ABSTRACT
This chapter provides an overview of contributions regarding coordination mechanisms between firms; among those coordination mechanisms. It addresses the connection between markets and vertical alliances and the kind of purchase. The chapter also provides a classification framework for alliances based on the literature review. It summarizes the six main factors characterizing the purchase and influencing the choice between market and vertical alliance. Those are: the presence of transaction specific investments; the frequency of the purchase; the risk and uncertainty related to the environment; the strategic relevance of the purchase; the supply market complexity and the complexity of product description. L.M. Ellram identifies four levels of coordination between market and hierarchy: short-term contract, long-term contract, joint venture and equity interest. M.G. Christopher provides an even stronger distinction between lean supply chains and agile supply chains sustaining that in turbulent and volatile markets an agile chain adopting postponement and modularization is much more efficient and effective.
