The determinants of relational governance and performance: How to manage business relationships?

It is the aim of this study to assess the influence of the determinants of the transaction, dyadic, and business environment level on relational governance and ultimately performance. We build an integrated framework for relationship management drawing from literature of transaction cost economics, marketing channels, and business networks. Dutch suppliers of potted plant and flower products (N=174) provided data for the empirical analysis. Our results show that joint planning, one of the constructs of relational governance, is positively influenced by interorganizational trust, information obtained from the network, physical transaction-specific investments (TSIs), and by fixed lines as the exchange mode. Joint problem solving, the other construct of the governance, is solely influenced by the two dimensions of trust. These two constructs of relational governance effect positively our performance measures. Managers should consider carefully each of the determinants of relational governance for the management of a relationship. As shown in our study, the success is dependent on some of the determinants of the three analytical levels of our integrated framework.     

Importer and exporter capabilities,governance mechanisms,and environmental factors determining customer-perceived relationship value

Although value creation is the overarching goal of interfirm exchange relationships, there is little research on relationship value in business markets in general and in global business markets in particular. The current research draws on the theoretical perspectives of dynamic capabilities, relational contracting, industry structure view, and Uppsala model of internationalization and synthesizes their insights to develop a model of customer-perceived relationship value in importer-exporter relationships. A mail survey was used to collect data from 211 import distributors of industrial products. The study results indicate that exporter core offering and customer responsiveness capabilities, importer market-sensing and customer relationship management capabilities, relational governance, psychic distance, and environmental munificence are important determinants of relationship value, while contractual governance has no detectable effect. Theoretical and managerial implications of the findings are discussed and future research directions are presented.     

Achieving relational governance effectiveness: An examination of B2B management practices in Taiwan

This study examines the antecedents of relational governance effectiveness in a country context where the prevalence of Confucian values is expected to create a culturally ingrained preference for relational governance. We also explore whether different management practices are better predictors of relational governance effectiveness under different collaborative inter-firm relationship configurations. Results from an analysis of 182 alliance relationships in Taiwan, a dynamic newly developed economy, reveal that, generally, demonstrating trustworthiness, establishing just and fair procedures, and building effective platforms for connectivity are management practices that are good predictors of relational governance effectiveness. The multi-group analysis provided more nuanced insights. The findings suggest that different inter-firm relationship configurations require different subsets of management practices. Building effective platforms for connectivity is a strong predictor of relational governance effectiveness in equity-based alliances with foreign partners. In equity-based alliances with domestic partners, establishing fair and just procedures is emphasized. In contractual alliances with foreign partners, ensuring contractual clarity and building effective platforms for connectivity are found to be facilitators of relational governance effectiveness. Last, contractual alliances with domestic partners seem to rely on a portfolio of management practices encompassing demonstrating trustworthiness, establishing just and fair procedures, and building effective platforms for connectivity.     

Do formal contracts and relational governance function as substitutes or complements?

Relational exchange arrangements supported by trust are commonly viewed as substitutes for complex contracts in interorganizational exchanges. Many argue that formal contracts actually undermine trust and thereby encourage the opportunistic behavior they are designed to discourage. In this paper, we develop and test an alternative perspective: that formal contracts and relational governance function as complements. Using data from a sample of information service exchanges, we find empirical support for this proposition of complementarity. Managers appear to couple their increasingly customized contracts with high levels of relational governance (and vice versa). Moreover, this interdependence underlies their ability to generate improvements in exchange performance. Our results concerning the determinants of these governance choices show their distinct origins, which further augments their complementarity in practice. Copyright © 2002 John Wiley & Sons, Ltd.     

Effects of relational ties paradox on financial and non-financial consequences of servitization: Roles of organizational flexibility and improvisation

Drawing from relational governance and dynamic capabilities literature streams, we develop a conceptual model in which business and political ties are antecedents of organizational flexibility, which in turn are related to organizational improvisation and, ultimately, financial and non-financial firm performance. We test our model using a data collected from 302 Turkish senior managers. We find positive direct and indirect impacts of business ties on organizational improvisation, and negative direct and indirect impacts of political ties on organizational improvisation. We find organizational improvisation significantly related to several indicators of firm performance. Our results provide clarity on relational governance and firm performance. The intermediate variables of organizational flexibility and improvisation shed light on equivocal findings regarding the effects of business and political ties on firm performance.     

