Management control of alliances: an exploratory
research on the governance system for two
Air Navigation Service Providers
Master’s Thesis
MSc Business Administration: Organizational & Management Control
University of Groningen – Faculty of Economics and Business
MANAGEMENT SUMMARY
The Single European Sky (SES) framework is changing the current Air Traffic Management (ATM) in Europe. Due to this framework, the Dutch government has decided that two organizations, the Military Air Navigation Service Provider (Mil ANSP) and Air Traffic Control the Netherlands (ATCN), should intensify their cooperation and on the 17th of May 2010 this intensification was announced by the organizations. The organizations are working together to establish an alliance in which the interests of both organizations need to be respected. For Mil ANSP the key interest is mission effectiveness: timely and flexible availability of suitable, sanitized training areas within a short flying distance from the base. ATCN has interest in using the airspace capacity more effective opposed to the current setting where two different air navigation service providers are located at two different locations with different systems. A more effective use of the airspace capacity will result in lower costs for the airspace user and less carbon dioxide emissions which diminishes the environmental pollution. Both organizations have their own structure and type of control and currently it is unclear how business operations in this alliance should be completed. The main challenge in this alliance is to come to the right governance that will accomplish the interests of both organizations. This thesis aims to discover what governance structure is most suitable for the alliance by understanding the theoretical implications of the specific situation. The following research question is addressed:
“How should the arrangements about the governance system of the alliance be established in order to fulfil
the interests of the organizations?”
To provide an answer on this research question this study adopts the academic problem solving cycle approach, which is meant to develop context-specific knowledge in order to solve a context-specific field problem. At first, a literature study was conducted to explain what an alliance is and how it can be controlled. A governance system was found to be a tool to control the processes and decisions in an alliance. The design parameters of such a governance system are; centralization, specialization, formalization, coordination, monitoring and incentives. The prominent contingencies that influence the governance system are distinguished and examined by conducting interviews in both organizations. The data from the interviews was analysed by using the template approach.
The results of this study indicate that in the beginning there should be an emphasis on a centralized way of decision making on the main issues of ownership, resource allocation and the degree of cooperation. When there is an agreement on these decisions, the decision making will shift to lower levels. The involvement of the organizational members on the alliance tasks, denoted as specialization, should be more extensive and depending on the main decisions about the alliance the degree of specialization will vary. The nature of the service that the organizations provide calls for a higher degree of formalization. In addition, the risk of opportunism and the efficiency goal make it highly advisable to clearly specify the appropriate means of reaching the cooperation between the organizations, which also demands higher formalization. The high degree of formalization implies a comprehensive use of coordination, monitoring and incentive mechanisms. Enforcement provisions will make sure that the organizations are held accountable for their part of the alliance tasks by indicating the formal monitoring mechanism. The contractual provisions will help the organizations to coordinate and specify which coordination mechanisms are used at the different levels.
TABLE OF CONTENTS
Management Summary ... 2
1. Introduction ... 4
2. Literature review ... 7
2.1. Strategic alliances ... 7
2.2. Organizational issues ... 8
2.3. Governance system ... 9
2.4. Design criteria ... 10
2.5. Conceptual model ... 13
3. Research method ... 14
3.1. Type of research ... 14
3.2. Case description ... 14
3.3. Data collection ... 15
3.4. Research population ... 16
3.5. Data analysis ... 17
3.6. Criteria for research ... 17
4. Results ... 19
4.1. Description of the results... 19
4.2. Analysis of the results ... 25
4.3. Discussion of the results ... 26
4.4. Design ... 27
5. Conclusion ... 30
5.1. Recommendations for future research ... 31
6. Reference list ... 32
7. Appendices ... 36
Appendix 1: Conceptual model of Albers (2010) ... 36
Appendix 2: Extensive conceptual model ... 36
Appendix 3: Specific conceptual model per category ... 37
Appendix 4: Organizational chart Defence ... 38
Appendix 5: Organizational chart Air Traffic Control The Netherlands (ATCN) ... 40
Appendix 6: Interview template ... 40
Appendix 7: Codebook ... 42
1. INTRODUCTION
“The Single European Sky initiative is crucial to boost competitiveness in the aviation sector, create jobs, and
contribute to the European economy’s growth. Today’s vote in the Parliament gives a boost to the entire project. It is now up to the Member States to take this important issue forward, and deliver a truly efficient air traffic system in Europe.”i (Brussels, 12 March 2014)
This statement of the Vice President Siim Kallas of the European Commission reflects the ambition to change the current Air Traffic Management (ATM) in Europe. The EU is pushing for consolidation of the European ATM landscape through its Single European Sky (SES) framework. The SES framework is aimed to; enhance safety and efficiency of air transport in Europe, reduce delays by improving the use of the scarce airspace and airport resources, improve services and reduce cost for air transport passengers by reducing fragmentation of the ATM in Europe and improve the integration of military systems into the European ATM system.ii The SES initiative has significant impacts on the ATM system of the Netherlands as it indicates a restructuring of the Dutch airspace. The Netherlands should take a proactive approach to these called for developments, if they choose to wait it could possibly lead to the loss of its solid position in the European aviation industry. As a result of these developments the Dutch government has given clear direction to the development of the Dutch aviation in the aviation memorandum established in April 2009. The ambition and objective for the Dutch aviation is identified as the further development of an optimal network quality with a competitive and sustainable aviation.iii In order to implement this objective a good airside accessibility is an important prerequisite.
In the Netherlands there are three Air Navigation Service Providers (ANSPs) that provide the operations of the ATM, namely; Military Air Navigation Service Provider (Mil ANSP), Air Traffic Control the Netherlands (ATCN) and Maastricht Upper Area Control Centre (MUAC). The ATM system is structured around three airspaces; Upper Airspace, Lower Airspace and Terminal Manoeuvring Area and Control zone (TMA-CTR). This definition of airspaces refers to the different characteristics of the use which can be summarized in en-route, climb and descend and terminal respectively. Mil ANSP and ATCN Netherlands are responsible for the Lower Airspace and the TMA-CTR and MUAC and Mil ANSP are responsible for the Upper Airspace. As a result of the aviation memorandum the Mil ANSP and ATCN announce an intensification of the existing cooperation on the 17th of May 2010.iv
The main issue of this intensification of the cooperation between Mil ANSP and ATCN has been revealed by conducted preliminary interviews with the stakeholders. Both sides expressed their concerns about the details of the governance of the cooperation and the way in which the interest of both organizations can be achieved. For Mil ANSP the key interest is mission effectiveness: timely and flexible availability of suitable, sanitized training areas within a short flying distance from the base. ATCN has interest in using the airspace capacity more effective opposed to the current setting where two different air navigation service providers are located at two different locations with different systems. A more effective use of the airspace capacity will result in lower cost for the airspace user and less carbon dioxide emissions which diminishes the environmental pollution.
