Towards a model of governance in complex (product-service) inter-organizational systems

Traditional business models coped with the complexity inherent in buying complex capital assets that will be operated and maintained over many years by a division of labour based on subsets of the value chain. Recently, customers in a wide range of sectors are not buying subcontract production or construction capacity but procuring business 'solutions'. As a result, inter-organizational interactions are changing in terms of their scale, scope and dynamic, requiring us to reconsider those mechanisms that coordinate inter-organizational behaviour. Correspondingly, a conceptual model is developed that explores how contractual and relational mechanisms interact across different levels of analysis and over time. Reflecting on the implications of the model highlights how contractual and relational governance mechanisms are distinct but inseparable parts of a governance continuum, involving multi-level interactions and transitions. Given that these interactions/transitions influence the behaviour of exchange partners and impact on the effectiveness of the overall governance mix, these (albeit conceptual) insights should be beneficial to academics, practitioners and policy makers involved in complex product-service systems.