Governance theories, such as transaction cost economics, argue that systematic deviations from an attribute-governance alignment should influence performance. This article investigates the ...performance implications of contract specificity for the procurement of information technology products. The authors argue that parties choose a level of contract specificity that economizes on both the ex ante contracting costs and the ex post transaction costs and that deviations between the observed and the predicted levels of contract specificity are an important determinant of these transaction costs. The authors test the hypotheses using a comprehensive archival data set of information technology transactions and employ a two-step estimation procedure. First, they estimate the "predicted" level of contract specificity, which accounts for key transactional attributes. Second, they study the consequences of deviating from this predicted level of contractual specificity. The results provide the first explicit demonstration of the trade-off between ex ante contracting costs and ex post transaction problems and suggest that parties need to economize jointly on these costs when choosing the governance form. PUBLICATION ABSTRACT
Many marketing transactions between buyers and suppliers involve short-term collaborations or so-called temporary organizations. Such organizations have considerable value-creation potential but also ...face challenges, as evidenced by their mixed performance records. One particular challenge involves relationship governance, and in this respect, temporary organizations represent a conundrum: On the one hand, they pose significant governance problems due to the need to manage numerous independent specialists under time constraints. On the other hand, temporary organizations lack the inherent governance properties of other organizational forms such as permanent organizations. The authors conduct an empirical study of 429 business-to-business construction projects designed to answer two specific questions: First, how are particular selection and pricing strategies deployed in response to monitoring and coordination problems? Second, does the joint alignment between the two mechanisms and their respective attributes help mitigate cost overruns? The authors follow a formal hypothesis test with a series of in-depth interviews to explore and to gain insight into the validity of the key constructs, explanatory mechanisms, and outcomes. Managerially, the authors answer the long-standing question of how to mobilize a temporary organization. Theoretically, they develop an augmented “discriminating alignment” heuristic for relationship management involving multiple governance mechanisms and attributes.
Relationship Governance Dynamics Wathne, Kenneth H.; Heide, Jan B.; Mooi, Erik A. ...
Journal of marketing research,
10/2018, Letnik:
55, Številka:
5
Journal Article
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The article studies interfirm governance in the context of supplier–reseller relationships. Using a longitudinal study, the authors examine the roles of supplier selection efforts and mutual specific ...investments with respect to (1) motivating a supplier to make incremental investments and (2) safeguarding these investments from supplier ex post transaction costs. The authors also examine the joint effects of selection efforts and mutual investments on supplier ex post transaction costs. From a practical standpoint, the findings suggest guidelines for channel strategy. Theoretically, they provide new insights into relationship dynamics, including evidence regarding the effects of a firm's governance choices over time.
Many new products and processes originate from projects. In two studies, the authors consider how a project's organizational design, as captured by its particular task configuration, impacts its ...ability to promote product and process innovation. Study 1 involves an analysis of panel data spanning 2001 through 2015 and involving 429 business-to-business projects in the construction industry. The authors test hypotheses regarding the role of project size, subcontractor diversity, and task configuration on product and process innovation. Their empirical tests show a pattern of nuanced effects on the two innovation types. A project's task configuration, as reflected in the general contractor's participation in project tasks, plays a coordination role that helps unlock a positive effect of project size on product innovation. At the same time, such participation impedes process innovation due to subcontractor concerns about information leakage. Study 2 bolsters the first study through a survey of 230 subcontractors in the U.S. construction industry to show how leakage concerns arise, their outcomes, and how they are mitigated. The authors also bolster their central study through (1) interviews with professional construction managers and (2) survey evidence across five industries. They draw on their findings to develop implications for innovation management, business-to-business marketing, and marketing organization.
Political behavior pervades strategic decision-making, often damaging decision quality and undermining organizational performance. However, little is currently known about how top management teams ...(TMTs) cope with such behavior. To address this shortfall, we draw on the upper echelons literature to advance a contingent account of the factors that differentiate well-functioning and dysfunctional TMTs. Focusing on the psychological context surrounding the TMT, we theorize that cognitive consensus, power decentralization, and behavioral integration are key generative mechanisms that enable TMTs to countermand the potentially deleterious consequences of political behavior. We corroborate our theorizing using a field study of 117 strategic decisions, drawn from multiple TMT informants and secondary databases. Confirming the majority of our hypotheses, our findings indicate that behaviorally integrated and decentralized TMTs are better equipped to attenuate the potentially damaging effects of organizational politics, thereby safeguarding the quality of their decision processes.