Even though the organizations provide the same service there are all kinds of differences between the two organizations. These differences derive from the fact that one organization is more focused towards the national safety provision and the other on the commercial side of the industry which implies a different type of business, another culture within the organization and a distinct organizational model.
STATEMENT OF THE PROBLEM
The business problem can be stated as follows; due to external pressures two organizations, Mil ANSP and ATCN, are working together to establish an alliance. Both organizations have their own structure and type of control and currently it is unclear how business operations in this alliance should be completed exactly. The main challenge in this alliance is to come to the right governance that will accomplish the interests of both organizations.
PURPOSE OF THE STUDY
This thesis aims to discover what governance system is most suitable for the alliance by understanding the theoretical implications of the specific situation. By studying these implications it will provide recommendations for both organizations on how to enhance control so that the interests can be fulfilled.
SIGNIFICANCE OF THE STUDY
Alliances and governance systems of alliances have received a lot of attention in the literature from multiple theoretical perspectives (Gulati, 1988; Todeva & Knoke, 2005; Kale & Singh, 2009; Parmigiani & Rivera-Santos, 2011). The importance of alliances has increased in the course of globalization. Most research has been done in legal governance structures that exist in alliances. In this specific case the government imposes an alliance on the two organizations. Previous literature has reported on the other way around, where the government pressuring for efficiency and organizations responding with alliances and networks (e.g. Geleijnse, 2011) or governmental policies encouraging mergers (e.g. Weil, 2000). This thesis contributes to the literature by explaining how several contingencies effect the governance of the alliance in a specific case. The combination of a military and civil organization is rarely been explored in the literature, which makes the topic interesting. This research has a problem solving nature which implies that the primary objective is to develop context-specific knowledge in order to solve a context specific problem (van Aken et al., 2007). This problem solving nature makes it relevant for the case organizations and possible to future similar cases as well.
RESEARCH QUESTION
The research question cannot be answered at once because it consists of different and complex elements. To provide a good answer on the research question, it will be divided into questions. These sub-questions contain the main concepts of the research question and have the purpose of guiding the literature study. This thesis will continue to answer these sub questions by looking into the relevant literature about alliances, governance system of the alliance and its design criteria. The questions are listed below.
What is a strategic alliance?
What are organizational issues within an alliance?
What does the governance of an alliance consist of?
What are the design criteria for the governance system of an alliance?
STRUCTURE OF THE THESIS
2. LITERATURE REVIEW
The purpose of the literature review is to develop deeper understanding of the core concepts of the research question. This chapter will start with an explanation of the concept alliance and the underlying assumptions that originate from two perspectives. The organizational issues of an alliance will be explained and subsequently this chapter will elaborate on the term governance and the parameters that can be distinguished within the governance of an alliance. Finally, a set of criteria that are related to governance will be provided, required for establishing the governance of an alliance.
2.1. STRATEGIC ALLIANCES
Strategic alliances have received extensive attention by practitioners and scholars in the past two decades (Gulati, 1988; Todeva & Knoke, 2005; Kale & Singh, 2009; Parmigiani & Rivera-Santos, 2011). Consequently, there is a wide variation of definitions of an alliance. According to Todeva and Knoke (2005) a strategic alliance involves “at least two partner firms that remain legally independent after the alliance is formed, share benefits and managerial control over the performance of assigned tasks and make continuing contributions in one or more strategic areas, such as technology or products”. Gulati (1998) defines strategic alliances as “voluntary arrangements between firms involving exchange, sharing, or codevelopment of products, technologies, or services”. Albers (2010) describes a strategic alliance as “institutionalized voluntary cooperation between two or more firms toward a common goal”.
These
definitions, often overly broad, do not help to fully understand the specific concerns and issues
related to structuring these partnerships. By looking more deeply at the definitions the basic
assumptions are; an alliance consists of multiple autonomous organizations and a certain level
of cooperation is needed. The basic assumption behind an alliance is that when a company
enters the collaboration it will achieve more value than when it does not.
Cooperation can never
be an end by itself, it serves a purpose and is therefore a tool to realize this purpose (Kaats et al.
2005). The organizations in the alliance aim at a valuable cooperation in which choices have to
be made. Without ambition and a goal it is difficult to organize a sustainable cooperation.
2.2. ORGANIZATIONAL ISSUES
Analysts widely recognize that alliances represent an organizational form which uses hybrid modes of governance (Todeva & Knoke, 2005). The decision to cooperate aims at improving the future circumstances for each individual organization and their partner and is therefore not a responsive action. When organizations engage in these inter-organizational relationships, the organizations develop relational connections that do not fall into the simple dichotomy of hierarchy and markets (Williamson, 1991).
Powell (1990) distinguishes three methods of organizing transactions namely, the market form, the hierarchy form and the hybrid form. Each form has its own characteristics and its strengths and weaknesses. In the market structure prices determine the production and exchange. Markets are a form of non-coercive organization, there is coordination but there are no integrative effects. This form has a high degree of flexibility and a low degree of commitment among the parties concerned. In a hierarchical form there are clear departmental boundaries, clean lines of authority, detailed reporting mechanisms and formal decision making procedures. The strength of this form is it reliability and accountability. A weakness of the hierarchical form is that it is less flexible which makes it difficult to cope with changes. The market form is on the one side of a continuum and the hierarchy on the other side. Powell (1990) mentions that transactions between companies can also lay in between the two forms which he refers to as a hybrid form. In a hybrid structure the parties involved can reciprocally use each other’s resources and capabilities. In this way the risks of the organization are reduced and it will increase the speed of doing business as it is not one entity that faces everything alone. This distinction between the three methods of organizing transaction can, as the phrase implies, be seen as a core perspective in organizational economics.
