These repair centres
operate under a modular governance structure. Where repairers do not have the quality
Variables
Governance type
Complexity of
transactions
Codifiability of the
transactions
Supplier capabilities to
manage transactions
Market Low High High
Modular High High High
Relational High Low High
Captive High High Low
Hierarchy High Low Low
Source: Adapted from Gereffi et al. (2005) and Ashenbaum et al. (2009)
Table I.
Variables used to assess
governance types
Supply
governance
structures
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accreditation, PAS125 Kitemark, insurers closely monitor and control transactions.
These low capability suppliers who do not manage their repairs in the codified manner
are subject to a captive governance structure. Containing the risk of poor workmanship
requires the insurers to send engineers to the sites to check work and costs. Operating
with an industry standard or through captive governance minimizes the risk attributed to
defective or deficient repairs for both the insurance company and policy holder. The
governance structures used are shown in Table II. The governance structure is based on
high levels of complex transaction information and knowledge required to reduce the risk
to the insurer. Through the use of PAS125 insurers are raising the capability of the
suppliers therefore reducing costs associated with managing complexity.