Contractual and relational governance as substitutes and complements - explaining the development of different relationships

For a long time research on the management of IS outsourcing projects viewed relational and contractual governance as substitutes. However, subsequent studies provided empirical evidence for the complementary view. Recently, some authors supported the notion that relational and contractual governance mechanisms can simultaneously be complements and substitutes. Given these inconsistencies the question arises as to how contractual and relational governance become substitutes or complements. We investigate, whether the relationship between governance mechanisms is the outcome of distinct processes of interaction between contractual and relational governance. For that purpose, we conduct an exploratory, multiple-case study of five IS outsourcing projects at a leading global bank. We identify three archetypical processes illustrating how the interaction between relational and contractual governance can result in a complementary relationship. In addition, we discover one process explaining their substitution. The results of our study propose a shift in perspective. While former studies focused on explaining, whether contractual and relational governance are complements or substitutes, we answer the question how and why they become complements and substitutes. Based on our findings, we give implications for further research.