East-west corporate networking: A theoretical approach

In recent years after the beginning of the transition process, firms in Central and Eastern European countries have been trying hard to find access to international markets and production chains. Rapidly changing institutional, technological and demand conditions together with decades of isolation from world markets do not let ,,stand-alone strategies appear very successful in this context. The paper presents networking activities as a promising alternative for Central and Eastern European firms (CEEF) to organize international transactions. As several theories show, network forms of organization can - by establishing an atmosphere of trust and stability and by pooling resources and information - make it possible for network members to realize an economic advantage over external competitors that is higher than in markets or hierarchies. Among various types of networking activities, it is especially long-term-orientated relations that offer the possibility for CEEF to participate in an international exchange of crucial technologies and to upgrade their position in global production chains in the long run.

Countertrade and the choice of strategic trading form

Reciprocal trade agreements, usually known under the generic name of countertrade (CT) have been traditionally seen as a form of bilateralism, and thus as an inefficient form of international exchange. Although contemporary trade theories do not fully explain the increasing prevalence of CT transactions, we will argue that it is possible to construct and use a third (hybrid) institutional form, which is congruent with the transaction-cost theories, and we will show how — under market imperfections — countertrade can reduce transaction costs while conserving the efficiency gains generated by these specific arrangements.Publicad

From Hierarchies to Markets: FedEx Drivers and the Work contract as Institutional Marker

Judges are often called upon today to determine whether certain workers are “employees” or “independent contractors.” The distinction is important, because only employees have rights under most statutes regulating work, including wage and hour, anti-discrimination, and collective bargaining law. Too often judges exclude workers from statutory protection who resemble what legal scholars have described as typical, industrial employees — long-term, full-time workers with set wages and routinized responsibilities within a large firm. To explain how courts reach these counterintuitive results, the article examines recent federal decisions finding that FedEx delivery drivers are independent contractors rather than employees. It argues that the problem is embedded within the employment contract itself, in the law’s attempt to construe the legal relations of master and servant as a contract. The contemporary employment contract is product of a 19th century incorporation of master-servant authority into contracts for labor services. In the face of institutional disruption, the contradiction within employment between contractual equality and servitude tends to surface in the form of two doctrinal ambiguities. Both make the dominant standard for employment status irresolvable by merging contractual formation and performance. First, the attempt to fit master-servant authority in the framework of contract creates an ambiguity between the activities of bargaining over the work and carrying out the work, or between contracting and producing. Second, it makes ambiguous the relationship between a written agreement and contractual duties. The way in which FedEx organized the drivers’ work manipulated these ambiguities, which enabled the courts to maintain that features of the work that ordinarily, and under the governing legal tests, would be evidence of employment were here consistent with, or even evidence of, independent contracting. In fact, the courts transform some of the same vulnerabilities that place the drivers within the policy concerns of collective bargaining and wage and hour law into evidence of their autonomy. The attempt to encase master-servant relations in contract also destabilizes distinctions between firms and markets. The ambiguity in employment between contracting and producing exposes a tension within major economic theories of the firm: employment is the legal rationale for a firm’s centralized control over indirect, hierarchical, and multilateral relations in production; as a contract, however, employment is a direct and bilateral relationship between equal parties in a market. The FedEx decisions marshal this tension to redefine a firm, as conceptualized by major theories of the firm, as a market. Multilateral relations among drivers as they work under FedEx’s direction appear as bilateral contracts between drivers in a decentralized market. The courts conflate the impersonality of bureaucracy — in which work is embedded in sophisticated technology and a supervisory hierarchy — with the impersonality of the market. The drivers’ very fungibility as low-skilled workers performing standardized routines becomes evidence of their entrepreneurial opportunity. The article hypothesizes that the invisibility of logistics and communications technology, relative to the heavy machinery of industrial manufacturing, helped the courts to submerge the FedEx bureaucracy beneath a nexus of contracts. It critiques the decisions for rejecting theories of the firm that ground the legitimacy of the corporation in the efficient production of goods and services. The article concludes with a thought experiment showing how, using the arguments in the FedEx decisions, one could reinterpret assembly line employment as independent contracting

Understanding smart contracts as a new option in transaction cost economics

Among different concepts associated with the term blockchain, smart contracts have been a prominent one, especially popularized by the Ethereum platform. In this study, we unpack this concept within the framework of Transaction Cost Economics (TCE). This institutional economics theory emphasizes the role of distinctive (private and public) contract law regimes in shaping firm boundaries. We propose that widespread adoption of the smart contract concept creates a new option in public contracting, which may give rise to a smart-contract-augmented contract law regime. We discuss tradeoffs involved in the attractiveness of the smart contract concept for firms and the resulting potential for change in firm boundaries. Based on our new conceptualization, we discuss potential roles the three branches of government – judicial, executive, and legislative – in enabling and using this new contract law regime. We conclude the paper by pointing out limitations of the TCE perspective and suggesting future research directions

Countertrade and the choice of strategic trading form.

Reciprocal trade agreements, usually known under the generic name of countertrade (CT) have been traditionally seen as a form of bilateralism, and thus as an inefficient form of international exchange. Although contemporary trade theories do not fully explain the increasing prevalence of CT transactions, we will argue that it is possible to construct and use a third (hybrid) institutional form, which is congruent with the transaction-cost theories, and we will show how — under market imperfections — countertrade can reduce transaction costs while conserving the efficiency gains generated by these specific arrangements.Barter; countertrade; transaction cost theory; asymmetric information; trading strategies;

Hybrid laws: constitutionalizing private governance networks

s.a.: Das Recht hybrider Netzwerke. Zeitschrift für das gesamte Handelsrecht und Wirtschaftsrecht 165, 2001, 550-575.. Italienische Fassung: Diritti ibridi: la costituzionalizzazione delle reti private di governance. In: Gunther Teubner, Costituzionalismo societario. Armando, Roma 2004 (im Erscheinen)

Which governs - the relationship or the contract?

According to the transaction cost economics literature, a firm’s external contractual relationships must be ‘fit for purpose’. What is a ‘fit for purpose’ contractual relationship should not be a normative decision, but an objective one, to be made with regard to achieving transaction cost efficiency, while defending the core competencies of the firm. Data from a Hong Kong case study is used to examine whether or not the client’s choice of contractual relationship is ‘fit for purpose’ and also to evaluate the impact of such a choice. The findings suggest that maintaining a relationship of high quality as a strategic policy not only reduces recourse to the contract but, also improves the quality and predictability of project performance and, is an antidote to ill-aligned contractual elements. These findings lend support to the growing trend towards relationship or relational contracting in construction

The impact of contractor selection method on transaction costs: a review

The basic premise of transaction-cost theory is that the decision to outsource, rather than to undertake work in-house, is determined by the relative costs incurred in each of these forms of economic organization. In construction the "make or buy" decision invariably leads to a contract. Reducing the costs of entering into a contractual relationship (transaction costs) raises the value of production and is therefore desirable. Commonly applied methods of contractor selection may not minimise the costs of contracting. Research evidence suggests that although competitive tendering typically results in the lowest bidder winning the contract this may not represent the lowest project cost after completion. Multi-parameter and quantitative models for contractor selection have been developed to identify the best (or least risky) among bidders. A major area in which research is still needed is in investigating the impact of different methods of contractor selection on the costs of entering into a contract and the decision to outsource