Informal Governance Mechanisms Research Articles

Dual Systems of Urban Villages: Autonomy and Informal Governance Mechanisms of Yuan Village in Guangzhou

Implementing demolition and transformation policies in urban villages is essential for effective urban governance. However, these villages possess distinctive governance models and entities that set them apart from general urban and rural communities. This study examines the autonomous “informal governance” process in Guangzhou's Yuancun urban village through a case study approach. It investigates the formation mechanisms of the “dual system”. The study underlines the significance of grassroots innovation and the Chinese Communist Party's role in attaining governance autonomy. Despite the government's aim to integrate urban villages into the urban governance system, persistent challenges arise from these unique models and entities. The Village Company plays a pivotal role in promoting stable governance through participatory practices and economic advantages. Resolving the complex issues in urban villages necessitates integrated economic, political, and social solutions. Empowering the Village Company to handle specific public affairs can facilitate the transition towards the modernization of grassroots governance.

Scarcity and instability: Transforming societies through equitable distribution mechanisms

Under the framework of SDG 16, namely Peace, Justice and Strong Institutions, one key underexplored area of inclusion relates to the means of ensuring access to justice through the equitable governance of scarce resources, and mechanisms to promote equal and structural access to opportunities across society. This research sets out to answer the following questions across three case studies: (1) What is the relationship between critical or scarce resources and political conflict in the region under study?; (2) On what basis is the scarce or critical resource currently distributed within the region under study?; (3) What formal or informal governance mechanisms are in place to manage access to critical or scarce resources, and resolve conflicts created by it?; and (4) What improvements could be made to ensure more inclusive and equitable access to the distribution of this resource? The three proposed case studies, namely, Central Mali (land), Northeastern Kenya (water), and northern Mozambique (extraction and revenues of natural gas), have unique political and geographic features that are indivisible from peace and security. In each case, a blend of formal and informal mechanisms is used, but these often involve competing mandates, are guided by socioeconomic dynamics or are unenforced, potentially leading to different types of localised conflict. This paper argues that, in order to prevent conflict around the governance of natural resources, communities need to be involved in a blend of informal and formal governance mechanisms from the outset. While the exact nature of these governance mechanisms may differ according to the nature of the natural resource and its extraction, there is a need to move from top-down towards people-centred approaches. Moreover, there should be efforts to develop specific SDG 16 targets related to environmental governance.

CEO tenure, board monitoring and competitive corporate culture: how do they influence integrated reporting?

PurposeThis study aims to explore the association between chief executive officer (CEO) tenure and the quality of information disclosed through integrated reporting quality (IRQ), which combines financial and non-financial data. The authors also investigate how formal (e.g. board independence and gender diversity) and informal (e.g. corporate culture) governance mechanisms influence this association. By analysing these factors, the authors expect to provide valuable insights on the impact of CEO tenure and governance structures on the comprehensive nature of integrated reporting.Design/methodology/approachThis study uses a sample of the top 200 Australian Securities Exchange (ASX)-listed companies from 2015 to 2019. IRQ is measured through levels of compliance with the integrated reporting (IR) framework proposed by the International Integrated Reporting Council (IIRC). The hypotheses are tested using multiple regression analyses.FindingsThe authors find that CEO tenure is negatively associated with IRQ. Furthermore, CEO tenure has a more positive influence on IRQ in the early CEO tenure years than later ones. The authors' study finds that the association between CEO tenure and IRQ is insignificant when firms have a high level of monitoring, as measured by board independence and gender diversity. The authors also document that competitive corporate culture moderates the negative association between CEO tenure and IRQ.Originality/valueThe authors' study highlights the significant impact of internal formal and informal governance mechanisms on disclosure practices in Australia's voluntary IR environment. By shedding light on these factors, the authors' research enhances understanding of Australian companies' IR practices and offers valuable insights for scholars, policymakers and practitioners in the field.

