Dependence |
Need for formal contractual governance sophistication; the parties are relevant in determining the governance structure. |
Poppo and Zenger (2002)Poppo and Zenger, 2002 Poppo, L., & Zenger, T. (2002). Do formal contracts and relational governance function as substitutes or complements?. Strategic Management Journal, 23, 707-725., Schepker et al. (2014)Schepker et al., 2014 Schepker, D. J., Oh, W., Martynov, A., & Poppo, L. (2014). The many futures of contracts: Moving beyond structure and safeguarding to coordination and adaptation. Journal of Management, 40(1), 193-225.
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Uncertainty (task and environmental) |
Incomplete contracts; need for relationship coordination and adaptation, relational governance becomes relevant. Still, environmental uncertainty results in less complex contracts. |
Artz and Bush (2000)Artz and Bush, 2000 Artz, K. W., & Bush, T. H. (2000). Asset specificity, uncertainty and relational norms: An examination of coordination costs in collaborative strategic alliances. Journal of Economic Behavior and Organization, 41, 337-362., Cannon et al., 2000Cannon et al., 2000 Cannon, J., Achrol, R., & Gunslach, G. (2000). Contracts, norms, and plural form governance. Journal of Academy of Marketing Science, 28(2), 180-194., Crocker and Reynolds (1993)Crocker and Reynolds, 1993 Crocker, K. J., & Reynolds, K. J. (1993). The efficiency of incomplete contracts: An empirical analysis of air force engine procurement. RAND Journal of Economics, 24(1), 126-146., Williamson (1979)Williamson, 1979 Williamson, O. (1979). Transaction-cost economics: The governance of contractual relations. Journal of Law and Economics, 22(2), 233-261., Zhou et al. (2008)Zhou et al., 2008 Zhou, K., Poppo, L., & Yang, Z. (2008). Relational ties or customized contracts? An examination of alternative governance. Journal of International Business Studies, 39, 526-534.
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Difficulty in measuring performance |
More contractual sophistication; certain contractual flexibility. In case of expectancy of relationship continuity, the relational clauses contribute to the reduction of risks arising due to the difficulty in measuring performance. |
Mouzas and Blois (2013)Mouzas and Blois, 2013 Mouzas, S., & Blois, K. (2013). Contract research today: Where do we stand?. Industrial Marketing Management, 42, 1057-1062., Poppo and Zenger (2002)Poppo and Zenger, 2002 Poppo, L., & Zenger, T. (2002). Do formal contracts and relational governance function as substitutes or complements?. Strategic Management Journal, 23, 707-725., Poppo et al. (2008)Poppo et al., 2008 Poppo, L., Zhou, K. Z., & Zenger, T. R. (2008). Examining the conditional limits of relational governance: Specialized assets, performance ambiguity, and long-standing ties. Journal of Management Sciences, 45(7), 1195-1216.
