Abstract

Firms in China and in Asian-pacific countries normally encounter a governance paradox of being too lenient via relational-based governance or being too strict via contractual-based governance under uncertainty. While both governance mechanisms have been extensively studied separately under inter-firm governance contexts, though some studies showing complementary and substituted as the interactions between these two, few, if any studies focus on the further conversional process in details of how these two make complement or substitute especially in the digital age. In this study, from the lens of ambidexterity theory, we employ an exploratory case study methodology and attempt to understand its interaction process in a Chinese firm. We submit there is a conversion via information technology between contractual-based governance and relational-based governance and IT acts as an intermediary to support organization ambidexterity thus enabling governance conversion. Precisely, IT can bring flexibility and support general trust exploration as well as system-based change exploitation thus enabling contractual-based governance to convert into relational-based governance. Besides, IT can assess and standardize relationships via providing process and rules, and support knowledge-based trust exploitation as well as system-based process exploration thus enabling relational-based governance to convert into contractual-based governance. Our study inspires firms to response uncertainty and keeping inter-firm cooperation by IT-enabled governance conversion.

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