Competitive Trust Contracting And Transaction Cost Economy

Evolutionary and spiral acquisition are currently trends in use for acquisitions where the outcomes are uncertain. This paper looks beyond these processes to a concept emphasising trust and transparency within a transaction cost paradigm trust contracting. The evidence suggests that in this experimental trust contracting case study, there was a transaction cost advantage to the buyer of 55% over that of existing high tech acquisition processes. Where the end product (good or service) is largely unknown at the time of contract signature, trust contracting provides transparency and contractual safeguards for both contracting parties, and offers an alternative form of corporate governance which makes use of trust to improve buyer-seller relationships and outcomes for both, allocates risk according to the party best placed to carry the risk, speeds completion of contractual arrangements, and reduces transaction costs for both parties

TRUST BASED CONTRACTING IN VIRTUAL ORGANIZATIONS: A CONCEPT BASED ON CONTRACT WORKFLOW MANAGEMENT SYSTEMS

Abstract: For participants in virtual organizations it is necessary to work together on a temporary basis in order to solve specific problems. Both the search for adequate partners and the organizational set-up have to be very fast and efficient. The main difficulty of building a cooperation lies in finding the right balance between time-consuming, but safe ways based on traditional contracts, and less reliable, but faster ways based solely on traditional forms of trust. This paper introduces a contract/trust based solution and describes a computer-supported negotiation process to make the process of creating a virtual organization fast and safe at the same time. We propose an interorganizational workflow based on a combination of a minimal set of contractual documents supplemented by trustbased features. The workflow enables partners to establish a temporary cooperation agreement within a relatively short time. As workflow modelling language we have chosen so-called XML-nets, a novel variant of high level Petri nets which combines interorganizational workflow models with XML-document descriptions