Abstract
Focusing on business networks in which firms from different countries are embedded, the present paper is interested in a better understanding of how the formal and social governance mechanisms are related. In particular, the paper focuses on the construction process of network governance, recognizing the contract as the main coordination and control mechanism for stabilizing the network organizations. This paper aims to examine the process that might lead to the formulation of a contract between firms, comparing two different theories: Actor-Network Theory (ANT) and Pragmatic Constructivism (PC). ANT offers an account of how the difference in the parties’ interests was a key point in problematizing the introduction of the contract as an inscription that mobilizes the actors’ interests. However, ANT does not offer sufficient reasons to explain why the translation fails in a cross-national network where different national values may be relevant. Then, the use of PC points out a missed integration between national values, considering the contract a way of thinking. The case study describes the construction process of a cross-cultural network between an Italian, an Albanian and a Kosovar firm operating in the artistic lightening system business. The evidence showed a negative nexus between informal and formal mechanisms of governance
Highlights
Several contributions have recognized the relevance of using informal social systems and formal contractual relationship in network governance coordination (Chua & Mahama, 2007; Håkansson & Lind, 2004; Mahama & Chua, 2016; Mouritsen & Thrane, 2006; van Veen-Dirks & Verdaasdonk, 2009), highlighting that they could be substitutive or complementary (Argyres & Mayer, 200; Faems et al, 2008; Guerard et al, 2013; Poppo & Zenger, 2002)
This paper aims to examine the process that might lead to the formulation of a contract between firms, comparing two different theories: ActorNetwork Theory (ANT) and Pragmatic Constructivism (PC)
Following a relational perspective based on actor-network theory and on the performativity thesis, Minnaar et al (2017) examined a case of outsourcing relations whose findings were described by the authors as follows, “touching upon how the contract and the control structures were shaped, the study was focused on how these entities perform in and change the interfirm relationship, and on how they are constitutive of this relationship” (p. 39)
Summary
Several contributions have recognized the relevance of using informal social systems and formal contractual relationship in network governance coordination (Chua & Mahama, 2007; Håkansson & Lind, 2004; Mahama & Chua, 2016; Mouritsen & Thrane, 2006; van Veen-Dirks & Verdaasdonk, 2009), highlighting that they could be substitutive or complementary (Argyres & Mayer, 200; Faems et al, 2008; Guerard et al, 2013; Poppo & Zenger, 2002). Social mechanisms, as trust, could lead to an increase of commitment between partners (Bachmann & Inkpen, 2011; Child & Mollering, 2003). These mechanisms may develop over time through learning processes between partners, making the relationship more durable and encouraging interactions and promotion of each other’s interests (Johanson & Mattsson, 1987). The present study, instead, considers that the process of objectifying contract and control structures deserves a deeper understanding, especially in cross-national inter-firm relationships, where a difference in national values may play an important role in the building of trust and contractual arrangements. In objectifying the contract and control structures, the trust may play a constructive role and may be the consequence of common values, shared between the partners
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