According to Battilana and Dorado (2010), a network or hybrid organization is one that combines different institutional logics in unprecedented ways. Unprecedented way refers to the different forms a hybrid organization can take, as there is not a universal form. This type of organization needs to comply with different institutional logics that make the form unique in each specific situation. Scott (1994) describes institutional logics as “taken-for-granted social prescriptions that represent shared understandings of what constitutes legitimate goals and how they may be pursued”. Institutional logics help explain the taken-for-granted rationales behind the practices of organising the control of resources within organizations and the important organizational processes affecting organizational practices. Within a network or hybrid form there are influences of two or more pluralistic institutional logics which make them by nature arenas of contradiction (Pache & Santos, 2013). Institutional logic is recognized as a core perspective in organizational theory and sociology (Greenwood et al., 2008).
2.3. GOVERNANCE SYSTEM
The existing literature on alliances has predominantly distinguished the different types of governance structure on the basis of legal structure classification, for instance equity (e.g. Hennart, 1988) and alliance contracts (e.g. Parkhe, 1993). This literature focuses on the formal elements of governance and discourages to the informal elements such as coordination arrangements. Legal structure is only a small part of corporate governance and is usually derived from transaction cost economics, ignores key issues such as board composition and decision rights. Only recently have alliance scholars begun to examine these central governance concerns in alliances (Reuer & Devarakonda, 2012).
Todeva and Knoke (2005) describe that “governance refers to combinations of legal and social control mechanism for coordination and safeguarding the alliance partners’ resource contributions, administrative responsibilities and division of rewards from their joint activities”. Governance captures the essence of the management of interdependent collaborations. The collaborations consist of horizontal forms, joint ownership and a high degree of interdependency in contrast to the hierarchical relationship with a superior and subordinate in an autonomous organization. Ho et al. (2009) mentioned scholars in management consider governance structures and organizational control to have critical impact on the performance of an organization. Within the literature on alliances the concept of governance is used to denote the management control, which is a broader concept than organizational control. Organizational control, traditionally used in the management accounting literature, illustrates the administrative process designed to regulate the activities of organization’s participants (Mills, 1983). Management control systems are implemented to assist managers in decision making about achieving desired organizational outcomes or organizational goals and to control the behaviour of subordinates (Chenhall, 2003). The term governance is used because the relationships in alliances go beyond the hierarchical management viewpoint and beyond the traditional boundaries of the organization. Alliance governance systems are order organizations that lack the features of a unitary actor (Borys & Jemison, 1989). This second-order organization complements the first-second-order organizations which consist of the employees in the organizations involved in the alliance. The governance systems have unique structures and use mechanisms to coordinate and monitor an alliance and its performance (Albers, 2010). The nature of a governance system, the lateral relationship, emerges from the importance of securing cooperation between the organizations. Håkansson and Lind (2004) show that the coordination within an alliance can include features of all classical control and coordination forms (hierarchy, market and hybrid). These findings are supported by Van der Meer-Kooistra and Scapens (2008) who state that these various practices can be used in combination to ensure governance when relationships are formed. The classic controls are founded in the organizational theory that studies how organizations function and how they affect and are affected by the environment in which they operate. An alliance governance system can be accessible for description and analysis through concepts and findings from traditional organizational theory research (Grandori, 1997). The concepts and findings, however, need to be adapted to enable them for handling of the second-order organization.
Formalization captures the use of written rules, procedures and plans in which the rules can be interpreted as formal written statements that specify the appropriate means for reaching the desired goals (Pugh et al., 1968).
The terminology varies but scholars agree that every governance system includes mechanisms to control the people in the organization to maximize an organizations ability to create value (Jensen, 1983). The principal purpose of the governance structure is one of control: to control the way people coordinate their actions to achieve goals, to control the means used to motivate people to achieve these goals and to control that the goals are achieved by monitoring the people. Coordination, monitoring and motivating are the governance mechanisms that align the interest of principals and agents.
The coordination mechanisms that Albers (2010) used in her model are derived from the classic organizational theory of Mintzberg (1980). Mintzberg (1980) differentiates direct supervision; where one individual gives order to others, standardization; the work is coordinated around the imposed standards varying around work process, outputs and skills, and mutual adjustment; individuals in the organization coordinate by communicating informally with each other. For the monitoring mechanisms Albers
(2010) follows the study of Balinga and Jager (1984) who differentiate between formal and informal. Formal mechanisms are explicit and have a specific nature, like reports and performance indicators whereas informal mechanisms are more implicit and are of an aggregated nature. Motivating or incentive mechanism support the coordination and monitoring mechanism. Incentives direct the behaviour of the organizations to achieve compliance and the intended goals that benefits the alliance (Parkhe, 1993). Contractual complexity assesses the extent to which the organizations should be monitored and coordinated. Reuer and Arino (2007) have distinguished two underlying dimensions of contractual complexity, namely: enforcement provisions and coordination provision. The enforcement provisions indicate the degree on which the intellectual property and severe breaches should be determined. Albers (2010) denotes this as safeguards, which are defence mechanism that discourage opportunistic behaviour by laying punishments on the partner organization (Dyer & Singh, 1988). The contractual provisions have a more informational nature and are focused on coordination of the alliance. Albers (2010) refers to this as synergy allocation rules.
2.4. DESIGN CRITERIA
2.4.1. EXTERNAL ENVIRONMENT
Studies by Lawrence and Lorsch (1967) and Burns and Stalker (1961) indicate that organizations should adapt their structure to reflect the degree of uncertainty in their environment. The set of forces that cause the uncertainty in the environment can be viewed in terms of complexity, dynamism and richness. Environmental complexity deals with the amount of interconnectedness with the specific and general environment. Environment dynamism indicates the extent to which forces change quickly over time in the specific and general environment (Aldrich, 1979).
If the environment is stable the governance will be more formalized and centralized as the forces change in a predictable way. Environment richness denotes the amount of resources that are available for the organization. Uncertainty in a rich environment is low because organizations do not need to compete for the resources as they are in abundance (Hedberg, Bystrom & Starbuck, 1976).
When the environment of the organizations is complex, the formalization and centralization are low because the environment is difficult to predict and control (Emery & Trust, 1965). Alliances situated in a complex environment need to quickly adapt to the changing circumstances to keep up with market. A high level of centralization would slow down decision-making in the alliance and as consequence, the employees are not able to respond quickly to the changes. Reuer et al. (2013) confirm in that when environmental uncertainty is high the board involvement should be low. In addition, the unpredictability of changes makes it difficult for boards to control and coordinate due to the possession of imperfect information (Holmstrom, 1979; Demsetz & Lehn, 1985). This makes it hard to estimate the degree of detail of the contingencies and responses and therefore the formalization will be low.
