The determinants of relational governance and performance: How to manage business relationships?

Abstract

It is the aim of this study to assess the influence of the determinants of the transaction, dyadic, and business environment level on relational governance and ultimately performance. We build an integrated framework for relationship management drawing from literature of transaction cost economics, marketing channels, and business networks. Dutch suppliers of potted plant and flower products ( N=174) provided data for the empirical analysis. Our results show that joint planning, one of the constructs of relational governance, is positively influenced by interorganizational trust, information obtained from the network, physical transaction-specific investments (TSIs), and by fixed lines as the exchange mode. Joint problem solving, the other construct of the governance, is solely influenced by the two dimensions of trust. These two constructs of relational governance effect positively our performance measures. Managers should consider carefully each of the determinants of relational governance for the management of a relationship. As shown in our study, the success is dependent on some of the determinants of the three analytical levels of our integrated framework.