Designing effective contracts within the buyer-seller context: a DEMATEL and ANP study

This study examines the factors that contribute to effective contract design within the context of buyer-seller relationship. Research streams on contract factors, supply chain factors, environmental factors, and competitive factors were reviewed to arrive at 18 contract factors. A hybrid model of Decision-Making Trial and Evaluation Laboratory (DEMATEL) and Analytic Hierarchy Process (ANP) analysed empirical data collected from 17 experts to weight the importance of contract factors. It was found that most important factors are, in order of significance: policies, supplier technology, force majeure, formality, relationship learning, buyer power, legal actions, liquidated damages, supplier power and partnership

Understanding and Managing Behavioural Risks -The Case of Food Risks Caused by Malpractice in Poultry Production

The probability that actors in economic relationships break rules increases with the profits they thus expect to earn. It decreases with the probability and level of short- and long-term losses resulting from disclosure. It also decreases with the level of social context factors and intrinsic values which shield actors from yielding to economic temptations. This paper assesses the relative merits of various scientific approaches concerned with risks in economic relationships and outlines their contribution to the study of opportunistic rule-breaking. Since the identification of (misdirected) economic incentives faced by firms and individuals represents the starting point for a systematic analysis of opportunism in any field, we also outline a microeconomic approach that systematically provides this crucial information. The approach is applied to the problem of food quality and safety threatened by opportunistic malpractice of food business operators. Its essentials are illustrated through a study which systematically searches for the temptations to break production-related rules in the poultry industries.asymmetric information, control theories, economic misconduct, game theory, moral hazard, principal-agent model, opportunism, protective factors, relational risks, Food Consumption/Nutrition/Food Safety, A13, K32, K42,

Contract Enforcement, Institutions and Social Capital: the Maghribi Traders Reappraised

Economists draw important lessons for modern development from the medieval Maghribi traders who, according to Greif, enforced contracts multilaterally through a closed, private-order ‘coalition’. We show that this view is untenable. The Maghribis used formal legal mechanisms and entered business associations with non-Maghribis. Not a single empirical example adduced by Greif shows that any ‘coalition’ actually existed. The Maghribis cannot be used to argue that the social capital of exclusive networks will facilitate exchange in developing economies. Nor do they provide any support for the cultural theories of economic development and institutional change for which they have been mobilised.contract enforcement, reputation, legal system, social network

Regional monopoly and interregional and intraregional competition: the parallel trade in Coca-Cola between Shanghai and Hangzhou in China

This article uses a “principal-agent-subagent” analytical framework and data that were collected from field surveys in China to (1) investigate the nature and causes of the parallel trade in Coca-Cola between Shanghai and Hangzhou and (2) assess the geographic and theoretical implications for the regional monopolies that have been artificially created by Coca-Cola in China. The parallel trade in Coca-Cola is sustained by its intraregional rivalry with Pepsi-Cola in Shanghai, where Coca-Cola (China) (the principal) seeks to maximize its share of the Shanghai soft-drinks market. This goal effectively supersedes the market-division strategy of Coca-Cola (China), since the gap in wholesale prices between the Shanghai and Hangzhou markets is higher than the transaction costs of engaging in parallel trade. The exclusive distributor of Coca-Cola in the Shanghai market (the subagent) makes opportunistic use of a situation in which it does not have to bear the financial consequences of the major residual claimants (the principal and other agents) and has an incentive to enter the nondesignated Coca-Cola market of Hangzhou by crossing the geographic boundary between the two regional monopolies devised by Coca-Cola. The existence of parallel trade in Coca-Cola promotes interregional competition between the Shanghai and Hangzhou bottlers (the agents). This article enhances an understanding of the economic geography of spatial equilibrium, disequilibrium, and quasi-equilibrium of a transnational corporation's distribution system and its artificially created market boundary in China

The Complexity of Corruption: Nature and Ethical Suggestions

Corruption is a well-established research topic which increasingly attracts interest, as attested by a growing body of literature. Nevertheless, disagreements persist not only about how to curve it, but even about its definition, causes and consequences. Such a lack of consensus reflects the complexity of the problem, a feature which is often cited but rarely analyzed. This paper aims to fill that gap. In particular, we first address the nature of corruption’s complexity by offering and analyzing an inventory of “generators of complexity” compiled from the available literature. Secondly, our paper draws from the key conclusions of that analysis to shed some light on the complex role played by corporations on corruption. Finally, we suggest that ethical aspects have to be considered in order to clarify many complex dilemmas around corruption and illuminate the corporate role in both domestic and foreign business activity.

