6. SECTOR AGROPECUARIO
6.2. Información pecuaria
The question is which governance mechanisms can be used to tackle these organisational challenges in co-innovation partnerships. Structural governance, which is based on the norm of efficient organisation, is considered incongruent with innovation, where the norm of exploration and flexibility should prevail. Theoretical attention was directed at relational governance, which offers more flexibility due to the entailing social norms and pressures as modes of organisational control (e.g. Child and McGrath, 2001). This resulted in a lack of attention to the matching of organisational challenges of the knowledge exchange processes with governance mechanisms to arrive at the most effective and efficient outcomes (Foss, 2007). The present study is a first step towards closing this gap in research by considering how the combination and interplay of structural and relational governance can be employed to mitigate the organisational challenges of innovation uncertainty and network heterogeneity to arrive at the most effective and efficient outcomes (Grandori, 1997; Osterloh and Frey, 2000).
While network heterogeneity would plead for more structural governance through formalisation and control, innovation uncertainty requires loose organisation and governance by trust. As both of the conditions are present in innovation partnerships, both structural and relational governance mechanisms are studied in four configurations of high and low innovation uncertainty and network heterogeneity (see Figure 5.1). All co-innovation partnerships entail uncertainty and heterogeneity, but a distinction can be made between lower and higher levels of uncertainty and heterogeneity, on the basis of the novelty of the innovation and the size of the network. The aim is to explore the concerted effect of these two traits on the balance and interplay between structural and relational governance mechanisms in co-innovation where conditions develop over time due to the changes in the innovation and collaboration process. The present study contributes to the existing literature by exploring
Homocertain
Low uncertainty (LU) Low heterogeneity (LH)
Heterouncertain
High uncertainty (HU) High heterogeneity (HH)
Heterogeneous
Low uncertainty (LU) High heterogeneity (HH)
Uncertain
High uncertainty (HU) Low heterogeneity (LH) Network heterogeneity
Innovation uncertainty
Figure 5.1 Classification of co-innovation partnerships on the basis of innovation uncertainty and heterogeneity of the network of partners.
what structural governance exactly entails in the context of innovation and demonstrating that it can offer advantages in tackling organisational challenges in innovation partnerships. In the following section, the structural and relational governance perspectives are introduced. In the third Section, it is explained how the explorative case study method is used to analyse a collection of co-innovation partnerships which aim at sustainability-oriented innovation in the agro-food sector in the Netherlands. In the fourth Section, the governance mechanisms in 18 co-innovation partnerships are discussed. Four of these co-innovation partnerships are discussed in more depth in order to be able to analyse the way in which the interplay/ dynamic among the structural and relational governance mechanisms develops during the collaboration. In the fifth section, conclusions are drawn and discussed in the light of previous research and the existing literature.
5.2 Theoretical background
In the present study, two main perspectives on governance are looked at: the structural and the relational perspective (Faems et al., 2008). The main difference between the structural and the relational perspective lies in the basic assumption upon which the two streams of theories are based. The structural perspective is grounded in transaction cost (Williamson, 1985) and contract theory (Hagendoorn and Hesen, 2007), with the arguments and propositions being based on the assumption of self-interested behaviour of the human being. The relational view is based on social exchange theory and the assumption of a ‘social’ human being, who is able to trust and who can be trusted (Granovetter, 1985; Larson, 1992; Zaheer and Venkatraman, 1995; Gulati, 1995; Uzzi, 1997; Dyer and Singh, 1998).
The structural perspective posits that calculated rational behaviour, which may entail opportunistic or self-interested behaviour, governs exchanges (see Table 5.1). In order to safeguard against opportunistic behaviour, design of detailed contracts and agreements is considered as the remedy (Williamson, 1985; Poppo and Zenger, 2002). Structural governance mechanisms consist of rules, such as ownership rights, that can be observed in, for example, written documents that are determined and implemented by formal authorities (Zenger, Lazzarini and Poppo, 2002). It includes explicit incentives (which reflect the rational commitment), contractual terms and defined boundaries (Zenger, Lazzarini and Poppo, 2002). Agreements contribute to structure and alignment of incentives of partners. Through agreements on confidentiality of information exchange, a safeguard is created which decreases the fear to share information freely, increasing knowledge mobility (Dhanaraj and Parkhe, 2006). Gulati (2007) categorises structural governance into (1) incentive systems (2) monitoring behaviour (3) dispute resolution procedures (4) knowledge protection (5) standard operating procedures that allow quick decisions and (6) command structure and authority systems. In Table 5.1 structural governance is summarised to contractual formalisation as governance mechanism, and rational commitment as the main incentive
entailed in structural governance. Gulati’s six-fold categorisation of structural governance is used for the operationalisation of structural governance (see Appendix 3, Table A3.1). The extensive literature on the relationship between trust and control (Reuer and Arino,
2007; Reuer et al., 2006; Klein-Woolthuis et al., 2005; Anderson and Dekker, 2005) posits
a critical point of view towards contracts and planning, when it comes to cooperation in the setting of innovation. This critical view is due to the limitations of anticipation and planning for contingencies in highly uncertain conditions (Coase, 1988; Simon, 1957). In addition to the limitations which are inherent to the uncertainty entailed in innovation, structural governance mechanisms, such as contracts, are also considered rigid (Håkanson, 1993; Hart, 1989; MacNeil, 1980), limiting the creativeness and liberty to explore (Cheng and Van de Ven, 1996; Holmstrom, 1989). Accordingly, in conditions where innovation and uncertainty paint the picture of collaboration, relational governance mechanisms became the focus of attention. The relational perspective posits that socially defined, norm-driven definitions of proper behaviours can substitute formalised definitions of these norms (Zenger et al., 2002; Dekker, 2004; Grandori, 2006), whereby frequent and high level of information exchange (Caniëls and Gelderman, 2010), including observation and correction of each other’s behaviour (Lampel, 2004), play an important role. From the point of view of relational governance, informal norms and rules indicate how decision, control, residual rewards and ownership rights are distributed among the group members. Trust is the social mechanism which governs behaviour from the relational perspective. Trust is based on the expectation that the partner will not take advantage of the actor or intentionally harm his/her interests (Bhattacharya et al., 1998; Jones and George, 1998; Hagen and Choe, 1998; Das and Teng, 1998) because of
the value attached to the relationship (Bromiley and Cummings, 1992; Mayer et al., 1995).
Also, it involves reliability of the partner in terms of his/her adherence to a set of commonly accepted principles. Trust develops in conditions of cognitive closeness (McEvily et al., 2003) and acquaintance with the reliability (compliance trust) and competencies (competence trust) of a partner. This is the case when there is a frequent and high level of information exchange (Gulati, 1995; Caniëls and Gelderman, 2010). Attitudinal commitment or the value of the relationship as an asset which yields high returns (Johanson and Mattsson, 1987; Jarillo, 1988; Zajac and Olsen, 1993; Madhok, 1995) is the incentive for partners to refrain from
Table 5.1 Governance mechanisms structural and relational perspectives.
Structural Relational Mechanism contractual formalisation trust Incentive rational commitment
calculated and self-interested motive
attitudinal commitment
value of relationship as an asset which yields high returns
opportunistic behaviour due to the fear of damaging the relationship. Relational governance is summarised in Table 5.1 indicating trust as the main governance mechanism with attitudinal commitment as the main incentive for action. The governance mechanisms and incentives set out in Table 5.1 will be empirically explored, with a conclusion on their definitive compilation at the end of this chapter.