Governing local supplier opportunism in China: Moderating role of institutional forces

China provides a vast and prominent manufacturing base, so curtailing its local supplier opportunism represents a primary concern for local and foreign buyers. Drawing on institutional theory, this study examines how regulatory uncertainty and relationship structure moderate the role of contracts and trust in restricting local supplier opportunism in China. An analysis of 293 buyer–supplier dyads in China reveals that contracts are more effective in deterring supplier opportunism when regulatory uncertainty is high. In addition, contracts help curtail opportunism more in domestic, compared with international, buyer–supplier relationships, whereas trust is more effective in restricting supplier opportunism in international relationships than in domestic ones.     

Revisiting the interplay between contractual and relational governance: A qualitative and meta-analytic investigation

Although extant literature has shown that formal contracts and relational governance play a key role in interorganizational relationships, the nature of their interplay still remains equivocal. To better understand the relationships between contractual and relational governance, we conducted a qualitative review and meta-analysis of the existing literature. Meta-analytic results from 33,051 interorganizational relationships across 149 empirical studies have indicated that contractual governance is positively related to both sides of relational governance—trust and relational norms. Our results have also indicated that contracts, trust, and relational norms jointly improve satisfaction and relationship performance and jointly reduce opportunism. These findings provide strong evidence for the complementarity arguments of the contractual–relational governance relationships and their joint impacts on performance. We also found that the mutual relationships between contractual and relational governance are moderated by the institutional environments, the interorganizational relationship type and length, and the construct measurement of contracts. Overall, this study provides new insights on when contractual and relational governance complement or substitute each other. We discuss the implications of our study for theory and practice and propose a research agenda for future research on governance in interorganizational relationships.     

Leader–member exchange,subordinate stewardship,and hierarchical governance

In this article, by integrating the institutional theory, leader–member exchange (LMX) theory, and stewardship theory, we propose a model of subordinate stewardship behaviors in organizational hierarchies and the resultant hierarchical governance structures. First, we develop propositions suggesting that the quality of LMX (supervisor–subordinate) is determined by three antecedents: leader characteristics, subordinate characteristics, and internal organizational context. The quality of LMX, in turn, affects the subordinate stewardship behaviors. Second, by integrating institutional theory and stewardship theory, we propose that the interaction between isomorphic pressures and the level of subordinate stewardship behaviors may result in four distinct types of hierarchical governance structures: isomorphic stewardship, isomorphic controls, firm-specific controls, and firm-specific stewardship. These governance mechanisms reflect the internal drive toward subordinate stewardship, while complying with the external norms of isomorphism. Thus, different types of governance structures may exist between and within firms. Implications of this model are discussed here.     

Preserving a Professional Institution: Emotion in Discursive Institutional Work

We studied the discursive institutional work written by pharmacy leaders as part of a larger institutional project to preserve the institution of pharmacy. Our analysis of monthly editorials printed in the Journal of the American Pharmacists Association from 1960 to 2003 shows how different discrete emotions were systematically incorporated in specific rhetorical argument structures over the course of an institutional project. In contrast to previous research, we show how discursive institutional work that is directed to members of the same specific social group (e.g., a profession) can vary over time in response to significant events and changes in practices of the target audience. Our longitudinal study shows that the relative frequency of argument types, the incorporation of emotion, and the content of rhetorical argumentation changed over time. We contribute to theory about the role of emotions in discursive institutional work by unpacking the role of discrete emotions and showing how such discourse evolves over time in concert with field conditions.     

Contract ineffectiveness in emerging markets: An institutional theory perspective

The effectiveness of contracts is bounded by the institutional environment in which they are designed and enforced. When firms form supply chain partnerships in emerging markets, they may experience contract ineffectiveness, which is defined as a firm's perceived limits of contracts with respect to safeguarding interests and coordinating activities. Specifically, we identify two institutional factors that may give rise to contract ineffectiveness, information transparency and legal enforceability, as they determine how effectively a firm designs and enforces a contract. In addition, we reveal that contract ineffectiveness prompts a firm to seek social ties, including business ties and political ties, to overcome the institutionally induced limits of contracts. These efforts, however, are moderated by the type of predominant pressure a firm bears. While equity pressure strengthens the relationship between contract ineffectiveness and a firm's pursuit of social ties, efficiency pressure weakens this relationship, because seeking social ties imposes an extra burden of efficiency. Tested by data collected from 187 distributors in China, our study reveals the institutional causes and the consequences of contract ineffectiveness, which is a common problem encountered by firms when forming supply chain partnerships in emerging markets.     

