Relational Governance Mechanisms Research Articles

Boundary spanning for contractual fairness in public infrastructure projects: its impact on performance and innovation

ABSTRACT While the literature on public-private collaboration in large infrastructure projects stresses both contractual and relational governance mechanisms for good outcomes, less attention has been paid to the role of boundary spanners and the way the contract is enforced in practice. This study contributes by bringing in the concept of contractual fairness building on organizational justice theory. It tests the effect of boundary spanning activities on contractual fairness and their impact on performance and innovation as two different outcomes. Findings indicate that boundary spanning activities positively affect contractual fairness, innovation, and performance, while contractual fairness partly mediates the relationship with performance.

Influence of Project Governance Mechanisms on the Sustainable Development of Public-Private Partnership Projects: An Empirical Study from China

In China, achieving sustainable development goals for PPP projects is an urgent issue. Project governance mechanisms are important to PPP project sustainability, but there are many risk factors in traditional project governance mechanisms. This research focuses on embedding risk governance mechanisms into the traditional project governance system with contract governance mechanisms and relationship governance mechanisms. The main purpose is to reveal the integration of PPP project governance mechanisms and its impact on governance performance and project sustainability, and to propose governance optimization strategies. First, by enriching the understanding of the governance mechanism, governance performance and project sustainability, and improving the measurement scale. Then, by constructing a structural equation model, collecting data through questionnaires, and exploring the effect of the project governance mechanism on project sustainability. (1) The results of direct effect testing show that contractual governance mechanisms, relational governance mechanisms and risk governance mechanisms are positively associated with governance performance, and governance performance is positively associated with project sustainability; (2) the results of mediating effect testing show that interaction of the three governance mechanisms has a positive effect on governance performance. The research results provide a new approach and perspectives for improving project governance mechanisms and achieving sustainable development in the practice of PPP projects.

Governing the knowledge commons: Hybrid relational–contractual governance in china’s mining industry

How do industry participants govern knowledge commons and deal with knowledge production and sharing? Beyond privatized intellectual resources safeguarded by the intellectual property system (e.g., patent and copyrights), a knowledge commons is an alternative type of intellectual property regime that has become increasingly prevalent but remains understudied. Substantiated by fieldwork data in three mining sites in China’s Jiangxi province, this article examines the ways in which contractual and relational governance mechanisms work together to facilitate collaboration and innovation and mitigate ambiguity and volatility. This study contributes to the existing literature on knowledge commons and innovation governance and enhances the empirical understanding of innovation in emerging economies where formal protection of intellectual property is insufficient.

Member commitment in farmers' cooperatives in China: The role of contractual and relational governance mechanisms.

Farmers' cooperatives play a critical role in social, economic, and environmental sustainability in terms of poverty reduction, food quality and safety, farm sustainability, and members' well-being. However, they are generally faced with low or declining member commitment, which restricts their performance and sustainable development. This study aims to investigate the effect of cooperative governance on member commitment as well as the moderating effects of cooperative types through an empirical exploratory study applying a random sampling survey. The results indicate that both contractual and relational governance have significant positive effects on member commitment, but vary with cooperative types. Specifically, there is a greater effect of contractual governance in company-affiliated cooperatives than in primary cooperatives, while the effects of relational governance increase in the order of company-affiliated, primary, and company-led cooperatives. Moreover, relational governance displays a greater positive influence on member commitment than contractual governance. These findings suggest that cooperatives should take organizational features, contractual and relational governance into consideration to improve member commitment and sustainable development.

Achieving risk resilience in an environment of mistrust: supply chain piracy of physical goods

PurposeThis paper investigates how companies become resilient to supply chain (SC) piracy through using transactional and relational governance mechanisms to develop strategies effective in environments characterized by weak regulative institutions and mistrust.Design/methodology/approachThis study developed case studies of nine large manufacturers with operations in Brazil.FindingsThe companies employed transactional and relational governance mechanisms to learn from past incidents, anticipate, and respond to the threat of SC piracy, becoming more resilient over time. Transactional governance mechanisms reduced risk triggers through technology, while relational governance mechanisms enhanced trust between SC and non-SC members, allowing the members to build social capital.Practical implicationsThe authors provide practical guidance for managers and policymakers in developing risk management strategies based on technology and collaboration to reduce SC piracy in environments characterized by mistrust.Social implicationsSC piracy is a serious problem for global operations and SCs in many low-cost manufacturing locations. Besides the cost and service level consequences, the authors also highlight worker safety consequences, including the potential for kidnapping, psychological trauma, injuries, and death.Originality/valueThis study focuses on the little-researched topic of SC piracy. The authors examine the negative effects of a weak institutional environment, while most prior research focuses on the positive effects of a strong institutional environment. The authors position transactional and relational governance mechanisms as essential elements of SC risk resilience.