Enhancing performance in emerging-market-supplier/MNE-buyer relationships: An examination of the interplay between virtual and relational governance

Despite the emerging role of information technology (IT)-enabled interactions between exchange partners, few studies simultaneously examine IT-enabled governance (virtual governance) and relational governance. Drawing on the relational and IT-enabled governance literatures, this study develops and tests a contingent view of the interplay between virtual and relational governance in emerging-market-supplier/MNE-buyer relationships. The findings from a survey of 240 Taiwanese contracting suppliers show that the interaction between virtual and relational governance is negatively related to relationship performance. In addition, the negative interaction is stronger when the institutional distance is higher and the environment is changing rapidly. The results indicate the need for emerging-market suppliers to be aware of different uses of virtual and relational governance strategies according to differences in institutional environments and how the environment is changing.     

Governance of supplier collaboration in technologically uncertain NPD projects

Firms that are searching for new technologies from suppliers through collaborative new product development (NPD) need to devise effective approaches for governing the supplier relationship. Based on in-depth case studies of four collaborative NPD projects, this paper shows that in projects with a high degree of uncertainty (1) firms achieve governance by simultaneously limiting supplier involvement and allowing for high levels of collaboration, (2) transactional and relational governance have distinct roles in achieving limited supplier involvement and establishing high levels of collaboration, and (3) transactional and relational governance are organizationally separated. These findings have implications for the complementary use of relational and transactional governance, as well as for the role of purchasing and R&D in technologically uncertain NPD projects.     

资源外包网络的治理研究

资源外包网络作为一种特殊的资源联合体,其运作过程并非十全十美,机会主义行为和知识分享问题及其引致的网络失灵成为网络治理的主要诱因。资源外包网络的治理包含两个层面:关系治理和结构治理。机会主义行为多发生于外包商和供应商双边交易过程中,对应于资源外包网络的关系治理;知识分享问题涉及网络整体的协调与管理,对应于网络的结构治理。论文分别从关系治理和结构治理两个角度剖析了资源外包网络的治理特点、作用机制和治理对策。     

Expanding the conceptual domain of governance in franchising

We propose a model that expands the conceptualization of governance in franchising that acknowledges traditionally ignored stakeholders, including debt and equity holders. Though research has examined how equity holders benefit from the organizational form of franchising, it has not examined the specific role that equity or debt holders play in governing franchise organizations. Additionally, the unique ontology of franchising, which includes semi-internal members of the organization (i.e., franchisees) that invest their own assets and maintain their own balance sheets, provides a rich context for exploring such governance issues. Franchisees exist outside traditional firm boundaries and are not employees, but they are closely linked to the brand given their significant investments in firm-specific assets. Franchisee-based organizations also are growing their own corporate structures and investments in firm-specific assets, sometimes dwarfing those of their franchisor partners. By expanding the concept of governance in franchising, we open avenues for significant scholarship that can enrich both the governance and franchising literatures. We provide several preliminary propositions and constructs to help encourage new research in this emerging arena of franchising research.     

Social power as an antecedence of governance in buyer-supplier alliances

Buyer-supplier alliances require certain governance mechanisms to be successfully controlled and coordinated. However, relatively little is known about how power differentials between the actors affect the applicability of those governance mechanisms. This paper follows the assumption that different sources of social power among firms directly influence the governance mechanisms and indirectly their performance. Our study utilizes a sample of 250 European firms to test the influence of four social power sources on three different governance mechanisms. We find different influences of social power on certain governance mechanisms. Suppliers' perception of buyers' coercive power leads to stronger contractual governance and stronger buyer directives but reduces the use of relational norms. Reward power only relates to contractual governance. Expert power steers towards buyer directives and relational norms. Referent power stimulates the development of relational norms. A cluster analysis of power types provides additional insights and enriches our managerial implications.     

