Informal Governance Mechanisms Research Articles

A Sustainable Development Perspective on Cooperative Culture, Knowledge Flow, and Innovation Network Governance Performance

The contemporary sustainable development imperative sees enterprises seeking competitive advantages in innovation networks, the distinguishing features of which are continuous interaction and knowledge flow between participants. As an informal governance mechanism, cooperative culture influences the stability and durability of the members’ interactions. Knowledge flow is a core network activity that is highly dependent on the cultural environment. The purpose of this paper is to explore whether innovation governance performance is affected by cooperative culture and knowledge flow. How do they play an influential role? We use structural equation modeling (SEM) to analyze the linear relationships among the three variables: cooperative culture, knowledge flow, and governance performance. The results suggest that knowledge flow has a mediating effect on the relationship between cooperative culture and governance performance. We also use fuzzy set qualitative comparative analysis (fsQCA) to explore how cooperative culture and knowledge flow combined can influence governance performance. The results indicate that different combinations of cooperative culture and knowledge flow lead to different levels of governance performance, with two paths leading to high governance performance, which are fit creation-oriented and compatible sharing-oriented paths. These findings have significant implications for improving innovation governance performance and their sustainable development.

Examining Governance in Hospital Operations: The Effects of Trust and Physician Employment in Achieving Efficiency and Patient Satisfaction

ABSTRACTGovernance can be challenging in healthcare operations, particularity when attending physicians lack financial relationships with the hospital. In the absence of formal incentive system mechanisms, it may be possible to use informal relational governance to synchronize activities. We use Relational Resource Based View and Agency theory to conceptualize trust (an informal governance mechanism) and physician employment (a formal governance mechanism) as moderators of key operational phenomena in hospitals. Specifically, we test the moderated effects of trust and physician employment on the relationships among lean strategy, process integration, operational efficiency, and patient satisfaction. Analysis of 583 data points from 302 acute care U.S. hospitals reveals that lean strategy impacts process integration, and process integration impacts operational efficiency and patient satisfaction. Trust enhances the positive relationship between lean strategy and process integration such that the relationship is stronger when physicians are employed by the hospital and weaker when physicians are not employed by the hospital. A post hoc analysis reveals that physician employment also influences how process integration affects patient satisfaction. Our results explain the key roles of trust, physician employment, and integration in linking strategy and outcomes. Practitioner interviews validate and help to tease out the implications of our findings. This study contributes important insights for researchers, executives, and policy makers interested in governance and improvements in healthcare delivery.

Relational capability and strategic alliance portfolio configuration

PurposeThe purpose of this paper is to focus on evaluating relational capability regarding the configuration of a network of technological partners in Brazilian technology-based firms (TBFs).Design/methodology/approachThe data were collected using an online questionnaire made available to technology-based companies resident in Brazilian Technological Parks. A total of 73 companies responded. The data were analyzed using bivariate and multivariate statistical techniques and were processed using Statistical Package for Social Sciences software. The statistical tests included factor analysis, Cronbach’s α and multiple regression.FindingsThe paper shows that the strategic alliance portfolio is influenced by organizational learning, diversity of partners, governance structure, intensity of partnership relations and configuration. In particular, the portfolio of alliances with competence orientation is characterized by tacit knowledge exchanges and learning exploration, homogeneity of partners, informal governance mechanisms, strong bonds of trust and reciprocity with partners and low diversification of actors’ profiles, their attributions and the results obtained in the portfolio. Meanwhile, the characteristics of alliance portfolios with legitimacy orientation include explicit knowledge exchange and learning exploitation, heterogeneity of partners, formal governance mechanisms, weak bonds of trust and reciprocity with partners and high diversification of the profile of the actors, their attributions and the results obtained from the portfolio.Practical implicationsThe configuration of the alliance portfolio plays an important role in innovation. To stimulate the creation of new technological skills, the executive of a technology-based company from emerging countries such as China, Russia and India, can configure the portfolio of strategic alliances with more homogeneous partners in terms of profile and attribution. However, if this executive is challenged to seek legitimacy and complementary resources in these markets he can invest in the diversification of the strategic alliance portfolio, prioritizing partners with differentiated profiles and attributions.Originality/valueThe originality of the research lies in the adoption of a complementary and multidimensional theoretical prism, considering the relational capacity of TBFs in the configuration of alliances, both in the intra-firm and portfolio perspective. Furthermore, it was considered that the configuration of alliances can be based on both competence and legitimacy factors.

