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Conflict Dynamics in Interfirm Relationships: An Exploratory Analysis of the Importance of Governance Mechanisms

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Interfirm Networks

Abstract

The level of conflict present in interfirm relationships largely determines the partners’ ability to realize relationship performance goals because conflict can create costs that substantially decrease or even exceed cooperation benefits. Although scholars have called emphatically for studying the dynamics of conflict, empirical investigations of interorganizational conflict development are scarce. Consequently, we explore the evolutionary dynamics of conflict in interfirm relationships, for what is ostensibly the first time based on all the five sequential states of conflict as proposed by the “dominant process model” (Pondy 1967). We argue that the selection and implementation of formal as well as relational governance mechanisms are central drivers of conflict transitions. Therefore, on the basis of extensive longitudinal data from retailers of Germany’s two largest grocery chains, our exploratory analyses examine conflict from a process perspective and provide insights into the relative importance of governance mechanisms over the conflict “lifecycle”.

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Notes

  1. 1.

    We view conflict as a “cost of participation” (Pondy 1967) that may be reduced by adequate governance mechanisms (MacLeod 2000). Since we focus on relationships that persist over the time of examination, we do not consider relationship termination or breach, which may constitute the climax of conflict-laden action; efficient breach, i.e. where conflict benefits would exceed its costs, is out of scope in regard to this study (Macneil 1980).

  2. 2.

    There are numerous models that deal with conflict, negotiation, and litigation within an organizational context. Yet, the model of Pondy (1967) takes a very comprehensive view that allows for investigating conflict between departments or even entire firms (Lewicki et al. 1992) and facilitates the attempt to take a dynamic approach for analyzing interfirm boundaries (Winsor et al. 2012).

  3. 3.

    Vice versa, we abide by Williamson (2000) and define governance structures as the “institutional frameworks within which the integrity of contract is decided.”

  4. 4.

    The only exception is the measure for manifest conflict that has been applied in an intrateam context (Barki and Hartwick 2001).

  5. 5.

    The complete range of scales and items as well as their sources and reliabilities are available on request.

  6. 6.

    We employed Kruskal–Wallis tests to account for non-normally distributed conflict scales.

  7. 7.

    Though Kruskal–Wallis tests could not clarify the direction of causality, we assume conflict at t = 1 to be logically independent from conflict at t = 2 due to the natural order of events.

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Authors and Affiliations

  1. Institute of Strategic Management, Westfälische Wilhelms-Universität Münster, Leonardo-Campus 18, Münster, 48149, Germany

    Jochen Lengers & Brinja Meiseberg

  2. University of Oklahoma, 307 West Brooks, Norman, OK, 73019, USA

    Rajiv P. Dant

  3. Griffith Business School, Gold Coast, Parklands Drive, Southport, QLD, 4222, Australia

    Rajiv P. Dant

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  1. Jochen Lengers
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  2. Rajiv P. Dant
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  3. Brinja Meiseberg
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Correspondence to Jochen Lengers .

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Editors and Affiliations

  1. Department of Management, University of Vienna, Vienna, Austria

    Josef Windsperger

  2. Centre Recherche en Economic et Management (CREM), Universite de Rennes 1, Rennes Cédex 7, France

    Gérard Cliquet

  3. Institut für Strategisches Management, University of Münster, Münster, Germany

    Thomas Ehrmann

  4. Department of Organization, Erasmus University, Rotterdam, The Netherlands

    Georg Hendrikse

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Lengers, J., Dant, R.P., Meiseberg, B. (2015). Conflict Dynamics in Interfirm Relationships: An Exploratory Analysis of the Importance of Governance Mechanisms. In: Windsperger, J., Cliquet, G., Ehrmann, T., Hendrikse, G. (eds) Interfirm Networks. Springer, Cham. https://doi.org/10.1007/978-3-319-10184-2_14

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