of
distributive justice to develop responsible business models. Fair inter-­organizational justice (Fang et al. 2016; Liu, Aroean, and
processes and efficient operations create equitable power dy- Ko 2022). Future research should include additional moderators
namics, benefiting society through improved network cohesion or controls to capture network-­w ide influences.
and resource distribution (Cao and Lumineau 2015). Hub-­f irms
that implement effective governance structures enhance both Sixth, the survey design omitted factors affecting NPD col-
operational efficiency and societal value. laboration willingness, including buyer–supplier depen-
dency (e.g., Zaefarian et al. 2016), supply chain activity types
Second, the substitution effect between justice types demon- (e.g., Matopoulos et al. 2007), knowledge sharing (e.g., Zhou,
strates the importance of context-­specific approaches to social Govindan, and Xie 2020), and other variables. Future research
equity. Supply chain firms can achieve efficient dispute resolu- should incorporate these variables to clarify collaboration dy-
tion while maintaining fairness by adapting their strategies to namics in hub-­and-­spoke supply chain networks. Finally, future
specific situations. This adaptability enables networks to ad- research should explore justice dimensions beyond procedural
dress urgent societal challenges through equitable outcomes and distributive justice. For instance, studying interactional and
rather than rigid procedures. Research shows that understand- informational justice (Duffy et al. 2013; Liu et al. 2012) could
ing situational dynamics helps create more effective justice offer deeper insights into justice practices in supply chain re-
mechanisms for societal benefit (Liu, Aroean, and Ko 2019; lationships. Additionally, while this study focused on formal
Zhou, Govindan, and Xie 2020). contracts, relational governance mechanisms are particularly
important in emerging markets (e.g., Li, Poppo, and Zhou 2010;
Third, formal contracts address societal implications by rein- Luo et al. 2011). Future research should investigate the role of
forcing the substitution effect between procedural and distribu- these mechanisms in shaping supply chain relationships.
tive justice. Contracts manage fairness perceptions and promote
collaboration, particularly in power-­ asymmetric networks
(Williamson and De Meyer 2012). Embedding distributive jus- 5.5   |   Concluding Remarks
tice into contractual terms, such as detailed performance met-
rics and balanced risk allocation, offsets procedural limitations This research advances understanding of inter-­organizational
and fosters equitable conditions for suppliers. This approach justice and collaboration in hub-­and-­spoke supply chain net-
builds resilient supply chain relationships that contribute to so- works during NPD. TCE extension reveals nonlinear rela-
cietal welfare through responsible business practices. tionships between procedural justice, distributive justice, and
collaboration, showing substitutive characteristics. Formal
contracts moderate these dynamics, contributing to theory and
5.4   |   Research Limitations and Future Research practice. As hub-­and-­spoke supply chain structures gain prom-
Opportunities inence through resource pooling and market opportunities,
these findings prove timely. Future research should examine
First, this study examines a Chinese manufacturer's hub-­and-­ how technologies and market dynamics influence justice per-
spoke supply chain network. While aligning with existing stud- ceptions and collaborative behavior. This study enhances gov-
ies (e.g., Duffy et al. 2013; Malagueño, Gölgeci, and Fearne 2019), ernance and innovation management knowledge in complex
the single industry and country focus limits generalizability. supply chain networks.
Future studies should explore multiple industries and countries
to account for cultural, economic, and regulatory influences.
Second, collection relied on hub-­ f irm manager translations
and selective sampling, potentially excluding firms with nega- Endnotes
tive justice perceptions or those who withdrew. Future research 1 Just actions (rule adherence) generate fairness perceptions that in-
should use independent translation verification and include all fluence justice interpretations (moral evaluations) in business prac-
suppliers, including non-­participants, for a more comprehensive tice. This study adopts an interchangeable approach to these terms,
perspective. despite their distinctions in certain disciplines (e.g., Goldman and
Cropanzano 2015). This integrated perspective aligns with estab-
lished research on inter-­ organizational relationships and supply
Third, the quantitative survey did not directly measure spe- chain management (Mir et al. 2022; Narasimhan, Narayanan, and
cific transaction costs. While qualitative insights from execu- Srinivasan 2013).
tive interviews reflect these costs, the lack of explicit measures 2 Thisstudy focuses on procedural and distributive justice within the
limits testing their effects on justice–collaboration relation- dimensions of inter-­organizational justice due to their close alignment
ships. Future research should develop validated scales to mea- with formal contracts in supply chain networks (Griffith, Harvey, and
sure transaction costs in hub-­and-­spoke networks, enhancing Lusch 2006). TCE theory supports this emphasis through their direct

