Converging and Diverging Governance Mechanisms: The Role of (Dys)Function in Long‐term Inter‐organizational Relationships

Abstract

This paper explores the dynamic interplay of formal/informal governance mechanisms, in terms of functional and dysfunctional consequences for both sides of the dyad, in longterm inter-organizational relationships. Using two longitudinal cases of UK defence sector procurement (warship commissioning) we move beyond notions of complementarity and substitution in governance towards a more nuanced view where the governance mix of inter-organizational relationships can be convergent or divergent. Our findings, showing that relationships can exhibit functional and dysfunctional behaviour simultaneously, lead us to conclude that mismatches in governance mechanisms can be positive as well as negative. In building a context-dependent understanding of governance we both summarize the (dys)functions associated with formal and informal governance mechanisms and explore their impact on relationship exchange performance over time.

Sustainable Collaborative Governance in Supply Chain

“…As a widely used concept in many fields, governance can be generally described as a series of regulation and coordination of activities through a variety of formal and/or informal mechanisms based on a specific purpose [23][24][25]. Governance mechanisms may include policies, guidelines, rules, laws, norms, standards, monitoring and verification procedures, financial and other incentives, and the exercise of authority [26,27].…”

Effective contracting for high operational performance in projects

“…While classical contracts establish the rules for discrete and simple, one-off transactions or exchanges, and are often used as tools for dealing with transactions at arm's length; relational contracts approach the matter not merely as one-off transactions, but also as relationships so they use clauses with extra-contractual relationship means (Kimel, 2007: 235-6). The extant literature and practice alike argue that both classical and relational contracts are incomplete (Howard et al, 2018;Grandori, 2010;Williamson, 1999).…”

“…Grandori and Furlotti, 2006). To our knowledge, the issue of contract clauses combination remains unanswered because no study has hitherto tested combinations of contract clauses (as emphasized by, for instance, Howard et al, 2018;Hartmann et al, 2014;March et al, 2000). In other words, research needs to test the combinations of contracts, which amounts to testing the combinations of clauses.…”

“…Contracts providing legal governance for projects are often formulated in environments involving highly complex relationships; environments in which time and cost pressures do not allow relational mechanisms to evolve (Broekhuis and Scholten, 2018;Curlee and Gordon, 2011;Oltra et al, 2005). Thus, contract incompleteness and complementarity need to be investigated in project contracts in other ways (Howard et al, 2018;Sumo et al, 2016;Kalkancı et al, 2014;Roehrich and Lewis, 2014). Accordingly, the following research question was posed: What combination (or combinations) of contract clauses can lead to high operational performance in projects?…”

Governing and (re)producing project governance

“…However, empirical evidence is rather contradictory in terms of whether contractual and relational governance mechanisms act as substitutes or complements. Only recently have scholars started to conceptually and empirically explore the dynamic interplay of governance mechanisms and the materialization of their idiosyncratic relations over time (Cao & Lumineau, 2015;Howard, Roehrich, Lewis, & Squire, 2017;Huber et al, 2013).…”