Do control mechanisms always promote collaborative performance: the role of formal institutions and business ties

Abstract

PurposeThis paper aims to examine the effectiveness of control mechanisms in promoting collaborative performance by exploring the moderating effects of formal institutions (government support and legal enforcement in this study) and informal ties (business ties in this study) on the relationship between control mechanisms and collaborative performance.Design/methodology/approachA conceptual model is developed with the direct effects of contractual execution and relational norms on collaborative performance and the moderating effects of government support, legal enforcement and business ties on the above relationships. Hierarchical regression analysis is used to test the hypotheses based on 393 responses from Chinese computer and computer components distributors.FindingsThe empirical results generally support the conceptual model. First, consistent with most previous studies, both contractual execution and relational norms contribute to collaborative performance. Second, government support and business ties weaken the role of contractual execution, whereas legal enforcement strengthens it. Third, business ties enhance the effects of relational norms, and, unexpectedly, government support also fosters the relationship between relational norms and collaborative performance.Originality/valueFirst, this study solves the problem of conflicting findings on the relationship between contract and performance by examining the effect of contractual execution, rather than contract design, on collaborative performance. Second, this study contributes to institutional theory by examining the moderating role of formal institutions. Third, this study deepens the understanding of the role of business ties by exploring its moderating effect on the relationship between control mechanisms and collaborative performance.