2.4.2. CHARACTERISTICS OF THE ORGANIZATIONS
Characteristics of the member organizations consist of two factors, organizational complexity and alliance experience. The degree of differentiation, which can be measured by the number of different divisions, denotes the organizational complexity (Jones, 2012). As the volume of an organization grows the organization needs to differentiate and allocate people and resources to specific organizational tasks. The allocation of the people and resources induces a greater desire to control the activities in complex organizations since there are more resources available and more people to manage. When the organizations are more complex the emphasis will lie on higher degrees of formalization, specialization and decentralization (Child, 1973). The coordination mechanisms used have a higher degree of standardization to cope with the extensive amount of resources and people and mutual adjustment to facilitate the specialized manager to communicate and make decisions independently. Specialization tends to be higher in large organizations because there are more managers available (Albers, 2010).
2.4.3. SPECIFICATIONS OF THE ALLIANCE
The specifications of the alliance include alliance scope, behavioural uncertainty and alliance goals. The scope of the alliance relates to the variety of tasks and processes that need to be considered in the alliance governance system. As the number increases the formalization and specialization tend to increase in order to cope with the activities and rights in a manner that is easily accessible (Inkpen, 2000). The mechanism of coordination, monitoring and incentive also increase as the scope increases (Dussauga & Garette, 1995).
One central issue in alliance design is how to protect the organization against opportunism (Pisano, 1989). Opportunistic behaviour occurs when one of the partners takes advantage of the knowledge from the alliance for its own interest. The risk of opportunism increases when the partners in the alliance consider each other competitors (Oxley & Sampson, 2004).
Organizations that have overlapping businesses need to share similar resources and are therefore more likely to compete with each other (Freeman, Caroll & Hannan, 1977). This can lead to conflict between the organizations during the operations in the alliance, especially in the overlapping areas. The more extensive and interdependent the activities in the organizations are the higher the extent of coordination and direct contact to achieve success (Kogut, 1988; Kogut & Zander, 1992; Gulati & Singh, 1988). It will be necessary to come to the right arrangements between the partners about the allocation of tasks and responsibilities. Attaching and enforcing claims on the contribution of each partner in the alliance becomes more difficult when activities are complex and interdependent.
When the risk of opportunistic behaviour increases there will be more attention to contractual safeguards (Macneil, 1980, Heide, 1994). According to Reuer et al. (2013) the board involvement will be higher when the organizations have a great overlap in the market, which implies centralization. The defensive behaviour of the partners can increase when there is a great overlap. This will put more emphasis on monitoring and control (Ghoshal & Moran, 1996).
The goal of an alliance can be distinguished between efficiency-oriented and growth-oriented alliances, Dussauge, Garette and Mitchell (2000) call this link alliance or scale alliance. Efficiency-oriented alliances are mainly focussed on reducing costs and sharing resources. This focus leads to a more critical role of coordination between the still autonomous organizations, which implies a more formalized and standardized governance system. The growth-oriented goal the organizations can benefit from a variety of areas the partner has to offer like, know-how, geographical coverage or product range. It includes the discovering of new terrain. If there is a growth goal the governance system needs to be more specialized and the authority should be delegated to lower ranks which implies decentralization.
2.4.4. INTERRELATIONSHIPS DESIGN PARAMETERS
Not only the contingencies determine the alliance governance system, there are also interrelationships between the design parameters. A high level of formalization typically implies centralization that is accompanied with standardization as coordination mechanism. Standardization is based on rules and regulations which are formal monitoring mechanism. As the degree of formalization increases safeguards are used as incentive mechanisms to make sure that sufficient monitoring is in place. A low level of formalization implies that mutual adjustment among people across organizational functions is the main coordination mechanism. Decision making is a dynamic process resulting in a more decentralized structure because employees must have the authority to commit the organization to certain actions when they make decisions. A high level of specialization encourages the use of mutual adjustment as coordination mechanism and more elaborated systems of monitoring. However, when the alliance passes a certain threshold of specialization, mutual adjustment will be accompanied by direct supervision of standarization otherwise it will lose control.
2.5. CONCEPTUAL MODEL
The literature described in this chapter provides insights on how the governance of an alliance is formed. Figure 1 illustrates the conceptual model derived from the literature. On the left side of the model the independent variables are distinguished, which consist of; external environment, characteristics of the organizations and specifications of the alliance. These variables influence the intermediate variable, governance system as they all have an impact on the design parameters; centralization, specialization, formalization, coordination, monitoring and incentive. The details of the design parameters will have its significant impact on the fulfilment of the interests of the organizations as these parameters determine the approach of controlling the interests. The dependent variable is grew because it was already explained in the introduction what the interest of the organizations are.
The conceptual framework depicted in figure 1 is a simple and clear because the design parameters are illustrated in one box. However, each of the independent variables consists of features that determine how the design parameters should be established. In appendix 2 and appendix 3 a conceptual model is added, which elaborates further on the individual relations.
The arrows indicate the relationships between the variables which are translated into sub-questions and can be stated as follow:
1) What is the influence of the external environment on the alliance governance system?
2) What is the influence of the characteristics of the organizations on the alliance governance system?
3) What is the influence of the internal environment on the alliance governance system?
3. RESEARCH METHOD
3.1. TYPE OF RESEARCH
Concerning the transparency and clear approach to the research question, the method of research will be further explained. The purpose of this research is to discover what governance structure is most suitable for the alliance. To achieve this objective this research adopts the academic problem solving cycle approach (van Aken et al., 2007,) which is useful in business administration and social science issues. The regulative cycle by van Strien (1997) is the classic form of the problem-solving cycle, in which the word regulative refers to decision making. This is in contrast with the academic empirical cycle where the main goal is to produce scientific knowledge. According to van Aken et al. (2007) the primary objective of the problem solving cycle is to develop context-specific knowledge in order to solve a context-specific field problem.
Van Aken et al. (2007) distinguish three parts in this problem solving cycle namely, the design part: in which a redesign of the business system or organizational unit is made based on the problem definition, analysis and diagnosis, the change part: in which the redesign is realized through changes in organizational roles and routines, and the learning part: in which the client organization learns to operate within the new system and with the new instruments, and learns to realize the intended performance improvement. In this research only the first part of the problem solving cycle will be conducted, the other two parts are beyond the scope of this research because of the limited time available. The actual implementation of the design, the change part and the learning part, fall outside the range of this research. In this specific case the research was not initiated because of a specific business problem but to exploit a business opportunity. The academic problem solving cycle can still be used with a little modification. Van Aken et al. (2007) state “the problem definition step may be skipped, but one needs an analysis step to assess the opportunity and the potential for the company to exploit it“.
