Article Abstract
We propose a conceptual framework of transaction governance that augments the existing transaction cost economics (TCE) model with research on organizational identity orientation. Our focus is on how particular identity orientations imply preferences for formal versus informal governance mechanisms. These preferences, in turn, are activated when a firm faces particular transaction hazards. In general, the identity orientation construct augments the current perspective on governance choice and helps expand the current TCE model. We also discuss how a firm’s identity orientation is itself systematically shaped (strengthened or weakened) by transactional outcomes. These feedback processes involve certain paradoxes. For instance, even successfully governed transactions may actually weaken a firm’s identity orientation, to the extent that the governance choice is incompatible with the firm’s prevailing identity orientation.
Academy of Management Review, February 2026
About the researcher
Simon Bell is Professor of Marketing in the Department of Management & Marketing in the Faculty of Business & Economics. Simon studies how firms can become more effective organisations by engaging with customers more meaningfully. He focuses on how frontline employees interact with customers to create value for the customer, the firm, and themselves. He also studies how firms initiate, maintain, and evolve relationships with other firms and how they create conditions for innovation. Behind all his research is the idea that by recasting how firms connect with others, whether their customers, staff, or other firms, they can build strong brands and beneficial relationships. His research has focused on the retail and financial services industries and has been published in journals such as the Journal of Marketing, the Journal of the Academy of Marketing Science, the Academy of Management Review, and Harvard Business Review. He is an Associate Editor of the Journal of the Academy of Marketing Sciences and sits on the editorial board of the Journal of Marketing.
With his focus on academically rigorous research for real-world problems in industry, government, and not-for-profit organisations, Professor Bell has worked extensively with industry in research, consulting, and executive education capacities. He has worked with organisations locally and abroad, including Unilever, PWC, Honda, Ailo, Salesforce.com, Agricultural Bank of China, and IBM. He has also delivered executive education courses for Cambridge University, Duke Corporate Education, and Melbourne University. He remains a Fellow of Judge Business School at Cambridge University.