Dynamic Governance Matching in Solution Development

Abstract

Facing competitive and commoditization threats, many companies shift to solution offerings, albeit with mixed results. With a qualitative analysis of dyadic data (suppliers and customers), this article investigates an important, often overlooked reason for such mixed outcomes: the complex, dynamic role of governance matching. This study identifies a series of tensions arising from solution-specific exchange conditions and the matched governance mechanisms actors use to address them: temporary asset colocation, network closure, knowledge-based boundary objects, rights allocation agreements, and liaison champions. It also reveals the dynamic nature of governance matching. Solutions evolve in three phases—experimentation, integration, and evolution—in which single mechanisms have different functions (safeguarding and/or coordination), provide contingent and transient benefits, and can be used in combination to address complex tensions. This study also identifies two decision points, mutual commitment and balanced power, that separate the three phases; their outcomes help explain why certain solution efforts do not take off, others stall, and still others revert to mere spot exchanges. Beyond contributing to solutions literature, these findings provide actionable insights to marketing managers.