Relational ties – an empirical test of the role of transaction cost and network determinants in sustainable vertical business relationships in Albania
New Medit, Vol. 14, n. 2, (June 2015), pp. 55-64
Jel classifications: A14, D23, D85
We develop a model of relational governance as a hybrid form of inter-firm relationships, conceptualizing it in terms of repeated exchange under low behavior uncertainty level. Furthermore, we derive a model of its determinants based on arguments of transaction cost economics, social network theory and sociological issues.
Logistic regression modeling is employed to test the model on data collected from a sample of 170 Albanian farmers engaged in the cultivation and collection of medicinal aromatic plants. The results show that asset specificity and antecedents of trust are the strongest predictors of relational governance, and competition among suppliers has small but significant positive effect. Directions for further research on determinants of this particular governance choice are also developed in the light of the research limitations.
relational governance, trust, transaction cost economics, network