Governance Mechanism and Structural Power Fit: Evidence from an Information System Development Project

2020 ◽  
Vol 29 (04) ◽  
pp. 2050006
Author(s):  
Sojung Kim ◽  
Seonyoung Shim
Keyword(s):  
System Development ◽  
Development Project ◽  
Governance Mechanism ◽  
Governance Mechanisms ◽  
Relational Governance ◽  
Organizational Relationships ◽  
Structural Power ◽  
Quantitative Performance ◽  
Contractual Governance ◽  
Project Level

This study identifies how relational and contractual governance mechanisms differently influence the distinct output of information systems development (ISD) performance at the project level. This study also reveals how the consequence of two modes of inter-organizational relationships (IOR) governance mechanism is affected by the gap of a dyadic partner’s centrality within the network — the client’s structural power (CSP). We collected dyadic samples of clients and vendors for 107 ISD projects and explored their governance mechanisms and project performances, all of which were evaluated by both parties. Our results first reveal a positive relationship between relational (or contractual) governance and qualitative (or quantitative) performance, respectively, but not vice versa. Second, the results incorporating a structural position within the network reveal that CSP facilitates the efficacy of relational governance to lead the quantitative performance, but surprisingly, CSP also mitigates the efficacy of contractual governance.

Dynamic changes of governance mechanisms in mega construction projects in China

2019 ◽  
Vol 26 (4) ◽  
pp. 723-735 ◽  
Author(s):  
Dedong Wang ◽  
Shaoze Fang ◽  
Kaili Li
Keyword(s):  
Construction Projects ◽  
Positive Impact ◽  
Project Performance ◽  
Equation Modeling ◽  
Governance Mechanisms ◽  
Relational Governance ◽  
Dynamic Changes ◽  
Content Type ◽  
Positive Effects ◽  
Contractual Governance

Purpose The purpose of this paper is to study the mechanisms governing dynamic changes in relational and contractual governance at different stages of government-funded mega construction projects (MCPs) by studying their different effects on project performance and participants’ opportunism. Design/methodology/approach Partial least squares structural equation modeling was used to test eight hypotheses based on data collected from 147 respondents in different participating organizations in Chinese MCPs. Findings First, contractual governance has a stronger positive impact on project performance than relational governance in the early stage of MCPs, while relational governance exerts more positive effects on project performance than contractual governance in the middle and late stages. Second, opportunism is a mediator variable between governance mechanisms and project performance, and relational governance is more effective than contractual governance in restricting opportunism. Originality/value In contrast to a static analysis of project governance mechanisms, this study examines dynamic changes in the governance mechanisms of MCPs in the Chinese context by considering the mediating role of opportunism as well as guanxi as an element of relational governance, thus filling in gaps in the literature on MCP governance and contributing to the development of MCP management theory.

The impact of relative governance on B2B firms’ value appropriation from industrial buyer–seller relationships: empirical evidence from China

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jing Zhang ◽  
Ya Zhang ◽  
Mingfei Du
Keyword(s):  
Structural Equation ◽  
Factor Model ◽  
Theory Development ◽  
Governance Mechanism ◽  
Relational Governance ◽  
Value Appropriation ◽  
Content Type ◽  
Perceived Justice ◽  
Contractual Governance ◽  
The Impact

Purpose This paper aims to investigate how relative contractual and relational governances impact seller’s value appropriation via buyer’s trust, perceived justice and opportunism in the context of industrial buyer–seller relationships. Design/methodology/approach Survey data from 232 matched buyer-seller dyads of Chinese business-to-business (B2B) firms was used to test the conceptual model and research hypotheses. The confirmatory factor model and structural equation model were tested by using Lisrel 8.80. Findings The findings show that relative contractual governance and relative relational governance have opposite consequences on B2B relationship and value outcomes. Relative contractual governance generates higher level of buyer’s opportunist behavior because it reduces buyer’s trust and perceived justice, therefore harms seller’s value appropriation. By contrast, relative relational governance enhances buyer’s trust and perceived justice, therefore curbs buyer’s opportunism and improves seller’s value appropriation. Originality/value This study makes significant contributions to theory development of value appropriation and inter-firm governance mechanism by extending dyadic view to network view. It proposes the concept of relative governance and explores its role in shaping a business partner’s perception and behavior. It also provides insightful implications for B2B companies on capturing more benefits from the relationship with buyers by leveraging relative governance strategies.

