Control of Inter-Organizational Relationships: Evidence on Coordination Requirements and Appropriation Concerns

Abstract:     
This paper presents a framework of the control of inter-organizational relationships. Building on transaction cost economics and organizational theory, two control problems are identified that arise when firms engage in inter-organizational relationships: the management of appropriation concerns and the coordination of tasks. The control mechanisms used to manage these control problems and their interrelationships with informal (trust-based) mechanisms are discussed. The explanatory power of the framework is assessed by a case study of a strategic alliance between a buyer and a supplier of railway safety equipment.

Keywords: Inter-organizational relationships, governance, control, transaction costs, coordination, trust, case study

JEL Classification: D23, L14, L22, M10, M40, M46

Accepted Paper Series