Institutional theory and HRM: A new look

The context of HRM is important but undertheorized (Paauwe, 2009) and subsequently underresearched (Jackson, Schuler, & Jiang, 2014). We offer two recent perspectives of institutional theory—institutional logics and institutional work—as theoretical lenses through which scholars can explore the influence of institutional context on HRM and more intriguingly the influence of HRM professionals on their institutional contexts. Though others have introduced institutional theory to HRM scholarship (e.g. Paauwe & Boselie, 2003), we bring a conceptualization of institutional theory that reflects its advances over the last fifteen years, advances highly relevant to HRM scholars. While previous conceptualizations of institutional theory focus on the direct constraint of institutions on HRM, institutional logics emphasizes complexity, multilevel dynamics, and agency. Similarly, institutional work addresses agency at the day-to-day level, exploring how actors create, maintain, and disrupt the institutional contexts in which they are embedded. Directions for HRM research are discussed.     

Analysing the Influence of Institutional,Organizational and Interpersonal Forces in Shaping Inter‐Organizational Relations*

abstract Much of the literature on inter‐organizational relations assumes that firms operate as relatively autonomous and cohesive units that are (1) unimpeded by wider institutional norms governing the industry as a whole, and (2) allow little or no role for the boundary spanning agents who oversee and monitor ‘contracts’ on a daily basis. This perspective is not surprising given that so many studies rely solely on questionnaires completed by a single respondent within one or more of the organizations. Nor has there been much recognition of the dynamic interplay between forces at the institutional, organizational and interpersonal levels. In order to address these issues, we propose a framework that explicitly focuses on forces at these three levels, as well as the interplay between them, in order to analyse how and why inter‐organizational relations take the forms they do. We argue that trusting, OCR‐type relations are more likely to be produced and reproduced when there are strong institutional forces promoting common obligations on both parties, and there is a relative mutuality of power relations between the organizations. However, because the contract is maintained by boundary spanning agents, agreed norms at the institutional and organizational levels are a necessary but not sufficient factor for OCR to develop. Conversely, in the absence of these forces, there is less incentive for either organization to establish and maintain close interpersonal relations, and indeed ACR‐type, distant relations may be beneficial for organizations and individuals that wish to dispense with existing contracts.     

The Emergence of Proto-Institutions in the New Normal Business Landscape: Dialectic Institutional Work and the Dutch Drone Industry

In the current business landscape, in which technology-enabled entrepreneurship is part of the New Normal, regulatory institutional structures are in constant flux. Previous studies have framed the challenges facing entrepreneurs in mature organizational fields as avoiding the power of overbearing regulators long enough to establish the legitimacy of their ventures. In fields typified by New Normal conditions, however, regulatory frameworks for evaluating new technology-enabled ventures are often still lacking. Regulators may choose to actively reach out to entrepreneurs to arrive at a better understanding of the radical technological changes and high-frequency entrepreneurial behavioural adaptations that occur in these settings. To grasp how novel regulatory institutional structures come about in the New Normal business landscape, we conducted a processual study of the emergence of a new technology that is the Dutch remotely piloted aircraft systems (drone) industry between 2000 and 2018. Our findings show that regulatory proto-institutions result from dialectic institutional work in the form of structured interactions between entrepreneurs and regulators. Specifically, we present a process model that reveals how new regulatory structures evolve in contexts where high levels of technological and behavioural change induce systemic uncertainty, and enlarge the interdependence between entrepreneurs and regulators. We suggest that our process theory of proto-institutional emergence generalizes towards other organizational fields in which technology-enabled entrepreneurship has become the main driver of growth. Theoretically, our findings speak to the literatures on institutional work, proto-institutional emergence, and the New Normal business landscape.     

The sequencing of union contract negotiations

In this paper we explore the determination of the sequencing of wage bargains in an institutional structure consisting of a single firm employing two unions, under two alternative assumptions about the nature of feasible contracts. If contingent contracts are prohibitively costly, we find that the unions prefer to lead in the negotiations process if the labor inputs are substitutes and follow if they are complements, while the firm is indifferent. If contingent contracts are permitted, both unions prefer to lead, while the firm prefers to negotiate first with the weaker union.     

