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Increasingly, marketing activity is carried out within temporary organizations, whereby teams are assembled to complete a specific task within a predetermined time frame. Such organizations are uniquely suited to promoting various marketing outcomes but are not well understood. From a practical standpoint, their inherent characteristics create organizational challenges that, if not appropriately managed, can compromise performance. Drawing on agency theory and research on embedded ties, the authors conceptualize these challenges in terms of particular selection and enforcement problems. They identify three forms of temporary marketing organizations that vary in their selection and enforcement qualities. Next, the authors develop a conceptual framework that shows the selection and enforcement implications of a temporary organization’s task, timeline, and team composition. They also demonstrate that selection and enforcement mechanisms have portable qualities and can be “imported” to a given temporary organization, from either a prior temporary organization or a larger permanent one.

Many marketing transactions between buyers and suppliers involve short-term collaborations or so-called temporary organizations. Such organizations have considerable value-creation potential but also face challenges, as evidenced by their mixed performance records. One particular challenge involves relationship governance, and in this respect, temporary organizations represent a conundrum: On the one hand, they pose significant governance problems due to the need to manage numerous independent specialists under time constraints. On the other hand, temporary organizations lack the inherent governance properties of other organizational forms such as permanent organizations. The authors conduct an empirical study of 429 business-to-business construction projects designed to answer two specific questions: First, how are particular selection and pricing strategies deployed in response to monitoring and coordination problems? Second, does the joint alignment between the two mechanisms and their respective attributes help mitigate cost overruns? The authors follow a formal hypothesis test with a series of in-depth interviews to explore and to gain insight into the validity of the key constructs, explanatory mechanisms, and outcomes. Managerially, the authors answer the long-standing question of how to mobilize a temporary organization. Theoretically, they develop an augmented “discriminating alignment” heuristic for relationship management involving multiple governance mechanisms and attributes.

This article examines the effects of monitoring on interfirm relationships. Whereas some research suggests that monitoring can serve as a control mechanism that reduces exchange partner opportunism, there is also evidence showing that monitoring can actually promote such behavior. The authors propose that the actual effect of monitoring depends on (1) the form of monitoring used (output versus behavior) and (2) the context in which monitoring takes place. With regard to the form of monitoring, the results from a longitudinal field study of buyer–supplier relationships show that output monitoring decreases partner opportunism, as transaction cost and agency theory predict, whereas behavior monitoring, which is a more obtrusive form of control, increases partner opportunism. With regard to the context, the authors find that informal relationship elements in the form of microlevel social contracts serve as buffers that both enhance the effects of output monitoring and permit behavior monitoring to suppress opportunism in the first place.

This article develops a conceptual framework of roles in marketing relationships. Drawing on emerging theory from economic sociology and March's (1994) notion of decision “logics,” the authors discuss two prototypical relationship roles, namely (1) a “friend,” who uses a “logic of appropriateness” and follows established rules, and (2) a “businessperson,” whose decisions are guided by utility-maximizing considerations under a “logic of consequences.” Next, they use extant theories of interfirm governance to suggest that firms’ relationship strategies can be used both to create different relationship roles in the first place and to activate them over time. The authors posit that activation can have several different outcomes, including reinforcement of an existing dominant role or actual switching to a new one. Theoretically, the conceptual framework allows for integration of different perspectives on interfirm relationships, some of which have provided seemingly inconsistent accounts of firm behavior. From a managerial perspective, the framework identifies specific matches between particular relationship roles on the one hand and firms’ governance strategies on the other hand. In general, the framework suggests that an in-depth understanding of roles is a prerequisite for the deployment of relationship management initiatives toward resellers, customers, and suppliers.

The authors examine how a firm's strategy in a (downstream) customer relationship is contingent on how a related relationship outside of the focal dyad is organized. Drawing on emerging perspectives on interfirm governance and networks, the authors propose that the ability to show flexibility toward a (downstream) customer under uncertain market conditions depends on the governance mechanisms that have been deployed in an (upstream) supplier relationship. The governance mechanisms take the form of (1) supplier qualification programs and (2) incentive structures based on hostages. The authors develop a set of contingency predictions and test them empirically in the context of vertical supply chain networks in the apparel industry. The tests show good support for the hypotheses. The authors discuss the implications of the findings for marketing theory and practice.

