Governance and Control as Mediating Instruments in an Inter-Firm Relationship : Towards Collaboration or Transactions?

This paper explores the mediation of governance and control structures in an inter-firm relationship between a semi-conductors producer and its contractor. As mediating instruments (Miller and O'Leary 2007) the contract and the control structures are not just pre-given results of distanced managerial decision making, but are generated in and constitutive of the relationship. They offer the possibility to interpret and to interact and they contribute to more or less unexpected transformations in the relationship. In particular, the study explores how the mediation of the governance and control structures has socializing and/or individualizing consequences. The paper particularly offers insights into how the mediation of the governance and control structures is impacted by changes in boundary spanners (i.e. managers who represent their organizations in an inter-firm relationship). The paper draws on Roberts (1991, 2001) and distinguishes four patterns of governance that may be consequential of mediation by governance and control structures: immobilized governance, individualized governance, socialized governance and complementary governance. The study illustrates that accounting is not so much a force that creates transparency for distanced others, but a constitutive mechanism that produces a collaborative inter-firm relationship with socialized governance. It provides a basis for discussion and debate in the relationship