Revista
de
Administração
http://rausp.usp.br/ RevistadeAdministração52(2017)374–391
Corporate
Governance
Formal
and
relational
contracts
between
organizations:
proposal
of
a
model
for
analysis
of
the
transactional
and
governance
structure
characteristics
of
comparative
cases
Contratos
formais
e
relacionais
entre
organiza¸cões:
proposi¸cão
de
um
modelo
para
análise
das
características
transacionais
e
das
estruturas
de
governan¸ca
a
partir
de
casos
comparativos
Contratos
formales
y
relacionales
entre
organizaciones:
proposición
de
un
modelo
para
el
análisis
de
las
características
transaccionales
y
las
estructuras
de
gobernanza
a
partir
de
casos
comparativos
Luciana
Cardoso
Siqueira
Ambrozini
∗,
Dante
Pinheiro
Martinelli
UniversidadedeSãoPaulo,RibeirãoPreto,SP,Brazil
Received13November2015;accepted3March2017 Availableonline11September2017 ScientificEditor:PaulaSaritaBigioSchnaider
Abstract
Theliteratureindicatesthattheuseofformalandrelationalgovernancestructureshaveafundamentalroleintheconductandmaintenanceof inter-organizationalrelationships.Nevertheless,therearepossibilitiesfordiscussionsaboutthecompositionandfunctionofthesestructuresinthe presenceofdifferenttransactionalcharacteristics.Thus,amodelbasedontheliteraturesofformalcontracts,inter-organizationalrelationships, RelationalContractTheory,andTransactionCostEconomicsisproposed.Sincethisisaqualitativeexploratoryresearch,sixstructuredinterviews werecarriedoutandinterpretedbymeansofContentAnalysisforcasecomparisonanddiscussionoftheoreticalpropositions.Itwasobservedthat sometransactionalcharacteristics,whenpresentwithgreaterintensityinthecontextofatransaction,tendtocorroboratethetheoreticalpropositions offormalcontractualfunction,demonstratingthattheintensityofthesecharacteristicsisarelevantfactorforanalyzingtheadequacyofgovernance structures.Likewise,theuseofdifferentrelationalnormspresentsvariationswithineachcharacteristicanalyzed.Otheraspectsexploredinthe ContentAnalysisaresuggestedinthecompositionoftheanalysismodel.Thepropositionsexploredregardingthecompositionofthetransaction contextandthecomplementarityofgovernancestructureofinter-organizationalrelationshipsarealsodiscussed.
©2017DepartamentodeAdministrac¸˜ao,FaculdadedeEconomia,Administrac¸˜aoeContabilidadedaUniversidadedeS˜aoPaulo–FEA/USP. PublishedbyElsevierEditoraLtda.ThisisanopenaccessarticleundertheCCBYlicense(http://creativecommons.org/licenses/by/4.0/).
Keywords: Interorganizationalrelations;Formalcontractualcontent;Relationalcontractualcontent;TransactionContext
Resumo
Aliteraturaapontaqueautilizac¸ãodeestruturasdegovernanc¸aformaiserelacionaistempapelfundamentalnaconduc¸ãoemanutenc¸ãodasrelac¸ões interorganizacionais.Entretanto,verifica-sepossibilidadesparadiscussõessobrecomposic¸ãoefunc¸ãodessasestruturasnapresenc¸adediferentes características transacionais.Propõe-se,assim, ummodelo fundamentadonas literaturasdecontratos formais,relac¸ões interorganizacionais, nasTeoriasdosContratosRelacionaiseEconomiadosCustosdaTransac¸ão.Sendoumapesquisaqualitativa-exploratória,foramrealizadase interpretadaspormeiodaAnálisedeConteúdo seisentrevistasestruturadasparacomparac¸ãodoscasosediscussãodeproposic¸õesteóricas.
∗Correspondingauthorat:AvenidadosBandeirantes,3900,CEP14040-900RibeirãoPreto,SP,Brazil.
E-mail:lucianasiqueira@usp.br(L.C.Ambrozini).
PeerReviewundertheresponsibilityofDepartamentodeAdministrac¸ão,FaculdadedeEconomia,Administrac¸ãoeContabilidadedaUniversidadedeSãoPaulo –FEA/USP.
https://doi.org/10.1016/j.rausp.2017.08.010
Observou-sequealgumascaracterísticastransacionaisquandopresentescommaiorintensidadenocontextodatransac¸ãotendemacorroborar asproposic¸õesteóricasdeconteúdo efunc¸ãocontratualformal,demonstrandoqueaintensidadedapresenc¸adecaracterísticas transacionais apresenta-secomofatorrelevanteparaanálisedeadequac¸ãodeestruturasdegovernanc¸a.Nomesmosentido,autilizac¸ãodasdiferentesnormas relacionaisapresentavariac¸õesdentrodecadacaracterísticaanalisada.OutrosaspectosexploradosnaAnálisedeConteúdosãosugeridosparaa compordomodelodeanálise.Sãodiscutidasproposic¸õesexploradasacercadacomposic¸ãodocontextodatransac¸ãoeacomplementaridadede estruturasdegovernanc¸aderelac¸õesinterorganizacionais.
©2017DepartamentodeAdministrac¸˜ao,FaculdadedeEconomia,Administrac¸˜aoeContabilidadedaUniversidadedeS˜aoPaulo–FEA/USP. PublicadoporElsevierEditoraLtda.Este ´eumartigoOpenAccesssobumalicenc¸aCCBY(http://creativecommons.org/licenses/by/4.0/).
Palavras-chave:Relac¸õesinterorganizacionais;Conteúdocontratualformal;Conteúdocontratualrelacional;Contextodetransac¸ão
Resumen
Laliteraturaindicaque lautilización deestructurasdegobernanza formalesyrelacionales tiene unpapel fundamentalen laconduccióny mantenimientodelasrelacionesentreorganizaciones.Enesteestudioseanalizanlacomposiciónylafuncióndeesasestructurasenpresenciade distintascaracterísticastransaccionales.Sepropone,así,unmodeloconbaseenlaTeoríadelosContratosRelacionalesylaTeoríadelaEconomía delosCostosdeTransacción.Sellevaacabounestudiocualitativoexploratoriopormediodelanálisisdecontenido.Sehanrealizadoseisentrevistas estructuradasparalacomparacióndeloscasosydiscusióndeproposicionesteóricas.Sehaobservadoquealgunascaracterísticastransaccionales, cuandosepresentanconmayorintensidadenelcontextodelatransacción,tiendenacorroborarlasproposicionesteóricasdecontenidoyfunción contractualformal,loquedemuestraquelaintensidaddelapresenciadecaracterísticastransaccionalesseconfiguracomofactorrelevanteparael análisisdeadecuacióndeestructurasdegobernanza.Asimismo,lautilizacióndelasdistintasnormasrelacionalespresentavariacionesdentrode cadacaracterísticaanalizada.Paracomponerelmodelodeanálisis,sesugiereconsiderarotrosaspectosexaminadosenelanálisisdecontenido. ©2017DepartamentodeAdministrac¸˜ao,FaculdadedeEconomia,Administrac¸˜aoeContabilidadedaUniversidadedeS˜aoPaulo–FEA/USP. PublicadoporElsevierEditoraLtda.Esteesunart´ıculoOpenAccessbajolalicenciaCCBY(http://creativecommons.org/licenses/by/4.0/).
Palabrasclave: Relacionesentreorganizaciones;Contenidocontractualformal;Contenidocontractualrelacional;Contextodetransacción
Introduction
Thecooperativerelationshipbetweencompaniessetsup dif-ferent productive arrangements, and can stem from different motivations, such as: acquisition of additional competences; increaseof productivityand quality;cost andrisk reduction; organizationallearning;marketaccess;orpoliticalneed(Arino &delaTorre,1998;Baudry&Chassagnon,2012;Wallenburg &Schaffler,2014).
Nevertheless,suchcooperationisneithercreatednor main-tained automatically, due to either the possible exploitation by the parties, or the existence of faults in the relation-shipcoordination.Thus,theuseofgovernance structuresand mechanisms—such as formal and relational contracts which minimizethepossiblenegativeeffectsofcooperationbetween thecompaniesandcontributetothecoordination,control,and adaptation between the parties—becomes relevant (Dekker, 2004;Lumineau&Malhotra,2011).
Formalcontractsrepresentpromisesorobligationstocarry outcertainfutureactionswhichcanpresentvariationsintheir complexity,inturn affectingthe costof drawing upthe con-tract.Thus,the contracting partiestendtotakeonhighcosts fortheestablishmentofcomplexcontractsonlywhenthe con-sequencesof breachof contractareconsidered. Nevertheless, the contract’s capacity to safeguard the parties or even per-form coordinationand adaptation roles inthe relationshipis limited, mainlybecause future contingencies cannotbe fore-cast(Macneil,1978;Mayer&Argyres,2004;Poppo&Zenger, 2002;Williamson,1985).
