Uncovering the hidden costs of offshoring: The interplay of complexity, organizational design, and experience

This study investigates estimation errors due to hidden costs—the costs of implementation that are neglected in strategic decision-making processes—in the context of services offshoring. Based on data from the Offshoring Research Network, we find that decision makers are more likely to make cost-estimation errors given increasing configuration and task complexity in captive offshoring and offshore outsourcing, respectively. Moreover, we show that experience and a strong orientation toward organizational design in the offshoring strategy reduce the cost-estimation errors that follow from complexity. Our findings contribute to research on the effectiveness of sourcing and global strategies by stressing the importance of organizational design and experience in dealing with increasing complexity

The theory of international business: the role of economic models

This paper reviews the scope for economic modelling in international business studies. It argues for multi-level theory based on classic internalisation theory. It present a systems approach that encompasses both firm-level and industry-level analysis

Mitigating agency risk between investors and ventures’ managers

The general management literature has long focused on the agency risks involved in the relationship between general managers and shareholders. Shareholders can deploy contractual and non-contractual mechanisms to reduce these inefficiencies. This study examines - based on a broad international sample of investment contracts - how the use of contractual and non-contractual mechanisms is related to the degree of risks associated with the venture’s development stage as well as how these practices differ across countries. Hypotheses are tested using a proprietary dataset of 265 hand-collected investment contracts associated with ventures in the U.S., Israel and nine European countries. Findings suggest that the use of mitigating contractual and non-contractual mechanisms is related to the degree of agency risks, and that these practices vary across countries. This study draws implications for how investors can best deploy their capital in different institutional settings whilst nurturing their relationships with managers and entrepreneurs

E-supply chain integration adoption: examination of buyer–supplier relationships

The purpose of this study is to empirically examine the adoption of e-supply chain integration by electrical and electronic industry suppliers. This study has integrated both the transaction cost and resource-dependence models in understanding the influence of buyer–seller relationships on e-supply chain integration. Hypotheses were developed based on the proposed model. Data were collected from 122 electrical and electronic suppliers located in Malaysia. The data was examined using multiple regression analysis. The results showed that Asset Specificity, Product Technological Uncertainty, Transaction frequency, Proportion of sales to e-supply chain integration promoter, and number of customers are able to explain suppliers’ decisions to adopt e-supply chain integrations with their buyers. Buyers that would like to improve the adoptions of e-supply chain integration will be able to formulate and plan strategies from the buyer–seller relationships perspectives

Vertical integration in production and services: development in transaction cost economics

In this paper, we first establish the core, fundamental concepts of Williamson's TCE, examining the different governance structures or the institutional alternatives that TCE theory proposes. We go on to describe some critical considerations and theoretical proposals that correspond fundamentally to Williamson's heuristic model, the integration of incentives in organizational forms, idiosyncratic demand, and how the concept of transaction is conceived in general.Peris-Ortiz, M.; Bonet, F.; Rueda Armengot, C. (2011). Vertical integration in production and services: development in transaction cost economics. Service Business. 5(1):87-97. doi:10.1007/s11628-011-0103-0S879751Alchian A (1965) The basic of some recent advances in the theory of management of the firm. J Ind Econ 14:30–41Alchian A (1969) Corporate management and property rights. In: Manne GH (ed) Economic Policy and Regulation of Corporate Securities. 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Geographical interdependence, international trade and economic dynamics: the Chinese and German solar energy industries

The trajectories of the German and Chinese photovoltaic industries differ significantly yet are strongly interdependent. Germany has seen a rapid growth in market demand and a strong increase in production, especially in the less developed eastern half of the country. Chinese growth has been export driven. These contrasting trajectories reflect the roles of market creation, investment and credit and the drivers of innovation and competitiveness. Consequent differences in competiveness have generated major trade disputes

How managers can build trust in strategic alliances: a meta-analysis on the central trust-building mechanisms

Trust is an important driver of superior alliance performance. Alliance managers are influential in this regard because trust requires active involvement, commitment and the dedicated support of the key actors involved in the strategic alliance. Despite the importance of trust for explaining alliance performance, little effort has been made to systematically investigate the mechanisms that managers can use to purposefully create trust in strategic alliances. We use Parkhe’s (1998b) theoretical framework to derive nine hypotheses that distinguish between process-based, characteristic-based and institutional-based trust-building mechanisms. Our meta-analysis of 64 empirical studies shows that trust is strongly related to alliance performance. Process-based mechanisms are more important for building trust than characteristic- and institutional-based mechanisms. The effects of prior ties and asset specificity are not as strong as expected and the impact of safeguards on trust is not well understood. Overall, theoretical trust research has outpaced empirical research by far and promising opportunities for future empirical research exist

Opportunistic decision-making in government: concept formation, variety and explanation

The notion of opportunism is too often used loosely in policy and administrative research on executive decision-making: its various meanings are too rarely clearly distinguished. To make it useful for explanation, this article presents fresh concept formation work, clarifying the concept to recognize different kinds and degrees of opportunism. To illustrate the use of the refined concept, the article examines key decisions by British cabinets and core executives between 1945 and 1990. It proposes that neo-Durkheimian institutional theory can help to explain why different kinds of opportunism are cultivated in differently ordered administrations, so providing new insight into decision-making.This work was supported by the Leverhulme Trust (grant number: F01374I

Trust, power or money: What governs business relationships?

This article suggests conceptualising trust as a generalised symbolic medium of communication. It is argued that in business relationships trust appears intertwined with other media, such as power or money. Furthermore, it is shown that typical combinations of trust, power and money are dominant in different business systems (liberal vs. coordinated market economies). The overarching aim of this article is to demonstrate that trust is a fundamental concept of social theory and that the theory of generalised symbolic media of communication provides a useful conceptual perspective to integrate trust into social theory