The Dynamics of Inter-Organisational Governance: Contractual and Relational Mechanisms in Public-Private Supply Arrangements

This research investigates the dynamic interplay of contractual and relational governance mechanisms in long-term supply arrangements. The thesis contributes to an emerging debate that examines the combination of contractual and relational governance in inter-organisational exchanges. Contractual and relational governance mechanisms have been positioned as precluding mechanisms, which may result in destructive effects if combined for governing inter-organisational relationships. Previous research studies have increasingly acknowledged that the use of contractual mechanisms does not exclude the use of relational mechanisms and vice-versa. However, the recent literature offers limited insights into the dynamic interaction of both inter-organisational governance mechanisms and their impact on overall performance. The analysis in this research utilises a conceptual framework and a number of theoretical lenses through which the dynamic interplay of contractual and relational governance mechanisms is explained. Based on empirical case analysis of six public-private supply arrangements across three sectors: healthcare, waste management and emergency services, the research explores the dynamic interplay of both governance mechanisms and their impact on overall performance. Retrospective case study data was collected deploying semi-structured interviews and the critical incident technique was used to investigate the governance interplay over time. The contribution to knowledge is a conceptual framework that refines contractual and relational governance components in supply relationships over time. The findings indicate the importance of the interplay between inter-personal and inter-organisational trust in combination with complex contracts and intermediate contractual agreements. From this the conclusion is drawn that organisations entering into long-term supply relationships need to deploy both contractual and relational governance mechanisms in combination in order to achieve better overall performance.