This article examines the phenomenon of plural governance, a firm's simultaneous use of market contracting and vertical integration for the same basic transaction. The author studies two particular aspects of plural governance, namely the conditions that motivate firms to deploy plural governance and the manner in which one governance form influences the other when the two coexist in a joint structure. Drawing on agency theory and information economics, the author develops a set of research hypotheses and tests them empirically in the context of industrial purchasing decisions. The results suggest that the plural governance phenomenon can be understood from the perspective of solving information asymmetry problems between buyers and suppliers. The author discusses the implications of a “make and buy” approach to extant theory of interfirm governance, relationship management, and marketing strategy in business-to-business settings.

Specific investments, which are tailored to a particular company or value-chain partner, are important components of firms' marketing strategies. At the same time, extant theory suggests that such investments pose considerable risk, because they put the receiver in a position to opportunistically exploit the investor. In this article, the authors examine this “expropriation” scenario but also consider whether specific investments, because of their specialized nature, may actually “bond” the receiver and reduce opportunism under certain conditions. These conditions involve a focal relationship's time horizon (i.e., its extendedness) and particular norms. The key theoretical argument is that the effect of specific investments on opportunism will shift in a nonmonotonic fashion over the range of these relationship conditions. The authors test their research hypotheses empirically through parallel analyses on each side of 198 matched buyer–supplier dyads. The empirical tests provide general support for the predictions but also reveal differences between buyers and suppliers regarding the focal effects. The authors discuss the implications of the findings for marketing theory and practice.

Recent research has documented how exchanges between buyers and sellers are frequently embedded in social relationships. An unresolved question, however, is the extent to which such relationships protect incumbent suppliers from new competitors and their marketing programs. The authors develop a conceptual framework of how relationship and marketing variables influence choice of supplier and test the framework empirically in the context of business-to-business services. The results show that interpersonal relationships between buyers and suppliers serve as a switching barrier but are considerably less important than both firm-level switching costs and marketing variables. Moreover, unlike switching costs, interpersonal relationships do not play the frequently mentioned role of a buffer against price and product competition. Finally, the authors show that buyers and suppliers hold systematically different views of the determinants of switching.

Much of the recent literature on interfirm relationships has focused on strategies for controlling opportunism. Somewhat surprisingly, little attention has been paid in this literature to the opportunism construct itself. Specifically, prior research has failed to recognize the different types of behavior that are hidden behind the general opportunism label. As a consequence, the knowledge of strategies for managing opportunism remains incomplete. The authors review the original and emergent conceptualizations of opportunism and illustrate them using actual industry cases. The authors also develop a conceptual framework of governance strategies that can be used to manage different forms of opportunism.

Many marketing exchanges are characterized by an information asymmetry between suppliers and customers. Specifically, customers are faced with both adverse selection and moral hazard problems that involve, respectively, uncertainty about supplier characteristics and the risk of quality cheating. Drawing on prior research, the authors propose that agency problems in a customer relationship can be resolved by means of customer bonds and price premiums, which serve as signals and supplier incentives, respectively. The authors also propose that adverse selection and moral hazard problems exist in relationships between suppliers and their employees. Similar to the customer relationship, these problems can be addressed with signals and incentives of various kinds. The authors present hypotheses regarding the agency problems in both of these relationships and test them empirically in the context of automotive service purchases. Data obtained from 287 service managers support the hypotheses. The data also suggest that institutional differences across service outlets (e.g., ownership structure and size) influence how the two types of agency problems are managed.

The authors report the results of a study that examines retailer participation in manufacturer-sponsored promotion programs. Two particular aspects of participation are studied, namely, (1) retailer agreement to participate in point-of-purchase programs and (2) retailer compliance with established agreements. Previous research in marketing, economics, sociology, and organization theory suggests that participation is influenced by two types of variables. The first is the nature of the interpersonal relationship that exists between the boundary personnel in the retailer's and manufacturer's firms. The second are various organization-level variables, including incentive premiums (promotional allowances) and monitoring efforts. The authors extend previous research by examining both the independent and joint effects of these factors on retailer participation. On the basis of an empirical study involving a conjoint task, the authors show that the presence of a strong interpersonal relationship does not diminish the importance of other variables, such as incentives. Within the limits of the conjoint task, the results also suggest that interpersonal relationships are less important determinants of participation than economic incentives. The authors discuss the implications of the study for marketing theory and practice.

Over the past decade, transaction cost analysis (TCA) has received considerable attention in the marketing literature. Marketing scholars have made important contributions in extending and refining TCA's original conceptual framework. The authors provide a synthesis and integration of recent contributions to TCA by both marketers and scholars in related disciplines, an evaluation of recent critiques of TCA, and an agenda for further research on TCA.

