Características Morfológicas

As stated above, relational exchange theory is concerned with protecting exchange relationships through establishing relational norms between exchange partners. Relational norms are many and varied. They may include shared planning and joint responsibility (Johnston, McCutcheon, Stuart, & Kerswood, 2004), reputation and cooperation (Arend, 2009), risk sharing and exchange of information (Arrighetti, Bachmann, & Deakin, 1997) and trust (Claro & Claro, 2008; Morgan & Hunt, 1994). Further, trust is generally considered to be the most important variable within relational exchange literature and is commonly used to represent relational norms (Lambe, Wittman, & Spekman, 2001). Trust is an abstract concept and means different things to different people. For example, Ring & Van de Ven (1992) define trust as confidence in the other party‟s goodwill. It is the firms‟ belief that each party to

the transaction will act for the benefit of the other (Anderson & Narus, 1990). Sako (1992) identifies three types of trust relevant to buyer supplier relations and these are contractual trust, competence trust and goodwill trust. Contractual trust refers to a belief that all parties will act ethically and keep the promise, be it a written or an oral promise, while competence

trustrefers to abelief that a partner possesses the capabilities of doing what it promises to do, or is competent to execute the task at hand. Goodwill trust refers to the assumption that parties will make an open ended endeavour to take initiatives for the benefit of both parties and will not act opportunistically. According to Burchell and Wilkinson (1997, p. 218) trust means “at a minimum that the supplier can be relied upon to deliver on time the product or service of the agreed design, quantity, quality and price, and that the customer can be relied upon to accept the delivery of the order and to pay up fully and on time”. What emerges is that despite the many meanings of trust, a common thread between these meanings is that trustworthy partners are expected to act in the best interest of their trading partners and thus are least expected to behave opportunistically.

Norm based relational exchange theory argues that inter-firm transactions are governed by these norms. Transactions are characterised by repeated exchanges and embeddedness in social relationships (Granovetter, 1985; Poppo & Zenger, 2002). Firms create close ties with their trading partner(s) and transactions are projected into the future (Macneil, 1978). They are seen as a series of uncertain, open ended, incomplete exchanges over medium to long term (Masters, Miles, D'Souza, & Orr, 2004). Baker, Gibbons and Murphy (2002) argue that in a relational set up, the relationship between the two parties is sustained by the value of future transactions and interactions. Relational governance allows inter-firm relationships to go beyond transactions to include sharing of knowledge, technology and even marketing strategies. There is expectation that cooperation between the firms will provide future mutual benefits (Paulin, Perrien, & Ferguson, 1997). The need and will to adhere to relational norms and expectations, especially norms of reciprocity, obligation to cooperate and fairness are important foundations for relational governance (Chiles & McMackin, 1996).

The main objective of the exchange partners is to maintain their relationship for the foreseeable future. They are therefore unlikely to conduct themselves in ways that would compromise this goal. This leads to repeated exchanges, which further fosters trust as the more the parties trade with each other over a long period of time without breach, the more they trust each other and reduces transaction costs. Repeated exchange between parties also leads to social embeddedness where economic relationships are shaped by social networks characterised by informal arrangements rather than bureaucratic structures such as formal contractual relationships between actors (Granovetter, 1985; Ring & Ven, 1992). In fact, some commentators view the use of formal contracts as encouraging opportunism rather than protecting exchange relationships as intended. For example, Macaulay (1963, p. 64) argues

that the use of formal contracts in an exchange relationship “indicates a lack of trust and blunts the demands of friendship, turning a cooperative adventure into an antagonistic horse trade”. He further argues that businesspeople often prefer to rely on a word of mouth or a handshake even when exposed to serious transaction risks. These relational norms therefore reduce transaction costs (Chiles & McMackin, 1996), and hence, like the TCE and agency exchange frameworks, it helps protect exchange relationships against opportunism. For example, when there is trust between two actors, there is less need to employ expensive safeguard measures such as contract negotiations and renegotiations, installation of monitoring devices to detect agents‟ shirking or even provision of incentives to encourage agents‟ performance, all of which results in increased transaction costs. In a relational set up, monitoring costs are substantially lowered because trust reduces the need to check every time whether the other party is really doing what he promised to do. Thus, norms help address problems associated with moral hazard. When actors belong to the same group they face less coordination problems, which reduce their transaction costs. With reference to trust, Lyon (2000, p. 664) notes that; “trust plays a major role in reducing transaction costs, especially in situations of long distance trade, through reducing the need for monitoring and information”.

Since norms discourage opportunistic behaviour (Uzzi, 1997; Wakabayashi, 2003), they encourage better investment decisions, and ensure rapid and flexible responses to unforeseen circumstances (Lyons & Mehta, 1997). The theory argues that specific investments through the use of social mechanisms such as restricting access to exchanges, imposition of collective sanctions, and trading with reputable partners only (Borgatti, Hesterly, & Jones, 1997). Restricted access seeks to limit the number of trading partners within the network. This is normally meant to ensure that members of the network are of an acceptable status. It has been mentioned that repeated exchanges facilitate the development of trust and therefore embeddedness. Access is therefore in most cases restricted to members who have continuously shown commitment to quality through previous transactions (Podolny, 1994) and who have developed as a social unit over time.

Fewer suppliers or restricted access reduces transaction costs (coordination costs) and allows for better and close monitoring through frequent interaction (Borgatti et al., 1997). This not only helps ensure high quality inputs but also reduces the possibility and dangers of opportunism. This is so because having fewer partners who closely interact encourages the development of close ties and as this happens, the parties interests become aligned and hence mitigate opportunistic behaviour (Granovetter, 1973). Smaller groups generally find it easy to

become loyal towards each other, which is a positive development towards averting opportunism because in the absence of loyalty and adherence to promises, opportunism is largely seen as a stronger form of self interest (Ghoshal & Moran, 1996). Group sanctions involve imposition of sanctions or punishment on group members who violate group norms and values. Punishment may include withdrawal of cooperation, disapproval and stigmatising culprits (Lyon, 2000). Sanctions safeguard exchanges and relationship specific assets as actors are normally aware of the consequences of engaging in unacceptable behaviour. Reputation involves a high degree of integrity. It is a signal of the company‟s capabilities and reliability, and hence conforms to Sako‟s (1992) competence trust. It is about the company‟s attributes based on its past dealings with transacting parties. Such attributes include level of performance, quality of products and even the type of partners (Vendelo, 1998). Dolphin (2004) views identity, image, prestige, goodwill, esteem; and standing as synonyms of reputation. Good reputation is good for business as it is a signal of value, good performance and helps build sustainable competitive advantage (Mahon & Wartick, 2003). Reputation is therefore sort after as it is an advantage to firms.

The fact that relational norms help reduce transaction costs and the need for constant monitoring, suggests that relational exchange theory may help address the limitations of agency theory that arise due to monitoring and incentive costs. This further helps the performance of TCE incomplete contracts. Hence, it is fair to argue that like monitoring and incentives, relational norms help drive TCE incomplete contract to some degree of completeness, and thus help improve the protection of exchange relationship. That is, incomplete contracts may perform better when they are coupled with monitoring, incentives and relational norms.