Duetothe complexity andincompletenessof formal con-tracts,normsorrelationalcontractsareseenintheorganizational literatureas substitutes or additionsto formalcontracts or to
verticalintegration;relational contractsareinformal contracts sustainedbythe valueof futurerelationshipswithinthe orga-nizationsorbetweenthem(Baker,Gibbons,&Murphy,2002; Dyer&Singh,1998;Macneil,1978;Uzzi,1997).
Concerning the governance mechanisms and structures,
LumineauandMalhotra(2011)highlightthatmultiplemeansof coordinationandcontrolareinevitablyusedintherelationships, andthedeterminationofthelevelinwhichthecontractual struc-turesareusedisrelevant.Fromtheconsiderationspresented,the presentpaperarguesthatsinceformalcontractsareestablished atanexantemomentandare incomplete,relationalcontracts becomerelevantfortheminimizationofrisksandindrivingthe relationshipbetweencompanies.
According to the theory of Transaction Cost Economics (TCE), contracts are governance structures used tominimize transaction costs, in which the costs arise from drafting the agreement between the parties; losses that arise from oppor-tunisticbehavior;andthelackofadaptationofthecontracting parties.Accordingtothistheory,thetransactionalcharacteristics presentinarelationshipimplygreaterorreducedrisks,whichin turnwouldalterthecosts,functions,andcompositionsof con-tracts (Schepker,Oh,Martynov, &Poppo, 2014;Williamson, 1985).
Context transactional characteristics
Formal contracts Relational contracts
Relational risk reduction/Coordination/Adaptation Contractual
incompleteness
Contractual incompleteness
Fig.1.Interactionbetweenformalandrelationalcontractsforgovernanceintherelationshipsbetweenfirms.
Source:elaboratedbytheauthors.
Weintendtoproposeamodelforanalyzinghowtransactional characteristicsinfluencethefunctionandcomplexityofformal contractsandthetendencytouserelationalcontracts(i.e. rela-tionalgovernance).Theproposalputforthinthisstudyisbased ontheliteratureonformalcontracts,theTheoryofRelational Contracts,andtheTheoryofTransactionCostEconomics(TCE) appliedtointer-organizationalrelationships,withthelatterused asabasisfortheanalysisoftransactionalcharacteristics.Fig.1
showstheconstructinteractionsusedinthisresearch.
Justification
Despite the various benefits arising from companies’ networks, the continued sustainability of an arrangement requiresgovernancestructurecombinationswhichoffer verifi-cationoftheparticipants’autonomy(Lima,Garcia,Carvalho,& Martinelli,2009;Menárd,2011,Chap.26).Theunderstanding ofthecontingencyconditionsandothercriticalfactorsinthe for-mationandmaintenanceofthearrangementsisrelevantdueto thefactthatwell-coordinatedrelationshipstendtoeasea com-plexinterdependenceinthe transactions(Balestrin &Vargas, 2002;Balestrin&Vargas,2004).
Previousstudiespointoutthatcontextualfactors(i.e. trans-actionalcharacteristics,institutionalenvironment,relationship typeandduration,typeofvariablemeasurement)mayinfluence notonlythecompositionandthepurposeofformalcontracts(i.e. protection,coordination,adaptation),butalsothecomposition ofrelationalcontracts(Cannon,Achrol,&Gunslach,2000;Cao &Lumineau,2015;Mayer&Argyres,2004;Schepkeretal., 2014).
Thus,thereareindicationsthatthe useof formaland rela-tionalcontractualstructuresinacomplementarywaymaydiffer innatureandfunction,duetothecombinationandpresenceof transactional characteristics inthe relationships (Bakeretal., 2002; Cimino, 2015; Mallewigt, Decker, & Eckhard, 2012; Poppo&Zenger,2002;Uzzi,1997).
Nevertheless,itisstillpossibletoidentifyroomfor discus-siononhowvarioustransactionalcharacteristicscaninfluence
thecompositionandfunctionofformalandrelationalcontracts.
CaoandLumineau(2015)pointoutthatalthoughtheexisting literatureshowsthatformalcontractsandrelationalgovernance haveafundamentalroleininter-organizationalrelationships,the natureoftheactioncombinedwiththesegovernancestructures remainsambiguous.
SuchobservationissupportedbyCimino(2015),who high-lights the relevance of studies in which an economic and organizational perspectiveis consideredalongwiththesocial and relational aspects of the transaction, as an approach for understandingtheeconomicsofrelationalexpectationsof con-tractors.
Toaddtothediscussionoftheadditionalinteractionsbetween formalandrelationalcontracts,thetheoreticalfoundationsfor the propositionof an exploratorymodel are presented in the followingsections.
Transactioncharacteristics,functions,andcomplexity
offormalcontracts
TCE’s fundamental issues are related to the economics of transactioncosts inthe presence of different transactional attributes, which demand governance structures that differin costsandadaptivecapacities.Fromthisperspective,the prob-lemoforganizationaleconomicsissetasacontractingissue,and thepurposesoforganizationalefficiencyaremetbythematch betweenthegovernancestructureandthetransactionattributes, inadiscriminatoryway(Williamson,1985).
Thus,thecontractualrangeismainlyexplainedasaresultof differencesinthetransactionattributes.Inthecaseof assump-tionsabouthumannature(i.e.limitedrationality;opportunism) whichhaveexanteorexposteffectsonestablishingthe relation-ship,thecharacteristicsofthetransactiontendtoinfluencethe effectivenessofthecontractsinminimizingtherisksassociated withthe relationships(Brosseau&Glachant,2002; Schepker etal.,2014;Simon,1962;Williamson,1979,1985).
distinguishesTransactionCostEconomicsfromothereconomic treatments—as well as those of uncertainty and frequency (Williamson,1985).
Assetspecificityhappenswhenaninvestmentmadein sup-portofatransactionhasalowervalueinalternativeuses.This transactioncharacteristic,togetherwiththebehavioral assump-tions of opportunism and limited rationality implied in the complexity of formal contracts, and the extent to which the clausesaimingtosafeguardthepartiesareused,means transac-tionsenabledbyconsiderablespecificinvestmentsbenefitmore from a formal governance structure (Mallewigt et al., 2012; Williamson,1985).
Anothertransactional characteristicpresented by the TCE is uncertainty, which is related to unanticipated and unpre-dictablechangesinthecircumstancesinwhichtherelationship isinserted,challengingthecreation ofaligned incentivesand responsibilities.Sinceexantetransactioncoordinationbecomes impracticalincasesofuncertainty,contractstakeontheroleof promotingadaptationtothecontingencieswhenspecifying prin-ciplesandnormssothatthepartiescandealwithunanticipated events(Luo,2002;Mayer&Bercovitz,2008;Williamson,1985; Zhou,Poppo,&Yang,2008).
Transactionfrequencyisrelevant,sincethecostsof a spe-cializedgovernancestructurewillbemoreeasilyrecoveredwith greaterandrecurrenttransactions.Thus,intransactionsinwhich thepartiesinteractwithgreater frequency,thereisatendency touseformalclausesasthebases forfuturetransactions.The contractalsohasacoordinationfunction,avoidingthe useof thecourtsinfavorofarbitration,tobetterpreserve the conti-nuityof therelationship(Batenburg,Raub, &Snijders,2003; Williamson,1985).
Besides the transactional characteristics considered in the TCE,theliteratureoninter-organizationalrelationshipspoints toothersthatpossiblyinfluencethecompositionofgovernance structure,namely:dependence,difficulty inmeasuring perfor-mance,relationshipperiod, andthe expectation of continuity oftherelationship(Artz&Bush,2000;Crocker&Reynolds, 1993;Poppo&Zenger,2002;Schepkeretal.,2014;Williamson, 1979,1993;Zhouetal.,2008).Next,thesecharacteristicsand correspondinggovernancestructuresarereviewed.
Following Scheer, Miao, and Palmatier (2015), the term “dependence”refers totheneed of oneof the partiesto pre-servetherelationshiptomeetitsgoals.Unlikeassetspecificity, inthecaseofdependenceoneof thepartiesneedsthe perfor-manceoftherelationshipfortheattainmentofresourcesorin ordertoperformitsactivities.Theadjustmentsrequiredinthe caseofthischaracteristicandthecostsofchangingtoanother relationshipdemandtheuseofformalcontractualclauseswhich leadtothecoordinationoftaskscarriedoutintherelationship (Hállen,Johanson,&Seyed-Mohamed,1991;Lusch&Brown, 1996;Mallewigtetal.,2012;Williamson,1985).
Consideringthattherisksregardingperformancearisefrom thepossibilitythat theparties’objectivesarenotreached,the difficultyinmeasuringperformancealsotendstoaffecttheway thegovernancestructureissetup,andthemeasurementofsome kindsofperformancecanbecomecostlyuptobeing impracti-cable.Nevertheless, whenthe risksassociated withbreachof
contractarerelevant,thecontractualclausestendtobeusedto safeguardtheparties(Crosno&Brown,2015;Mouzas&Blois, 2013;Poppo&Zenger,2002).