Governing buyer–supplier relationships to foster relational rents in organic short food supply chains

PurposeThis paper aims to analyze the influence of governance mechanisms in the generation of relational rents for supplier in short food supply chains (SFSCs).Design/methodology/approachThis study used data from a survey of 181 organic producers in SFSCs, using partial least squares structural equation modeling (PLS-SEM) with the aid of the SmartPLS® 3 software for the analysis.FindingsThe results show the relationship between formal and informal governance mechanisms and relational rents. The predominance of informal mechanisms enabled a higher explanatory power than that provided by formal governance mechanisms. Further, the authors found that the complementary use of governance mechanisms has a stronger impact on generating relational rents. However, contextual factors such as relationship time, power asymmetry and uncertainty in demand have not shown any influence on governance mechanisms for generating relational rents.Originality/valueThe result sheds new light on the relevance of governance mechanisms to foster relational rents to suppliers in SFSCs. It also shows that contextual factors that affect relationships in traditional supply chains do not play a relevant role in SFSCs due to their specific characteristics.

Managing appropriation concerns and coordination costs in complex vendor relationships: Integration and isolation as governance strategies

Many studies have shown that the inter-organizational governance mechanisms required to manage appropriation concerns come into conflict with the mechanisms needed to manage coordination costs. Research has, however, largely left unanswered the question of how client organizations govern complex vendor relationships that involve multiple categories, transactions, and activities where appropriation concerns and coordination costs must be managed simultaneously. We propose that this may be achieved by utilizing two strategies; while integrating some activities, transactions and categories, others can be isolated. Drawing on 23 interviews as well as procedural documents associated with vendor management, this study examines how a leading automotive manufacturer governs relationships with three vendors. The analysis reveals how corporate and operational-level staff combine formal and informal governance mechanisms as they pursue integration and isolation strategies, enabling the client organization to maintain and develop long-term complex relationships. Our findings lead us to question a tendency in the literature to regard isolation as negative and integration as an ideal strategy for managing long-term relationships. Only when utilized in tandem will isolation and integration strategies enable organizations to align the conflicting governance mechanisms required to manage appropriation concerns and coordination costs.

Organizational citizenship behavior: understanding interaction effects of psychological ownership and agency systems

Organizational citizenship behavior is a highly sought-after outcome. We integrate insight from the psychological ownership perspective and agency theory to examine how the juxtaposition of informal psychological mechanisms (i.e., ownership feelings toward an organization) and formal and informal governance mechanisms (i.e., employee share ownership, agency monitoring, and peer monitoring) influences employees' organizational citizenship behaviors. Our empirical results show that psychological ownership has a positive effect on organizational citizenship behavior. Contrary to the common belief that informal and formal mechanisms complement each other, we find that the positive influence of psychological ownership on organizational citizenship behavior is more pronounced when employee share ownership and agency monitoring is low compared to high. Implications for theory and future research are discussed.

Formal and informal governance mechanisms of machinery cooperatives: The case of Quebec

Although embedded in a regulatory framework, studies suggest the important role of informal (relational) mechanisms in agricultural cooperatives, mostly viewed as complements to formal mechanisms. However, the interaction between these two mechanisms remains unclear. To improve our understanding of this interaction, we investigate governance mechanisms in agricultural machinery cooperatives, especially the “Coopératives d′Utilisation de Matériel Agricole” (CUMA). Machinery cooperatives allow producers to share machinery within a legally defined structure, but the traits of these cooperatives cause to rely heavily on informal mechanisms. This paper analyses how the interaction between formal and informal mechanisms minimizes coordination and motivation problems. Based on a multiple case study approach, the paper shows that the use of informal mechanisms results from the failure of formal mechanisms to minimize opportunism among members. As a result, CUMA members will primarily resort to informal mechanisms, using formal mechanisms as a complement when needed.

How family firms use governance mechanisms to mitigate the risks of ecosystems: a case study from healthcare

This study aims to increase our understanding of how family firms, acting as ecosystem orchestrators, mitigate perceived relational and performance risk in ecosystems via the use of governance mechanisms. We use the ecosystem governance literature to understand whether family firms’ characteristics lead to a unique governance approach in an ecosystem setting. Our findings and theoretical implications are threefold; (1) formal and informal governance mechanisms act as complements to mitigate relational and performance risks; (2) the choice of governance mechanisms differs for relational and performance risk; (3) changes in perceived risk over time result in shifts in the relative dominance of formal/informal governance mechanisms.