Governance mechanism alignment at the top and operating levels of alliance hierarchy: reconciling two competing schools of thought

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Xuan Bai ◽  
Shibin Sheng ◽  
Julie Juan Li
Keyword(s):  
Governance Mechanism ◽  
Governance Mechanisms ◽  
Relational Governance ◽  
Positive Interaction ◽  
Content Type ◽  
Alliance Performance ◽  
Operating Level ◽  
Hierarchical Levels ◽  
The Cross ◽  
Alliance Governance

Purpose This paper aims to examine alliance governance at different hierarchical levels. Design/methodology/approach The data is collected from both top-level and operating-level managers in 286 strategic alliances in China (a total of 572 managers). Hierarchical moderated regression models are adopted to test the hypotheses and two-stage regression analyzes are used to correct for endogeneity. Findings This paper finds that relational governance has a greater impact on alliance performance than contract utilization at the top level. Furthermore, the simultaneous use of relational governance at the top and operating levels have a detrimental impact on alliance performance. Finally, top-level contract utilization has a negative interaction with operating-level relational governance but a positive interaction with operating-level contract utilization. Research limitations/implication First, the cross-sectional nature of the data collection approach provides only a snapshot of how each type of governance mechanism and its interactions affect alliance performance. Second, the sample is limited to firms located in emerging markets. Practical implications Managers should realize that the effectiveness of contract and relational governance mechanisms varies across different management levels and they should be cautious about the cross-level governance mechanism alignment. Originality/value This study advances the interfirm governance literature in that this paper examined alliance governance at different hierarchical levels and provides new insights into the ongoing debate on whether the contract and relational governance mechanisms function as complements or substitutes by exploring the governance alignment across different alliance hierarchies.

A transaction cost economics model for estimating performance effectiveness of relational and contractual governance

2016 ◽  
Vol 36 (11) ◽  
pp. 1551-1575 ◽  
Author(s):  
John G. Wacker ◽  
Chenlung Yang ◽  
Chwen Sheu
Keyword(s):  
Problem Solving ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Relative Effectiveness ◽  
Asset Specificity ◽  
Governance Mechanisms ◽  
Relational Governance ◽  
Content Type ◽  
Contractual Governance ◽  
Supplier Contracts

Purpose As outsourcing continues to grow, supplier management becomes critical to the success of manufacturing firms. Transaction cost economics (TCE) suggests that firms should choose supplier governance mechanisms to ensure fulfillment of contractual obligations and safeguard against opportunism for their outsourcing activities. Accordingly, the purpose of this paper is to examine how buying organizations govern supplier contracts to improve manufacturing competitiveness and financial performance. The relative effectiveness of two primary governance mechanisms, contractual governance (CG), and relational governance, are examined. Design/methodology/approach Expanding upon previous studies, this study delineates three relational governance mechanisms (negotiation efficiency (NE), problem solving relations, and information sharing (IS)) that are conceptually, statistically and pragmatically different. Based on the TCE literature, a conceptual model is developed to decipher the relationships between pre-contract conditions (supplier asset specificity and environmental uncertainty (EU)), governance mechanisms, performance ambiguity (PA), and performance. Using the data collected from 987 firms, the statistical results present several important findings that would advance current theory and practice in outsourcing. Findings The authors find empirical support for the effects of contractual and relational governance in improving manufacturing and financial performance. The governance of supplier contracts clearly facilitates manufacturers’ ability to leverage their resources to improve performance. The relative effectiveness of these two governance mechanisms is related to the levels of EU and supplier asset specificity. Relational governance displays greater influence on performance than CG does. However, CG appears to be complementary to relational governance. Research limitations/implications The interplays between supplier asset specificity and EU should be examined in the future. The relationships among NE, IS, and problem solving should also be examined to facilitate the development of relational governance. Practical implications Managers should be aware of the situational performance of governance mechanisms. Moreover, it is important to realize how differently each of the three relational governance mechanisms and CG contribute to performance. Originality/value This study extends the academic discussion of supplier governance by investigating the alignment of governance mechanisms (relational governance and CG) with pre-contract conditions to reduce PA and, thereby, enhance manufacturing performance. Under the theoretical framework of TCE, the direct and indirect effects of pre-contract conditions and governance variables are fully examined and discussed. Moreover, relational governance involves multiple mechanisms that are conceptually and pragmatically different, and future studies should not treat it as one single construct.

