Relational governance as an interorganizational strategy: An empirical test of the role of trust in economic exchange

Akbar Zaheer, N. Venkatraman

Research output: Contribution to journalArticlepeer-review

928 Scopus citations

Abstract

We develop a model of relational governance as a specific form of interorganizational strategy that is distinct from the traditional modes of markets and hierarchies. We conceptualize this form of strategy in terms of structural and processual dimensions and derive a model of its determinants through arguments drawn from transaction cost economics and the sociological exchange literature. Hierarchical regression modeling is employed to test the theoretical model on data collected from a sample of 329 independent insurance agencies. We include the relational variable of trust and demonstrate that the combined model explains relational governance better than a model with the traditional determinants of governance form alone. Further, we observe that governance structure and process are related and discuss implications of the dynamic link between them. Directions for extensions are developed for strategic management research and practice.

Original languageEnglish (US)
Pages (from-to)373-392
Number of pages20
JournalStrategic Management Journal
Volume16
Issue number5
DOIs
StatePublished - 1995

Keywords

  • interorganizational strategy
  • relational governance
  • trust

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