The recent marketing literature reflects a growing interest in relationship management issues. In particular, several recent studies have drawn on transaction cost and agency theory to examine how interfirm relationships are organized. The general premise is that explicit control mechanisms must be deployed in a relationship to manage a partner's potential opportunism. Although previous research has shown that different mechanisms can be used, the tendency has been to examine individual mechanisms in isolation. The authors develop hypotheses about interdependences between different control mechanisms. They also identify some of the contextual factors that influence their use. The framework is tested empirically by examining how chemical manufacturers organize their supplier relationships. The results generally support the hypothesis that firms’ choices among control mechanisms are influenced by contextual factors. Only limited support is found for the hypothesis that interdependencies exist between different mechanisms.

High-technology markets represent unique problems for organizational buyers and, in turn, for their existing and potential vendors. These problems are due to high levels of uncertainty and the presence of switching costs tied to existing technologies or vendors. The authors focus on two aspects of buyer decision making in such markets: (1) whether buyers include new vendors at the consideration stage of the process and (2) whether they switch to new vendors at the choice stage. Using survey data from organizational buyers’ purchases of computer workstation equipment, the authors present a joint test of the antecedent conditions that influence the two processes. Based on a sequential logit model, they show that individual antecedents have different effects on consideration and switching behavior. The authors then discuss the implications of their study for the literatures on high-technology markets and organizational buyer behavior.

Previous research on buyer behavior in high technology markets has focused on specific outcomes (product adoption or rejection) as opposed to buyers’ underlying processes. The authors identify key dimensions of high technology markets and draw on organization theory and information economics to develop hypotheses about their effects on organizational buyers’ search behavior. They also present propositions about how certain aspects of a firm's present buying situation may influence its perceptions of the characteristics of a given market. An empirical test of the propositions in a sample of computer workstation purchases shows good support for the hypothesized relationships.

Territorial restrictions long have been the subject of intense policy debate. The central issue in this debate has been whether such distribution arrangements are deployed for efficiency or anticompetitive purposes. The authors add to the debate by broadening the existing conceptualization of business efficiency and providing evidence of the importance of efficiency considerations in the decision to deploy restrictions. In the past, efficiency often has been viewed narrowly, in terms of giving distributors incentives to provide free-rideable services. The authors show that information asymmetry and transaction costs also represent important efficiency-based explanations of territorial restrictions. With regard to anticompetitive concerns, their results show that manufacturers are more likely to use territorial restrictions when they face competition ex ante. Ultimately, this may reduce interbrand competition. From a public policy perspective, their pattern of results supports the current rule of reason treatment of territorial restrictions in the United States. At the same time it questions the current European policy of per se illegality.

Transaction cost analysis is rapidly becoming an important theoretical paradigm in marketing. However, the accumulation of transaction cost studies has been accompanied by a growing body of criticism, primarily directed toward its underlying behavioral norm of opportunism. That norm is a serious theoretical deficiency, not only because it may be descriptively inaccurate, but also because it limits the applicability of the theoretical framework. The authors show that norms play a very significant role in structuring economically efficient relationships between independent firms. In the absence of supportive norms, it is not possible for parties whose specific assets are at risk to acquire vertical control as per the transaction cost prescription. Instead, those parties lose control because of their dependence. An empirical test of the conceptual model in a sample of manufacturer-supplier relationships shows good support for the authors’ hypotheses.

Recent trends in industrial markets indicate that buyers and sellers are increasingly supplanting conventional “arm's length” arrangements with “alliances” involving closer ties. The authors develop a theoretical model of industrial buyer-supplier ties that presents joint action as a key aspect of closeness. Whereas conventional ties emphasize a clearly defined division of labor, these newer relationships are distinguished by more tightly integrated roles based on undertaking activities jointly. Drawing primarily on a normative theory of transaction costs, the authors identify the conditions under which these relationships are useful. The utility of the relationships derives from an ability to safeguard relationship-specific investments and to facilitate adaptation to uncertainty. Using data from a sample of industrial firms and their suppliers, the authors test these predictions. The results show good support for the model. Consequences for research and practice in marketing are drawn.

The authors develop a theoretical extension to the basic transaction cost model by combining insights from dependence theory with the TCA approach. They introduce offsetting investments as a means of safeguarding the specific assets of small firms in conventional channels. The traditional TCA safeguards are insufficient here, because vertical integration is not feasible for the small firm at risk and long-term contractual protection is not present in conventional channels. Data from 199 manufacturers' agencies support the theoretical predictions. Agencies with more specific assets invested in their relationship with a principal attempted to bond themselves more closely to their accounts to safeguard those assets. Such bonding efforts resulted in a lower level of dependence on the principal because the agencies were better able to replace the principal if necessary. Also, their financial performance was improved when dependence was reduced, provided levels of specific investments were relatively high.