Chapter 6: Duality and Dialectic Tensions
* From a dialectical perspective, then, speciﬁc theories are not in any simple sense to be set aside. Rather they are to be superseded in a more encompassing framework. (Benson, 1977: 17) INTRODUCTION The mainstream literature on contracts, rules and procedures presumes that formalization is directed at coordination and control, and that its inﬂuence on performance is contingent upon ﬁrm, transaction and contextual characteristics. In response to recent calls for inquiries into dialectics in interorganizational relationships, and in an eﬀort to provide managerial choice with a more prominent position in research on interorganizational governance, a complementary perspective is being developed here. I propose a framework in which formalization is presented as a duality, involving tradeoﬀs between its functions and dysfunctions, and eventuating in dialectic tensions with which managers have to cope. In line with this, I argue that researchers should be preoccupied not only with assessing the ‘rightness’ of governance solutions, but also with the trade-oﬀs and tensions associated with them. The framework is illustrated by a case study of an alliance between a major European ﬁnancial services ﬁrm and one of the world’s leading retailers. The alliance managers in this particular relationship attempted to reduce or capitalize on the tensions associated with formalization by (1) adopting a semi-structure, in which outcomes were formalized, but behaviour was not; (2) justifying formalization through referring to factors that were beyond their control, and (3) alternating their emphasis on diﬀerent requirements by each of the partner ﬁrms. The...
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