IDEAS home Printed from https://ideas.repec.org/a/sae/entthe/v31y2007i2p279-297.html
   My bibliography  Save this article

The Governance Paradox: Preferences of Small Vulnerable Firms in the Homebuilding Industry

Author

Listed:
  • James R. Dewald
  • Jeremy Hall
  • James J. Chrisman
  • Franz W. Kellermanns

Abstract

This article explores the variables that drive small firms to choose quasi–integration as an alternative to vertical integration in situations of high asset frequency. Drawing on transaction cost theory and institutional approaches, we develop and test several hypotheses regarding quasi–integration among homebuilders and land developers in a major Canadian city. Our focus is on the preferences of small, vulnerable firms operating in an environment where quasi–integration has been institutionalized as a trusted form of governance. The findings indicate that the preference for quasi–integration is driven by asset specificity, bargaining power, and opportunistic expectations, supporting a paradoxical view that small, vulnerable firms pursue both efficiency and institutional legitimacy in making governance choices regarding large dominant suppliers.

Suggested Citation

  • James R. Dewald & Jeremy Hall & James J. Chrisman & Franz W. Kellermanns, 2007. "The Governance Paradox: Preferences of Small Vulnerable Firms in the Homebuilding Industry," Entrepreneurship Theory and Practice, , vol. 31(2), pages 279-297, March.
    • Handle: RePEc:sae:entthe:v:31:y:2007:i:2:p:279-297
    DOI: 10.1111/j.1540-6520.2007.00173.x
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1111/j.1540-6520.2007.00173.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1540-6520.2007.00173.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jeffrey H. Dyer, 1997. "Effective interim collaboration: how firms minimize transaction costs and maximise transaction value," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 535-556, August.
    2. Oliver E. Williamson, 1999. "Strategy research: governance and competence perspectives," Strategic Management Journal, Wiley Blackwell, vol. 20(12), pages 1087-1108, December.
    3. Jarillo, J. Carlos, 1989. "Entrepreneurship and growth: the strategic use of external resources," Journal of Business Venturing, Elsevier, vol. 4(2), pages 133-147, March.
    4. Oliver E. Williamson, 1991. "Strategizing, economizing, and economic organization," Strategic Management Journal, Wiley Blackwell, vol. 12(S2), pages 75-94, December.
    5. Jeffrey H. Dyer, 1996. "Does Governance Matter? Keiretsu Alliances and Asset Specificity as Sources of Japanese Competitive Advantage," Organization Science, INFORMS, vol. 7(6), pages 649-666, December.
    6. Lorenzoni, Gianni & Ornati, Oscar A., 1988. "Constellations of firms and new ventures," Journal of Business Venturing, Elsevier, vol. 3(1), pages 41-57.
    7. Russell W. Coff, 1999. "When Competitive Advantage Doesn't Lead to Performance: The Resource-Based View and Stakeholder Bargaining Power," Organization Science, INFORMS, vol. 10(2), pages 119-133, April.
    8. Nicola Costantino & Roberto Pietroforte & Peter Hamill, 2001. "Subcontracting in commercial and residential construction: an empirical investigation," Construction Management and Economics, Taylor & Francis Journals, vol. 19(4), pages 439-447.
    9. Peggy A. Golden & Marc Dollinger, 1993. "Cooperative Alliances and Competitive Strategies in Small Manufacturing Firms," Entrepreneurship Theory and Practice, , vol. 17(4), pages 43-56, July.
    10. John Child & Guido Möllering, 2003. "Contextual Confidence and Active Trust Development in the Chinese Business Environment," Organization Science, INFORMS, vol. 14(1), pages 69-80, February.
    11. Andrew L. Zacharakis, 1997. "Entrepreneurial Entry into Foreign Markets: A Transaction Cost Perspective," Entrepreneurship Theory and Practice, , vol. 21(3), pages 23-40, April.
    12. Akbar Zaheer & N. Venkatraman, 1995. "Relational governance as an interorganizational strategy: An empirical test of the role of trust in economic exchange," Strategic Management Journal, Wiley Blackwell, vol. 16(5), pages 373-392.
    13. Lawrence M. Gales & Richard S. Blackburn, 1990. "An Analysis of the Impact of Supplier Strategies and Relationships on Small Retailer Actions, Perceptions, and Performance," Entrepreneurship Theory and Practice, , vol. 15(1), pages 7-22, October.
    14. Robert J. David & Shin‐Kap Han, 2004. "A systematic assessment of the empirical support for transaction cost economics," Strategic Management Journal, Wiley Blackwell, vol. 25(1), pages 39-58, January.
    15. Jeffrey H. Dyer & Wujin Chu, 2003. "The Role of Trustworthiness in Reducing Transaction Costs and Improving Performance: Empirical Evidence from the United States, Japan, and Korea," Organization Science, INFORMS, vol. 14(1), pages 57-68, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jim Dewald & Frances Bowen, 2010. "Storm Clouds and Silver Linings: Responding to Disruptive Innovations Through Cognitive Resilience," Entrepreneurship Theory and Practice, , vol. 34(1), pages 197-218, January.
    2. Memili, Esra & Chrisman, James J. & Chua, Jess H. & Chang, Erick P.C. & Kellermanns, Franz W., 2011. "The determinants of family firms' subcontracting: A transaction cost perspective," Journal of Family Business Strategy, Elsevier, vol. 2(1), pages 26-33, March.