The Social Ontology of Virtual Environments

This paper analyzes the ontological structure of institutional and other social entities in virtual environments. The emphasis is on institutional reality, which consists of entities (objects, events, etc.) like money, contracts, and chess pieces, which are constituted in part through collective agreements. It is studied how institutional entities are constructed in virtual environments, how they relate to institutional entities in the real world, and how they are recognized by users.     

Creating psychological and legal contracts through human resource practices: A signaling theory perspective

Despite the surge in research on the psychological contract over the past two decades, there has been little integrative research that has examined psychological contracts in conjunction with legal contracts. We address this shortcoming by presenting a framework for understanding the differences between psychological contracts and legal contracts in the United States. This is done by presenting definitions and examples of psychological contracts (i.e., relational and transactional) and the two forms of legal contracts: (a) express (written and oral), and (b) implied (quasi-contract and promissory estoppel). In addition, by utilizing signaling theory [Rynes, S.L. (1991). Recruitment, job choice, and post-hire consequences: A call for new research directions. In M. D. Dunnette & L. M. Hough (Eds.), Handbook of industrial and organizational psychology, (pp. 399–444). Palo Alto, CA: Consulting Psychologists Press.], we describe the means by which human resource practices such as recruitment, training, performance appraisal, compensation, and employee handbooks can create psychological and legal contracts. We conclude by proposing directions for future research and implications for practicing managers.     

Managing partner opportunism in public–private partnerships: the dynamics of governance adaptation

ABSTRACT

Controlling partner opportunism in public–private partnership (PPP) is still controversial despite its extensive adoption. We demonstrate that partner opportunism gets controlled by the extent to which deployed governance mechanisms are aligned with the governance needs of the transaction. As unique constraint, the institutional voids limit this alignment. If not aligned with governance needs, governance adaptation cycle continues, resulting in extensive or minimally acceptable partner opportunism. The organizations tolerate opportunism as long as they derive some economic value. In the context of institutional voids, the risk of exploitation of incomplete contracts is high but if governed effectively PPPs could still deliver value.     

U.S. chief procurement officers’ perspectives on public procurement

Each year public procurement officials in the United States spend trillions of dollars to purchase goods and services for public use. The volume of public procurement spending compels public administration and supply chain management scholars to examine these procurement practices. Based on a unique dataset composed of a series of qualitative and quantitative interviews with chief procurement officers (CPOs) and their team members from 45 states and 2 territories in the United States, this paper explores the key institutional factors affecting state-level public procurement in the U.S., explores variation in the definition of contract performance, and assess the importance of multiple factors in creating procurement contracts. We present an agenda for future research on state-level public procurement in the U.S that has important implications for the theory and practice of public procurement.     

Pricing in a Service Sector Context: Accounting and Marketing Logics in the Hotel Industry

The paper analyses hotel room pricing via an application of institutional economic theory. The institutional framework considers the impact of accounting and marketing templates that help hotel managers make sense of complex pricing decisions. From an institutional perspective, the spread and implementation of these templates is influenced by specific historical factors and may be subject to path dependency. The institutional theory is applied to a case study using a pragmatic constructivist methodology. The case site revealed that whilst long run cost structures are important in locating the market niche of the business and that hotels use conventional cost control techniques, costs play relatively little role in price determination with a dominant role for marketing templates that concentrate on revenue management. The study suggests how the synthesis between institutional economics and pragmatic constructivism offers a research framework that could be replicated in further studies.     

Decision-making in organizations: when to delegate and whom to delegate

A production process involves a principal and two privately informed agents. Production requires coordinated decision making. It might be carried in a centralized organization or through delegated contracting in a hierarchical structure. We compare the performance of different organizational structures when renegotiation of initial contracts is possible. We show that delegated contracting always dominates centralization if the downstream contract between the agents is observable. Contracting (resp. control) should be delegated to the agent with the least (resp. most) important information. If downstream contracts are not observable, we obtain a tradeoff between centralization and delegation.     

