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Choice and performance of governance mechanisms: Matching contractual and relational governance to sources of asset specificity

Author

Listed:
  • Glenn Hoetker

    (University of Illinois at Urbana-Champaign, College of Business)

  • Thomas Mellewigt

    (University of Paderborn, Department of Management)

Abstract

We argue that the optimal configuration of contractual and relational governance mechanisms in an alliance is contingent not only on the amount of asset specificity, but on the nature of the asset involved in the alliance. Physical assets are more suited to contractual controls, while knowledge assets will be best suited to the use of relational governance mechanisms. Using data on alliances in the German telecommunications industry, we find that the choice of governance mechanisms is as hypothesized. In addition, relational and contractual governance mechanisms are perceived to perform better in the presence of knowledge and physical assets, respectively. Relational governance mechanisms improve overall alliance performance to the degree that knowledge assets are involved, but impair performance when property assets are involved. Our findings contribute to the literature on alliances, as well as the underlying literatures of transaction cost economics, the literature on relational governance, and recent work studying their interaction.

Suggested Citation

  • Glenn Hoetker & Thomas Mellewigt, 2004. "Choice and performance of governance mechanisms: Matching contractual and relational governance to sources of asset specificity," Industrial Organization 0411008, EconWPA.
  • Handle: RePEc:wpa:wuwpio:0411008
    Note: Type of Document - pdf; pages: 41
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    Cited by:

    1. Cécile Cézanne & Marianne Rubinstein, 2011. "The Role of CSR in the Governance of the "New firm": an Empirical Study of the French Telecommunications Industry," CEPN Working Papers hal-00628726, HAL.
    2. Cézanne, Cécile & Rubinstein, Marianne, 2012. "La RSE comme instrument de gouvernance d’entreprise : une application à l’industrie française des télécommunications," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 12.
    3. Cécile Cézanne & Marianne Rubinstein, 2010. "La RSE comme instrument de la gouvernance d'entreprise," Post-Print hal-00628645, HAL.
    4. repec:gam:jagris:v:8:y:2018:i:4:p:51-:d:139014 is not listed on IDEAS

    More about this item

    Keywords

    Alliances; contractual governance mechanisms; relational governance mechanisms; asset specificity; telecommunications;

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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