Knowingthatthepossibilityoffutureopportunistic behav-iorcannotbedirectlyobserved,previousexperiencecanserve as a useful guide, making the relationship period a relevant variableintheanalysisofthe contextoftherelationship. The inter-organizational routines provide a basis for the parties to reach their relationship goals, in which the contracts are tools that contain information about coordination and coop-eration. This communication, originating from a specialized language,is developedascollaborative experiences are accu-mulated(Crocker&Reynolds,1993;Williamson,1979;Zollo, Reuer,&Singh,2002).
The continuity of the relationship reflects the long-term feasibilityperspective.Agents whohaveabackgroundwhich demonstratesatendencytocooperate,usingconflictresolution withoutfalling back onthird-partyintervention, tendtohave futureexpectationsofthecontinuityoftherelationship, estab-lishingcontractswhichreflect the expectationofmaintaining theallianceinthefuture.Unlikerelationshipswhichpresenta predeterminedterm,formalcontractsplaytheroleofproviding coordination guidelines to alignexpectations inrelationships withoutaterminationdate(Crocker&Reynolds,1993;Jap& Anderson,2003;Mallewigtetal.,2012;Reuer&Arino,2007). As the transactions become more complex and uncertain duetothepresenceofthetransactioncharacteristicsdiscussed above,theeconomicchangestendtorequiremoresophisticated contractualgovernance,suchasabilateralgovernancestructure that,comparedtoverticalintegration,enablesareducedcostof control.However,problemsarisewhencontractualand adapt-abilityexpensesareconsidered,makingleewayforadjustments and flexibility necessary (Schepker etal., 2014; Williamson, 1979).
Considering that cooperationin the relationships between companies does not take place automatically, and that for-malcontractsareveryheterogeneousdocumentswhichinclude terms whichare notlegally rendered, it issuggested that the purpose ofcontractsisbroaderthanjustprovidingguidelines tothecourts.Fromthisperspective,contractscontain informa-tion that gobeyond the function of safeguarding the parties, presentingclauseswhichcanbeusedforthepurposesof coordi-nationandadaptationoftherelationship(Malhotra&Lumineau, 2011; Mallewigt et al., 2012; Ryall &Sampson, 2003). The possibilitiesofthefunctionsofformalcontracts(i.e.safeguard; coordinate;adapt)aredescribednext.
FromtheTCEperspective,takingintoaccountopportunism, one of the main motivations to write a contract is to safe-guard investmentsandownership rightsagainst therelational riskofmisappropriation;thereforetheattributeofasset speci-ficityplaysarelevant role inthe useof safeguarding clauses (Williamson,1985).
Table1
Contractualfunctionsandtypicalclausesinformalcontracts.
Contractual function
Safeguard Coordination Adaptation
Typical clauses
Propertyrights Functionsand responsibilities
Priceadjustment
Confidentiality Communication (reporting)
Engineering changes Anticipated
unilateral termination
Projectscale Compellingreason clauses
Disputeresolution Designationof specificstaff
Source:AdaptedfromMallewigtetal.(2012).
tobeharmonized.Therefore,thecontractcoordinationfunction aims toalign the actions, withtask dependenceas the back-ground,whichimposescoordinationchallenges(Dekker,2004; Gulati&Singh,1998;Mallewigtetal.,2012).
Whilesafeguardandcoordinationclausesareassociatedto the ex ante moment of the transaction, inherent risks due to thepresenceofuncertaintyandtheimpossibilityofforecasting allfuturecontingenciescreatetheneedforcontractualclauses whichhelpthepartiesdealwithunexpectedevents.The pres-ence of procedures and guidelines direct the actions of the partieswhen dealingwithunpredicted circumstancesor con-flicts,reflectingsituationscharacterizedbytheinstabilityofthe transaction(Crocker&Reynolds,1993;Luo,2002;Mallewigt et al., 2012).Table 1 summarizes the typical clauses for the functionscommonlyaimedatformalcontracts.
Inthisrespect,Mallewigtetal.(2012)arguethatthe perfor-manceofinter-organizationalrelationshipsisnotonlyaffected bythenumberofcontractualclauses(i.e.contractual complex-ity), but also bythe content whichspecifies the functionsof the contracts. From the model proposed by the authors, the clausesconsideredtypicalof thesafeguardfunctionarethose relatedtoownershiprights,confidentiality,anticipated unilat-eraltermination,anddisputeresolution.Ontheotherhand,the coordination function would involve the presence of clauses addressingfunctionsandresponsibilities,communication(i.e. reporting),projectscale,andtheappointmentofspecificstaff. Finally,theadaptationwouldleadtothepresenceofclausesof priceadjustment,engineeringchanges,andcompellingreason clauses.
In this sense,the one-dimensionalconceptualization tends tohidethefactthatdifferentcontractualclauseshavedifferent purposes. Whenconsidering morethanjustcontractual com-plexity,itisseenthatthetransactionalcharacteristicsinfluence thecomposition,use,andcomplexityofformalcontractsinorder tomatchthemtothetransactionalcontextatissue(Mallewigt etal.,2012).
In order to corroborate, Arino and Reuer (2004) argue that empirical evidence suggests a significant contractual heterogeneityinhybridarrangements,andthetransaction char-acteristics are determinant of the contractual complexityand governance form.The authorsalsohighlight that,inthe con-textinwhichthepartieshavealreadyhadpreviousexperience with eachother, the relationshipcanbe maintained withless use of complex formal contracts,since uncertainty about the otherparty’sbehaviorisreduced.Table2summarizesthe rela-tionshipsbetweenthecontractualfunctionandthetransaction characteristicsobservedintheliterature.
Basedonthepremisethatrelationalgovernanceandformal contractualfunctions,andtheircomplexity,canoriginateinthe samecontextthrough the complementarityapproachbetween governanceforms(Poppo&Zenger,2002);andthatcontracts specify the termsof anagreement betweentwo partiesbeing presentedinvariedways,frominformalpromisestoformalized agreements(Schepkeretal.,2014),thecomplementary perspec-tivebetweentheformalandrelationalcontractsisdiscussedin thenextentry.
RelationalContractsasadditionalstructuretoformal
contracts
LumineauandMalhotra(2011)pointoutthatthepartiescan limittheuseofformalcontractualgovernancestructureforthree reasons:(1)thereductionofcostsassociatedwithcontract devel-opment,monitoring,andexecution–accordingtotheTCE;(2) therecognitionoftherelevanceofnewinformationconcerning the parties’interests,needs,andabilities; and(3)the encour-agementofmutualdevelopmentofreliabilityandcooperative norms.
Therefore,itisarguedthattheoperationalizationof transac-tioncostsisoptimizedwhenotherformsofagreementbetween thepartiesareused(i.e.relationalperspective)tomakethe gov-ernancestructureoftherelationshipefficient(Mayer&Teece, 2008;Williamson,1985).Sincecontractsarelimitedin provid-ingefficientgovernancemechanismsinrelationshipswithhigh
Table2
Transactionalcharacteristicsandtheirrespectiveformalcontractualfunctionsaccordingtotheliterature.
Transactionalcharacteristics Tendencyoftheformalcontractualfunction Authors
Dependence Coordination Mallewigtetal.(2012)
Uncertainty(environmental) Adaptation Mallewigtetal.(2012),RindfleischandHeide(1997) Difficultyinmeasuringperformance Safeguard PoppoandZenger(2002)
Assetspecificity Safeguard Mallewigtetal.(2012),RindfleischandHeide(1997)
Transactionfrequency Coordination Batenburgetal.(2003)
Relationshipperiod Coordination Zolloetal.(2002)
Expectationofrelationshipcontinuity Coordination ReuerandArino(2007)
levelsofexpertise,thereisthusroomforcontractualsolutions whichallowadjustments.Forthispurpose,formalandinformal governancemechanismsmaybe usedtocomplementor even supplementthecompositionof governancestructure (Cannon etal.,2000;Williamson,1979,1993).
Therefore,therelationalcontractshelptoovercomethe diffi-cultiesofformalcontracting,sincethelastonehastobespecified inexanteterms,whichcanbecheckedexpostbyathirdparty (Baker et al., 2002). Relational contracts can also be based on the results observed by the parties, allowing them touse theirspecificknowledgeofthesituationandadjustthemselves tonewinformationwhichisavailable.Thus,relational gover-nancestructuresprovideaflexibledeviceandprotectionagainst opportunism,whicharenecessaryforcontextswhichdemand anefficientadaptation(Bakeretal.,2002;Cannonetal.,2000). AccordingtothetheoryofRelationalContracts,the interac-tionbetweenthecontractingpartiesisruledbyasetofclauses whichplayarelevantroleinformingtheresponsibilitiesofthe partiesandtherealfunctioningofcontracts.Theseclausesare basedonasetofinnervalues,thesocialcontext,andthe eco-nomicfactorsoftherelationship,andarecalled“usualclauses”, consideredcommontoallkindsofcontracts(Diathesopoulos, 2010;Macneil,1983).
