Chapter 2: Mainstream Literature: Coordination and Control
While diﬀerent theoretical perspectives or paradigms may be irreconcilable in their own philosophical terms, when applied to the study of organizational phenomena they are not necessarily incommensurable. (Child, 1997: 44) INTRODUCTION In this chapter, I describe two perspectives on formal interorganizational governance that have dominated the literature for the last three decades. I label those relatively generic views on interorganizational governance the ‘control’ and ‘coordination’ perspectives. The ﬁrst approach to interorganizational governance is rooted in transaction cost theory and agency theory. The second approach draws its arguments from the behavioural theory of the ﬁrm and research on dynamic capabilities. Jointly, both perspectives function as a basis or platform for discussing each of the research themes, which build on and complement the coordination and control perspectives depicted here. MAJOR THEORETICAL PERSPECTIVES ON FORMAL INTERORGANIZATIONAL GOVERNANCE The most common and inﬂuential theoretical perspectives describing the role of formal interorganizational governance can be grouped into two broad categories: (1) the ones focusing on formal governance as a mechanism for control, and (2) the ones viewing formal governance as a means of coordination. Although these theoretical perspectives may be irreconcilable in their own philosophical terms, I concur with Child (1997: 44) that ‘when applied to the study of organizational phenomena [diﬀerent perspectives] are not necessarily incommensurable’. In fact, each of them highlights diﬀerent aspects of the phenomenon, and both are argued to be deeply intertwined. Emphasizing both the coordination and control perspective connotes with Makadok’s (2003: 1043) statement that ‘future...
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