Relational governance forms and firm performance: the role of unilateral and collaborative capabilities

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University of Alabama Libraries

Firms in today's market environment compete as members of business-to-business relationship networks more commonly than as vertically integrated stand-alone entities. The core structure of those networks are the relational governance contracts between firms, which may be explicit (detailed), normative (informal), or a hybrid of both. The theories of how and why firms engage in such collective competition include transaction costs economics, and the resource-based view of the firm. While there are stark distinctions between these views, there are also commonalities. By deconstructing relational governance and supply chain management literature, this research proposes a broader view of the capabilities and structures that firms leverage to compete collectively, identifying a series of unilateral capabilities (internal to each firm), collaborative capabilities (derived from interactions between partnering firms), and relational contextual factors (imposed by the markets partner firms compete in and the characteristics of each relationship). Employing qualitative interviews and structural equation modeling to analyze firms involved in business-to-business relationships, this research finds that unilateral capabilities, collaborative capabilities, and relational contextual factors jointly shape value outcomes that firms experience as a result of business-to-business relationships. Futher, the effect of such capabilities and contextual factors is influenced by the tendency of firms to employ more explicit or more normative relational governance contracts. This research offers another step in integrating the transaction cost and resource-based theories, proposes a new way for scholars to examine the capabilities by which business relationships are built and managed, and provides practitioners means of examining how effectively their practices fit with their capabilities in managing inter-organizational relationships.

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