Once the inner values are related to the relationship, the intensity of the usual clauses contributes to the position of the relationship on a spectrum which varies from more dis-cretetomorerelational.Thefollowingnormsareconsidered: (1)IntegrityRole;(2)Reciprocity;(3)Implementationof plan-ning;(4)Effectuationofconsent/agreement;(5)Flexibility;(6) Contractualsolidarity;(7)Relianceandexpectation,whichare linkingnorms;(8)Creationandrestraintofpower;(9)Propriety ofmeans;(10)Harmonizationofthesocialmatrix(Blois,2002; Blois&Ivens,2007;Macneil,1983).
AccordingtoCannonetal.(2000),therelationalnormsreflect theexpectationsabouttheattitudesandbehaviorsoftheparties while they workcooperatively to reach mutual or individual goals,anddefinetherelationalpropertieswhichaffecttheability toadapttotheconditionsimposedbythepresenceof transac-tionalcharacteristics.
Macneil(2000)highlightsthatusualclausesprovidea check-listtoisolate the elementsof the relationships whichinvolve andaffectthetransactionsignificantly, therebyestablishing a conceptualstructurefor theunderstandingandanalysisofthe governancestructuresofthetransactions.Consideringthe com-plementaritybetweenformalandrelationalcontracts,andwhich different transactional characteristics demand distinct gover-nance structures, the grounds for the model proposition are presentedinfollowingtable.
Theoreticalfoundationsandpropositionsforthemodel
Accordingtotheliterature,avarietyofmechanisms,from formalcontractsandthecourts,toreputationpreservationand themaintenanceoftherelationship,enforcethecommitments madebytheparties,andmorebroadlyincentivizethemto coop-erate.Itisarguedthatsometransactionalcharacteristicsrequire safeguardswhichincludegreater surveillanceandmonitoring,
aswellasgreatercomplexityofformalcontracts,whileothers requiregreaterflexibilityandcoordination,thereforealteringthe contractualcomposition(Schepkeretal.,2014;Weber,Mayer, &Marcher,2011).
Knowingthatthecharacteristicspresentedgeneratedifferent riskstotheorganizationsofnotreachingtheintendedresults, differentgovernancestructuresthatmayvaryfromdiscreteto relational,usingformalcontractsornot,aredemandedforthe conductoftherelationships,asexplainedinTable3,andeach characteristicofthetransactionsisdetailednext(Dekker, Sak-aguchi,&Kawai,2013;Hatten,James,Fink,&Keeler,2012).
Dependence
Formal contracts have a foremost position as governance structuresincasesofdependence,containingguidelineswhich coordinate the actions of the parties in the relationship, and which also reduce the risks faced by the participants. Sec-ondarily,such characteristics mayalterthe levelof relational commitment, changing the reliability perception between the dependent parties (Geyskens, Steenkamp, Scheer, & Kumar, 1996;Schepkeretal.,2014).
Uncertainty
The issues related to governance are also noticeable in changescharacterizedbyuncertainty,whichintensifies contrac-tual incompleteness,demandingmechanismsthat bringabout adaptationswhicharespecifictotherelationship.Since uncer-taintyincreasesthecostsofformalcontractingbyincreasingthe difficultyofforecastingfuturecontingenciesandsettingproper safeguards,lessformalcomplexcontractsaremade,whichgives roomtotherelationalgovernanceforms(Cannonetal.,2000; Crocker&Reynolds,1993).
Difficultyinmeasuringperformance
Thepartiesmaytendtomakelesseffortintherelationship duetoinformationasymmetryconcerningtheresulttobe deliv-ered,demandingmoreresourcestobeallocatedtothecreation ofcomplex(i.e.detailed)contractsforthirdpartyverification. Thus,therelationalgovernancewouldtendtobelessused,since satisfactionwiththeperformancewouldbeminimizedbecause thepartiesavoidtheeffort(Poppo&Zenger,2002;Poppo,Zhou, &Zenger,2008).
Assetspecificity
Table3
Transactionalcharacteristicsandthetypeofgovernancestructureaccordingtotheliterature.
Characteristicsofthe relationshipwhich determinethe vulnerabilityofthe parties
Typeofgovernancestructure(formal/relational) Authors
Dependence Needforformalcontractualgovernancesophistication;thepartiesare relevantindeterminingthegovernancestructure.
PoppoandZenger(2002),Schepkeretal.(2014)
Uncertainty(taskand environmental)
Incompletecontracts;needforrelationshipcoordinationandadaptation, relationalgovernancebecomesrelevant.Still,environmentaluncertainty resultsinlesscomplexcontracts.
ArtzandBush(2000),Cannonetal.,2000,Crockerand Reynolds(1993),Williamson(1979),Zhouetal.(2008)
Difficultyin measuring performance
Morecontractualsophistication;certaincontractualflexibility.Incaseof expectancyofrelationshipcontinuity,therelationalclausescontributeto thereductionofrisksarisingduetothedifficultyinmeasuring performance.
MouzasandBlois(2013),PoppoandZenger(2002), Poppoetal.(2008)
Assetspecificity Needforcontractualgovernancesophistication;morecomplexcontracts. Strictercontractualprovisions.Contractsfocusedonsafeguardingthe parties.Morecontractualdetailingwouldtendtoreducerisk,decreasing theneedofreliability.
ArranzanddeArroyabe(2012),CrockerandReynolds (1993),Joskow(1988),Luietal.(2009),Malhotraand Munigham(2002),ReuerandArino(2007),Riordan andWilliamson(1985),Schepkeretal.(2014), Williamson(1979),ZhouandPoppo(2010) Transactionfrequency Thegreatertherelationshipfrequency,themoreinformationaboutthe
otherparty,andthelessrelevanttheformalcontractis.Thelowerthe frequencyandthelessinformationabouttheotherpartyyouhave,the morerelevancetheformalcontracthas.
PoppoandZenger(2002) Williamson(1985)
Durationof relationship
Thelongertherelationship,themorerelationalgovernanceisusedin conductinginter-organizationalrelationships,duetothereductionof uncertaintyandincreaseinreliabilitybetweentheparties.Intheuseof formalgovernance,greatercontractspecificationispossible.Theless historybetweentheparties,thelessthetendencytodeveloprelational practicesandnorms.
CrockerandReynolds(1993),Luo(2002),Poppoand Zenger(2002),Poppoetal.(2008),Tsamenyietal. (2013)
Expectationof relationshipcontinuity
Theexpectancyofrelationshipcontinuitydecreasestheshort-termhorizon oftheparties,therebyalsodecreasingthetendencyofopportunistic behaviors,andhavinggreaterrelationalpresence.
PoppoandZenger(2002),Williamson(1993)
Source:Elaboratedbytheauthors,fromtheworkmentioned.
inthelegalsystem(Crocker&Reynolds,1993;Joskow,1988; Schepkeretal.,2014;Williamson,1979).
Frequency
TheliteratureinTCEpointstothesupplantingofthecourtsby arbitrationincasesofgreaterintensityofthisdimension,since itismoreorientedtothecontinuityofthetransactionsbetween the parties.Thus,formalcontracts would serve as guidesfor conductingthe relationship,andthesocialandrelational pro-cessesplayarelevantroleingovernancewhenpromotingnorms whichgenerateflexibility,sympathy,andinformationexchange (Batenburget al.,2003; Poppo &Zenger, 2002; Williamson, 1985).
Durationoftherelationship
Inrelationships inwhichthepartiespresentstable interac-tionstandardspromoted byrepeatedcollaborations,thereisa tendencytoincreasecoordinationandcooperationthroughthe familiaritybetweentheparties,whichisnecessaryforthe devel-opmentofrelational governance.Therefore,companieswhich interactfor longertendtoadopt lesscomplex contracts,with fewerclauses,andwhichcontainprovisionsorientedtothe
coor-dinationof therelationship(Poppo&Zenger, 2002;Reuer& Arino,2007;Williamson,1979;Zolloetal.,2002).
Expectancyofrelationshipcontinuity
Formal contracts used in relationships with undetermined periods,andinrelationshipswithpre-fixedperiods,present dif-ferentcontractualprovisions,andtherewouldbeatendencyto useclausesofanenforceablenatureinthelastcondition. There-fore, relational normsof cooperationand mutualcooperation haveanimportantroleinprovidingflexibilitytocooperatein theunexpectedcontingenciesthatcannotbeavoidedovertime, preservingthestabilityoftherelationship.Sincetheformal con-tractualspecificationsforthecoordinationofexpectedbehavior are imperfect, furtherrelational mechanismsmay be used to extendthelongevityandcontinuityoftherelationship(Klein, 1995; Poppo&Zenger, 2002;Reuer&Arino,2007;Zhou& Poppo,2010).