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Asset specificity |
Need for contractual governance sophistication; more complex contracts. Stricter contractual provisions. Contracts focused on safeguarding the parties. More contractual detailing would tend to reduce risk, decreasing the need of reliability. |
Arranz and de Arroyabe (2012)Arranz and de Arroyabe, 2012 Arranz, N., & de Arroyabe, J. C. F. (2012). Effect of formal contracts, relational norms and trust on performance of joint research and development projects. British Journal of Management, 23, 575-588., Crocker and Reynolds (1993)Crocker and Reynolds, 1993 Crocker, K. J., & Reynolds, K. J. (1993). The efficiency of incomplete contracts: An empirical analysis of air force engine procurement. RAND Journal of Economics, 24(1), 126-146., Joskow (1988)Joskow, 1988 Joskow, P. L. (1988). Asset specificity and the structure of vertical relationships: Empirical evidences. Journal of Law, Economics and Organization, 4(1), 95-117., Lui et al. (2009)Lui et al., 2009 Lui, S. S., Wong, Y., & Liu, W. (2009). Asset specificity roles in interfirm cooperation: Reducing opportunistic behavior or increasing cooperative behavior. Journal of Business Research, 62, 1214-1219., Malhotra and Munigham (2002)Malhotra and Munigham, 2002 Malhotra, D., & Munigham, J. K. (2002). The effects of contracts on interpersonal trust. Administrative Science Quarterly, 47, 534-559., Reuer and Arino (2007)Reuer and Arino, 2007 Reuer, J. J., & Arino, A. (2007). Strategic alliance contracts: Dimensions and determinants of contractual complexity. Strategic Management Journal, 28, 313-330., Riordan and Williamson (1985)Riordan and Williamson, 1985 Riordan, M. H., & Williamson, O. E. (1985). Asset specificity and economic organization. International Journal of Industrial Organization, 3(4), 365-378., Schepker et al. (2014)Schepker et al., 2014 Schepker, D. J., Oh, W., Martynov, A., & Poppo, L. (2014). The many futures of contracts: Moving beyond structure and safeguarding to coordination and adaptation. Journal of Management, 40(1), 193-225., Williamson (1979)Williamson, 1979 Williamson, O. (1979). Transaction-cost economics: The governance of contractual relations. Journal of Law and Economics, 22(2), 233-261., Zhou and Poppo (2010)Zhou and Poppo, 2010 Zhou, K., & Poppo, L. (2010). Exchange hazards, relational reliability, and contracts in China: The contingent role of legal enforceability. Journal of International Business Studies, 41, 861-881.
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Transaction frequency |
The greater the relationship frequency, the more information about the other party, and the less relevant the formal contract is. The lower the frequency and the less information about the other party you have, the more relevance the formal contract has. |
Poppo and Zenger (2002)Poppo and Zenger, 2002 Poppo, L., & Zenger, T. (2002). Do formal contracts and relational governance function as substitutes or complements?. Strategic Management Journal, 23, 707-725.
Williamson (1985)Williamson, 1985 Williamson, O. (1985). The economic institutions of capitalism: Firms, markets, relational contracting. Nova Iorque: The Free Press.
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Duration of relationship |
The longer the relationship, the more relational governance is used in conducting inter-organizational relationships, due to the reduction of uncertainty and increase in reliability between the parties. In the use of formal governance, greater contract specification is possible. The less history between the parties, the less the tendency to develop relational practices and norms. |
Crocker and Reynolds (1993)Crocker and Reynolds, 1993 Crocker, K. J., & Reynolds, K. J. (1993). The efficiency of incomplete contracts: An empirical analysis of air force engine procurement. RAND Journal of Economics, 24(1), 126-146., Luo (2002)Luo, 2002 Luo, Y. (2002). Contract, cooperation, and performance in international joint ventures. Strategic Management Journal, 23, 903-919., Poppo and Zenger (2002)Poppo and Zenger, 2002 Poppo, L., & Zenger, T. (2002). Do formal contracts and relational governance function as substitutes or complements?. Strategic Management Journal, 23, 707-725., Poppo et al. (2008)Poppo et al., 2008 Poppo, L., Zhou, K. Z., & Zenger, T. R. (2008). Examining the conditional limits of relational governance: Specialized assets, performance ambiguity, and long-standing ties. Journal of Management Sciences, 45(7), 1195-1216., Tsamenyi et al. (2013)Tsamenyi et al., 2013 Tsamenyi, M., Qureshi, A. Z., & Yazdifar, H. (2013). The contract, accounting and trust: A case study of an international joint venture (IJV) in the United Arab Emirates (UAE). Accounting Forum, 37, 182-195.
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Expectation of relationship continuity |
The expectancy of relationship continuity decreases the short-term horizon of the parties, thereby also decreasing the tendency of opportunistic behaviors, and having greater relational presence. |
Poppo and Zenger (2002)Poppo and Zenger, 2002 Poppo, L., & Zenger, T. (2002). Do formal contracts and relational governance function as substitutes or complements?. Strategic Management Journal, 23, 707-725., Williamson (1993)Williamson, 1993 Williamson, O. (1993). Calculativeness, trust, and economic organization. Journal of Law and Economics, 36, 453-486.
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