Advertisement

Contracts, norms, and plural form governance

  • Joseph P. Cannon
  • Ravi S. Achrol
  • Gregory T. Gundlach
Article

Abstract

The organization of interfirm exchanges has become of critical importance in today’s business environment. Many scholars have criticized the inadequacies of legal contracts as mechanisms for governing exchange, especially in the face of uncertainty and dependence. Other scholars argue that it is not the contracts per se but the social contexts in which they are embedded that determine their effectiveness. This study investigates the performance implications of governance structures involving contractual agreements and relational social norms, individually and in combination (plural form) under varying conditions and forms of transactional uncertainty and relationship-specific adaptation. Hypotheses are developed and tested on a sample of 396 buyer-seller relationships. The results provide support for the plural form thesis—increasing the relational content of a governance structure containing contractual agreements enhances performance when transactional uncertainty is high, but not when it is low. Implications for theory and future research are discussed.

Keywords

Governance Structure Plural Form Exchange Partner Contractual Agreement Transaction Cost Theory 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

References

  1. Abolafia, M. 1984. “Structured Anarchy: Formal Organization in the Commodities Futures Market.” InThe Social Dynamics of Financial Markets. Ed. P. Adler. Greenwich, CT: JAI.Google Scholar
  2. Achrol, Ravi S., Torger Reve, and Louis W. Stern. 1983. “The Environment of Marketing Channel Dyads.”Journal of Marketing 47 (Fall): 55–67.CrossRefGoogle Scholar
  3. Aiken, Leona S. and Stephen G. West. 1991.Multiple Regression: Testing and Interpreting Interactions. Newbury Park, CA: Sage.Google Scholar
  4. Alchian, Arman and Harold Demsetz. 1972. “Production, Information Costs, and Economic Organization.”American Economic Review 62 (December): 777–795.Google Scholar
  5. Aldrich, Howard E., 1979.Organizations and Environments. Englewood Cliffs, NJ: Prentice Hall.Google Scholar
  6. Anderson, Erin. 1985. “The Salesperson as Outside Agent or Employee: A Transaction Cost Analysis.”Marketing Science 4 (Summer): 234–254.CrossRefGoogle Scholar
  7. Anderson, James C. and David W. Gerbing. 1988. “Structural Equation Modeling in Practice: A Review and Recommended Two-Step Approach.”Psychological Bulletin 103 (3): 411–423.CrossRefGoogle Scholar
  8. Armstrong, J. Scott and Terry S. Overton. 1977. “Estimating Nonresponse Bias in Mail Surveys.”Journal of Marketing Research 14 (August): 396–402.CrossRefGoogle Scholar
  9. Axelrod, Robert. 1986. “An Evolutionary Approach to Norms.”,American Political Science Review 80 (December): 1095–1111.Google Scholar
  10. Barney, Jay B. and William G. Ouchi. 1986.Organizational Economics. San Francisco: Jossey-Bass.Google Scholar
  11. Bendor, Jonathan and Dilip Mookherjee. 1990. “Norms, Third-Party Sanctions, and Cooperation.”Journal of Law, Economics and Organization 6 (Spring): 33–63.Google Scholar
  12. Bollen, Kenneth A.. 1989.Structural Equation Models With Latent Variables. New York: John Wiley.Google Scholar
  13. Bradach, Jeffrey L. and Robert G. Eccles. 1989. “Price, Authority, and Trust.”Annual Review of Sociology 15: 97–118.CrossRefGoogle Scholar
  14. Campbell, Donald T., 1955. “The Informant in Quantitative Research.”American Journal of Sociology 60 (January): 339–342.CrossRefGoogle Scholar
  15. Child, John. 1972. “Organizational Structure, Environment and Performance: The Role of Strategic Choice.”Sociology 6 (January): 2–22.Google Scholar
  16. Churchill, Gilbert A. Jr. 1979. “A Paradigm for Developing Better Measures of Marketing Constructs.”Journal of Marketing Research 16 (February): 64–73.CrossRefGoogle Scholar
  17. Cohen, Jacob and Patricia Cohen. 1983.Applied Multiple Regression/Correlation Analysis for the Behavioral sciences. 2d ed. Hillsdale, NJ: Lawrence Erlbaum.Google Scholar
  18. Eccles, Robert G.. 1981. “The Quasifirm in the Construction Industry.”Journal of Economic Behavior Organization 2: 335–357.CrossRefGoogle Scholar
  19. — 1985.The Transfer Pricing Problem: A Theory for Practice. Lexington, MA: Lexington Books.Google Scholar
  20. Futrell, Charles M. and A. Parasuraman. 1984. “The Relationship of Satisfaction and Performance to Salesforce Turnover.”Journal of Marketing 48 (Fall): 33–40.CrossRefGoogle Scholar
  21. Gibbs, Jack P. 1981.Norms, Deviance, and Social Control: Conceptual Matters. New York: Elsevier.Google Scholar
  22. Gundlach, Gregory T., 1994. “Exchange Governance: The Role of Legal and Nonlegal Approaches Across the Exchange Process.”Journal of Public Policy and Marketing 13 (2): 246–258.Google Scholar
  23. — and Ravi S. Achrol. 1993. “Governance in Exchange: Contract Law and Its Alternatives.”Journal of Public Policy and Marketing 12 (November): 141–155.Google Scholar