China–Africa Exports: Governance Through Mobility and Sojourning

ABSTRACTA centre for Asian and intercontinental immigration and export-oriented production, Guangzhou city is at the forefront of China’s global interactions. Based on ethnographic fieldwork, this article examines informal governance mechanisms that co-ordinate the circulation of goods and capital between China and Africa. The question addressed is: What roles do mobility and sojourning play in governing trade relations? The analysis is informed by research from three fields: economics scholarship on the trade–migration nexus, ethnographic studies of informal trans-border trade, and historical accounts of long-distance trade in pre-colonial and colonial eras. These traditions point to different ways in which the mobility of people and goods are interlinked. In the case of China–Africa interactions, the flow of goods has increased in tandem with the number of visits by African itinerant traders. The empirical discussion demonstrates that the emergence of intercontinental movements of goods and people between China and Africa was predicated on the brokering role played by African sojourners in Guangzhou. Of particular importance was informal hospitality and logistics infrastructure set up by Africans in the late 1990s, which subsequently evolved and adapted. This infrastructure has facilitated the mobility of people and goods and increased the pace at which trading capital circulates.

Tele-Coupling Energy Efficiency Polices in Europe: Showcasing the German Governance Arrangements

Climate change entails many situations of tele-coupling. We analyze an example in the field of European climate and energy policy. The EU aims at an almost full decarbonisation of its economy by 2050. Achieving this objective asks for transforming the energy sectors of EU Member States. These are responsible for 80% of carbon emissions. Further to this policy coupling, the EU transformation objectives have to be implemented by the Member States, regions and local actors. This proves especially complex in the field of energy efficiency. Here, a variety of policy instruments and actors are in place. In our contribution, we investigate in the question how multi-level governance arrangements in the energy efficiency field are designed. We focus on Germany as example for a federal state setting. Our review method comprises literature content analysis, primary sources, expert interviews and an in-depth screening of the German Sustainable Energy Action Plans. We find that formal vertical coordination has been successfully backed up by horizontal and especially informal governance mechanisms, leading to a model of polycentric governance. This model might serve as blueprint for other multi-level governance arrangements. Yet, we find that the “last mile” of this coordination still needs strengthening: Local actors need more active engaging and empowering to reap the full potential of the governance arrangements.

Formal and informal governance mechanisms in state-owned enterprises

PurposeThe purpose of this paper is to shed light on the formal and informal governance mechanisms of state-owned enterprises operating in a post-transitional economy of Poland.Design/methodology/approachThe study combines legal analysis of Polish regulations in force, review of literature on the Poland’s institutional legacy, and a statistical analysis, based on a data set of 204 management board members, 180 external supervisory board members, and 114 state officials supervising Polish SOEs in 2011.FindingsLegally designed relationships among the management board, supervisory board, and the state treasury, represented by the minister and ministry officials, constitute the key formal governance mechanisms in Polish SOEs. They are, however, complemented by relationships between SOEs and their stakeholders and distorted by other informal phenomena, including informal noninstitutional behavior, mechanisms grounded in cognitive and normative institutions, and perception of the relationship structure by the actors themselves. As a result, key corporate governance actors differ in their perception of governance influences upon SOEs.Practical implicationsThis study contributes to policymaking by helping authorities gain a better understanding of the governance challenges in SOEs.Originality/valueThis paper is one of the first and few empirical studies investigating the issue of formal and informal governance mechanisms in SOEs in post-transitional economies of CEE.