This study considers the influence of contracts on enforcement and the subsequent performance impact of aligned and misaligned enforcement. We define enforcement as a corrective action aimed at ...remedying problems occurring in the transaction. First we explain the role of contracts and show that at the component level, contracts can both increase and decrease enforcement. Building on an alignment perspective and accounting for the endogeneity of enforcement, we use these contractual components and variables related to enforcement to predict the occurrence of enforcement. We use such predictions to show that aligned enforcement results in higher performance. We also show that the performance impact of misaligned enforcement is relatively greater for transactions where enforcement is not expected. We conduct the study using a unique dataset reporting on 971 business transactions across a wide range of industries.
Rapid innovation, shortened product life cycles and fierce competition place great pressures on top managers to make fast strategic decisions. However, a key question in strategic decision‐making ...research is whether decision speed helps or harms decision quality, and there is a shortage of theory and evidence concerning the consequences of decision speed across different environmental contexts. We develop new theory by considering the effects of decision speed on decision quality under conditions of environmental munificence, under conditions of dynamism, and under the joint conditions of munificence and dynamism. We test our theory through analysis of multi‐informant survey data drawn from top management teams and secondary databases, in 117 UK firms. Our findings demonstrate that munificence is the central generative mechanism which moderates the relationship between decision speed and decision quality, and markedly alters the previously theorized positive effects of decision speed in dynamic contexts.
This paper examines the mechanism through which HRM practices promote firms' innovation and how this relationship differs across cultures. Based on a data-set of 3755 firms from 13 countries, this ...study finds that in most countries employee-oriented HRM practices that dedicate attention to employee needs and interests are positively related to firms' market-sensing capability, which is the capability to continuously learn about their markets. Market-sensing capability is in turn significantly related to firms' product and process innovation. Cross-country examination further reveals that in high power distance countries employee-oriented HRM practices have a stronger positive effect than in low power distance countries. This study highlights the importance of HRM in supporting the use organizations make of external knowledge, which is critical for organizational innovation. Bringing an external perspective, we complement existing literature that emphasizes the role of HRM in integrating internal knowledge. Our cross-cultural findings contribute to the understanding of cultural contingency in HRM theories.
How do buyer–supplier relationships affect innovation? This study suggests that the relational exchange norms of flexibility, information sharing, and solidarity (the bright side) encourage buyer ...innovation. However, negative (dark side) aspects of relationships with suppliers—loss of supplier objectivity, increasing buyer expectations, and supplier opportunism—may accompany the bright side and subsequently reduce buyer innovation. The study reports on the simultaneous effects of the bright and dark sides on innovation and the resultant effect on supplier performance as evaluated from the buyer's perspective. Using data from the travel and computer industry, regression models reveal that the bright side encourages buyer innovation. Buyers reciprocate this support by enhancing their supplier evaluations. The findings indicate that rising buyer expectations—supposedly a dark side of relational exchange—encourage innovation, while loss of supplier objectivity reduces relationship performance. These findings imply that the bright and dark sides are not mutually exclusive dimensions of good versus bad behavior.
Previous work in fields such as marketing has documented that the ability to contractually govern exchanges is contingent on a potential to legally enforce contracts. However, some contractual ...governance is not legally enforceable. Casual observation, particularly in high-tech industries, also suggests that weaving or “braiding” legally enforceable contracting with non-legally enforceable contracting is a preferred practice. An important, but hitherto unanswered, question is why parties devise such “braided” contracts. We draw on the legal concept of “definiteness” to delineate legally enforceable from non-legally enforceable contracting (highly unlikely to be enforced through courts) and we take some steps to understand why exchange parties choose to include these two modes of contracting. Based on the legal literature, which articulates that “braiding” occurs in response to heightened uncertainty, and insights from the extant contract and governance theory, we focus on three different forms of uncertainty (i.e., technological, legal, and partner uncertainties). We show, using a unique longitudinal database of 203 high-tech licensing agreements, and analyzed by multivariate Probit regression, that these uncertainties differentially affect the inclusion of (non-)legally enforceable contracting. Further, we demonstrate that the effects of uncertainties to a licensing exchange are conditional on the licensee's general licensing experience rather than partner-specific experience.
•Contractual governance does not equate to legally enforceable contracting.•Legally and non-legally enforceable contracting have different drivers.•Contingent on experience, early-stage and international licensing make some legally enforceable contracting more likely.•Contingent on experience, early-stage and international licensing make some non-legally enforceable contracting more likely.
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