Competition, formal governance and trust in alliances: An experimental study

We study the role of alliance governance in the behavior of partners in alliances with different degrees of competition. Using data from a lab experiment on 1,009 alliances and 31,662 partners' choices, we explore whether and how alliances succeed in different competitive scenarios, contingent on the use of formal governance mechanisms (termination clauses) and the number of partners in the alliance. We find that trust, an informal governance mechanism, emerges as a complement to formal governance in order to establish success in our experimental alliances, especially when competition is high. In particular, we document the significance of “trust-building” in initial stages and “trust repair” in later stages of our experimental alliances.

A relational view of horizontal collaboration among micro and small enterprises: a study of the brewery sector in Wales

PurposeThis study aims to explore how horizontal collaboration can help small and micro enterprises within the drink sector through the relational theory lens.Design/methodology/approachThe use of qualitative research methods, including focus groups and interviews, facilitated understanding the horizontal collaboration in micro and small companies within the Welsh brewery industry. Data collection involved conducting three focus groups and 13 interviews within the Welsh brewery sector in the UK. The collaboration phenomena were explained using the three elements of relational theory: relational rents, relational capitals and relational governance.FindingsMicro and small enterprises in the drink sector use collaborative initiatives in building new capabilities to generate relational rents. In addition, relational capitals and relational governance mechanisms were identified to support the horizontal collaboration among these enterprises.Research limitations/implicationsThe focus is on only one part of the drinks industry, i.e. the brewery industry; therefore, this study could be extended to other industries within the drink sector or across manufacturing industries.Practical implicationsThe micro and small enterprises can collaborate to achieve relational rent, but this collaboration requires strong relational capitals, such as trust. These partners need to change informal governance mechanisms that already exist towards more contractual formal mechanisms.Originality/valuePrior research has largely focused on vertical collaboration, with limited studies using the relational theory lens to explicate horizontal collaboration phenomena and no previous research in the context of micro and small companies. Relational rents, relational capitals and relational governance mechanisms are studied to provide insights into an effective collaboration in this context.

Informal governance in the digital transformation

PurposeThe purpose of this study is to explore if and how informal governance mechanisms are used for coordinating actors of digitalized supply networks.Design/methodology/approachA multiple case study analysis of ten German firms in digitalized supply networks is conducted. Data are collected through semi-structured expert interviews with interviewees having notable years of professional experience in purchasing or sales.FindingsThis research shows that reduced personal contacts in digitalized supply networks decrease the ability to coordinate with informal governance mechanisms. However, the need for informal governance in digitalized supply networks remains when facing supply network disruptions or building new business relationships.Originality/valueThis is the first study examining the role of informal governance mechanisms in digitalized supply networks. Theoretical and practical insights on the changing abilities and needs to use informal governance after the digital transformation are given.

A Dynamic Relational View of Cross-Sector Collaborations

In this paper, we question how some of the taken-for-granted assumptions from the interorganizational alliance literature apply for collaborations between hybrid partners – i.e., actors with distinctive institutional logics – and that inherently generate positive externalities. Specifically, we look at how the dynamic relational view (Dyer, Singh, & Hesterly, 2018) applies to cross-sector collaborations (CSCs) – i.e., associations between nonprofit, for-profit, and/or public organizations. We offer a framework that details how these hybrid associations’ intrinsic characteristics affect some assumptions of the dynamic model. First, we show that, besides the interdependence of the partners’ resources, both the actors’ different institutional logics and the collaborations’ emphasis on tackling social issues also influence the collaborations’ governance choices. Second, we propose that, for many CSCs, the interdependence and the nature of the partners’ assets will not be the critical factor in deciding the initial investments on either relation-specific assets or knowledge-sharing routines. Instead, the prevalence of an institutional logic will be more relevant to determine these investments. To conclude, we argue that the cross-sector collaborations’ intrinsic characteristics can also accelerate, delay, or compromise the future investments in these sources of competitive advantages and the development of informal governance mechanisms, both critical to creating relational rents. Altogether, we develop a model that provides a temporal explanation for how the nature of cross-sector collaborations affects the development of their drivers of competitive advantages and the generation of relational rents.

