The governance of lateral relations between and within organisations

Recent years have witnessed various changes in organisational structures and seen the increasing importance of lateral relations. The objective of this paper is to explore the nature of lateral relations and to develop a framework for conceptualising the elements of a ‘governance package’ for lateral relationships. Drawing on two illustrations – one of lateral relations between organisations and the other of lateral relations within an organisation – the paper explores the governance of lateral relations that are characterised by interdependence, flexibility and continuous learning. Building on ideas from the product development literature, the paper works towards a framework for understanding the governance of lateral relations. It is argued that minimal structures are needed to regulate lateral relations, but they must leave room for manoeuvre to enable the parties react to new situations as they arise; i.e., they must combine ‘firmness and flexibility’. Four dimensions of minimal structures are discussed – economic, institutional, social and technical. These four structures form the basis of the governance package for lateral relations. Returning to the two illustrations, the paper then describes practices used to govern lateral relationships, and it observes that they can comprise a mix of hierarchical, market and relationship practices. The paper then discusses some of the contradictions inevitably embedded in the governance of lateral relations. It concludes with a summary of the framework for understanding the governance of lateral relations, and with a challenge to accounting and management researchers.