    3. MahdaviMazdeh, Hossein & Saunders, Chad & Hawkins, Richard William & Dewald, Jim, 2021. "Reconsidering the dynamics of innovation in the natural resource industries," Resources Policy, Elsevier, vol. 72(C).
    4. Meijer, Rick & Buitelaar, Edwin, 2023. "What drives developers? Understanding vertical (dis)integration strategies in the land development process," Land Use Policy, Elsevier, vol. 131(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Delbufalo, Emanuela, 2021. "Asset specificity and relationship performance: A meta-analysis over three decades," Journal of Business Research, Elsevier, vol. 134(C), pages 105-121.
    2. Ranjay Gulati & Maxim Sytch, 2008. "Does familiarity breed trust? Revisiting the antecedents of trust," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(2-3), pages 165-190.
    3. Virgile Chassagnon, 2008. "Qu'est-ce qu'une firme (-réseau) ?," Post-Print halshs-00374758, HAL.
    4. Raji Srinivasan & Thomas H. Brush, 2006. "Supplier Performance in Vertical Alliances: The Effects of Self-Enforcing Agreements and Enforceable Contracts," Organization Science, INFORMS, vol. 17(4), pages 436-452, August.
    5. Lui, Steven S. & Wong, Yin-yee & Liu, Weiping, 2009. "Asset specificity roles in interfirm cooperation: Reducing opportunistic behavior or increasing cooperative behavior?," Journal of Business Research, Elsevier, vol. 62(11), pages 1214-1219, November.
    6. M. Meuleman & S. Manigart & A. Lockett & M. Wright, 2006. "Transaction costs, behavioral uncertainty and the formation of interfirm cooperations: Syndication in the UK private equity market," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 06/359, Ghent University, Faculty of Economics and Business Administration.
    7. repec:wsi:acsxxx:v:21:y:2019:i:08:n:s1363919619500130 is not listed on IDEAS
    8. Marta Gancarczyk, 2015. "Proces wzrostu przedsiębiorstwa w świetle podejścia zasobowego i teorii kosztów transakcyjnych," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 5, pages 5-31.
    9. repec:dgr:rugsom:03g23 is not listed on IDEAS
    10. Mark H. Hansen & Robert E. Hoskisson & Jay B. Barney, 2008. "Competitive advantage in alliance governance: resolving the opportunism minimization-gain maximization paradox," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(2-3), pages 191-208.
    11. Joanita Kataike & Xavier Gellynck, 2018. "22 Years of Governance Structures and Performance: What Has Been Achieved in Agrifood Chains and Beyond? A Review," Agriculture, MDPI, vol. 8(4), pages 1-32, March.
    12. D. Vandaele & P. Gemmel, 2007. "Dealing with Business Service Transactions after the Sourcing Decision: Influence of Contract and Uncertainty," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 07/432, Ghent University, Faculty of Economics and Business Administration.
    13. Virgile Chassagnon, 2011. "The Network Firm as a Single Real Entity: Beyond the Aggregate of Distinct Legal Entities," Journal of Economic Issues, Taylor & Francis Journals, vol. 45(1), pages 113-136.
    14. Huang, Shihping Kevin, 2014. "The emergence of the outsourcing market and product technological performance," Technological Forecasting and Social Change, Elsevier, vol. 82(C), pages 132-139.
    15. Ebers, Mark & Semrau, Thorsten, 2015. "What drives the allocation of specific investments between buyer and supplier?," Journal of Business Research, Elsevier, vol. 68(2), pages 415-424.
    16. Latusek, Dominika & Vlaar, Paul W.L., 2018. "Uncertainty in interorganizational collaboration and the dynamics of trust: A qualitative study," European Management Journal, Elsevier, vol. 36(1), pages 12-27.
    17. Han, Jiqin & Trienekens, Jacques H. & (Onno) Omta, S.W.F., 2011. "Relationship and quality management in the Chinese pork supply chain," International Journal of Production Economics, Elsevier, vol. 134(2), pages 312-321, December.
    18. Gerwin, Donald, 2006. "Buyer-vendor relations for components: The extreme example of custom integrated circuits," Research Policy, Elsevier, vol. 35(5), pages 673-690, June.
    19. Peters, Frank, 2018. "The business of video games is a multi-player game : Essays on governance choices and performance in a two-sided market in the cultural industries," Other publications TiSEM 886b3148-4bbb-4ea4-b666-0, Tilburg University, School of Economics and Management.
    20. Wang, Lei & Jiang, Fuming & Li, Jun & Motohashi, Kazuyuki & Zheng, Xiaosong, 2019. "The contingent effects of asset specificity, contract specificity, and trust on offshore relationship performance," Journal of Business Research, Elsevier, vol. 99(C), pages 338-349.
    21. Sonya Wen & Cheng-Min Chuang, 2010. "To teach or to compete? A strategic dilemma of knowledge owners in international alliances," Asia Pacific Journal of Management, Springer, vol. 27(4), pages 697-726, December.
    22. Wang, Lei & Zhang, Chun & Jiang, Fuming, 2019. "Matching governance mechanisms with transaction-specific investment types and supplier roles: An empirical study of cross-border outsourcing relationships," International Business Review, Elsevier, vol. 28(2), pages 316-327.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:entthe:v:31:y:2007:i:2:p:279-297. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.