Choice and performance of governance mechanisms: matching alliance governance to asset type

Formal and relational governance mechanisms are used in strategic alliances to coordinate resources and mitigate the risk of opportunistic behavior. While recent work has shown that these approaches are not mutually exclusive, we understand little about when one approach is superior to the other. Using data on the governance choices and subsequent performance of alliances in the German telecommunications industry, we find that the optimal configuration of formal and relational governance mechanisms depends on the assets involved in an alliance, with formal mechanisms best suited to property‐based assets and relational governance best suited to knowledge‐based assets. Furthermore, a mismatch between governance mechanisms and asset type can harm the performance of the alliance. Our findings contribute to transaction cost economics, the literature on relational governance, and recent work studying their interaction. Copyright © 2009 John Wiley & Sons, Ltd.     

社区性产业集群与合作性激励的生成——对温州民间商会生发机制的社会经济学考察

作为一种合作机制的温州民间商会，其形成和运作基于社区性产业集群所具有的企业之间的关系性契约。它提供民间商会治理所不可或缺的合作性激励。而民间商会推动了企业之间的关系性契约向制度化合作的演进。本文运用经济学的分析方法。构建一个合作激励的形成模型与变迁机制．从逻辑上回答理性经济人的企业是如何形成具有“共同利益”的合作性激励，又如何推进合作的演进，形成制度化的合作机制——民间商会。     

Formal governance mechanisms, relational governance mechanisms, and transaction-specific investments in supplier-manufacturer relationships

This study addresses the question of how to design governance mechanisms so that local suppliers are encouraged to make transaction-specific investments in foreign manufacturing firms. Suppliers' transaction-specific investments can increase the efficiency of production for foreign manufacturing firms operating in a host country. However, it can be difficult to induce suppliers to make specialized investments, because of the numerous hazards associated with such investments. Basing its conclusions on the results of a survey of Taiwanese firms using Chinese suppliers, this study examines the effectiveness of both formal governance mechanisms (i.e., contractual agreements and financial commitments) and relational governance mechanisms (i.e., calculative and benevolent trust) in inducing suppliers to make specialized investments. We find that both formal governance and relational governance mechanisms affect suppliers' tendencies to make specialized investments. Additionally, we find that calculative trust acts as a moderating factor in the relationship between formal governance mechanisms and transaction-specific investments.     

Transforming provider-customer relationships in digital servitization: A relational view on digitalization

Digitalization is viewed as a source of future competitiveness due to its potential for unlocking new value-creation and revenue-generation opportunities. To profit from digitalization, providers and customers tend to move away from transactional product-centric model to relational service-oriented engagement. This relational transformation is brought about through digital servitization. However, current knowledge about how providers and customers transform their relationship to achieve benefits from digital servitization is lacking. This paper addresses that knowledge gap by applying the relational view theory to a study of four provider-customer relationships engaged in digital servitization. The results provide evidence for four relational components – complementary digitalization capabilities, relation-specific digital assets, digitally enabled knowledge-sharing routines, and partnership governance – that enable providers and customers to profit from digital servitization. A key contribution is the development of a relational transformation framework for digital servitization that provides an overview of how the four relational components evolve as the relationship progresses. In doing so, we contribute to the emerging servitization literature by offering key relational insights into the interdependence of activities throughout the transformation phases of provider-customer relationships in digital servitization.     

Board involvement in international joint ventures

The last two decades have witnessed substantial scholarly interest in corporate boards, yet little research has been devoted to boards of international joint ventures (IJVs). We combine the corporate governance and alliance governance literatures in order to study this important ex post governance mechanism for IJVs. We identify a fundamental tension inherent in IJVs, which arises from the unique features of this organizational form and influences the level of involvement by their boards. International joint ventures are hybrid organizational forms that can require administrative control to facilitate monitoring and coordinated adaptation in the presence of exchange hazards. At the same time, the fact that IJVs operate in different host countries can make it efficient to delegate authority to local management for certain collaborations. In investigating the determinants of IJV board involvement, we therefore examine characteristics of IJVs that reflect this underlying tension. We conclude that board involvement reflects efficiency considerations in individual ventures, and the administrative control provided by boards is an important dimension of IJV governance. Copyright © 2013 John Wiley & Sons, Ltd.     

