Relational Ties and Transaction Costs – The Moderating Role of Uncertainty

Relational governance is argued by many authors to positively affect performance exchange between business partners. Investigating the supplier side of the dyad, this study focuses on the effect of behavior uncertainty on the relationship between relational exchange supported by trust and the outcome of the exchange—negotiations and monitoring costs that occur during bargaining and ex post arrangements. Moderated multiple regression analyses is employed to test the model on primary data collected from a sample of 170 Albanian farmers engaged in cultivation and collection of medicinal aromatic plants. Findings show empirical support for the proposition that the adoption of relational exchange lowers ex post transaction costs. It also demonstrates that behavior uncertainty acts as a quasi-moderator, wherein it impacts both directly and indirectly the ex post transaction costs. The role of uncertainty in shaping relational ties, outcomes, and implications is further discussed