HYBRID AND ALTERNATE MODES OF GOVERNANCE: IMPLICATIONS FOR RELATIONAL EMBEDDEDNESS IN THE THREE-TIER SUPPLY CHAINS

Background: Leveraging the relational embeddedness perspective, we empirically investigate whether hybrid governance (perceived as a combination of market and hierarchy), and the alternate modes of governance (non-market and non-hierarchal) are capable of providing the social layer to governance within the three-tier supply chain framework.

Methods: The study covers two research stages. In the first stage, the variables that demonstrate two modes of formal governance (both market and hierarchy) are reduced through the Principal Component Analysis (PCA) to highlight the main underlying multi-item factors. In the second stage of our research, the cluster analysis is conducted to compare different clusters in terms of relational embeddedness. As our research is exploratory in nature, we used non-parametric tests to evaluate the significance of results.

Results: The results evidence that that along with the pure mechanisms of supply chain governance (market and hierarchy), one may also identify both the hybrid and alternate modes. It corresponds to four clusters embracing three-tier supply chains with different governance mechanisms: the alternate mode, market, hybrid and hierarchy. Likewise, the study shows that both market and hybrid governance demonstrate the strongest relational embeddedness of both dyads. On the other hand, though the alternate mode of governance, perceived as neither market nor hierarchy, demonstrates stronger relational embeddedness than pure hierarchy, nevertheless the strength of its relational embeddedness is significantly lower as compared to market governance.  

Conclusions: The study shows that it is difficult to reveal clearly delineated tendencies regarding both the hybrid and alternate modes of governance in terms of relational embeddedness. In fact, the hybrid mode of governance should be rather linked to market as they both are very similar, while the alternate mode of governance demonstrates a moderate strength of relational embeddedness. On the other hand, the lowest strength of relational embeddedness is still reported by hierarchy.