Informal Governance and Its Impact on Transactional Uncertainty of Transnational Companies: The Case of Social Relatedness

Abstract

Due to their particular characteristics, transnational companies (TNC) face numerous challenges, in particular dealing with uncertainty in both external and internal transactions. In this paper, we investigate whether and how far individual and inter-personal interactions among members of the internal units of TNC influence their transactional relationships. We develop the proposition that social relatedness is a crucial means to cope with transactional uncertainty in cross-border relationships within organizational boundaries. Our empirical study provides first support of this causality.