Relational selling strategy and key account managers' relational behaviors: An exploratory study

Many companies see key account management as a potentially successful way to implement a relational strategy. Nevertheless, the literature suggests that strategy implementation at the sales force level is difficult to achieve, mainly because salespeople may not understand - nor accept - what they are requested to do. Despite their relevance, behaviors of key account managers have poorly been investigated. This article defines and tests a model of relational selling behaviors from the part of key account managers. Results show that the perception of the adoption of a relational selling strategy is associated with some specific key account managers' behaviors (customer-oriented selling, adaptive selling and team selling), but not with others (organizational citizenship behaviors). These findings suggest that potential discrepancies can exist between a relational selling strategy and its implementation at the key account manager level. Based on these results, theoretical and managerial implications are discussed.     

How to manage strategic alliances in OEM-based industrial clusters: Network embeddedness and formal governance mechanisms

The rapidly growing original equipment manufacturer (OEM)-based industrial clusters have been a prominent form of economic organization in several emerging Asian markets. Characterized by close interdependence and intertwined personal linkages, firms of Asian OEM-based industrial clusters participate in the phenomenon of strategic alliances. However, how these alliances can be effectively managed through formal governance mechanisms within embedded networks requires further investigation. This study uses social network analysis to identify personal, ownership, and technology networks in 141 semiconductor firms in an OEM-based industrial cluster in Taiwan that feature different types of OEM-led alliances and the prevalence of Guanxi. We find that relational embeddedness based on personal ties and structural embeddedness based on ownership ties support the employment of formal governance mechanisms. We also pay particular attention to the moderating role of network embeddedness in diminishing the relationship between transaction hazards and formal governance mechanisms. By identifying the embeddedness context in the governance of alliances, our research contributes to a better understanding of the ways in which formal governance mechanisms are contingent on the network embeddedness of OEM-based industrial clusters in Taiwan and other similar Asian economies.     

The impact of culture on the relationship between governance and opportunism in outsourcing relationships

To address concerns of opportunism, outsourcing firms are encouraged to deploy contractual and relational governance. The individual and collective effects of these mechanisms have been previously examined but not in specific contexts. This study examines the effects of contractual and relational governance on provider opportunism, incorporating the moderating influence of a “shift parameter”—national culture. Our results reveal that contractual governance is more effective in individualistic and low uncertainty avoidance cultures. Relational governance is more effective in collectivist and high uncertainty avoidance societies. The individualism–collectivism dimension also moderates the joint effect of these mechanisms. While the mechanisms are generally complementary in mitigating opportunism, a singular focus on either contractual or relational can be just as effective under situations of high individualism and collectivism, respectively. Copyright © 2014 John Wiley & Sons, Ltd.     

Decomposing the effect of supplier development on relationship benefits: The role of relational capital

Buyers invest considerably in developing their suppliers, yet the performance effects of such investments are not universal. Drawing on social capital theory, this research investigates whether the relationship between supplier development and relationship benefits may be facilitated by the generation of relational capital. The authors examine mediating and moderating roles of relational capital in the relationship between two aspects of supplier development (capability development, supplier governance) and two dimensions of relationship benefits (supplier benefits, buyer benefits), using survey data collected from 185 suppliers of a large manufacturing firm. Investment in supplier development does not automatically result in benefits for the supplier or reciprocated benefits for the buyer. Rather, relational capital “bridges” supplier development and relationship benefits. Without relational capital, benefits from capability development do not accrue, and the impact of a supplier governance regime can be even detrimental. In conditions of high relational capital, capability development results in lower perceived buyer benefits. The results can help managers ensure that the benefits from their supplier development efforts fully materialize.     

Relational norms and collaborative activities: Roles in reducing opportunism in marketing channels

Reducing opportunism is a critical task to support channel performance and channel member satisfaction. Recent research into marketing channels focuses on the role of relational governance in curbing opportunism; this study advances this thesis by positing that relational governance encompasses both relational norms and collaborative activities (i.e., joint planning and joint problem solving). In turn, the current research investigates how these two aspects of relational governance independently and jointly check opportunism in marketing channels. The tests of the hypotheses involve 149 Chinese manufacturer–distributor relationships. The results show that relational norms have a negative effect on opportunism, but the effect of collaborative activities is contingent on the level of consistency between the relational norms and collaborative activities that mark the relationship. A low level of relational norms prompts joint planning to inhibit opportunism and joint problem solving to exacerbate it. However, a high level of relational norms reverses these effects: Joint planning fosters opportunism, and joint problem solving curbs it. Thus collaborative activities have different properties that need to be devised in accordance with relational norms if the goal is to reduce opportunism.