Asian Family Firms through Corporate Governance and Institutions: A Systematic Review of the Literature and Agenda for Future Research

AbstractAlthough the corporate governance model of Asian family firms has recently gained increased attention, it remains unclear how these firms’ corporate governance mechanisms (and their effectiveness) differ from those of family firms in the western world. Drawing upon a comparative institutional perspective, this paper systematically reviews 148 published articles in peer‐reviewed journals from 1980 to 2015. The aim of this paper is to contribute to the understanding of institutional complementarities that constitute informal governance mechanisms adopted by Asian family firms by considering a wider set of institutional factors (i.e. political environment, cultural values and social norms) embedded in the Asian context. The main findings suggest that: (i) given the lack of market‐supporting institutions and the presence of strong political control over Asian economies, family firms tend to cultivate political connections to respond to the failure of legal systems; (ii) Asian family firms still rely heavily on personal networks (e.g. guanxi) to reduce uncertainty, strengthen business ties, and gain access to external resources; and (iii) cultural values and social norms (e.g. ‘face’ saving, reputational concerns and adult child adoption) lead to functionally equivalent corporate governance mechanisms in Asian family firms. The downstream effects of such mechanisms are also discussed, and future research avenues are identified.

Governance Mechanisms and Family Firms

Governance, along with goals and resources, is a key determinant of the distinctiveness and heterogeneity of family firms. Our introduction discusses formal and informal governance mechanisms that emanate from inside and outside the firm and then reviews, integrates, and extends the contributions to this topic of the six articles and four commentaries in this special issue. Building and reflecting on these contributions, we suggest that although formal governance mechanisms inside family firms have unique characteristics, informal governance mechanisms may be equally important, and external mechanisms, both formal and informal, can also profoundly influence the behavior and performance of family firms.

Converging and Diverging Governance Mechanisms: The Role of (Dys)Function in Long‐term Inter‐organizational Relationships

AbstractThis paper explores the dynamic interplay of formal/informal governance mechanisms, in terms of functional and dysfunctional consequences for both sides of the dyad, in long‐term inter‐organizational relationships. Using two longitudinal cases of UK defence sector procurement (warship commissioning) we move beyond notions of complementarity and substitution in governance towards a more nuanced view where the governance mix of inter‐organizational relationships can be convergent or divergent. Our findings, showing that relationships can exhibit functional and dysfunctional behaviour simultaneously, lead us to conclude that mismatches in governance mechanisms can be positive as well as negative. In building a context‐dependent understanding of governance we both summarize the (dys)functions associated with formal and informal governance mechanisms and explore their impact on relationship exchange performance over time.

Converging and Diverging Governance Mechanisms: The Role of (Dys)Function in Long-Term Inter-Organizational Relationships

This paper explores the dynamic interplay of formal/informal governance mechanisms, in terms of functional and dysfunctional consequences for both sides of the dyad, in long-term inter-organizational relationships. Using two longitudinal cases of UK defence sector procurement (warship commissioning) we move beyond notions of complementarity and substitution in governance towards a more nuanced view where the governance mix of inter-organizational relationships can be convergent or divergent. Our findings, showing that relationships can exhibit functional and dysfunctional behavior simultaneously, lead us to conclude that mismatches in governance mechanisms can be positive as well as negative. In building a context dependent understanding of governance we both summarize the (dys)functions associated with formal and informal governance mechanisms, and explore their impact on relationship exchange performance over time.

“Pingado Dilemma”: Is formal contract sweet enough?

“Pingado” is a Brazilian beverage similar to cappuccino, macchiato. For a good “pingado”, coffee and milk should be of good quality. The formal institutions ensure the minimum attributes of quality for coffee and for milk in Brazil. However, in order to reach consumer desirable quality attributes for a differentiated “pingado” the transactions between farmers and agroindustry in quality-driven systems is likely to be conducted with hybrid forms. Thus, “Pingado Dilemma” involves the interactions between private and public institutions affect the combination of formal and informal governance mechanisms in transactions, in both chains, and involve complexities in terms of obligations to do and obligations to give in contract farming. This paper aims at analyzing the contract farming and the role of public and private institutions in transactions between farmers and agroindustry in Brazilian high-quality dairy and coffee chains. The research design used in this study is a case study based on multiple cases. The results indicate that while in dairy chain the private institutions reinforce public requirements (formal institutions), for the coffee sector, the role of private institutions is to establish and guarantee a new level of quality and differentiation. Interactions between private and public institutions affect the combination of formal and informal governance mechanisms in transactions, in both chains, and involve complexities in terms of obligations to do and obligations to give in contract farming.