Computational Modeling of Culture's Consequences

This paper presents an approach to formalize the influence of culture on the decision functions of agents in social simulations. The key components are (a) a definition of the domain of study in the form of a decision model, (b) knowledge acquisition based on a dimensional theory of culture, resulting in expert validated computational models of the influence of single dimensions, and (c) a technique for integrating the knowledge about individual dimensions. The approach is developed in a line of research that studies the influence of culture on trade processes. Trade is an excellent subject for this study of culture’s consequences because it is ubiquitous, relevant both socially and economically, and often increasingly cross-cultural in a globalized world

The influence on export performance of performance ambiguity among foreign sales agents

Purpose – This study examines the extent to which exporter difficulties in evaluating foreign sales agent performance affect export performance, either directly or as mediated by opportunism. Methodology – In developing the hypotheses, the study integrates transaction cost theory and principal-agent theory. The proposed relationships between the constructs (performance ambiguity, opportunism, and export performance) are examined for a multi-industry sample of Norwegian exporters in their dealings with foreign sales agents. A survey of 410 qualified key informants yielded 101 usable questionnaires—a response rate of 24.6%. Structural equation modelling is used for data analysis and hypothesis testing. Findings – The analysis finds support for the hypothesis that sales agent performance ambiguity relates negatively to export performance. While performance ambiguity is positively related to sales agent opportunistic behavior, opportunism does not significantly influence export performance. It seems that the adaptation costs created by the evaluation problem are of greater importance in reducing export performance than the costs created by opportunistic behavior. Research limitations and implications – In focusing on the core dimensions of sales agent performance in foreign markets, other factors influencing export performance are not included. The fact that small Norwegian firms dominate the sample, further limits application and generalization of the findings. Nevertheless, the study provides export managers and scholars with a more thorough understanding of basic potentially deteriorating dimensions in the relationship between exporter and foreign independent sales agent. Originality/value – To the best of our knowledge, this study is the first to examine how performance ambiguity and opportunistic behavior among foreign sales agents impact on export performance. By concentrating on basic deteriorating dimensions, the study adds to the few that focus on inhibiting drivers of exporter – foreign-sales-agent relationships.acceptedVersio

Governing of agrarian sustainability

The new developing interdisciplinary methodology of the New Institutional and Transaction Costs Economics (combining Economics, Organization, Law, Sociology, Behavioral and Political Sciences) is incorporated into agrarian sphere, and a framework for governing of agrarian sustainability suggested. It takes into account the role of the specific institutional environment (formal and informal property rights, and systems of their enforcement); and the behavioral characteristics of individuals (bounded rationality, tendency for opportunism, entrepreneurships, preferences, risk aversion etc.); and the transaction costs associated with protection and exchange of property rights; and the critical factors of each transaction (such as frequency, uncertainty, asset specificity, and appropriability); and the comparative efficiency of market, private, public, and hybrid governing modes. The discrete structural analysis is applied, and the principle forms for governing of transactions with specific critical dimensions specified. The cases of market and private sector failures are identified, and the needs for a third party (Government, international assistance etc.) intervention justified. The comparative advantages and disadvantages of different modes for public involvement (property rights modernization, regulations, taxes, assistance and support, public provision, hybrid modes) are assessed. The effective governance mix for public intervention in environmental transactions is presented.Agrarian Governance; Governing of Agrarian Sustainability; Efficiency of Market, Private, Public and Hybrid Modes; New Institutional and Transaction Costs Economics

Temporal, cognitive and behavioral dimensions of transaction costs: To an understanding of hybrid vertical inter-firm relations

transaction costs;costs and cost price

Networks In Cultural, Economic and Evolutionary Perspective

Depending on the kind of literature networks in general, and Chinese networks in particular seem to be different phenomena, or are explained by different factors leaving the interested public puzzled. Whether Chinese networks resemble Clans, Clubs, or Mafia-kind of organizations is as much disputed as the effects of networking on the economy. While some argue that networks contribute to overall factor productivity in a situation in which neither the old planning system nor the nascent markets function, others insist on their counterproductive potential for the transformation of the Chinese economy. A third group dismisses networks as a transitory phenomena that will disappear with ongoing market reforms, in particular the wider use of the price mechanism for allocating resources and co-ordinating economic activities. The following attempts to shed some light into the confusing argumentation by grouping the different approaches according to what is explained, and the explaining items. The paper will systematically compare theories that are usually classified as taking a cultural, economic, and evolutionary perspective and which can be found in China-specific or social science literature. All these approaches claim to provide explanations for (Chinese) networks. Yet they differ with respect to the phenomena that they want to explain, namely networks and/or the explanatory factors they regard as crucial. Thus, for example cultural and economic, better: Transaction cost economics (TCE) approaches focus on networks as a given organizational form, while evolutionary economics or the capability approach in management science include a further dimension, namely time, subsequently regarding network as an activity that might lead to different network forms. The approaches differ also widely according to the factors singled out – or isolated -which are claimed to be the crucial items in any explanation for networks. As will be shown the two competing models in which networks are either based on co-ethnic groups or on expected functional value are not necessarily mutually exclusive.networks;social capital;Chinese business behavior;cross cultural studies