3.2. CASE DESCRIPTION
3.2.1. MILITARY AIR NAVIGATION SERVICE PROVIDER (MIL ANSP)
The Military Air Navigation Service Provider (Mil ANSP) is one of the three Air Navigation Providers (ANPs) that contributes to the Air Traffic Management (ATM) in the Netherlands. The service is located at the Air Operation Control Station in Nieuw Milligen (AOCS NM) which is one of the eight air force bases. Each base has its own tasks and responsibilities, and contributes to the main product of the Air force called Air power. The air traffic controllers situated at AOCS NM monitor and coordinate military and civil air traffic in the designated areas. Mil ANSP falls under responsibility of the commander of the air force (CLSK), and therefore under the ultimate responsibility of the commander of the armed forces (CDS) supported by the Defence Staff.
Monitoring and protecting the Dutch airspace and the area of responsibility assigned by the NATO
Guiding the air traffic
Processing and distribution of flight plan-, airspace- and aeronautical information
Educating the air combat and air traffic controllers according to COI/CVI
Conducting Link 16 operations
The organizational chart of the organization is included in appendix 4.
3.2.2. AIR TRAFFIC CONTROL THE NETHERLANDS (ATCN)
In January 1993 Air Traffic Control the Netherlands (ATCN) has become quasi-autonomous non-governmental organisation (quango). Before this date ATCN was part of the directorate general of Civil Aviation of the Ministry of Transport until the government devolved the power to the organisation itself. The Ministry of Transport merged with the Ministry of Housing, Spatial Planning and Environment in 2010 under the name Ministry of Infrastructure and Environment.
As a quango, ATCN has an advising role to the Minister of Infrastructure and Environment regarding the design of the airspace and the way air traffic is controlled and managed. This means that ATCN participates in international consultations for the preparation of international regulations. The members of ATCN are officers as defined by the Public Service. On the basis of the Aviation Act, ATCN provides air traffic management in the designated areas of airspace, the necessary communication and information infrastructure, and information, for example, in the form of maps for air traffic.
ATCN is designed along a matrix structure which implies that people and resources are grouped in two ways simultaneously; by function and by project. There are five functional departments; Operations, Procedures, Systems & Infrastructure (S&I), Strategy & Performance (S&P) and Corporate Services. In addition there are three projects; Control, which aligns the expectations of the internal and external stakeholders and looks for possible opportunities for the organization, Change, which develops and manages the ATM system which is composed of man, machine and procedure, and last Supply, which delivers ATM service on the basis of the ATM system at the agreed Safety, Efficiency, and Environment level.
According to this law ATCN is responsible for:
Providing air traffic service within the flight information region Amsterdam
Providing communication-, navigation- and surveillance services
Providing aeronautical information services and publishing aeronautical publications and maps
Providing training for air traffic safety
Advising the Minister of Infrastructure and Environment and the Minister of Defence on the matters in the field of air traffic management
Performing other by or under the Aviation Act assigned tasks The organizational chart of the organization is provided in appendix 5.
3.3. DATA COLLECTION
The primary sources of data for the theoretical analysis of this research are academic journals and management books obtained through a comprehensive search in online business research databases. By looking in the search engines for relevant data the snowball method was also used, which is done by tracing references.
The choice of research method does not necessarily restrict the researcher to a particular technique for the collection of empirical data (Pickard, 2013). For the empirical analysis, data was obtained by conducting semi-structured interviews with the stakeholders concerned with the decisions around the alliance. These stakeholders have sufficient authority and power which makes their opinions count. The choice of semi-structured interviews was made to gain more knowledge on feelings and attitudes of the stakeholders with respect to the alliance and its governance system. The semi-structured interviews are constructed by addressing each variable distinguished in the conceptual model and the features of the variables explained in chapter 2. The questions in the interview are structured around the topics of the conceptual model and the format is illustrated in appendix 6. The interviews started with an introduction of the research topic and an introduction of the researcher. Then some open questions were asked with regard to the alliance and the added value for the organization. Subsequently more specific subjects were addressed like: alliance, characteristics of the organization, internal environment, external environment and the governance system.
3.4. RESEARCH POPULATION
Excluding the informal and follow-up conversations, eight interviews were conducted. The eight stakeholders for the interviews were chosen on the basis of their interference with the intensification of the cooperation. Within the Royal Air Force the key stakeholders were not all situated at the base AOCS NM. The Royal Air Force has centralized some of the tasks and responsibilities in the staff of the commander of the Royal Air Force and in the staff of the commander of the Armed Forces. The commander of AOCS NM was interviewed as he is in charge of the operations of the air traffic controllers. In the staff of the Royal Air Force a commander was interviewed from the department direction operations, in specific the department C4ISR. C4ISR represents Command, Control, Communications, Computer Intelligence, Surveillance & Reconnaissance, this department is responsible for the operational control of the air traffic controllers. From the staff of the commander of the Armed Forces two stakeholders were interviewed. One from the department direction plans, which is responsible for the preparation of the requirements, including the budgets. The other stakeholder has a specific function in the alliance, which is called programme bureau.
3.5. DATA ANALYSIS
As the choice of data collection was semi-structured interviews, the data analysis must be appropriate for this kind of data. The data from the interviews with the multiple stakeholders are analysed according to a code-book, developed from the theory which is included in appendix 7. This approach is called template approach (Miles & Huberman, 1994) because it involves the application of a template based on prior research and theoretical perspectives. The approach relies on using codes from the code-book for tagging segments in the transcript, which are then sorted among similar contents into categories. The final step is to sort the categories into themes. The codes were established by looking at the features of variables of the conceptual model.
The interviews were transcribed in Microsoft® Word 2010 and the answers to the same questions were structured in one document per organizations. This made it easier to see whether the stakeholders of the organizations had the same ideas about the concepts. After this analysing the transcripts the answers of both organizations were again structured underneath the same questions to compare these findings. The fragments of the interviews established in chapter 4 are not distinguished on the basis of the function of the stakeholders. The goal of this thesis is to look at the entire organizations in which the different stakeholders contribute to the findings by providing information on different levels and functions. Furthermore, it was discussed with the stakeholders that the collected information would be treated confidentially and that the final report would only mention the organizations and not the respondent explicitly.
