Formal Governance by Meta-Organizations and the Challenge of Relational Network Alternatives

Drawing on interviews and observations of a wholesale fish market in France, this article examines how market actors arbitrate between formal and relational governance of transactions, and how the marketplace, conceptualized as a meta-organization, copes with the challenge of being bypassed. Meta-organizations - organizations that coordinate collective action through agreement among their members about higher-order goals and not through employment contracts – tend to impose organizational rules and regulatory procedures onto their members. Our findings reveal that members of meta-organizations may experience these formal elements as too constraining and opt for relational network alternatives, although less efficient. Findings also reveal that meta-organizations respond to this issue by developing capabilities to simultaneously emulate, and differentiate from, relational network alternatives. The findings extend our understanding of the dynamics between formal and informal governance, and the capabilities meta-organizations develop to make their formal form of governance attractive.