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Column 13 · Channels and Governance · Era 4, Orientation and Relationships (1990s)

Relational Governance

Implementation, process · Landmark · Cluster V, Interfirm Networks

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Description

Heide and John showed that relational norms determine whether buyers can exercise control over suppliers, and Heide developed a typology of market, unilateral, and bilateral governance forms for interorganizational relationships.

Managerial Implications

Interfirm relationships can be governed by markets (arm's length), by hierarchy (contracts and control), or by relational norms (flexibility, information sharing, solidarity). Norms let partners handle what contracts cannot anticipate. When investing in partnerships with specific assets, build norms deliberately through joint planning and open information; contracts alone cannot protect you, and heavy-handed control destroys the cooperation that justified the partnership.

Anchor Works