Mind the Gap: Creating Value when Formal and Informal Structures Do Not Match

Drawing on an eight year longitudinal case study of Nissan and its suppliers, I examine the evolution in buyer-supplier relations. I find that formal structural changes undertaken by Nissan as it purposively shifted from relational to transactional governance did not immediately eliminate the benefits it had been deriving from its earlier relational approach to supplier relations. In line with the literature on modulation I find that the norms, expectations, and informal inter-organizational processes took several years to adjust to Nissan's formal shift to a transactional model. Once the informal processes mirrored the formal transactional structure, Nissan undertook a conscious effort to return to an intermediate mode of exchange that incorporated elements of both the relational and transactional governance modes. However, the same lags were present, leading Nissan to face some of the drawbacks of both the relational and transactional governance modes.

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