Mobilizing the Temporary Organization: The Governance Roles of Selection and Pricing

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.