How to reduce coordination failure in option-dated forward contracts: the compensatory role of relational governance

ABSTRACT

The aim of this study is to explore the relationship between prior ties and informal norms in achieving interorganizational coordination as an outcome of exchange efficiency. The data from the hotels operating in the Antalya tourism region show that prior ties reduce the potential for unfair rents from ex post renegotiations in flexible contractual settings. Hence, informal norms from prior ties result in enhancing efficiency of interorganizational exchange relationships with a consistent and effective management of operational risks from external environment. Overall, this study contributes to the governance literature by exemplifying compensatory role of relational governance from prior ties in coordination failure of option-dated forward contracts.

KEYWORDS:

• Interorganizational coordination
• exchange efficiency
• prior ties
• informal norms
• uncertainty

Disclosure statement

No potential conflict of interest was reported by the author.