Contracts, norms, and plural form governance

The organization of interfirm exchanges has become of critical importance in today’s business environment. Many scholars have criticized the inadequacies of legal contracts as mechanisms for governing exchange, especially in the face of uncertainty and dependence. Other scholars argue that it is not the contracts per se but the social contexts in which they are embedded that determine their effectiveness. This study investigates the performance implications of governance structures involving contractual agreements and relational social norms, individually and in combination (plural form) under varying conditions and forms of transactional uncertainty and relationship-specific adaptation. Hypotheses are developed and tested on a sample of 396 buyer-seller relationships. The results provide support for the plural form thesis—increasing the relational content of a governance structure containing contractual agreements enhances performance when transactional uncertainty is high, but not when it is low. Implications for theory and future research are discussed. Joseph P. Cannon (Ph.D., University of North Carolina) is an assistant professor of marketing at Colorado State University. His areas of research interest include the effective management of business-to-business buyer-seller relationships in domestic and international markets. His research has appeared in theJournal of Marketing Research, theJournal of Marketing, theAcademy of Management Review, theJournal of Public Policy & Marketing, and other publications. He is a member of the Editorial Review Board of theJournal of Marketing. Ravi S. Achrol (Ph.D., Northwestern University) is a professor of marketing and global management research professor in the School of Business and Public Administration at George Washington University. Prior to joining George Washington University in 1991, he served for 10 years on the faculty of the University of Notre Dame. His areas of research interests include interorganization theory and marketing strategy. His articles have appeared in theJournal of Marketing, theJournal of Marketing Research, Social Science Research, theJournal of Business Strategy, theJournal of Public Policy and Marketing, and various other publications. He is a member of the Editorial Review Board of theJournal of Marketing. Gregory T. Gundlach (Ph.D. J.D. University of Tennessee) is an associate professor of marketing in the College of Business Administration at the University of Notre Dame. His areas of research interest include theories of exchange governance, industrial organization, and antitrust policy. His articles have appeared in theJournal of Marketing, theJournal of Marketing Research, Marketing Science, theJournal of Public Policy & Marketing, theJournal of Business Research, Antitrust Bulletin, and other publications. He is a member of the Editorial Review Board of theJournal of Marketing, theJournal of the Academy of Marketing Science, theJournal of Public Policy & Marketing, and theJournal of Retailing.