3.6. CRITERIA FOR RESEARCH
To ensure the quality of the research, three major criteria for evaluating the results are explained next. The first criterion is controllability, which is a prerequisite for the other two, reliability and validity. In order to make the research results controllable, the manner of executing the research must be revealed which is explicitly done in this paragraph of the chapter by explaining the reliability and validity.
3.6.1. RELIABILITY
3.6.2. VALIDITY
When the research results are justified by the way they are generated, they become valid (van Aken et al., 2007). The relationship between the results and how these are derived should be clear. There are three types of validity namely, construct, internal and external. The construct validity is realized by clearly showing how the concepts in the theory are operationalized. In the format of the interview included in appendix 6, the questions are categorized under the main concepts of the conceptual model. During the interviews, some respondents answered multiple questions at once but every concept was discussed. The transcripts were analysed by using a codebook (appendix 7), which shows the operationalization of the variables. The internal validity of results shows that the relationships between the variables are properly demonstrated and that there are no plausible alternative explanations. The interviews were conducted in both organizations and with stakeholders of multiple levels. As mentioned before, the same format was used in every interview which increases the internal validity as the answer could be compared. The analyses of transcripts showed consistency between the answers of the different stakeholders.
4. RESULTS
In this chapter the main findings from the interviews with the stakeholders are presented. The interviews consist of four topics that are illustrated in the conceptual model in chapter 2 namely; external environment, characteristics of the organization, specifications of the alliance and the governance system. The findings of the interviews will contribute to answering the research question by providing insights on the practical level, how the stakeholders look at the factors that influence the design of the governance system and the design parameters included in the governance system.
The first part of this chapter will be oriented towards describing the results of the four topics and answering the sub-questions that are based on the conceptual model in chapter 2. The second part will focus on analysing the results against the theoretical perspectives. The discussion about the main issues that are found in respond of the first two parts will be discussed next. At the end of this chapter the design will be presented.
4.1. DESCRIPTION OF THE RESULTS
4.1.1. EXTERNAL ENVIRONMENT
Both organizations expressed that the restructuring of the Dutch Airspace has major impact on the alliance and on the organizations itself. This change entails the need to reconsider the current procedures of providing the service on all aspects in the organizations. These aspects take form in three “tracks”, denoted as “men, machine and procedure”. The men track will be changed by the way an air traffic controller guides the air traffic. The role of the air traffic controller currently consists of controlling the altitude, heading and speed of the air traffic. This active guiding function will change to a more monitoring function. Regarding this track, one of the managers of Air Traffic Control the Netherlands (ATCN) mentioned:
“There is a shift from very tactical traffic control to a more systematic way of traffic control with an increased system support that enables the air traffic controller to optimize the traffic flow. (…) that is what we call the new way of working, to make the method more and more uniform and to make it more predictable.” (ATCN)
This quote demonstrates that there is a shift towards more formalization as the predictability of the work of the air traffic controller increases. The machine track concerns the operating systems that an air traffic controller uses to guide the air traffic. The systems need to be adapted to the new airspace structure, new layers and areas of the airspaces need to be defined and new coordination agreements facilitated. In addition to these changes all stakeholders pointed out that the technical developments will push for more automation which implies that the air traffic controller will increasingly be governed by the technology. The ATM system has recently been changed at the Military Air Navigation Service Provider (Mil ANSP) and one of the colonels said:
“With the shift from to the old system to the new system, the assistant functionality could be removed. So, a task that was done by man in the old system is now being adopted by the technology.” (Royal Air Force)
As a consequence of restructuring the Dutch Airspace, which is accompanied with changes in all tracks of the organizations, there should be an emphasis on the accompaniment of the air traffic controllers. A colonel of the Royal Air force said:
“You need to look at the weight and the amount of changes the air traffic controller is facing on a continuous base, and you should ensure that there are not too many changes at once. There should be a kind of order and one should get enough time to get used to the changes. We really tend to lose sight of these facts.” (Royal Air Force)
This statement shows that even though there are multiple changes in the environment which is denoted as dynamism, these can be predicted and situated in the right order, which makes it easier to formalize. At ATCN the managers declared another aspect of the external environment that was changing and had effect on the organization and the alliance. Globalization of the Air Traffic Management (ATM) at European level induces an intensification of the laws and regulations. The Single European Sky (SES) is a framework that reflects the ambition of the European Commission to aim for more consolidation of the ATM landscape in Europe. ATCN used to answer to the National Supervisory Authority (NSA) and they would answer to European Aviation Safety Agency (EASA). The regulations of the NSA were provided at national level and could have modifications for the Netherlands. With the globalization of the ATM the EASA pushes for an increased regulation that is applicable for entire Europe and is therefore more coercive. The Royal Air Force has a different authority which oversees that the organization is working according to the safety requirements called, Military Aviation Authority. The Military Aviation Authority establishes the regulations for the military air traffic controllers which are derived from the civil regulations. “When the
organizations are working together the regulations with the highest requirements should be applied”
(Colonel, Royal Air Force). The military demands are more specific to the kind of airplanes the Royal Air Force uses and these must be met in the alliance.
The monitoring of the institutions is becoming more precise, as both organizations have to live up to standards induced by the regulatory bodies. The degree of formalization and standardization in the alliance increases to cope with the demanding of these institutions.
SUB-QUESTION 1
The answer on question 1, “What is the influence of the external environment on the alliance governance
system?” can be stated as follows; although there are a lot of changes in the external environment, they
occur in a predictable way. The changes in the environment push for more formalization as the new way of working is associated with a more systematic and automated manner and the regulatory bodies become more demanding. This makes it possible to have a higher level centralization and higher degree of formalization.
4.1.2. CHARACTERISTICS OF THE ORGANIZATION
The organizational charts of both organizations indicate that there is a definite hierarchy present. When the stakeholders were asked about the hierarchy and the control in the organization some similarities and differences became apparent.