Government role, governance mechanisms, and foreign partner opportunism in IJVs

Although institutional environments are important determinants of transaction costs in IJV management and performance, prior studies have paid limited attention to their impacts on partner opportunism. Building on institution theory, this study examines how the characteristics of the host country government affect IJV foreign partner opportunism. The authors posit that host government resource dependence and policy uncertainty increase foreign partner opportunism, and their impacts are constrained by formal (i.e., contract specificity) and informal (i.e., shared vision) governance mechanisms, respectively. The empirical results from a primary survey of IJVs show that contract specificity is effective in curtailing the effect of resource dependence on foreign partner opportunism. In contrast, shared vision weakens the effect of policy uncertainty on foreign partner opportunism. These findings provide important research and managerial implications on how to manage foreign partner opportunism in IJVs.

BUILDING THE EDUCATION REVOLUTION (BER) PROGRAM: GOVERNING THE IMPLEMENTATION OF PROJECT POLICIES

The project world is plagued with the interest and influence of diverse stakeholders shaping major project policy strategies. From deception, strategic manipulation to illusions of control, stakeholders using power and any other means to influence project strategies to achieve their desired ends: the tribalism and Machiavellianism of the project world. Governing tribalism or Machiavellianism especially at the front-end of projects is absolutely essential for project policy success. But how does a project manager shape a major project policy into success? The purpose of this research is to investigate tribalism and Machiavellianism and implement the necessary governance mechanisms to shape the implementation of project policies to optimize its success. This requires a deep understanding of human relational behavior. A case study approach was adopted that investigated Australia’s largest infrastructure program in history, the AUD $16.2 billion Building the Education Revolution (BER) program, which was plagued with power and politics and Machiavellianism of the project world. Factors such as collective institutional leadership with formal and informal governance mechanisms in rationalizing decisions were identified as essential aspects from the case study. It was also revealed that if the factors are implemented at the front-end of project policies and managed appropriately it could significantly limit the potentness of the tribal or Machiavelli plague and optimize the chances of project policy success.

Intermediary–user collaboration during the innovation implementation process

ABSTRACTThe innovation process is characterised by obstacles faced both by innovation suppliers during development and by users during implementation. Although the literature has underscored the importance of collaboration, how this process occurs during implementation remains understudied. In this study, a cross-case analysis of implementation processes showed that intermediary–user collaborations are characterised by different ways of matching users’ demands with intermediaries’ services, different formal and informal governance mechanisms, and different implementation outcomes. We propose that these characteristics are due to the specificities of implementation and to the particularities of the intermediary–user relationship. Additionally, there are particularities to intermediary–user collaborations that both facilitate implementation and create risks for its outcomes. We suggest that the link between the implementation outcome and the collaboration process affects user satisfaction, further investments in the technology, and learning. We conclude by drawing implications of the particularities of intermediary–user collaboration and implementation for theory, managers, and further research.

Institutional Constraints, Managerial Choices, and Conflicts in Public Sector Supply Chains

ABSTRACTIn this research, we compare the governance mechanisms that public sector managers and private sector managers leverage when responding to conflict in supply chain relationships. We find evidence that public sector managers are more likely than private sector managers to rely on written (formal) contract mechanisms, but that both public and private managers use relational (informal) governance mechanisms to similar extents. We also find that managers from both sectors perceive an improvement to the quality of the exchange relationship when a relational approach is emphasized in managing the conflict. Our research provides an important contribution to our understanding about the actions public managers take in dealing with supply chain conflicts and suggests potential policy alternatives to foster contracting efficiency and effectiveness.