Supply chain governance in the context of industry 4.0: Investigating implications of real-life implementations from a multi-tier perspective

This paper addresses the impact of Industry 4.0 (I4.0) on supply chain governance (SCG) mechanisms within inter-organizational relationships in a multi-tier context. Special emphasis is paid to the investigation of the dynamics and outcome with regard to the structure and management of the relationships along the multi-tier. A multiple case study method is applied to explain the impact of I4.0 based on a theory-grounded research framework through the lens of complementary SCM theories. Building on qualitative in-depth interviews with 19 experts in managerial positions, three cases from the manufacturing industry involving an I4.0 implementation across the multi-tier were analyzed. This research demonstrates an intensification of synergistic combinations of inter-firm resources, emphasizing SCG as essential.With the implementation of I4.0, competitive advantage along the multi-tier takes higher priority over the competitive advantage in the individual or dyadic perspective. Relational governance mechanisms evolve, allowing competitive advantage as a multi-tier balancing out traditional power mechanisms within the supply chain hierarchy. Findings show that contractual governance mechanisms are limited in their effect, revealing the need for an evolution of “relational contracting.” Finally, the case research proposes “agility” as an extended mechanism in SCG research. The study offers in-depth insights into the structure of SCG mechanisms and the implications of adapted SCG on SCM outcomes to redesign multi-tier relationships. Supported by SCM theories and the dimensions of SCG, this paper contributes to the first insights beyond the dyadic perspective, providing an integrated multi-tier perspective while discussing specific mechanisms and identifying relevant propositions for future research.

Fostering Knowledge Collaboration in Construction Projects: The Role of BIM Application

Knowledge collaboration is beneficial for project parties to assess valuable knowledge resources from others in order to enhance their competitive advantages. However, knowledge collaboration is hampered by the special project environment and temporary structure of construction projects. Based on relational contract theory, this study employs trust and relational norms as the two relational governance mechanisms for improving knowledge collaboration. Next, this study explores the effect of relational governance mechanisms on knowledge collaboration and the moderating role of the building information modelling (BIM) application level. We collected data from 166 responses in construction projects. Our results reveal that relational norms significantly impact knowledge collaboration, which is contrary to the effect of trust. Furthermore, the BIM application level has an interactive effect with relational norms, which improves knowledge collaboration. These findings reveal that the level of BIM application significantly affects the effectiveness of relational governance mechanisms. This study suggests that project managers should help project parties to develop BIM responsibilities in order to facilitate collaborative performance.

How Governance of Interorganizational Projects Develops Resilience: Mediating Role of Resource Reconfiguration

The resilience of interorganizational projects has attracted increasing attention from researchers and practitioners. However, the impact of governance of interorganizational relationships on project resilience has not been understood or empirically investigated. Using dynamic capability theory, this study investigated the mechanism by which interorganizational governance influences project resilience. According to the literature and theoretical analysis, resource reconfiguration is identified as a mediator between interorganizational governance and project resilience. It was conducted by a quantitative analysis of a survey of the engineering industry in China using structural equation modeling. The findings show that both contractual governance and relational governance are enablers of project resilience. This unpacks how this relationship can be achieved through resource reconfiguration as the mediator and contract governance partially function through relational elements. Drawing on the dynamic capability view, our findings enrich the body of knowledge of resilience in the project realm by exploring the impact of contractual and relational governance mechanisms on project resilience.

Explicating the contextuality of corporate governance through ownership structure and family management: evidence from an emerging economy

PurposeThis study aims to investigate the impact of family management and ownership structure, including foreign ownership and business group ownership, on corporate performance.Design/methodology/approachUsing an agency perspective and a quantitative research methodology, this study examines listed firms in Pakistan from 2009 to 2018.FindingsThe results suggest that family management and concentrated leadership constrain, whereas family leadership, foreign ownership and group ownership strengthen monitoring effectiveness and corporate performance. These findings imply that the shareholder governance logic offers optimal solutions in an emerging economy, as relational governance may activate agency problems.Originality/valueThe findings are consistent with the relevance of relational governance mechanisms in the form of family leadership. However, the results suggest that emerging economies require a hybrid governance model to address their unique agency problems, thereby underlining context relevance in corporate governance scholarship. Furthermore, this research adopts a thick view of institutions to clarify institutional embeddedness and corporate governance contextuality in an emerging economy.