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connection to transaction costs and contractual governance (Poppo Relationships.” International Journal of Information Management 33,
and Zhou 2014). In contrast, interactional and informational justice no. 1: 20–27.
show limited relevance, as they pertain to individual-­level interac-
Fang, E., J. Lee, R. Palmatier, and Z. Guo. 2016. “Understanding the
tions more closely aligned with social exchange theory (Cropanzano,
Effects of Plural Marketing Structures on Alliance Performance.”
Prehar, and Chen 2002; Liu et al. 2012; Luo 2007).
Journal of Marketing Research 53, no. 4: 628–645.
3 We appreciate the editorial team's suggestion to apply the framework
Fieller, E. C. 1954. “Some Problems in Interval Estimation.” Journal of
by Haans, Pieters, and He (2015). This approach has strengthened our
the Royal Statistical Society Series B: Statistical Methodology 16, no. 2:
ability to theorize and test the nonlinear relationships between justice
175–185.
dimensions and NPD collaboration in hub-­and-­spoke supply chain
networks. Goldman, B., and R. Cropanzano. 2015. ““Justice” and “Fairness” Are Not
4 This the Same Thing.” Journal of Organizational Behavior 36, no. 2: 313–318.
study uses the term “HUB-­F IRM” as a fictitious name to refer
to the specific company identified as a hub-­firm in the interview Griffith, D. A., M. G. Harvey, and R. F. Lusch. 2006. “Social Exchange
quotations. in Supply Chain Relationships: The Resulting Benefits of Procedural and
Distributive Justice.” Journal of Operations Management 24, no. 2: 85–98.
Haans, R. F. J., C. Pieters, and Z.-­L . He. 2015. “Thinking About U:
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Appendix 1 Appendix 2
Measurements Semi-­Structured Interview Protocol.
Core Question 1: How would you describe the fairness of the hub-­
Questionnaires completed by the hub-­ firm's decision-­making processes in your collaborative NPD projects?
firm's suppliers Loading Follow-­up queries:
Procedural Justice • Probe for specific examples and experiences.

The hub-­f irm has treated us fairly in our 0.643 • Explore the participant's understanding of procedural justice in
dealings. this context.

The hub-­f irm explained fully the decision-­ 0.886 Core Question 2: How does the distribution of rewards and risks
making criteria to us. administered by the hub-­firms in your joint NPD projects affect your
firm's collaborative NPD efforts?
The hub-­f irm applied consistent decision-­ 0.868
making criteria in its dealings with us. Follow-­up queries:
• Encourage the participant to provide concrete instances of per-
Distributive Justice
ceived equity or inequity.
The hub-­f irm made significant —
• Investigate the factors contributing to these perceptions of distribu-
contributions to this engagement.
tive justice.
The hub-­f irm achieved substantial outcomes 0.904 Core Question 3: How do formal contracts between your firm and the
and rewards from this engagement. hub-­f irm influence your perceptions of fairness in decision-­making pro-
We made substantial contributions to this 0.933 cesses and reward distribution?
engagement. Follow-­up queries:
We attained significant outcomes and 0.908 • Explore the role of contracts in shaping perceptions of both proce-
rewards from this engagement. dural and distributive justice.
Formal Contracts • Inquire about specific clauses or aspects of contracts that impact
these perceptions.
We possess specific and comprehensive 0.930
agreements with the hub-­f irm. Core Question 4: Can you describe instances where your perceptions
of fairness or unfairness in decision-­making processes or reward distri-
We maintain customized agreements that 0.962 bution have influenced your firm's willingness to engage in joint NPD
delineate the obligations of both parties. projects with the hub-­f irm?
We hold detailed contractual agreements 0.975 Follow-­up queries:
specifically designed with the hub-­f irm.
• Seek detailed examples of how justice perceptions have affected
Questionnaires completed by the hub-­ NPD collaboration.
firm for each individual supplier
• Probe for both positive and negative influences on collaboration
New Product Development Collaboration willingness.

This supplier has actively participated in 0.647 The number of follow-­up questions will not be limited to two. If neces-
the design initiatives of our supply chain sary, we will ask further clarifying questions based on the participants'
networks based collaborative new product responses and explore any emerging themes.
development projects.

This supplier cooperated with other 0.933

suppliers within our supply chain networks
to co-­design these products.

Other suppliers within our supply chain 0.934

networks frequently sought consultations
from this supplier regarding the joint design
of our products.

This supplier played a pivotal role in the 0.851

design efforts of our collaborative new
product development projects.

Note: —, items excluded with factor loadings below threshold (λ = 0.362;

threshold: 0.400).

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