On the Evolution of Collective Enforcement Institutions: Communities and Courts

Impersonal exchange has been a major driver of economic development. But transactors with no stake in maintaining an ongoing relationship have little incentive to honor deals. Therefore, all economies have developed institutions to support honest trade and realize the gains of impersonal exchange. We analyze the relative capacities of communities (or social networks) and courts to secure cooperation among heterogeneous, impersonal transactors. We find that communities and courts are complementary in the sense that they tend to support cooperation for different sets of transactions but that the existence of courts weakens the effectiveness of community enforcement. By relating the effectiveness of enforcement institutions to changes in the cost and risks of long-distance trade, driven in part by improvement in shipbuilding methods, our analysis also provides an explanation for the emergence of the medieval Law Merchant and its subsequent supersession by state courts.Institutions;Contract Enforcement;Communities;Courts;Social Networks;Law Merchant;Lex Mercatoria;Commercial Revolution

Designing Value-Oriented Service Systems by Value Map

In this paper, we introduce a problem structuring method (PSM) called “Value Map”. Value Map is an extension to the Supplier Adopter Relationship Diagram in the Systemic Enterprise Architecture Method (SEAM). Value Map assists in understanding, analysis and design of value creation and capture in service systems. We illustrate the applicability of the Value Map by modeling value creation and capture in the service system of a social networking company called Webdoc. To validate the usefulness of the Value Map, we conducted an empirical study in which we also compared the Value Map to Business Model Canvas, one of the most established methods in business model design. The results of the study show that the Value Map helps business practitioners in understanding and analyzing customer value, customer value creation, and the value capture processes. We conducted an empirical study in which we assessed the usefulness of Value Map and compared it with Business Model Canvas, one of the most established methods in business model design. The results of the study show that the Value Map helps business practitioners to understand and analyze customer value, customer value creation, and the value capture processes

On the Evolution of Collective Enforcement Institutions:Communities and Courts

Impersonal exchange has been a major driver of economic development. But transactors with no stake in maintaining an ongoing relationship have little incentive to honor deals. Therefore, all economies have developed institutions to support honest trade and realize the gains of impersonal exchange. We analyze the relative capacities of communities (or social networks) and courts to secure cooperation among heterogeneous, impersonal transactors. We find that communities and courts are complementary in the sense that they tend to support cooperation for different sets of transactions but that the existence of courts weakens the effectiveness of community enforcement. By relating the effectiveness of enforcement institutions to changes in the cost and risks of long-distance trade, driven in part by improvement in shipbuilding methods, our analysis also provides an explanation for the emergence of the medieval Law Merchant and its subsequent supersession by state courts.

On the Evolution of Collective Enforcement Institutions: Communities and Courts

Impersonal exchange has been a major driver of economic development. But transactors with no stake in maintaining an ongoing relationship have little incentive to honor deals. Therefore, all economies have developed institutions to support honest trade and realize the gains of impersonal exchange. We analyze the relative capacities of communities (or social networks) and courts to secure cooperation among heterogeneous, impersonal transactors. Our main finding is that communities and courts are complements: They support cooperation in different types of transactions. We apply our results to the rise and fall of a medieval enforcement institution, the Law Merchant, concluding that progressive reductions in the risks and costs of transportation over long distances, driven in part by improvements in shipbuilding methods, increased first the value and then the composition of long-distance trade in ways that initially favored and later undermined this institution

On the evolution of collective enforcement institutions:Communities and courts

We analyze the capacities of communities (or social networks) and courts to secure cooperation among heterogeneous, impersonal transactors. We find that communities and courts are complementary in that they tend to support cooperation for different types of transactions but that the existence of courts weakens the effectiveness of community enforcement. Our findings are consistent with the emergence of the medieval law merchant and its subsequent supersession by state courts as changes in the costs and risks of long-distance trade, driven in part by improvement in shipbuilding methods, altered the characteristics of merchants’ transactions over the course of the Commercial Revolution in Europe. We then contrast the European experience with the evolution of enforcement institutions in Asia over the same period