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Governing inter-organizational relationships: Balancing formal governance mechanisms and trust

Alliances allow firms to “pool imperfectly tradable resources in order to gain greater efficiency in the use of existing resources as well as opportunities to create new re-sources” (Dussauge/Garrette/Mitchell 2000: 207). Not surprisingly, firms often engage in interorganizational relationships as a means of solving complex problems. Indeed, the formation rate of interorganizational relationships has increased dramaticallyin recent years. Accompanying the increasing number of relationships has been adramatic increase in their variety and the means by which they are governed. This special issue aims at exploring firms’ investment decisions related to alliances as well as the design and management of collaborative agreements.To be successful, a relationship must accomplish two goals, namely identifyingthe optimal combination of productive knowledge across parties and mitigating the risks of opportunistic behavior (Mitchell/Dussauge/Garrette 2002; Nickerson/Zenger 2004). The performance of the alliance thus depends critically on the selection of appropriate governing and coordinating mechanisms. Work drawing primarily on transaction cost economics has argued that increases in exchange hazards will lead to the greater use of formal governance mechanisms (Mayer/Argyres 2004; Williamson 1991). At the same time, a parallel literature has put its focus on more relational governance mechanisms based largely on trust and social identification, e.g., establishing teams, frequent direct managerial contact, shared decision making and joint problem solving (Gulati 1998; Uzzi 1997).The appropriate balance of formal and relational governance mechanisms in managing relationships is the topic of considerable ongoing research. This special is-sue contributes to this research stream by exploring a set of innovative ideas on the management of inter-organizational relationships. Each of the four articles collected in this issue puts a special focus on governance mechanisms and factors which may determine the monitoring and coordination of these relationships. They reflect the actual variety of inter-organizational relationships, because this issue includes papers on explorative R&D alliances, asymmetric alliances and relationships between industrial buyers and suppliers. The articles also illustrate the theoretical and methodological variety in this field.

Mellewigt, T., Hoetker, G., Weibel, A., "Governing inter-organizational relationships: Balancing formal governance mechanisms and trust (Guest editor's introduction to the special issue)", Management Revue, Vol. 17, No. 1, January, 2006, pp. 5-9. View and download