Governance mechanisms and practices in project-based interorganisational collaboration for innovation

•A case study of ten project-based interorganisational collaboration for innovation.•We identified four different governance needs with multi-project settings.•Governance mechanisms and practices should align and fulfil these needs. This study explores how project-based interorganisational collaboration for innovation employs formal contracts and relational governance in governance practices to fulfil different governance needs. The study sheds light on the previously unexplored interplay among the formal contracts, relational agreements and governance practices of project-based interorganisational collaboration for innovation. By interviewing managers and analysing the formal contracts and relational agreements in ten cases of Finnish project-based interorganisational collaboration for innovation, we found that the degree to which governance needs are fulfilled by the governance practices, relational agreements, and formal contracts varies. Although the governance practices seemed to fulfil all the needs to at least a certain degree, relational agreements and formal contracts, for example, conflicted with such practices and with each other, sometimes even internally. Based on our findings, we urge organisations to employ both formal contracts and relational governance to fulfil the governance needs of project-based interorganisational collaboration for innovation.