The interplay of structural and relational governance in innovation alliances

Abstract

The present paper aims to extend the discussion in the governance literature about whether structural and relational governance mechanisms complement or substitute each other in innovation alliances. Where structural governance mechanisms refer to the division of tasks within the alliance and to upfront contractual and non-contractual input, output and risk-related agreements, relational governance mechanisms refer to trust, using informal norms and rules for coordination purposes. In innovation literature much attention has been paid to relational governance, which is expected to offer more of the flexibility needed for innovation than the regulations in structural governance that are perceived as rigid. However, the authors argue that the essential role of structural governance as a solid basis for creating trust, especially in alliances in which the partners do not know each other, is clearly underexposed in management literature. To fill this gap, a model conceptualizing the innovation alliance from inception to performance was tested using Partial Least Squares, employing a cross-sectional dataset of 94 innovation alliances in the Netherlands, Belgium, Germany and Austria. The results do indeed show the essential role of structural agreements in creating a platform for trust on which relational governance can strive, while a clear task division can help to reduce the complexity of the inter-organizational innovation process, by reducing the interdependency of the partners. Both structural mechanisms ease communication among the alliance partners, leading to a higher level of knowledge exchange, and ultimately leading to better alliance performance.