The Effect of Institutional Environment and Governance Choices on IJV Foreign Partner Opportunism

Whereas institutional environments are important determinants of transaction costs in IJV management and performance, prior studies have paid limited attention on their impacts on partner opportunism. Building on the institution- based view, this study examines how host country government role affects IJV foreign partner opportunism. The authors posit that host government resource dependence and policy uncertainty increase foreign partner opportunism, and their impacts are differentially constrained by formal (i.e., contract specificity) and informal (i.e., shared vision) governance mechanisms. The results of 188 IJVs in China show that contract specificity, but not shared vision, is effective in curtailing the effect of resource dependency on foreign partner opportunism. In contrast, shared vision, but not contract specificity, weakens the effect of policy uncertainty on foreign partner opportunism. These findings provide important research and managerial implications on how to manage foreign partner opp...

The influence of informal governance mechanisms on knowledge integration within cross-functional project teams: a social capital perspective

This paper aims to explore the influence of informal governance mechanisms (IGMs) on knowledge integration (KI) within cross-functional project teams (CFPTs). In order to achieve this objective, we provide a novel and distinct perspective – social capital (SC). From this perspective, we analyse three dimensions of IGMs, that is, social interaction, social trust and social cognition. Propositions on underlying influencing mechanisms of the three dimensions on KI are then empirically tested using qualitative data from semi-structured interviews and quantitative data from questionnaire surveys. Results indicate that strong social ties, mutual trust and formation of shared vision facilitate KI within CFPTs. In addition, communication platforms are encouraged to provide more opportunities for team members to exchange knowledge. This paper provides suggestions for both knowledge governance theory and project management practice.

Governance Mechanisms Interplay in Resolving International Buyer-Supplier Relationship Conflicts

The research investigates the impact and interplay of formal and informal governance mechanisms in mitigating conflicts in international buyer-supplier relationships. The study deploys a multi-level analysis by focusing on boundary-spanners and inter-organizational relationships. An organizational information processing theory (OIPT) perspective is deployed to examine the individual roles and complementary effects of governance mechanisms when addressing inter-organizational conflicts. Rich datasets were collected from twelve Indian suppliers and their international buyers. Findings illustrate that ‘soft’ formal governance mechanisms, emphasizing the coordination, communication and sense-making functions, in combination with informal governance mechanisms can be used as an effective combination facilitate conflict resolution. In contrast, ‘hard’ formal governance mechanisms, emphasizing control functions through, for instance, third party involvement, substitute informal governance mechanisms and have a n...

Governance and Complex Performance:The Dynamic Interplay of Governance (Dys)functions

This paper examines how organizations coordinate the often conflicting demands for high performance delivered over long periods and involving complex environments. Using two longitudinal cases of defense contracts for supporting new warships we explore not only the roles of formal and informal governance mechanisms, but the dynamic interplay of functions and dysfunctions over time in complex inter-organisational relationships. We argue although varying degrees of formalization is important when managing long-term relationships, organisations should not just learn to contract or build up trusting relations, but consider both together in terms of the effect such interplay has on overall performance. In each case we find where both organizations do not always agree on the governance mechanisms to use, the result is a negative impact on performance. We find that formal governance functions of coordination and control substitute these functions in informal governance mechanisms, while dysfunctional governance ...

Informal Entrepreneurship and Dynamic Governance Mechanisms:Role of Entrepreneurial Resourcefulnes

Drawing on perspective of real governance this paper examines the informal and formal governance mechanisms of small informal-semi formal entrepreneurial firms. Empirically this study has been conducted in Pakistan and sample firms have been drawn from event planning industry. They are mostly young and small informal or semi-formal firms and have strongly emerged against core competition contributed by traditional hotel and catering industry. Findings improved our understanding of everyday governance i.e. real governance and elaborated the concept of entrepreneurial resourcefulness in un-favored institutionalized environment. As we found resourcefulness perspective be supportive in the process of generation and evolution of governance patterns.