Cooperative relationships between organizations
I recently rediscovered an article by Ring and Van de Ven (1992), which was published in the Strategic Management Journal: Structuring cooperative relationships between organizations. Herein, the authors propose that “[v]arying levels of risk and reliance on trust will explain the governance structures of transactions”. They distinguish between low and high risk and between low and high reliance on trust. This leads to four cells: (1) markets (low risk, low reliance on trust transactions), (2) hierarchies (high, low), (3) recurrent contracts (low, high), and (4) relational contracts (high, high). Thus, the article provides “a conceptual framework for understanding a broader variety of governance mechanisms than those typically accompanying a focus on markets and hierarchies”. Ring and Van de Ven’s paper was the 2008 winner of The Dan and Mary Lou Schendel Best Paper Prize, which “recognizes a paper published at least five years ago that has made a lasting contribution to scholarship in strategic management”.
Ring, P.S., & Van de Ven, A.H. (1992). Structuring cooperative relationships between organizations. Strategic Management Journal, 13 (7), 483-498 DOI: 10.1002/smj.4250130702