Study on Cooperative Culture, Network Power and Knowledge Flow from the Perspective of Enterprise Innovation Network Management

Efficiently development of enterprise innovation networks is inseparable from integrated innovation processes such as knowledge sharing and transfer. Knowledge flow is a core network activity that is highly dependent on the cultural and structural environment. As an informal governance mechanism, cooperative culture affects the stability and durability of relationship between members. Perfectly cooperative cultural mechanism is the key to promoting knowledge flow in innovation networks. The purpose of this paper is to explore whether and how cooperative culture and network power affect knowledge flow in innovation networks. This paper finds that cooperative culture, network power has a positive effect on knowledge flow, which was obtained by using SEM method based on 227 questionnaire survey samples of enterprises. Furthermore, this paper also uses fuzzy quantitative comparative analysis (fsQCA) to study how cooperative culture and network power work together on knowledge flow. This study finds out three paths that lead to high knowledge flow, which are composed of the elements of cooperative culture and network power. The three paths are knowledge reciprocity-oriented, cooperative culture-oriented and cultural knowledge fitoriented respectively. These findings are of great significance for promoting the management of innovation networks.

Asmeniniai santykiai kaip neformalus valdymo mechanizmas: ar skiriasi šeimos ir ne šeimos verslo įmonių valdymas?

Asmeniniai santykiai kaip neformalus valdymo mechanizmas: ar skiriasi šeimos ir ne šeimos verslo įmonių valdymas?

Governance mechanisms and collaborative value creation in cross-sector partnerships: case of NGO and business

The article analyses aspects of the cross-sector partnership of NGO and business actualizing the context of the governance dimension and collaborative value creation. The theoretical part of this article revealed the formal (contractual) and informal (relational) governance mechanisms, which influence the behaviour of partners in the cross-sector partnership. Moreover, the research presented organizational and partnership perspectives of the governance in cross-sector partnerships. The case study strategy was applied to conduct empirical research in Lithuania. It was found out that value creation based on collaboration in cross-sector partnership is influenced by partnership context that consists of macro and mezzo stimulating and limiting factors, characteristics of NGO and business organization, selection of a proper partner as well as formal and informal mechanisms of partnership governance.

Managing technology transfer between coopetitive firms: the roles of coopetition, asset specificity and justice

Purpose Prior studies have demonstrated the important role of coopetition in firms’ innovation. Based on the paradox perspective, this study aims to focus on technology transfer, the pre-innovation stage, to provide a supplementary understanding of the complementarity and contradictoriness of paradoxical coopetition, with the formal and informal governance mechanisms which are suitable with this understanding in coopetition. Design/methodology/approach This study conducted an original, multisource survey of 280 Chinese manufacturing firms. Hypotheses were tested through multiple regressions. Findings Coopetition has a positive impact on technology transfer between firms. Along with the increasing specificity of assets invested ex ante as a kind of formal governance mechanism, the relationship between coopetition and technology transfer becomes stronger. Meanwhile, inter-firm justice as an informal governance mechanism in the technology transfer process can be positively affected by coopetition between partners. Originality/value The study adds to the business-to-business coopetition literature on how to properly treat and use coopetition in technology transfer. Using the paradox perspective in the Chinese context, the findings emphasize the positive role of coopetition in the inter-firm technological exchange process, enriching the understanding of the complementary and contradictory features of paradoxical coopetition. To govern coopetitive relationships, the firms should also implement two fundamental governance mechanisms, that is, specialty asset and inter-firm justice.

Fairness Asymmetry and Changes of Trust and Explicit Contracts in Buyer–Supplier Exchanges

Despite the critical role of fairness in economic transactions, studies about asymmetric perceptions of fairness between exchange parties are very limited. By adopting a dyadic and dynamic perspective, the study investigates the impacts of fairness asymmetry on changes in trust and explicit contracts over time. With a two-wave longitudinal sample of 229 buyer–supplier dyads, the results show that over time, fairness asymmetry leads to a decrease of shared trust and an increase of explicit contracts. Our findings also reveal that both market uncertainty and behavioral uncertainty make the effect of fairness asymmetry on change in shared trust more adverse. Moreover, market uncertainty enhances the role of fairness asymmetry in developing explicit contracts. The study provides novel insights into the implications of fairness for formal and informal governance mechanisms in ongoing interorganizational relationships.