Table4
Studypropositions.
Propositions Transactioncharacteristic Tendencyoftheroleofformalcontracts Tendencytoformalstructures Tendencytorelationalstructures
1st. Dependence Coordinate + −
2nd. Uncertainty Adapt − +
3rd. Measurementdifficulty Safeguard + −
4th. AssetSpecificity Safeguard + −
5th. Frequency Coordinate − +
6th. DurationoftheRelationship Coordinate − +
7th. Expectationofcontinuity Coordinate − +
Source:Elaboratedbytheauthors.
governance compositions;and(iii) that formalcontracts may presentdifferentclausesandfunctionsinthevariouscontexts.
The“+”and“−”signsusedinthetableaboveaimto
repre-sentthetendencytotheuseofformalandrelationalgovernance typeswithgreaterorlesserintensity,sincethetheoretical foun-dationsarediscussedfromacomplementarityperspective.Thus, itisexpectedthat:(i)ifthereisdependencebyoneoftheparties inthe relationship, formalcontracts will havegreater weight inthegovernance,containingclauseswhichleadto coordinat-inginteraction;(ii)incaseofuncertainty,theformalcontracts would be used to help adapt, but relational contracts would bemorerelevant;(iii) inrelationshipswherethere exists dif-ficultyinmeasuring performance, therewould bea tendency to use predominantly formal contracts, mainly composed of safeguardclauses;(iv) assetspecificity wouldbringthe same governancestructureasdifficultyinmeasuringperformance;(v) thefrequencyoftransactionswouldimplytheuseofrelational governance, and formal contracts composedby coordination clauses;(vi)thedurationoftherelationshipbetweentheparties and(vii)theexpectancyoftherelationshipcontinuitywouldtend todemand the samegovernance structure as the “transaction frequency”characteristic.
Afterthe propositionswere discussedintheoreticalterms, theywereanalyzedempiricallybeforeelaboratingthemodel.In thenextentry,themethodologyusedtodosoispresented.
Methodology
Thepresentstudyaimstoproposeamodelforanalyzingthe tendencytouseformalgovernancestructuresfor the relation-shipsbetweencompanies,throughananalysisofformalcontract complexity and function, and the tendency to use relational structures,takingintoaccountseveraltransactionalcontexts.
Asitisamodelproposition,the presentresearchis classi-fied as qualitative-exploratory.Martins andTheóphilo (2007)
highlightthat,inqualitativestudies,thedata,information,and evidencearenotsubjecttomeasurement, makingitnecessary todescribe,understand,interpret,andanalyzeinformationthat isnotexpressedindataandnumbers.
Consideringtheexploratorynatureoftheresearch,the tech-niquesofinterviewandanalysisofcontentaresuitablebecause theyenrichtheattempttosoundoutthedatagathered, increas-ingthetendencyfordiscovery(Bardin,2011,p.35;Martins& Theóphilo,2007).
The data for the application of the technique of Content Analysiswereobtainedbymeansofstructuredinterviewsand written contracts.The interviewwasstructuredinthree ques-tiongroups,namely:(i)questionsreferringtotheuseofnorms whichestablishrelationalcontracts;(ii)questionsregardingthe formalcontractualcompositionforthecomplexityandfunction oftheformalcontract;and(iii)questionsaboutthetransaction characteristicspresentintherelationshipanalysis.
In ordertoobtain moreaccuracyinthe dataanalysis,Jick (1979) pointsout thetriangulation process. Theauthor high-lightsthat thisprocesscanbeappliedbymeansoftheuseof differentmethods(i.e.between-methods).Inthecaseof quali-tativestudies,multiplegroupcomparisonorcrosscheckingcan beusedtoensurethedata’sinnerconsistenceandreliability(i.e. within-method).
Intendingtoobtaingreaterinnerreliabilityinanexploratory study,it wasdecidedto(i)elaborateaninterviewscript from the structure of data collectionalready tested in papers pub-lished inthe field;(ii) use morethantwo questions for each variable (except the “relationship duration” and “transaction frequency”variables);(iii)carryouttheinterviewwithsix com-panieswhichhavedifferenttransactionalcharacteristicsinthe relationship, enabling case comparison; and(iv) collect data about the formalcontractual contentby meansof interviews, and paper documentsin the relationships which used formal contracts.
Theuseofmultiplemetricsforeachvariablemaximizesthe elucidationofvariationswhichwouldpossiblybeneglectedin casejustonemeasurewasused(Jick,1979).Therefore,an inter-viewscriptfromtwotosevenquestionspervariablewasused, andeachquestionwasapproachedwithstatementsandnegatives inordertocaptureinconsistencyintheanswers.InTable5,the constructs,thevariablesobserved,theworksonwhichthe pro-tocol isbased, andthe numberof questions appliedfor each variablearepresented.
Inordertomakeitpossibletoobservetherelational gover-nance,thetypicalnormscaleoftheRelationalContractTheory wasused,allowingustochecktheintensityoftheuseofthis governancetypeintheconductoftherelationships,promoting theunderstandingofthevariationinMacneil’sspectrum(Blois &Ivens,2007;Kaufmann&Dant,1992;Macneil,1978).
Table5
Constructs,variables,interviewprotocolgroundsandnumberofquestionspervariable.
Constructs Variablesanalyzed Workthatbasetheinterviewprotocol Numberof questionsper variable
Relationalgovernancestructure:norms analyzedfromtheTheoryofRelational Contracts
Integrityfunction KaufmannandDant(1992) 7 Relationalfocus(composedbytheplanning
normsandconsentestablishing)
KaufmannandDant(1992) 5
Reciprocity KaufmannandDant(1992) 5
Sympathy 7
Powerlimitation KaufmannandDant(1992) 4
Harmonizationwiththesocialframework– conflictresolution
KaufmannandDant(1992) 2
Flexibility KaufmannandDant(1992) 5
Adequacyofmeans BloisandIvens(2007) 3
Formalgovernancestructure:formal contractualcontentandcomplexity–basisin thecontractliterature
Prevailingcontractualfunction(presence/lackof safeguardclauses,coordination,adaptation)
Mallewigtetal.(2012),Parkhe(1993) 11
Contractualcomplexity–presence/lackof clauseswhichindicatecomplexity
8
Transactionalcharacteristics–basisinthe TheoryofTransactionCostsEconomicsand literatureininter-organizationalrelationships
Dependence Heide(1994) 4
Uncertainty ArtzandBush(2000) 3
Difficultyinmeasuringperformance Weberetal.(2011) 2
Assetspecificity ArtzandBush(2000) 3
TransactionalFrequency PoppoandZhou(2014) 1 Relationshipduration PoppoandZhou(2014),Poppoetal.
(2008)
1
Expectationofrelationshipcontinuity HeideandMiner(1992) 3
Source:Elaboratedbytheauthors.
governance forrisk reduction (Malhotra&Munigham, 2002; Parkhe,1993;Poppo&Zenger,2002;Reuer&Arino,2007).
Nevertheless,itisarguedthatcontractualcomplexitydoesnot playthesameroleasformalcontractsintheconductofthe rela-tionship,andthusthetypesofclauseswhichformthecontract arechecked;theseclausesareclassifiedaccordingtothemodel ofMallewigtetal.(2012),whoconsiderswhichclauseswould bemorecriticalforthe contractualfunctionsof safeguarding, coordinating,andadapting.Thetypicalclausesforeachfunction arepresentedinTable1.Additionally,thetransaction charac-teristicsweremeasuredaccordingtothemethodologicaltools proposedbyHeide(1994),ArtzandBush,(2000),Weberetal. (2011),PoppoandZhou(2014),Poppoetal.(2008),andHeide andMiner(1992),accordingtoTable5.
Afterthedatacollectionprotocolhadbeenelaborated,the interviewstookplace,carriedoutinperson,recorded,and tran-scribedafterwards.Theonlyexceptionwastheinterviewofthe managerof themill,whopreferredtobeinterviewedwithout beingrecorded.Inthiscase,thedatacollectionwasdonethrough notes.Fortheanalysisoftheformalcontent,itwaspossibleto haveaccesstothewritten contactsofthreeincubated compa-nies,whileintheothercasesthedatawasobtainedviaprotocol atthemomenttheinterviewwascarriedout.
InordertoapplythetechniqueofContentAnalysis,six man-agerswereinterviewedinAugustandSeptemberof2015.Three interviewsdescribedthecontractualgovernanceanalysisofthe incubatedcompaniesatdifferentstages;another,thegovernance betweenacompanywithinaformalconglomerateofcompanies andtheconglomerateasawhole;another,thegovernanceofa footwearcompany’srelationshipwithitsleathersuppliers,both membersofthesamenon-formalizedconglomerate;andfinally,
therelationshipbetweenasugarmillanditssugarcane suppli-ers.Therecordedinterviewslasted45,74,57,62,and77min, respectively(Table6).
