Examining the Conditional Limits of Relational Governance: Specialized Assets, Performance Ambiguity, and Long-Standing Ties

Despite recognition of the benefits of relational governance in inter‐organizational exchanges, factors that may erode its value have received little examination. We extend the literature by asking whether self‐interested opportunities and long‐standing ties erode the positive association between re...

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Bibliographic Details
Published in:Journal of management studies 2008-11, Vol.45 (7), p.1195-1216
Main Authors: Poppo, Laura, Zhou, Kevin Zheng, Zenger, Todd R.
Format: Article
Language:English
Subjects:
Business studies
Correlation analysis
Governance
Management science
Moral hazard
Organization theory
Organizational behavior
Partnering
Studies
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Summary:Despite recognition of the benefits of relational governance in inter‐organizational exchanges, factors that may erode its value have received little examination. We extend the literature by asking whether self‐interested opportunities and long‐standing ties erode the positive association between relational governance and performance. Consistent with transaction cost and moral hazard logics, exchange hazards, particularly asset specificity and difficult performance measurement, dampen the positive association of relational governance and performance. We further find, consistent with recent inquiries into the dark side of embedded ties that the performance benefits associated with relational governance decline when parties rely on repeated partnerships.
ISSN:0022-2380
1467-6486
DOI:10.1111/j.1467-6486.2008.00779.x