Opportunism in supply chains: Dynamically building governance mechanisms to address sustainability-related challenges

Opportunism has long been highlighted as one of the hazards of complex buyer–supplier relationships. This hazard has become more challenging to manage as the pressure from consumers and the public for improved sustainability-related performance is passed along the supply chain between buyers and suppliers. For example, buyer demands for and supplier implementation of sustainability requirements, such as low carbon emissions or fair worker treatment, are often poorly defined; difficult to document; and subject to change as pressure for immediate improvement builds, as scientific understanding deepens and as societal expectations advance. This complex setting generates tempting openings for either a buyer or supplier to act opportunistically. In an effort to advance both theory and managerial practice, we consider three aspects of sustainability-related opportunism. First, in line with prior research, we focus on defining sustainability-related opportunism as jointly considering the codification of expectations and verification of performance (while allowing for false suspicions). Second, our conceptualization stresses the need to move away from an implied static view to embrace more fully the changing nature of stakeholders’ sustainability-related concerns. For example, supply chain relationships evolve based on repeated interactions as firms influence each other’s beliefs, practices and outcomes. Third, in a related sense, a dynamic model can combine several theoretical perspectives to inform how the balance of transactional and relational governance mechanisms might adapt as our understanding of sustainability changes, institutional forces evolve, and dyadic relationships mature.

The Impact of Boundary Spanning by Public Managers on Collaboration and Infrastructure Project Performance

The public sector is increasingly collaborating with the private sector in the development of large-scale public infrastructure projects. However, the difficulties arising due to working across organizational boundaries are often detrimental to project performance. This article argues that boundary-spanning activities can enhance the quality of collaboration and subsequently the performance of projects. Boundary spanners utilize relational governance mechanisms and undertake conscious endeavors for building interorganizational relationships by engaging in activities, such as coordination and communication with the stakeholders. The data for this study are composed of 158 survey responses from lead public managers involved in Dutch national public infrastructure projects. The data are analyzed using structural equation modeling. The study demonstrates that the quality of collaboration has a significant impact on the performance of the project during the implementation phase. Further, we find that the different boundary-spanning activities are interconnected and that they have a significant positive relationship on project performance, with a mediating effect of collaboration. The study concludes that, and shows how boundary spanners are vital to the collaborative processes through which public infrastructure projects are implemented.

Leveraging digital and relational governance mechanisms in developing trusting supply chain relationships: the interplay between blockchain and norm of solidarity

PurposeDrawing on the signaling theory and the relational exchange theory, this study investigates how buyer–supplier trust is influenced through the congruence and incongruence between blockchain and norm of solidarity. The moderating role of technology uncertainty is further examined.Design/methodology/approachUsing a survey data of 110 Chinese firms, this study empirically tests not only the combined effect of blockchain and norm of solidarity on trust, but also how this combined effect is moderated by technology uncertainty. The proposed hypotheses are tested using the polynomial regression analysis and the response surface methodology.FindingsThe results suggest that trust increases along with an increasing congruence between blockchain and norm or solidarity, but in a diminishing rate (i.e. an inverted U-shaped relationship). Simultaneously, incongruence between blockchain and norm of solidarity can also guarantee sufficient trust (i.e. a U-shaped relationship). Moreover, technology uncertainty overturns the inverted U-shaped relationship between blockchain and norm of solidarity congruence on trust into a U-shaped relationship and nullifies the U-shaped relationship between blockchain and norm of solidarity incongruence on trust.Originality/valueThis study enriches supply chain governance literature by introducing the emerging blockchain governance and examining the blockchain governance's interplay with a conventional relational norm. The study emphasizes that the combined effects of these two are quite complex. Blockchain and norm of solidarity can offset each other’s limitations when both are at low to moderate levels. But simultaneous pursuit of both high blockchain and norm has only limited marginal benefits. Furthermore, the study also highlights the importance of technology uncertainty under which the combined effects between the two governance mechanisms vary. Collectively, the results provide nuanced insights into the design of supply chain governance portfolios in the digital era.