Thecaseswereselectedinordertoobtainadiversesample oforganizations,consideringthatalltherelationshipsanalyzed arepartofacontextwhichdemandscoordinationoutsidea hier-archical structure. Withadiversegroupof companies,it was possibletoanalyzethemodelpropositionincomparativecases. Inthefollowingsection,theinterviewanalysisispresented.
Analysisofinterviewcontent
Forexplorationandinterpretationoftheinterviews,the Con-tent Analysis method was used, and it was applied to the transcribed content followingthe orderof the datacollection protocol,beginningwiththeobservationoftransactional char-acteristics,followedbythecompositionofrelationalandformal contracts.
Table6
Characterizationoftheinterviewees.
Company Economicsectorofthecompany Positionofthe interviewee
Relationshiptypeinanalysis
1 Biotechnology–productionoftechniquesforDNAand RNAidentification
Companyowner Relationshipofpre-incubatedcompanywiththe incubator
2 Technology–developmentofinteractionplatformfor education
Companyowner Relationshipofincubatedcompanywiththeincubator
3 Biotechnology–serviceproviderinqualitycertification inthefieldofbiochemistryandprojectsincorporating newprinciplesincosmetics
Companyowner Relationshipofassociatedcompanywiththeincubator
4 Medicalandhospitalequipment–equipment manufacturer
Companyowner Relationshipofassociatedcompanytotheformalized localproductivearrangement
5 Footwear:productionofchildren’sshoes Companyowner Relationshipwiththemaininputsupplier 6 Agriculture:sugarmill ContractManager Relationshipwiththemaininputsupplier
Source:elaboratedbytheauthors.
Afterwards, the spreadsheet was completed with excerpts fromtheinterviews,andthewordswhichcorrespondedtothe analysiscategorywerehighlighted,withtheemphasisgivenby theintervieweestotheiranswersbytherepetitionof equalor similarwords also taken into account.Aspects of thereplies whichwerenotwithinthestructuredquestions,butwhich con-tributed tothe exploratoryaspects of the research,were also noted.
Aftertheinformationwasobtainedfromthematerial explo-ration,thetreatmentoftheresults,inference,andinterpretation, enabledanalysisofthepropositionsforelaboratingthemodel withinthelimitsofthecasesobserved.Thestructureusedfor understandingeachoneofthevariablesisdemonstratedinthe table,representedbytheanalysisofthevariable“dependence” forthepre-incubatedcompany.
Oncetheproceduredescribedabovewascarriedout,the pro-fileoftherelationshipsstudiedforthethreeanalysisconstructs was configured, considering the intensity (i.e. high, average, low)ofthepresenceof thevariables.Aftereachvariablethat representsthetransactioncharacteristicshadbeenanalyzed,the oneswhichhadgreaterintensity inthetransaction, i.e.which arepresentintheanalysisrelationshipcontext,wereallocated inthetable.
Therelationshipswerealsoanalyzedconcerning relational governance,andwereclassifiedonthe spectrumproposedby
Macneil(1981),whoclassifiestherelationshipsasdiscrete(D), thatisdeliberatelychosen,andrelational(R),inwhichsocial normsandinnervaluesarerelevantintherelationship.The inten-sityofthenormsdescribedbytheintervieweeswaschecked,and afterwardstherelationshipwasclassifiedaseither“tendingto relationalgovernance”(R),or“tendingtodiscretegovernance” (D)fromthenumberofnormspresentintherelationships ana-lyzed.Sinceitisanassessmentspectrum,themoderatevariation (R/D)—thatisrelationshipswhichdonotpositionthemselves attheextremesoftherelationalspectrum—isalsoconsidered.
Finally,theformalcontractualcomplexity,assessedinterms ofintensity(i.e.high,average,low),wasanalyzedbythenumber ofcontractualclausespresent,accordingtothemodelproposed byParkhe(1993).Therole playedbyformalcontractsinthe relationshipwasobservedfromthepresenceorlackoftypical provisionsofthecontractualfunctionsofsafeguarding,
coordi-nating,andadapting(Mallewigtetal.,2012)embeddedinthe contracts,enablinganalysisofthepredominantfunctionsinthe relationships.Aftertheexplorationanddatainterpretationstages hadbeenfulfilled,atableofthesummaryoftheanalyseswas developed.Theresultsforeachpropositionaredescribednext andpresentedinTable7.
1stproposition
In a divergence from the foundations in the literature reviewed,itwasnotpossibletoobserve,inthecasesanalyzed, thestandardofdependenceandgreatercontractualformality.
Even when there is highdependence intensity, the use of relational governance structures along with moderate formal contractual complexity canbe observed. Such finding differs fromthetheoreticalapproachoftransactioncosts,whichtakes theperspectivethatifthereisgreaterdependence,thereisalso needforamoresophisticatedformalcontractualgovernancein termsofcomplexity(Schepkeretal.,2014).
Theresult observedseemstobeinaccordwiththeoretical approaches that notedependenceaspredecessorfactorto the reliability formation,whichwould indicate theapproachof a less formalized governance (Tsamenyi, Qureshi, & Yazdifar, 2013).Inthelesserintensityextremeofthedependence charac-teristic(i.e.incubatedcompanyandsugarmill),thecontractual complexitylevelwaslow,andtherewasatendencyfor gover-nancebalancedbetweenrelationalanddiscrete.Regardingthe coordinationfunctionofformalcontracts,itwasnotpossibleto corroboratetheoneproposed.
Nevertheless,whencomparingtheinterviews,itisobserved thattheresourcetypewhichgeneratesdependencymay influ-ence the interviewees’ perception, as well as the life cycle of the companies. The “intangible” resources—described by intervieweesasmanagementandinstitutionalknowledge, net-working,accesstopotentialclients,gainofmarketreliabilityin lesstime—tendtointensifythedependenceperception.
Table7
Structureusedfortheanalysisofthevariables.
Company Interviewexcerpt Interpretation Variable:dependency
1–Pre-incubated “Iwoulddescribe,ingeneral,asagreatdifficulty”(toreplacethe resourcesfoundinthecurrentpartnership).(. . .)“Therewouldbea
lotofdifficultyifwedidn’thavetherelationshipwiththeincubator (. . .)suchastructuremakesiteasier”.
“Onthecurrentconditionweare,inthebeginningandsoon,there areaseriesofresources,aseriesofbusinessknowledge”.
“. . . (thechangeofstructure)besidesburdening,Iamnotsurewe
wouldmakeit,(. . .)Iamnotsurewecouldgetanythingmorein
ourfieldinbiotechnologybecausemanytimestheremaybe(. . .)
biotechnologyhasalittledifferentprofile,moretolongterm,soI don’tthinkitwouldbethateasytofindthiskindofsupport”.
Dependenceperceptionofgreat intensitybytheinterviewee,since hementionsthreetimeshow difficultitwouldbetonothavea relationshipwiththeincubator.
Highdependence perceptionofthe relationship
Dependenceperceptionnotonly regardingtheresourcesfoundin theincubatorstructure,butalso issuesconcerningthelifecycleof thecompany.
Perceptionofinfluencein thelifecycleofthe company.
Perceptionofthedifficultyof adaptingtheproductivesystemin anotherstructure.
Perceptionofinfluenceof thecompanysector regardingdependency.
Source:Elaboratedbytheauthors.
thatdependencecanbechangedinrelationshipsbetweenmore or less mature companies,and furtherthat different typesof transactionalresourcestendtochangesuchperception.Ifsuch propositions were corroborated, the data collection methods should,thus,includesuchvariationtobettermeasurethis vari-able.
2ndproposition
AccordingtothetheoryofTransactionCostEconomics,the presence ofuncertainty impliesgreater contractual costs,and thereforeless complexcontracts(Crocker &Reynolds, 1993; Williamson, 1985). Among the interviews analyzed, it was observedthat in caseswithgreater uncertainty present, there isatendencytowardmorediscrete governance,andmoderate contractualcomplexity.Likewise,inrelationshipswithalower uncertainty level,thereis highformalcontractual complexity andrelationaltendencyinthegovernance,andtheadaptation functionhasamoderateroleintheformalcontractual composi-tion.
Thus,cases representing the extremesof greater or lesser uncertainty(i.e.footwearandincubatedcompaniesrespectively) didnot corroboratethe propositionregarding thepresence of uncertaintyandlowerintensityofgovernanceformalstructures. Nonetheless, such checks show a complementarity per-spective, not the substitutionof governance formsin caseof uncertainty.It isalsohighlightedthat thefunctionof the for-malcontractisnotcorroboratedevenincasesofhighintensity ofthischaracteristic.In relationshipswithintermediatelevels ofuncertaintypresent,astandardbehaviorofthecharacteristic cannotbeverified.