Technology in the time of corona: A critical institutional reading

Drawing on institutional theory and using examples from Israel, we offer a critique of technology's deployment in responses to the coronavirus disease (COVID-19). We distinguish between technologies-in-use (“small ‘t' technologies”), the bundle of artifacts and practices that bring them into being, and “Big ‘T' Technology,” the latter being technology as an institution – shared meanings, structures, and practices that govern thought and action. Using the conceptual tool kit of institutional theory, we make three interrelated arguments. First, the deployment of technologies-in-use in response to the pandemic is embedded in diverse and contradictory institutions, the institution of technology among them. These technologies participate in the very construction of crisis, which fosters the revert to known and established ways of being and doing. Thus, technologies-in-use are not necessarily the most efficient and rational but rather the most legitimate and readily available. Second, putting certain technologies into action has not been happening by itself. Instead, we have witnessed contestations among relevant agents – like politicians and experts – who engage in institutional work to serve their interests. Third, despite its global reach, technology is locally adapted and implemented in specific contexts. All in all, institutional theory helps us to explore further and critique the naïve belief, common in public discourse, in technology as a remedy of all things. Instead, it offers a more critical understanding of the cultural dynamics involved in putting technology to work in the coronavirus crisis. This critical lens carries implications for policymaking and implementation in times of crisis.     

Antecedents of trust in industrial districts: an empirical analysis of inter-firm relations in a Turkish industrial district

Structural features and institutional settings of industrial districts, rather than contracts as a co-coordinating mechanism, promote trust in exchanges between firms in industrial districts. Based on this assumption, the paper explores the antecedents of trust in a Turkish industrial district at three levels: institutional environment; institutional arrangements; and inter-firm exchanges. In relation to institutional environment, dominant institutions of the Turkish economy – mainly state and finance – and their policies that undermine the role of SMEs in economic development are studied. In this context a third institution, the ‘district association’ that has a vital role in promoting trust-based governance has been analysed. At the second level, formal and informal institutional arrangements that govern the web of exchanges between firms are surveyed. The third level of analysis is directed at entrepreneurs and their attitudes towards family, friendship, expertise and reputation are studied. The research site is the Merter textile district in Istanbul. Data for second and third levels of analysis has been collected through structured interviews and is analysed quantitatively. For institutions and institutional environment, data has been collected mainly by in-depth interviews and is supported by secondary data. Research findings show that informal institutional arrangements are more important than formal arrangements and reputation and expertise of the other firm is more important than family-friendship connections as antecedents of trust.     

Corporate Social Responsibility, Public Policy, and NGO Activism in Europe and the United States: An Institutional-Stakeholder Perspective

abstract    Corporate social responsibility (CSR) is an increasingly pervasive phenomenon on the European and North American economic and political landscape. In this paper, we extend neo-institutional and stakeholder theory to show how differences in the institutional environments of Europe and the United States affect expectations about corporate responsibilities to society. We focus on how these differences are manifested in government policy, corporate strategy, and non-governmental organization (NGO) activism towards specific issues involving the social responsibilities of corporations. Drawing from recent theoretical and empirical research, and analysis of three case studies (global warming, trade in genetically modified organisms, and pricing of anti-viral pharmaceuticals in developing countries), we find that different institutional structures and political legacies in the US and EU are important factors in explaining how governments, NGOs, and the broader polity determine and implement preferences regarding CSR in these two important world regions.     

Market entry of firms with different legal forms: an empirical test of the influence of institutional factors

Drawing upon institutional theory we develop a conceptual model and investigate the determinants of market entry for worker cooperatives, publicly traded and limited-liability companies. Our results show that formal institutional conditions (i.e., mercantile legislation) influence the start-up choice of entrepreneurs regarding the legal form of their new venture. In addition, we take into account the influence of informal institutional conditions (i.e., local corporate culture) on the market entry rate of firms with different legal structures. Findings show that, while market entry is sensitive to the general economic climate, entry rates of firms with a different legal structure respond differently to the same economic conditions.

The Firm as a Multicontract Organization

The firm is often considered as a nexus of contracts linking the management and its different stakeholders: claim-holders, workers, unions, customers, suppliers, and the state, among others. This paper surveys recent work in contract theory, the multiprincipal incentive theory, and the theory of side contracts, which provides some insights into the structure of those contracts and therefore into the structure of the firm. First, we discuss the incomplete contracting assumptions underlying these variations of the usual grand contract approach. Second, we explain how the theoretical lessons learned from this work—the distribution of contracting rights, the power of incentive schemes within organizations, and the design of communication channels—apply to the theory of the firm.