One of the biggest differences between the organizations that is cited by the stakeholders can be explained by looking at activities both organizations are involved in. For ATCN, air traffic control is the core business. Everything in the organization is involved with this operation. The Ministry of Infrastructure and Environment oversees the organization and approves the tariffs but is not involved in the management of the cooperation. “We, as directors, justify the commitments that we make to the Ministry of
Infrastructure and Environment, but we are responsible and liable for the commitments.” (Manager, ATCN).
announcement that AOCS NM is closing, the air combat controllers also need to be moved which also requires attention” (Colonel, Royal Air Force). In addition to the spread of focus the commander of the Air Force
has asked the commander of the Armed Forces to take control over the project in terms of the financial consequences, which means that those aspects are located at the Defence Staff. The commander of the Air Force is still responsible for the operational implementation. “The ideas and discussion about the
collaboration started between the commander of the Air Force and the CEO of Air Traffic Control the Netherlands, but were quickly taken up a level to the Secretaries-General of Defence and Infrastructure and Environment” (Colonel, Royal Air Force). At the level of the Secretaries-General the main political decisions
about the collaboration are made. The decisions that were made on the outline were eventually pushed back into the organizations. By pushing the decisions about the alliance back two lower levels, there is decentralization in the organization.
The nature of the task, air traffic control, has everything to do with safety provision for the air space users so the emphasis in both organizations is on safety. At the Royal Air Force one of the colonels noted that “It
is a bureaucracy and that serves of course its function because you are talking about safety and all kinds of regulations”. One of the managers of ATCN mentioned in the interview that, “Especially when it comes to areas of safety and those kind of things, a bureaucracy is simply unavoidable”. It must be clearly
demonstrated how the organization achieves the safety requirements, which is done by following a set of rules and guidelines induced by a regulatory body. One of the managers at ATCN provided an example of software development and the extent of controllability.
“If you look at how we develop software, we have a whole software development methodology that aims to demonstrate that what we have done is safe. For example, when we change something in a system we will first look at how critical the system is. Depending on the criticality of the system, a specific gravity of development and the amount of testing belongs to the process, which means that every step you take has to show that the safety requirements are met.” (ATCN)
This example shows that there is a high degree of formalization as the rules and procedures that need to be followed are extensive. Even if there is a high amount of rules and guidelines on how to perform, there is also a need for an open culture among the air traffic controllers. In order to cope with the errors of the air traffic controllers, which are unavoidable as every person makes mistakes, there has to be an open environment were these mistakes can be discussed. A managers of ATCN explained the term “just-culture” which represents the phenomenon that all errors should be reported on which you should not criticize people but rather use the learning ability. Both organizations expressed that in addition to the bureaucracy, the organizations are also arranged among professionalism of the air traffic controllers. A colonel of the Royal Air Force compared it to a hospital, “The specialists are situated in the line
organisation, but based on of his knowledge and skills he performs the core process”. The air traffic
controller should anticipate on the actual situations when working behind the console and together with the supervisor they make decisions on the executive operations.
“Last week, we came together on our own initiative with five players; Management plan, the MLA,
staff CLSK, AOCS and the program office. That is actually a kind of team which covers all the aspects that affect this project. Actually, we concluded that these are the players that ultimately, in which perspective you put it, this is the core of the Air Force that should be involved in the alliance. But everyone has a different full-time job.” (Royal Air Force)
The cutbacks in the army have impact on the amount of resources and people that can be dedicated to the project. However, all stakeholders agree that this project needs attention, “I think there is no company in
the world that would put something like this as secondary task for its employees” (Colonel, Royal Air Force).
At ATCN one of the managers is assigned to the case, also on part-time base. In addition to him there are members of the organization assigned to the collaboration on project-base.
“There are people working from different aspects; strategy, training, engineering, finance and
housing. I think that all together 20 people are working on the collaboration. So all together that is quite a large group.” (ATCN)
Although the members of the organization perform the task next to their primary task or on project-base, according to the stakeholders at ATCN there is no need for these members to be more dedicated to the project. The project is part of the management team meetings in which there is focus on the progress and status, “It is part of the vision and strategy of Air Traffic Control the Netherlands. It is part of the company’s
future and occurs on the agenda” (Manager, ATCN). This indicates that there is a difference in
specialization. The Royal Air Force has different tasks to attend to and there is little specialization of the members in the organizations to the alliance. The colonels are working on the alliance, but this was on their own initiative. Within ATCN there are multiple members that are working on the alliance next to their own tasks.
The experience among the partners with alliances differentiates between the organizations but both mention that in this order of magnitude it is never been done before. The alliances of Mil ANSP are in the support, process design, consultations on regulations and airspace classifications. After normal opening hours Maastricht Upper Area Control Centre (MUAC) performs the operating tasks of Mil ANSP. A colonel of the Royal Air Force noted that “these kinds of alliances are often in the consultation structure and not in a
formalized cooperation”.
ATCN has experience in international partnerships. As the European Commission is pushing for the consolidation of ATM in Europe, they have divided Europe in Functional Airspace Blocks (FABs). The Netherlands is positioned in a group with Germany, France, Switzerland and the Benelux and is called, Functional Airspace Block Europe Central (FABEC). Within the organization “you actually see that people
in all departments are working on the project FABEC” (Manager, ATCN).
The two stakeholders of the organizations that are dedicated to the collaborations indicated a way of organizing the multiple related projects that are part of this collaboration. This is mainly about the lower level decisions on the operations. For each project there needs to be an examination of the issues that are related to the project. The issues of a project will be divided to departments that have the skills and knowledge about that issue. With an approval methodology, each issue can be signed as solved when an appropriate solution is found. A manager at ATCN explained it in the following quote:
“For example, a joint product is created for the project: consoles for the military air traffic
The colonel of the Royal Air Force said, “With these various projects we need to assemble capacity”. When the arrangements are discussed at the top level, the arrangements of the operations can be established further. When the project is implemented and there is a financial component involved the Royal Air Force will translate this project plan to an internal project that is run by the programme PRINCE2. PRINCE2 is a combination of a project management methodology and a reporting methodology which is used defence-wide. This structured way of designing the projects that are part of the alliance shows that the enforcement and coordination provisions are in order, which puts more emphasis on the coordination. The decisions are made at lower levels, where members of the organizations are designated to the projects. This demonstrates a greater amount of decentralization and specialization.
SUB-QUESTION 2
The answer on question 2, “What is the influence of the characteristics of the organizations on the alliance
governance system?” can be stated as follows; both organizations are complex of nature as they consist of a
lot of divisions. The main decision to form an alliance was made on the top level of the organizations and thereafter delegated to lower levels, which implies decentralization. Rules and procedures guide the working processes, which is a manner of formalization. There is an extensive amount coordination mechanisms present ranging from standardization to mutual adjustment. Specialization in the alliance differs per organization with the main reason, the amount of people available to work on this case. Within the ATCN the focus on the alliance and the governance of the alliance is high because it is decisive for the future of the organization.
