The relationship between mediated power asymmetry, relational risk perception, and governance mechanism in new product development relationships

Purpose – The purpose of this paper is to examine the impact of mediated power asymmetry on relational risk perception and modes of governance mechanism (intention‐based trust and unilateral control). Design/methodology/approach – Survey research was conducted to collect data from 112 new product development (NPD) relationships and structural equation modeling was conducted to test the hypotheses. Findings – The results suggest that benefiting from mediated power asymmetries by a firm is positively related to the relational risk perceived by its partner firm. This perception influences intention‐based trust to partner firm negatively and exercising of unilateral control positively. It was also found that the relationship between mediated power asymmetry and governance modes is mediated by relational risk perception. Originality/value – This paper enhances the understanding of NPD relationships by examining the key mechanisms through which governance decision modes are influenced. In particular, the paper shows how mediated power asymmetries through affecting relational risk perception influence two governance modes including intention‐based trust and unilateral control.