THE ROLE OF THE CONTRACT IN THE NETWORK GOVERNANCE CONSTRUCTION

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Abstract

Focusing on business networks in which firms from different countries are embedded, the present paper is interested in a better understanding of how the formal and social governance mechanisms are related. In particular, the paper focuses on the construction process of network governance, recognizing the contract as the main coordination and control mechanism for stabilizing the network organizations. This paper aims to examine the process that might lead to the formulation of a contract between firms, comparing two different theories: Actor-Network Theory (ANT) and Pragmatic Constructivism (PC). ANT offers an account of how the difference in the parties’ interests was a key point in problematizing the introduction of the contract as an inscription that mobilizes the actors’ interests. However, ANT does not offer sufficient reasons to explain why the translation fails in a cross-national network where different national values may be relevant. Then, the use of PC points out a missed integration between national values, considering the contract a way of thinking. The case study describes the construction process of a cross-cultural network between an Italian, an Albanian and a Kosovar firm operating in the artistic lightening system business. The evidence showed a negative nexus between informal and formal mechanisms of governance.

Keywords: Actor-Network Theory, Pragmatic Constructivism, Cross-Cultural, Actors, Values

JEL Classification: M49, M1

Received: 18.01.2018

Accepted: 19.03.2019

Published online: 20.03.2019

How to cite this paper: Rizza, C., Leotta, A., & Ruggeri, D. (2019). The role of the contract in the network governance construction. Corporate Ownership & Control, 16(3), 8-19. https://doi.org/10.22495/cocv16i3art1