An attempt to classify plural forms of governance

Nunes, Rubens

doi:10.1016/j.rauspm.2017.12.004

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Original Articles • RAUSP Manag. J. 53 (1) • Jan-Mar 2018 • https://doi.org/10.1016/j.rauspm.2017.12.004 copy

An attempt to classify plural forms of governance

Authorship SCIMAGO INSTITUTIONS RANKINGS

Abstract

Plural governance structures arise when a firm conduct the same transaction simultaneously under more than one governance structure. The article presents a classification of cases of plural governance structures, based on the rationale behind the choice of a combination of simple governance structures. The method was the comparison of cases reported in the literature. Four main sets of cases occurring plural forms were found, in which the governance structures are complementary; determined by resources available to firms; explained the diversity of contract makers; and related to the history of the firm. Various theoretical lenses are useful to analyze the phenomenon of plural, particularly Transaction Costs Economics, Resource Based View, and Industrial Organization, setting then the issue of the adequacy of theories to the concrete cases.

Keywords:
Structures of governance; Plural forms; Transaction costs

Year	Author	Country	Industry	Main findings
1992	Gallini and LutzGallini, N. T., & Lutz, N. E. (1992). Dual distribution and royalty fees in franchising. Economics & Organization, 8(3), 471-501.	Theoretical model	Franchises	The plural form allows the capture and signaling of private information regarding the demand for new products. The share of own stores decline as the private information became common.
1995	Dutta, Bergen, Heide, & JohnDutta, S., Bergen, M., Heide, J. B., & John, G. (1995). Understanding dual distribution: The case of reps and house accounts. The Journal of Law, Economics & Organization, 11(1), 189-204.	United States	Electric and mechanic	Risk of dependence and difficulty of assessing the performance of sales representatives induce industries to vertically integrate part of the sales force.
1996	WolakWolak, F. A. (1996). Why do firms simultaneously purchase in spot and contract markets? Evidence from the United States steam coal market. In D. Martimort (Ed.), Agricultural markets (contributions to economic analysis, Vol. 234) (pp. 109–168). Emerald Group Publishing Limited.	United States	Thermoelectric power	Transactions in the spot coal market mitigate the risks of opportunistic behavior for both parties involved in the supply of coal to the thermoelectric plants.
1997	AzevedoAzevedo, P. F. (1997). Integração Vertical no Sistema Agroindustrial Citrícola: Instrumento de barganha ou de eficiência. Revista de Economia Aplicada, São Paulo, 1(3), 373-391.	Brazil	Frozen and concentrated orange juice	The vertical integration of part of the orange demanded by the processing industry reduces the bargaining power of citrus growers. The locational and temporal specificity of orchards influences the distribution of the quasi-rent.
1997	BradachBradach, J. L. (1997). Using the plural form in the management of restaurant chains. Administrative Science Quarterly, 42, 276-303.	United States	Fast-food (franchises)	Plural forms provide a benchmark between proprietary and franchised stores, and facilitate the adaptation of the entire system - mutual learning improves the innovation process.
1999	Lewin-SolomonsLewin-Solomons, S. B. (1999). Innovation and authority in franchise systems: An empirical explanation of the plural form. Working paper 0015. Cambridge University, Department of Applied Economics.	United States	Fast-food (franchises)	The adoption of plural forms facilitates the acceptance of innovations proposed by the franchisor and avoids the imposition of inefficient innovations. Own stores reduce the information asymmetry between franchisor and franchisee.
2011	MeisebergMeiseberg, B. (2011). The prevalence and performance impact of synergies in dual distribution networks. In Paper presented at the Emnet Conference.	Germany	Retail and services (franchises)	Synergies provided by franchised stores are important determinants in the choice of governance mix, facilitating the uniformity of products and services, and the adaptability of the franchise system.
2013	Puranam, Gulaty, and BhattacharyaPuranam, P., Gulati, R., & Bhattacharya, S. (2013). How much to make and how much to buy? An analysis of optimal plural sourcing strategies. Strategic Management Journal, 34(10), 1145-1161.	Theoretical model		The supply through plural forms is optimal when the complementarity effects and/or firm constraints are strong face the risks involved in the transactions.
2013	Feltre and PaulilloFeltre, C., & Paulillo, L. F. O. (2013). A pluralidade nas transações de cana-de-açúcar no Oeste Paulista. Revista de Administração Contemporânea, 17(6), .	State of São Paulo, Brazil	Sugarcane	Different compositions of governance structures have been found in the same industry and region. Benefits of plural forms: reduction of the vulnerability of the plant and opening of information channel.