The experience of the organizations in this kind of alliance is low. The knowledge about the routines that are involved need to be established and therefore specialization is not extensive. However, there are already ideas on how the projects should be established at lower levels in the operation of the alliance. These projects are formalized and decentralized in the organization. The coordination and enforcement provisions are applied, which implies a greater emphasis on the coordination.
4.1.3. SPECIFICATIONS OF THE ALLIANCE
All the stakeholders agree that the scope of the alliance consist of all the fundamental activities the organizations are involved in as it is established by a co-location. The fundamental activities structuring the ATM system are distinguished between direct operations and indirect operations but both “are
essential for the success of the final result” (Colonel, Royal Air Force).
The direct operations concern those functions dealing with daily operations directly linked to handling air traffic: Approach Control, Area Control, Airspace Management, Air Traffic Flow and Capacity Management. Flight Information Service, Alerting Services. Security Tasks. The indirect operations concern those functions that support and/or evaluate direct operations: Airspace Design, Air Traffic Flow and Capacity Development, Air Traffic Service development, Systems & Infrastructure (inc. Communication, Navigation & Surveillance), Aeronautical Information Mgmt, Performance Management (e.g. Incident Analyses), Research & Development, Recruitment, Training, Simulation & testing, Collecting charger, Meteorological Information.
difference between the military and civil air controllers in handling the air traffic could also be an advantage. The civil air traffic controllers are specialized in managing a very busy airport, Schiphol. However, there are other smaller airports like Eelde and Beek, which need managing too but much more cost effective, “I absolutely see opportunities there for the military air traffic controllers” (Manager, ATCN). Looking at the co-location one of the managers of ATCN stated that, “With a co-location you can actually
say that Air Traffic Control the Netherlands facilitates, so ensures that all available technology and other needs are acquired but that the management remains separated.” This was confirmed by two other
managers at ATCN, who also see the operationalization of the co-location as Mil ANSP making use of the resources of the organization. This issue that needs more clarification as not all stakeholders agree or know what the situation will be. One Colonel at the Royal Air Force said:
“I’m very curious of how we are going to manage everything integral when the military air traffic controllers are collocated. How are we going to justify our interests? To what extent are we integrating in their management? If they are going to decide on a new system, do we decide with them and at what level?” (Royal Air Force)
This quote demonstrates that there is a great need for coordination, monitoring and incentive mechanisms. It should be clearly specified who is assigned to what task and responsibility. The scope of the alliance and the overlap of the organizations make it important to ensure that every one is doing what they are supposed to.
By asking the stakeholders about the extent to which the rules, procedures and plans should be established, it was found that the work procedures for the operational core need to be set in a formal way, “We simply have to do with flight safety and there is no room for flexibility on that part” (Colonel, Royal Air Force). At the management level there should be some room for discussion, but it would be wise to put the arrangement on paper. Two of the stakeholders of the Royal Air Force denoted in the interviews, “You do
not want to be confronted with investment or operating costs that you did not foresee in advance.” and “We have to be very clear on what our interests are and ensure that our interests are well represented.” These
statements show that formalization would be at place.
When the stakeholders were asked about the goals of the alliance, every single one of them denoted an increase in efficiency. One of the colonels at the Royal Air Force described it best in his interview,
“I clearly see that when you are doing the same things you can easily merge things together. There are opportunities, both synergy effects of doing the same things as taking the best of both worlds and deciding let’s do it their way.” (Royal Air Force)
The two organizations provide the same service and use all kind of resources that could be combined, which will lead to more effective use of the resources. Both organizations have resources that are alike and when the operations are performed from one location all these resources can be brought together. The costs of the organizations will go down because the organizations can simultaneously make use of the resources instead of individually. “You only need to develop and maintain one system instead of two, which
makes it less expensive for both organizations“. (Colonel, Royal Air Force).
With this efficiency goal it is of great importance to have good communication. One of the managers of ATCN mentioned that, “if they are co-located here and we will replace the system then all their requirements
still need to be completed just as we do for our air traffic management”. One of the Colonels of the Royal Air
Force denoted that each organisation has its own priority methodology for adjustments in the procedures and these need to be incorporated in one. Some of the questions that require attention according to him are; “Who is going to perform the priority considerations?” and “Is this something you should leave to Air
Traffic Control the Netherlands or should we get a role in that?”. The efficiency advantages that can be
In addition to the efficiency goal, ATCN will gain a stronger position towards the future when it deals with centre consolidation in Europe with the cooperation. “A combined centre attached to a major airport will
create a more sustainable existence than two smaller centres” (Manager, ATCN).
SUB-QUESTION 3
The answer on question 3, “What is the influence of the specifications of the alliance governance system?” can be stated as follows; the scope of the alliance is large, which calls for a lot of arrangements along the different activities. Opportunistic behaviour of the partners can exist as the organizations have the same domain of business. Therefore there needs to be more attention on the delegation of the responsibilities and tasks. Coordination provisions and enforcement provisions would be in place. The goal of the alliance is both on making the organizations work more efficient, as growing to a bigger organization with greater reach. The efficiency goal calls for a great deal of coordination and clear approach to the issues in the alliance, which also implies that incentives and monitoring mechanism should be established.
4.2. ANALYSIS OF THE RESULTS
4.2.1. EXTERNAL ENVIRONMENT
Based on the results, the stakeholders perceive the external environment as inducing a lot of changes for the organization and the alliance. The project SES causes the changes in the environment, but these changes are slow. SES was introduced in 2000 and the organizations have time to adapt to these changes. The stakeholders are concerned with the changes of the airspace structure and how they affect the work procedures. By looking at the things that need to be changed, doing it on time and in the right order the changes can be handled in a structured way. This calls for more emphasis on planning a standardized way of working. The technical developments in the environment will ultimately push for more automation, which also implies that the operations will be more standardized. In addition, the interconnections with other institutions who induce regulations and protocols, exert pressure on the organization and the alliance. These sources of external institutions, like the state and professional groups, because the organizations to work conform standards and is called coercive and normative isomorphism (Tsamenyi, Cullen & Gonzalez, 2006). Even though the stakeholders of both organizations experience a lot of changes, the external environment does not have a high degree of uncertainty. The rearrangements induced by European Commission and the institutions occur in a predictable way, which makes the board involvement and formalization more extensive. These findings are consistent with the findings of Emery and Trust (1965).