The Impacts of Network Governance on the Performance of ITO

2013 ◽  
Vol 21 (4) ◽  
pp. 56-76
Author(s):  
Tzu-Chaun Chou ◽  
Shu-Mei Hsu ◽  
Gwo-Guang Lee
Keyword(s):  
Information Technology ◽  
Network Governance ◽  
Mediating Effect ◽  
Empirical Testing ◽  
Governance Mechanisms ◽  
Relational Governance ◽  
Contractual Governance ◽  
Moderating Role ◽  
Insight Into

Information technology outsourcing (ITO) has been a spotlight issue for global enterprises and previous studies have suggested that ITO research has expanded from one organization and bilateral partnerships to a global form of network organization. Yet, little research has been conducted on the link between network governance and ITO performance as a way to understand an organization’s ITO efforts. This study proposes a model that employs several constructs: inter-organizational coordination, contractual governance and relational governance, and technological hegemony. The model explores the mediating roles of these governance mechanisms and the moderating role of technological hegemony as it influences the IT manager’s perception of the performance of ITO. Empirical testing of the model is based on a sample of 191 companies from Taiwanese industries. The results support the mediating effect of relational governance and the moderating effect of technological hegemony. The model and results offer a perspective on managing the performance of ITO as well as initial insight into the role of technological hegemony.

Inter-organizational relationships and firm performance: A study of the US equity underwriting market in the investment banking industry

2015 ◽  
Vol 21 (5) ◽  
pp. 650-674 ◽  
Author(s):  
Yi-Ju Lo ◽  
Tung Min Hung
Keyword(s):  
Business Performance ◽  
Lower Cost ◽  
Investment Banking ◽  
Governance Mechanism ◽  
Relational Governance ◽  
Organizational Relationships ◽  
Cost Performance ◽  
Price Performance ◽  
The Us ◽  
Premium Price

AbstractThe debate on how firms govern their inter-organizational relationships to foster their business performance is far from being settled. While several arguments suggest both transactional and relational mechanisms may act as complementary or substitutive forces, this paper explores and demonstrates how both mechanisms can be jointly exploited to enhance performance. Adopting the context of the US equity underwriting market, this paper reveals that an issuer adopting a transactional governance mechanism to manage its inter-organizational relationships with underwriters obtains a lower cost offering (cost performance) but may not entail price premium (price performance) of that offering. In contrast, an issuer taking a relational governance mechanism has superior price performance but worse cost performance. Nevertheless, this paper uncovers that an issuer adopting a synthesized mechanism obtains better cost performance and price performance by leveraging the advantages from both of the transactional and relational mechanisms.

Governance mechanisms and total relationship value: the interaction effect of information sharing

2018 ◽  
Vol 33 (5) ◽  
pp. 717-729 ◽  
Author(s):  
Ngoc Luu ◽  
Jack Cadeaux ◽  
Liem Viet Ngo
Keyword(s):  
Information Sharing ◽  
Design Methodology ◽  
Governance Mechanisms ◽  
Relational Governance ◽  
Content Type ◽  
Relationship Value ◽  
Contractual Governance ◽  
Relationship Performance ◽  
Practical Implications

Purpose The purposes of this study are to examine how contractual and relational governance mechanisms influence total value created in a buyer–supplier relationship and to investigate how supplier’s information sharing and information sharing asymmetry between two exchange parties differentially moderate these associations. Design/methodology/approach The study is conducted with a sample of 110 buyer–supplier matched dyads in various industries in Vietnam. Findings This study confirms that contractual governance and relational governance have curvilinear effects on total relationship value. Governance mechanisms have distinct interactions with supplier’s information sharing and information sharing asymmetry to influence total relationship value. Research limitations/implications Future study could expand the sample to various countries to investigate the role of cultural factors in the effects of contractual and relational governance. Practical implications This study draws implications for supplying managers about how to govern a relationship with a buying firm with which they are sharing information. It also provides implications about how to use contractual and relational governance to control the effects of supplier’s information sharing and information sharing asymmetry, on total relationship value. Originality/value This study extends the information sharing literature by looking into the effect of supplier’s information sharing on both parties’ relationship value. It contributes to the governance literature by investigating curvilinear effects of contractual and relational governance on relationship performance.

scholarly journals A viability criterion for computer system development projects

1984 ◽  
Vol 15 (3) ◽  
pp. 144-149
Author(s):  
J. Mende
Keyword(s):  
Computer System ◽  
Cost Of Capital ◽  
System Development ◽  
Development Project ◽  
Development Projects ◽  
Organizational Growth ◽  
Net Worth ◽  
Development Costs ◽  
Processing Cost ◽  
Informational Value

A manager facing the decision whether to proceed with a proposed computer system development project needs to determine whether its benefits are worth more than its costs. This can be done by applying a simple mathematical formula to calculate the project's 'net worth', as the sum of the annual benefits obtainable during the system's life span, less its development costs. The formula recognizes that a system's annual benefit, comprising enhanced informational value plus reduction In data processing cost, will change as a result of obsolescence, cost of capital, organizational growth and learning.

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