In inter-organizational relationships (IORs) governance literature, the dominant underlying theory is transaction cost economics (TCE) which is based on minimizing the transaction costs. Recently, TCE perspective has been criticized for its limited view towards explaining the value-based decisions on establishing or continuing exchange relationships. Moreover, some scholars have argued that a single-firm view about the interpretation of IORs performance promotes more opportunistic behavior among project participants in terms of IORs and impedes the collaborative atmosphere in the project. Borrowing from the lean construction literature, this paper develops the concept of “Lean Governance” in the context of IORs governance in construction projects and argues that the underlying logic for IORs governance should be on maximizing the value of relationships for the customers. Applying value-based and customer-focused approach of lean construction as well as its assumption of construction projects as complex systems, this paper further posits that value creation for the customers through IORs is associated with applying “Lean Governance” that is a combination of formal, social, and IT/IS governance mechanisms with more emphasis on social tools. This article contributes to both lean construction and IOR governance literature by conceptualizing this new approach towards IORs governance through discussing paradigm shifts from Non-Lean Governance to the “Lean Governance”.

Keywords