Governance and control as mediating instruments in an inter-firm relationship: towards collaboration or transactions?

Abstract

This paper explores the mediation of governance and control structures in an inter-firm relationship between a semiconductor producer and its contractor. As mediating instruments the contract and the control structures are not just pre-given results of distanced managerial decision-making, but are generated in and constitutive of the relationship. They offer the possibility to interpret and to interact and they contribute to more or less unexpected transformations in the relationship. In particular, the study explores how the mediation of the governance and control structures has socialising and/or individualising consequences. The paper particularly offers insights into how the mediation of the governance and control structures is impacted by changes in boundary spanners (i.e. managers who represent their organisations in an inter-firm relationship). The paper draws on Roberts 2001. Trust and control in Anglo-American systems of corporate governance: the individualizing and socializing effects of processes of accountability. Human Relations, 54 (12), 1547–1572. and distinguishes four patterns of governance that may be consequential of mediation by governance and control structures: immobilised governance, individualised governance, socialised governance and complementary governance. The study illustrates that accounting is not so much a force that creates transparency for distanced others, but a constitutive mechanism that produces a collaborative inter-firm relationship with socialised governance. It provides a basis for discussion and debate in the relationship.

Keywords:

• inter-firm relationship
• mediating instruments
• contract
• control structures
• performance measures

Acknowledgements

We wish to gratefully acknowledge the very helpful comments on earlier versions of this paper from Sven Modell and two anonymous reviewers.

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Muhammad Kaleem Zahir-ul-Hassan http://orcid.org/0000-0002-1512-2663

Reinald A. Minnaar http://orcid.org/0000-0001-8137-7077

Ed Vosselman http://orcid.org/0000-0001-9078-8193

Notes

1. The labelling of this form of governance differs from the labelling by Roberts (2001). Studying the context of a hierarchy as a governance structure, Roberts labels this form as ‘sovereign governance’, indicating that there may be abusive potentials of an entrepreneur who has absolute control and whose conduct may only be constrained by his own felt sense of obligation to others along with fear of the distanced remedies of the law (Roberts 2001, p. 1563). However, studying the context of a hybrid, we label this form as immobilized governance.