Family Governance Mechanisms in Moroccan Family Businesses: An Exploratory Study

Purpose - Despite the importance attached to the governance of family businesses, few studies have focused on the importance of family business governance in the Moroccan context. This article provides some specificities of family firms and an overview of main governance mechanisms identified in the literature while presenting the main contributions of agency and stewardship theories. We introduce a governance approach centered on the issue of strengthening family ties and increasing the commitment of family members to the firm. The purpose of this paper is to identify the governance mechanisms adopted by CEOs of Moroccan family businesses of the second generation. 
 
 Method - the authors used a qualitative method, using face to face semi-structured interviews among ten CEOs of family businesses in Morocco. Through the analysis of verbatim responses of Moroccan CEOs, we were able to identify some of the governance mechanisms they adopt to ensure a certain continuity of their business.
 
 Findings-The results suggest that most of the Moroccan managers opt for an informal and unwritten system of governance. According to them, the important thing is to share values and vision while maintaining communication. Even family meetings remain informal, the crucial thing is to preserve family solidarity, as far as the system of governance is known by all the members. We have identified three informal governance mechanisms, family meetings, task management, and sharing a family vision. The results have also shown some of the sources of conflicts among family members. 
 
 Practical implications – This paper helps to raise awareness among Moroccan leaders on the importance of governance. Whether formal or informal, it is essential to have common rules shared by family members, which will enable the firm to last over time.
 
 Originality - This paper contributes to research on family businesses by exploring a different context especially in terms of culture and country values. Our paper has the originality to focus on a specific area of investigation, namely the Moroccan context, where the management model of family businesses is different from anterior contributions.

Crimen organizado transnacional en América del Sur: un análisis de la presencia y gobernanza de actores armados no estatales en la frontera de Colombia y Venezuela

Este artigo tem como objetivo discutir o marco de segurança na subregião amazônica, localizada na parte sul da fronteira entre Colômbia e Venezuela, baseando-se em uma análise da presença de atores armados não estatais nos departamentos de Arauca, Vichada e Guainía. Tal análise nos permite refletir sobre os efeitos da baixa presença estatal nesta região, assim como sobre os mecanismos informais de governança gerados por tais grupos. Quanto aos padrões de cooperação entre tais atores, na dimensão temporal, caminha-se para alianças sem tempo definido, à medida que a operação continue lucrativa e bem-sucedida. Quanto ao tipo de cooperação, elas se apresentam como parcerias dentro de um mesmo tipo de atividade, como cadeia de produção, processamento e comercialização de drogas, extração de minérios ou extorsão. Por fim, o nível de cooperação permanece entre o pontual e o contínuo, porém com presença de disputas, o que pode ser observado pelas explosões periódicas de violência como demonstração de força desses atores. As conclusões são que, em geral, os grupos dissidentes formados depois dos Acordos de Paz aumentaram na região, gerando ainda mais instabilidade, disputas e insegurança para as populações locais.

Social Cohesion From the Top‐Down or Bottom‐Up? The Cases of South Sudan and Burundi

Both Burundi and South Sudan experience intractable conflicts which national and international actors struggle to resolve. Efforts to consolidate the nation‐state and foster social cohesion seem to be unsuccessful. As has been well documented in the literature, top‐down efforts to facilitate social cohesion by international and national actors are not enough to foster sustainable peace. Yet the dynamics and actors involved in bottom‐up interventions for social cohesion are less well understood than elite interventions. This article contributes to a deeper understanding of the bottom‐up interventions and explores the vertical integration between top‐down and bottom‐up efforts at social cohesion that exist along the local, national, and international trajectory in the two cases. Particularly in contexts such as South Sudan and Burundi, which are characterized by societies that are held together through complex social and relational networks, and in which informal governance and conflict resolution mechanisms hold high levels of legitimacy, this under‐researched aspect of social cohesion may hold critical insights in terms of consolidating nation‐states. The article provides an argument for the consideration of bottom‐up approaches for more integration of social cohesion mechanisms.