Year	Author	Country	Industry	Main findings
1968	Oxenfeldt and KellyOxenfeldt, A. R., & Kelly, A. O. (1968). Will successful franchise systems ultimately become wholly-owned chains? Journal of Retailing, 44, 69-83.	Theoretical model	Franchises	Firms opt for the contractual modalities of franchising due to the restriction of resources (including financial, human and physical) experienced at the beginning of their activities.
1997	BradachBradach, J. L. (1997). Using the plural form in the management of restaurant chains. Administrative Science Quarterly, 42, 276-303.	United States	Franchises (fast-food)	The franchise network can be expanded quickly without being deeply affected by resource constraints.
2006	Rothaermel, Hitt, and JobeRothaermel, F. T., Hitt, M. A., & Jobe, L. A. (2006). Balancing vertical integration and strategic outsourcing: Effects on product portfolio, product success, and firm performance. Strategic Management Journal, 27(11), 1033-1056.	World	Microcomputers	Plural forms enable the firm to have access to several sources of knowledge, to integrate tacit knowledge and complementary assets controlled by other firms.
2013	Feltre and PaulilloFeltre, C., & Paulillo, L. F. O. (2013). A pluralidade nas transações de cana-de-açúcar no Oeste Paulista. Revista de Administração Contemporânea, 17(6), .	State of São Paulo - Brazil	Sugarcane	In a sugar mill, vertically integrated production of raw materials, while able to reduce uncertainty in supply, was not adopted because it would require the immobilization of substantial financial resources.
2013	Puranam, Gulaty, and BhattacharyaPuranam, P., Gulati, R., & Bhattacharya, S. (2013). How much to make and how much to buy? An analysis of optimal plural sourcing strategies. Strategic Management Journal, 34(10), 1145-1161.	Theoretical model	Nonspecific	Supply through plural forms is optimal when the complementarity effects and/or effects of resources constraints are strong and offset the risks involved in the transactions.
2014	Miranda and ChaddadMiranda, B. V., & Chaddad, F. R. (2014). Explaining organizational diversity in emerging industries: the role of capabilities. Journal on Chain and Network Science, 14(3), 171-188.	Missouri - United States	Wine	The alignment between transaction characteristics and governance structures is underpinned by appropriate sets of resources and capabilities. Differences in skills help to explain organizational diversity.
2014	Nunes and MakishiNunes, R., & Makishi, F. (2014). O Setor de Cachaça: O Caso da Companhia Müller de Bebidas e da Indústria de Bebidas Pirassununga. In C. Ménard (Org.), S. Saes (Org.), V. L. S. Silva (Org.), & E. Raynauld (Org.), Economia das Organizações (1st ed.). São Paulo: Atlas.	State of São Paulo - Brazil	Cachaça	The authors identified a case of a producer and bottler of cachaça that acquires third-party raw beverages, since the demand exceeds the capacity of its own distillation columns.

Year	Author	Country	Industry	Main findings
1999	MarinoMarino, M. K. (1999). Análise da evolução da relação contratual entre produtor e agroindústria citrícola após a extinção do contrato padrão. In II workshop Brasileiro de Gestão de Sistemas Agroalimentares.	State of São Paulo - Brazil	Citrus growers	The size of the citrus grower influences the duration of orange supply contracts. Following the ban on the standard contract, a wide range of contracts emerged.
2005	MenezesMenezes, R. G. F. de. (2005). Percepção de risco e escolha dos contratos nas transações de venda do café (Dissertação de Mestrado). Universidade de São Paulo.	State of Minas Gerais - Brazil	Coffee growers	The attitude of the rural producer to risk is one of the determinants of the choice between contracts and the spot market.
2005	Souza Filho and PaulilloSouza Filho, H. M., & Paulillo, L. F. (2005). Public policies, transaction costs and access to commodity chain markets. Working paper of the Food Agricultural Organization – United Nations Organization.	State of São Paulo - Brazil	Citrus growers	The size of the citrus grower influences the choice of marketing channels and governance instruments in the sale of the orange.
2014	Hansen, Owan, Pan, and SugawaraHansen, Z., Owan, H., Pan, J., & Sugawara, S. (2014). The impact of group contract and governance structure on performance – Evidence from college classroom. The Journal of Law, Economics, & Organization, 30(3), 463-492.	United States	Experiment with students	Student's personal characteristics influence the choice of mechanisms of governance to prevent opportunistic behavior in academic teams.

Year	Author	Country	Industry	Main findings
2005	Mizumoto and ZylbersztajnMizumoto, F. M., & Zylbersztajn, D. (2005). Estratégia de Canais de Distribuição Múltiplos: Casos na Avicultura de Postura Brasileira. São Paulo: Seminários em Administração.	State of São Paulo - Brazil	Eggs	The authors have identified cases where distribution through wholesalers perpetuates over time, with no apparent advantages over relational contracts.
2014	Feltre, Paulillo, and Souza FilhoFeltre, C., Paulillo, L. F. O. & Souza Filho, H. M. (2014). O Setor Sucroalcooleiro da Região Centro-Sul do Brasil: os Casos das Usinas São Manoel-SP e Adecoagro-MS. In Ménard, C. (Org.), Saes, S. (Org.), Silva, V. L. S. (Org.), & Raynauld, E. (Org.). (2014). Economia das Organizações (1st ed.). São Paulo: Atlas.	State of São Paulo - Brazil	Sugarcane	The paper reports the case of a sugarcane production plant, which was acquired at the beginning of the group's business history, without any evident connection with the company's sugar and alcohol plant in a different region.
2014	Pongeluppe et al.Pongeluppe, L. S., Moron, C. R., & Lazzarinni, S. G. (2014). O Setor de Papel e Celulose: O Caso das Empresas Klabin e Grupo Orsa. In C. Ménard (Org.), S. Saes (Org.), V. L. S. Silva (Org.), & E. Raynauld (Org.), Economia das Organizações (1st ed.). São Paulo: Atlas.	Brazil	Pulp and paper	The firm has contracts with small producers, although there are no cost advantages or synergies with vertically integrated production.
2014	Smith et al.Smith, M. S. J., Martnelli, D. P., & Machado Neto, J. A. (2014). O setor de Couro para Calçados: O caso das Empresas Doctor Pé e Carmen Steffens. In C. Ménard (Org.), S. Saes (Org.), V. L. S. Silva (Org.), & E. Raynauld (Org.), Economia das Organizações (1st ed.). São Paulo: Atlas.	State of São Paulo - Brazil	Rubber for footwear	The authors have identified the practice of footwear firms that eventually buy rubber on advantageous terms, from tanneries or footwear factories facing liquidity problems.

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[1] * Correspondence to: Avenida Duque de Caxias, 225, CEP 13635-900 Pirassununga, SP, Brazil. rnunes@usp.br