Moreover,intheanalysis,itwasobservedthatthelifecycle ofthecompanyappearsasafactorrelatedtouncertainty,since theintervieweeshighlightthatatthebeginningofthecompany’s operations,itisnotpossibletoreallyknowtheacceptancelevel ofthe productinthemarket.Thus,theanalysespromote evi-dences that uncertainty could alter the way organizations in the initial stages, and more mature ones, govern their inter-organizationalrelationships.
Eventhoughthescalesanalyzedwithinthetheoretical per-spective used in thisworkpresent ahighlevel of reliability, institutionalaspectssuchastheoperationoftheorganizations ininternationalmarkets;orchangesinpublic,economic,andtax policies whichaffectthecompany,werenotconsideredinthe datacollectiontoolsreviewedforthiswork.However,theywere presentedbytheintervieweesasfactorswhichalterthe percep-tionofuncertainty,andconsequentlythemannerofcontracting betweencompanies.
3rdproposition
Regarding the difficulty of measuringperformance, it was observedthatcompaniesexhibitingahigherlevelofthis char-acteristic (i.e. incubated companies) present a high level of formal contractual complexityand function of high intensity safeguarding,withoutatendencytouserelationalgovernance. Suchobservationsareinagreementwiththeliteraturereviewed, sincethepresenceofgovernancerelationalnormsmaygenerate incentivestothepartiestotakeadvantageoftheinformational asymmetry originated from the difficulty in measuring per-formance (Jap&Anderson,2003),andformalcontractshave relevanceinthird-partymonitoringofthe relationship(Poppo &Zenger,2002).
In casesinwhichthe difficulty of measuring performance presentsatlowintensity,itwasconfirmedthatthecontractual complexity rangesfromlowtomoderate,andthe functionof safeguardingtheformalcontractrangesfromhightomoderate intensity.Whencomparingthetwoextremecases,thereis evi-dencethat,incaseswheredifficultyinmeasuringperformance wasmoreintense,thepropositioniscorroborated.Nevertheless, thefunctionofformalcontractswasnotdifferentfromcaseswith higherorlowercharacteristicintensities.
Otherfactors,suchasdifferencesinculturalaspectsandthe typeoftraded resources(i.e. involvingtechnology or innova-tion), seemto alterthe perception of difficulty in measuring performance.Therefore,itcouldbeexpectedthatifthe contract-ingpartiescomefromextremelydifferentculturalenvironments; or trade resources which result from processes with greater specificities, or evenresources withcharacteristics whichare noteasilydistinguishable,themeasurementoftheperformance oftherelationshipandthedefinitionof thegovernance struc-tures would be hindered. Regarding the cultural aspect, the resultobservedseemstobeinaccordancewiththe findingof
SteenkampandGeyskens(2012)abouttheneedofintegration between the TCE and the cultural theory in order to widely understandcompanies’governancechoices.
4thproposition
When analyzing asset specificity, it was observed that a greaterintensityofthischaracteristicispresentinrelationships withmoderatecontractualformality,andasafeguardfunction rangingfromhightomoderateintensity,presentinglowuseof relationalnorms andtendingtodiscretion.Suchobservations are in accordance with the TCE. According to the approach mentioned,assetspecificity implies amoresophisticated for-malcontractualgovernance,duetothedifficultyintransferring resources which had already been invested, at low cost, in anotherrelationship(Williamson,1979).
Incasesofnoorlowassetspecificity,contractualcomplexity waspresentedinthreelevels:low,moderate,andhigh,andthe safeguardfunctionofthecontractshadthesamebehavior.Thus, itwasonlypossibletohavethefourthpropositioncorroborated incasesinwhichtheassetspecificitylevelwasmoreintense.
Such checks may indicate a complementarity perspective betweenformal andrelational norms incases inwhichasset specificityislessintense.Sincethecontractualcomplexitymay vary according to the intensity of asset specificity, it can be inferredthat there isroomfor arelational perspective inthis relationshiptype. Fromthisperspective, the presence of spe-cificassetscouldmotivatecooperationbetweenthepartiesby increasingofreliabilitybetweenthem,andcomplexcontracts areusedless(Lui,Wong,&Liu,2009).
Consideringthatspecificassetsmaypresentspecificity cate-goriessuchasplace,time,humancapital,andtypeofdedicated assets(Williamson,1985),itissuggestedthat such character-isticsbe categorized for the purpose of data collection. This considerationisduetothefactthattheintervieweeshighlight theindustrysectorasafactorwhichtendstoaltertheneedfor specificinvestmenttotherelationship,andsuchvariablecanbe includedinthemodelforthepurposeofcontrolwhenchecking theinteractionof the contractualcharacteristics for abroader sample.
5thproposition
Inthe analysesconcerning frequency,it wasobservedthat thereisagreatertendencytorelationalgovernancein relation-shipsinwhichthepartiesinteractdaily,whichisinaccordance
withtheliterature,wherebythetaskfulfillment,promises,and expectancyoftherelationshiptakeplacebyasocialprocessin relationshipswithgreaterinteraction(Poppo&Zenger,2002). Moreover,theintervieweeshighlightthatseveralrelational gov-ernance norms, such as level of sympathy, power limitation, harmonizationwiththesocialframework,flexibility,reciprocity, and adequacy of means tend tobe used as maingovernance structuresinthegovernanceofmorefrequentrelationships.
Itispointedoutbytheintervieweesthatalthoughformal con-tractshaveahighlevelofcomplexity,eveninthemostfrequent relationships,theyareusedasasupplementalgovernancetool forcoordination.Suchobservationreinforcesthepropositionto considernotonlyformalcontractualcomplexityasameansof confirmingthis typeof governance, butalso inthe functions suchcontractshave.
It is also proposed to observe the way formal contracts areused intherelationshipgovernance,expandingthe under-standing of the interaction and complementarity of formal andrelationalstructures.Thelifecycleof thecompanieswas highlighted asafactorwhichmayinfluencethe frequencyof interactionbetweentheparties,mainlyinthecaseofthe transac-tionalcharacteristicofdependence.Morematureorganizations, whichhavealternativesforobtainingresourcesandwhichare moreindependentinternsofpositioningthemselvesinthe mar-ketwithoutresortingtojustonerelationship,tendtointeractwith lessfrequency.Thus,fromthecasesanalyzed,itisproposedthat companieswhicharemoredependentontherelationshiptend tointeractwithgreaterfrequency,usingrelationalcontractsat first.
6thproposition
Regarding the duration of the relationship, the literature suggests that a longer bond contributes to the effectiveness of cooperative agreements(Zollo etal., 2002),indicating the expecteduseofrelationalnorms.Nonetheless,itwasobserved thateveninrelationshipswithshorterduration,theuseof rela-tionalnormsisnotabsent.
Inshorter–durationrelationships(whichrangefromthreeand ahalfmonthstofourmonths),itwasseenthatthelevelsofformal contractualcomplexityweremoderateandhigh,andthe coordi-nationfunctionwasmoderate.Consideringthethreecaseswhich presentthesamerelationshipduration(threeyears)for compar-ative analysis of equal pairs,discerning astandard regarding formalcontractualcomplexity,whichrangedfromthe lackof contracttomoderatecomplexity,wasnotpossibleeither.
Theintervieweespointtodifferentusesofformalcontractsin differentstagesoftherelationship,andthisgovernancetypewas usedwithgreaterintensityinshorterrelationships.Thus,from thequalitativeanalysis,itisproposedthattheintensityofuse offormalandrelationalstructuresvaryduringtherelationship.
7thproposition
neither asregardsthe relationalgovernance structure,northe complexitylevelofformalcontractsandtheirfunctions. There-fore,despitethefacttheexpectationofcontinuityappearsinthe literaturereviewas acharacteristicwhichcaninterfereinthe governancestructureoftherelationships,itisnotadeterminant characteristicinthecasesstudied.
Nonetheless,itwasobservedintheinterviewanalysis,that factorssuch as the relevancethe traded itemhas in the pro-duction process, and even the difficulties the organizations wouldhaveinreplacingtheirpartnersorwayoftrading,would changetheexpectationofcontinuityoftherelationship.Thus, itisproposedthatthedependencelevelinfluencesthis expec-tation, and it is relevant to analyze the way such influence wouldtakeplace.Table9presentsthesummaryofthe propo-sitionanalyses,andpresentstheaspectsexploredfromthecase analysis.
Sincethisisanexploratory,notconfirmatory,research,other remarkswhichdonotrefertoverifyingpropositions,butwhich contributetotheelaborationofthemodelpresentedinFig.2,are presentedherein.Itispointedoutthattheremarkshighlighted wereobtainedfromthelimitednumberofcases,soother stud-iesfortheconfirmationof thepropositionsobtainedfromthe ContentAnalysisarenecessary.