  24. — Ravi S. Achrol, and John T. Mentzer. 1995. “The Structure of Commitment in Exchange.”Journal of Marketing 59 (January): 78–92.CrossRefGoogle Scholar
  25. Hadfield, Gillion K., 1990. “Problematic Relations: Franchising and the Law of Incomplete Contracts.”Stanford Law Review 42: 927–992.CrossRefGoogle Scholar
  26. Hallen, Lars, Jan Johanson, and Nazeem Seyed-Mohamed. 1991. “Interfirm Adaptation in Business Relationships.”Journal of Marketing 55 (April): 29–37.CrossRefGoogle Scholar
  27. Kaufmann, Patrick J. and Rajiv P. Dant. 1992. “Dimensions of Commercial Exchange.”Marketing Letters May: 171–185.CrossRefGoogle Scholar
  28. — and Louis W. Stern. 1988. “Relational Exchange Norms, Perceptions of Unfairness, and Retained Hostility in Commercial Litigation.”Journal of Conflict Resolution 32 (3): 534–552.CrossRefGoogle Scholar
  29. Kumar, Nirmalya, Louis W. STern, and Ravi S. Achrol. 1992. “Assessing Reseller Performance From the Perspective of the Supplier.”Journal of Marketing Research 29 (May): 238–253.CrossRefGoogle Scholar
  30. Lehmann, Donald R. and John O’Shaugnessy. 1974. “Difference in Attribute Importance for Different Industrial Products.”Journal of Marketing 38 (April): 36–42.CrossRefGoogle Scholar
  31. Lusch, Robert F. and James R. Brown. 1996. “Interdependence, Contracting and Relational Behavior in Marketing Channels.”Journal of Marketing 60 (October): 19–38.CrossRefGoogle Scholar
  32. Macaulay, Stewart. 1963. “Non-Contractual Relations in Business: A Preliminary Study.”American Sociological Review 28: 55–67.CrossRefGoogle Scholar
  33. Macneil, Ian R., 1980.The New Social Contract. New Haven, CT: Yale University Press.Google Scholar
  34. Mariotti, S. and G. Cainarea. 1986. “The Evolution of Transaction Governance in the Textile-Clothing Industry.”Journal of Economics Behavior Organization 7: 351–374.CrossRefGoogle Scholar
  35. Noordewier, Thomas G., George John, and John R. Nevin. 1990. “Performance Outcomes of Purchasing Arrangements in Industrial Buyer-Vendor Relationships”Journal of Marketing 54 (October): 80–93.CrossRefGoogle Scholar
  36. Palay, Thomas. 1985. “Avoiding Regulatory Constraints: Contracting Safeguards and the Role of Informal Agreements.”Journal of Law, Economics and Organization 1: 155–175.Google Scholar
  37. Pfeffer, Jeffrey and Gerald R. Salancik. 1978.The External Control of Organizations: A Resource Dependence Approach. New York: Harper & Row.Google Scholar
  38. Rubin, Paul H. 1990.Managing Business Transactions. New York: Free Press.Google Scholar
  39. Sharma, Subbash, Richard M. Durand, and Oged Gur-Arie. 1981. “Identification and Analysis of Moderator Variables.”Journal of Marketing Research 18 (August): 291–300.CrossRefGoogle Scholar
  40. Smitka, Michael J.. 1994. “Contracting Without Contracts: How the Japanese Manage Organizational Transactions.” InThe Legalistic Organization. Eds. Sim B. Sitkin and Robert J. Bies. Thousand Oaks, CA: Sage, 91–109.Google Scholar
  41. Stern, Louis W. and Torger Reve. 1980. “Distribution Channels as Political Economies: A Framework for Comparative Analysis.”Journal of Marketing 44 (Summer): 52–64.CrossRefGoogle Scholar
  42. Stinchcombe, Arthur L.. 1985. “Contracts as Hierarchical Documents.” InOrganization Theory and Project Management Administering Uncertainty in Norwegian Offshore Oil. Eds. Arthur L. Stinchcombe and Carol A. Heimer. Bergen, Norway: Norwegian University Press, 121–171.Google Scholar
  43. Uniform Commercial Code. 1978. American Law Institute and the National Conference of Commissioners on Uniform State Laws.Google Scholar
  44. Vincent-Jones, Peter. 1989. “Contract and Business Transactions: A Socio-Legal Analysis.”Journal of Law and Society 15 (2): 166–186.CrossRefGoogle Scholar
  45. Weitz, Barton A. and Sandy D. Jap. 1995. “Relationship Marketing and Distribution Channels.”Journal of the Academy of Marketing Science 23 (4): 305–320.CrossRefGoogle Scholar
  46. Williamson, Oliver E., 1979. “Transaction Cost Economics: The Governance of Contractual Relations.”Journal of Law and Economics 22: 233–261.CrossRefGoogle Scholar
  47. — 1985.The Economic Institutions of Capitalism: Firms, Markets, and Relational Contracting. New York: Free Press.Google Scholar
  48. — 1991. “Comparative Economic Organization: The Analysis of Discrete Structural Alternatives.”Administrative Science Quarterly 36 (June): 269–296.CrossRefGoogle Scholar
  49. — 1993. “Opportunism and Its Critics.”Managerial and Decision Economics 14: 97–107.CrossRefGoogle Scholar
  50. Wilson, Elizabeth J. 1994. “The Relative Importance of Supplier Selection Criteria: A Review and Update.”International Journal of Purchasing and Materials Management 30 (Summer): 35–41.Google Scholar

Copyright information

© Academy of Marketing Science 2000

Authors and Affiliations

  • Joseph P. Cannon
    • 1
  • Ravi S. Achrol
    • 2
  • Gregory T. Gundlach
    • 3
  1. 1.Colorado State UniversityUSA
  2. 2.George Washington UniversityUSA
  3. 3.University of Notre DameNotre DameUSA

Personalised recommendations