Blending traditionalism with legalism: a typology of understanding corporate governance systems in Ghanaian Family-owned businesses (FOBs) from a Bourdieusian perspective

PurposeThis paper aims to examine the nature of corporate governance systems in Ghanaian Family-owned Businesses (FOBs). Specifically, the study investigates the nature of boardroom decisions structures, sources of governance regulations and family roles in corporate governance.Design/methodology/approachDrawing on Bourdieusian perspectives of the field, capital, habitus and doxa, a case study design is used to gather detailed insights about the phenomena. Purposively, the study conducts 20 interviews with participants from 15 FOBs in Ghana. The interview data are complemented with secondary sources, such as FOB handbooks, website information, legal documents and scriptures. Subsequently, data gathered were thematically analysed.FindingsThe study finds that human actors blended traditionally tacit and legally expressed boardroom decisions structures in FOBs governance. Again, traditional values, social acceptance of religious sociology and regulatory frameworks of the field dictate corporate governance practices in FOBs. In multiple family ownerships, orthodoxy of doxa is challenged; hence, power struggles and family roles in governance depend on capital possessed by social actors.Practical implicationsTo continue as a going concern, FOBs must be mindful of traditional, religious sociology of family and regulatory frameworks within the field in which they operate. This is because, without this, the going concern of FOBs becomes suspicious and highly unlikely, especially where there are multiple family ownership and generations.Originality/valueThe previous literature predominantly focussed on formal boardroom structures in addressing FOBs' corporate governance issues. Notwithstanding, family governance risk of domineering and distrust associated with traditional and relational governance mechanisms remain under-represented and inconclusive, especially in Sub-Saharan Africa.

Formal and relational governance of artificial intelligence outsourcing

Outsourcing emerging technologies such as Artificial Intelligence (AI) are expected to impact organisations significantly, due to a tight labour market for AI expertise. However, how formal and relational governance effects Information Systems suppliers who provide AI services has not been studied. Based on an exploratory research amongst eight suppliers and two market research advisors, we conducted 18 expert interviews and found evidence how formal contractual and relational governance affects AI outsourcing. The results indicate various forms of contractual models in which some cater for clients’ needs specifically, e.g. outcome-based, experience-driven Service Level Agreements (SLAs). Our examination provides insights that formal and relational Information Systems (IS) outsourcing governance are complementary in cases where clients and suppliers co-develop AI. For our research, we adapted the outsourcing governance model of Lioliou et al. (Inf Syst J 24:503–535, 2014), including their emphasis on the psychological contract. We contribute to IS outsourcing literature by exploring, beyond contract management insights, differences between suppliers in providing AI services. Our study acknowledges that AI outsourcing shift the emphasis from a transactional type of arrangement to a relational type of outsourcing arrangement. In addition, the combination of both formal and relational governance mechanisms positively contributes to IS governance. Our study also confirms that the innovative character of AI positively contributes to the psychological contract in outsourcing AI.

How Does Relational Governance Affect Knowledge Collaboration in Integrated Project Delivery? A Transactive Memory System Process

Integrated project delivery mode (IPD) depends on high-level knowledge collaboration among project parties. Therefore, knowledge collaboration is critical for IPD to improve knowledge management performance and sustainable competitive advantage. However, effective knowledge collaboration is difficult to achieve because of the diverse knowledge and expertise area of IPD project parties. For a high level of cross-disciplinary knowledge collaboration, this study examines how relational norms and trust as two effective relational governance mechanisms affect knowledge collaboration through verifying the role of transactive memory system (TMS). Then, we proposed statistical hypotheses and tested them by using quantitative data from a questionnaire survey. The research findings present a remarkable indirect influence of relational norms and trust on knowledge collaboration via the mediating role of TMS. This study contributes to the literature in project and engineering management by demonstrating the significant role of TMS in IPD collaboration, especially the mediating effect of TMS on the relationship between relational governance and knowledge collaboration. The research findings provide the collaborative governance strategies for engineering managers by developing a well-functioning TMS to realize holistic knowledge collaboration for IPD projects.

Starting off on the Wrong Foot: The Formation of Licensing Agreements in the Shadow of the Court

Prior research on contract design and interorganizational governance has emphasized how the grant of exclusive licenses help reduce transactional hazards between parties. While these licensing deals are typically negotiated and signed on their own volition, the literature is scant on the inclusion of exclusivity provisions when parties are forced to negotiate and come to an agreement. We fill this gap by comparing the inclusion of exclusivity in volitional licensing agreements and those that are signed as a result of settlement of patent litigation between parties. It is likely that negotiations between both parties for a licensing agreement post settlement happen in an environment of mistrust caused by their involvement in a patent lawsuit. We suggest that licensing agreements signed post settlement are less likely to include exclusivity provisions due to an increase in transactional hazards between the parties. Additionally, evidence from our data suggest that while exclusivity is used as a contractual safeguard to protect licensee investments in complementary assets especially when there is uncertainty in the technology, this relationship is adversely impacted in the deals signed post settlement. Finally, we also examine the inclusion of exclusivity provisions in settlement contracts signed between parties that relied on relational governance mechanisms such as past licensing relationships. Evidence on these comparisons between contracts are provided from licensing deals in the biopharmaceuticals industry.

