Linking power, risk, and governance: a survey research in new product development relationships

Abstract

PurposeInter‐organizational arrangements are increasingly playing an important role in new product development (NPD). This article aims to investigate the links among power, risk, and governance in these kinds of relationships.Design/methodology/approachThe authors investigated the links based on the data collected from 112 respondents representing 112 different NPD relationships.FindingsThe results of structural equation modeling revealed that, in the situation where coercive power is imbalanced between partner firms, the weaker partner perceives relational risk while imbalances in non‐coercive power do not influence relational risk perception significantly. The results also showed that relational risk perception is strongly associated with governance modes in such a way that negatively influences trust and the norm of information sharing, and positively affects vertical control, respectively. Further investigations revealed that the influence of power bases on governance modes was mediated through the relational risk perception.Originality/valueThis article contributes to a better appreciation of the factors that account for important determinants of opportunistic behavior of partner firms (i.e. power asymmetries) and governance modes that are available for companies in order to impede relational risks.