Therefore,themodelpropositionpresentedinFig.2isbased on three pillars, which are presented in Fig. 1: (i)
transac-tionalcharacteristics;(ii)formalgovernanceoftherelationship; and(iii)relationalgovernance.Themaincharacteristicswhich form thecontextof the relationshipswere extractedfrom the TCEandtheliteratureoninter-organizationalrelationships,and it is argued that the presence or lack thereof, and even the intensity of these characteristics tend to influence the com-plementarity between the structures of formal and relational governances.
Forthispurpose,the functionsthat formalcontractscould haveincasesoftransactionalcharacteristicswerepresentedin
Table2,anditisarguedthat,fromtheliterature,thesecontracts couldpresentdifferentfunctions(i.e.safeguard,coordinate,and adapt). Nevertheless, the formal contracts may vary both in function andcomplexity. Knowing that formaland relational contracts may complement each other, Table 3 presents the expectationsofgovernancestructurereviewedintheliterature, whichwouldtendtobeusedininter-organizationalrelationships foreachcharacteristicconsideredinthiswork.
The items reviewed in the literature and presented in
Tables2and3wereusefulasabasisforthetheoretical propo-sitionsofthemodel,showninTable4.Thevariablesusedfor collectingdataandmeasuringthethreeconstructsarepresented inTable5,togetherwiththereferencesusedforsettingthedata collectionstructure.Aftertheinterviewswereanalyzed,Table8
presentsthe summaryof theobservationsof thecases, which
Composition of the clauses for conducting the relationship
Variables for analysis of the transaction characte ristics extracted from the
literature
- Dependence
- Uncertainty
- Difficulty in measuring performance of
the relationship
- Asset specificity
- Frequency of the relationship
- Duration of relationship
- Continuity Expectancy
Variables for the analysis of the relational
norms – relational spectrum
- Role integrity;
- Reciprocity;
- Implementation of planning;
- Effectuation of consent/agreement;
- Flexibility;
- Contractual solidarity;
- Reliance and expectation (linking norms);
- Creation and restraint of power;
- Propriety of means;
- Harmonization of the social matrix
Variables for analysis of formal contractual function and
complexity
Intensity of uncertainty, of
difficulty in measuring
performance and asset
specificity
- Perception of intangible
benefits
- Learning in the relationship
- Need to maintain standard of
resource traded
- Life cycle
- Operation in international
market and dealing with
cultural differences
- Activity sector
- Diversity in the
possibility of input
acquisition
- Company’s life cycle - Company size
- Type of resource traded in the
relationship (i.e. involves
technology/innovation)
Contractual complexity
- Safeguarding function
- Coordination function
- Adaptation function
Fig.2.Modelproposedforanalysisofthetransactioncharacteristics,formalandrelationalcontractualcontent,andexploratoryaspectsoftheresearch.
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Summaryoftheanalysisofrelationaltendency,functiontendency,andformalcontractualcomplexity,andpredominanceofcontextualcharacteristics.
Constructs Variablesanalyzed Pre-incubated Incubated Associated Medicalhospital equipment
Footwear Mill
Relational governance structure
Integrityrole High–R Moderate–R/D Moderate–R/D Moderate–R/D Low–D Lack–D Discretionincrease
(implementationofplanning andeffectuationofconsent)
Low–R Moderate–R/D High–D Low–R Moderate–R/D High–D
Reciprocity Moderate–R/D Moderate–R/D Low–D High–R Low–D Low–D
Contractualsolidarity High–R High–R Moderate–R/D Moderate–R/D Low–D High–R Creationandrestraintof
power;
High–R High–R Moderate–R/D High–R Moderate–R/D High–R
Harmonizationofthesocial matrix
Highrelational–R Highrelational–R Moderaterelational–R/D Highrelational–R Moderateformal–D Highrelational–R
Flexibility High–R High–R High–R High–R Moderate–R/D Low–D
Proprietyofmean Moderate–R/D Moderate–R/D Moderate–R/D High–R Moderate–R/D Alta–R Spectrumofdiscrete
relationshipandrelational tendency
Relationaltendency Relationaltendencywith lesserintensity
Discreterelationship tendency
Relationaltendency Discreterelationship tendency
Balancedrelationaland discretetendencies
Formal governance structure
Predominantcontractual function
Balanceamongthethree functions
Predominanceinthe safeguardfunction
Balancebetweenthe safeguardandcoordination functions
Lackofformal contract
Predominanceof safeguardfunction
Predominanceof safeguardfunction
Contractualcomplexity Moderate High Moderate Lackofformal
contract
Moderate Low
Transactional characteristics
Characteristicsofthe transactionalcontextwith greaterintensity
Dependence;expectation ofcontinuity
Difficultyinmeasuring performance;expectationof continuity
Assetspecificity;expectation ofcontinuity
Expectationof continuity
Uncertainty;asset specificity;expectationof continuity
Expectationofcontinuity
serveasabasisforanalyzingthepropositions.Table9 summa-rizes notonlytheanalysis of thepropositions extractedfrom literature,whichserveasabasisforthemodelproposition,but alsointerpretationsobtainedfromthecontentanalysisandwhich leadtonewrelationshipstobeconsideredinthemodelandtested inthefuture.
InFig.2,theillustrationwhichrepresentsthemodelproposed ispresented,consideringtheitemsexploredinthedata analy-sis.Thedottedillustrationrepresentstheexploredfactorswhich mayalterthevariablesthatformthetransactioncharacteristics andtheformalandrelationalcontractualgovernancestructures reviewedintheliterature.
Finalconsiderations
Thegoalofthispaperwastoproposeamodelforthe anal-ysisofhowtransactionalcharacteristicsinfluencethefunction andthecontentofformalcontracts,andthecontentofrelational contracts,basedontheTheoryofTransactionCostEconomics (TCE), the literature in formal contracts, and the Relational ContractTheory.
Given the application of the Content Analysis method, it wasobservedthatthecontextualcharacteristics“uncertainty”, “difficulty of measuring performance” and“assetspecificity” corroboratethepresenceofgreatercontractualformalityinthe
Table9
Summaryoftheanalysisofthepropositionsandaspectsobservedfromthecaseanalysis.
Propositions Observationsregardingthe propositionsdrawnfromthe literature
Aspectsexploredfromthecaseanalysisforthemodel composition
1st Dependence >Contractualformality Coordinationfunction
Propositionnotcorroborated. Dependencemaybealteredduetothelifecycleofthe contractingpartiesandthetypeofresourcestraded.If suchpropositionswerecorroborated,thedatacollection methodshouldincludesuchvariationstobetteranalyze theinfluenceofdependencebetweenthepartiesandits effectsontherelationshipgovernance.
2nd Uncertainty >Contractual informality Adaptationfunction
Propositionnotcorroborated,evenin extremecasesofgreaterorlesser uncertainty.
Variationsintheinstitutionalaspects(i.e.organization’s operationintheinternationalmarket,perceptionof consistencyinpublic,economic,andtaxpolicieswhich affecttheorganization)influencetheuncertainty perception,andconsequentlythecontractingform betweenthecompanies.
Contractualfunctionnot corroborated.
3rd Difficultyin measuring performance
>Contractual formality
Safeguardingfunction
Corroboratedincasesinwhichthe difficultyofmeasuringperformance isintensive.
Incaseofdifficultyinmeasuringperformance,thelife cycleoftheorganizationseemstoinfluencethewaythe companiescontract.
Culturaldifferenceshamperthemeasurementof performance,alteringthegovernancestructures. Contractualfunctionnot
corroborated. 4th Assetspecificity >Contractual
formality
Safeguardingfunction
Corroboratedincaseswithgreater intensityofassetspecificity.
Theindustrysectortendstoaltertheneedforspecific investmenttotherelationship.Theuseofthisvariablein themodelwouldplaytheroleofcontrollingthe interactionofassetspecificityandgovernanceformfor abroadersample.
Contractualfunctioncorroborated.
5th Frequency >Contractualinformality Coordinationfunction
Propositionformorefrequent interactioncorroborated.
Inthemostfrequentrelationships,therelational governancestructurestendtobeusedalongwithformal contracts,whicharenotviewedascoordinationtools,so itisproposedthatthewaythecontractsareusedbythe partiesbeanalyzed.
Thelifecycleoftheorganizations,alongwiththe transactionalcharacteristicsofdependence,tendto increasetheinteractionoftheorganizations,using mainlyrelationalcontracts.
6th >Durationof relationship
>Contractualinformality Coordinationfunction
Propositionnotcorroborated. Theintervieweespointtodifferentusesofcontractsin differentstagesoftherelationship.
Theintensityoftheuseofformalandrelational governancestructuresvaryduringtherelationship.
7th >Expectation ofcontinuity
>Contractualinformality Coordinationfunction
Thepresenceofexpectationswas homogeneousinthecases,andwas notconsideredavariablewhich differentiatesthestandardsof contractualgovernancestructure.
Itisproposedthatthedependencelevelofthepartner influencestheexpectationofcontinuityofthe relationship,alteringthewaythetransactionsare governed.
