Description
The observation by many scholars, including transaction cost economists, is that the governance of inter-organizational exchanges involves more than formal contracts. Inter-organizational exchanges are typically repeated exchanges which are embedded in social relationships. Here governance emerges from the values and agreed-upon processes found in social relationships (John, and Nevin, 1990; Heide and John, 1992), which may minimize transaction costs as compared to formal contracts (Dyer, 1996; Dyer and Singh, 1998). From such relationally-governed exchanges occur the enforcement of obligations, promises, and expectations through social processes that promote norms of flexibility, solidarity, and information exchange.