Orchestration in Entrepreneurial Ecosystems: Insights into Form, and Content

In this paper, we argue that the governance of entrepreneurial ecosystems involves an orchestration effort in which influential actors take the necessary measures to steer partners and promote ecosystem-level returns without using formal authority. We then review the literature on orchestration to understand how actors organize to collectively orchestrate entrepreneurial ecosystems and explore the activities they should perform to promote ecosystems-level output. We propose a theoretical framework to represent the form and content of entrepreneurial ecosystems orchestration. In relation to form, we discuss when ecosystems have a single or multiple orchestrators and explore their roles, reflecting carefully on the notion of shared orchestration. We then explore the content of orchestration by highlighting the activities orchestrators should execute (i.e. content of orchestration) to steer entrepreneurial ecosystems. We classify them as Horizontal orchestration activities to differentiate them from the practices to orchestrate activities related to the entrepreneurial process in the network. We contribute to the literature on entrepreneurial ecosystems governance by providing an additional means to understand how to steer actors in entrepreneurial ecosystems through relational governance mechanisms. Such knowledge can also offer insights for policy makers interested in creating incentives for entrepreneurial ecosystems as well as help actors understand best practices to stimulate the development of such ecosystems.

Resource Complementarity vs. Absorptive Capacity: The Governance of International Scientific Teams

This article explains and demonstrates how formal (contracts) and relational governance mechanisms influence the relationship between resource complementarity and absorptive capacity to enhance the performance of R&D international cooperation projects. We proposed a theoretical model regarding the moderating effects of customized contracts and relational mechanisms of governance (trust, shared objectives, and communication) on the relationships between resource complementarity (human, organizational, physical, and financial resources) and absorptive capacity (potential and achieved). The model was tested empirically through structural equation modeling, by using the maximum likelihood method for estimating the parameters. The sample consisted of 231 R&D projects of international cooperation in agricultural sciences, involving Brazilian and international institutions. In the presence of less customized contracts, the exchange of complementary resources extends the teams' absorptive capacity. We also found that there is a need of well-established relational mechanisms for resource complementarity to affect the absorptive capacity. In the joint action of governance mechanisms, less customized contracts of R&D projects increase the exchange of complementary resources, besides enhancing trust, aligning the goals of team members, and fostering progress in the communication with external partners. The results provide important information for managers and leaders of research programs and projects, regarding the use of governance mechanisms to enhance teams’ absorptive capacity through complementary resources. The study increases knowledge on the interaction of formal and relational mechanisms to enhance absorptive capacity, which has been little explored in previous research.

Governing the interplay of inter-organizational relationship mechanisms in open innovation projects across ecosystems

More and more self-interested businesses are organizing themselves in interdependent, non-hierarchically controlled networks to jointly create superior value by engaging in open innovation projects. In aligning the heterogeneous actors toward a focal value proposition, it is crucial for the orchestrators of such arrangements to manage their inter-organizational relationships by navigating the interplay of contractual and relational governance mechanisms. Despite the relevance of how contracts and relational governance co-evolve, knowledge on the interaction of contracts and relational governance in specific contexts is still missing. Through a multiple-case study of ten multinational ecosystem orchestrators, we explore how large multinational orchestrators govern the interplay inter-organizational relationship mechanisms in open innovation projects across ecosystems. Based on our findings, we propose a five-dimensional, sequential model of governing the interplay of inter-organizational relationship mechanisms in open innovation projects across ecosystems and discuss our contributions in the context of the current literature.

Relational governance mechanisms as enablers of dynamic capabilities in Nigerian SMEs during the COVID-19 crisis

During the COVID-19 crisis, small and medium-sized enterprises (SMEs) in developing markets, marred by significant institutional voids, grappled with a perennial lack of resources. This article seeks to understand how these SMEs activated their dynamic capabilities to manage business relationships during different phases of the crisis. Relying on the social exchange theory and drawing on semi-structured interviews with 42 business-to-business (B2B) SME owners in Nigeria, we examine the relational governance mechanisms of dynamic capabilities for SMEs during the COVID-19 crisis. Our findings reveal 12 relational governance mechanisms of dynamic capabilities of B2B SMEs. Furthermore, we disaggregate these 12 mechanisms into 34 relational governance micro-foundational components and demonstrate their relevance for B2B SMEs during different stages of the COVID-19 crisis in Nigeria.