electricity fuel contracting relationships with coal and gas suppliers the growth of competition in the electricity generation industry along with changes in natural gas and coal regulation have led to renewed interest in the nature of efficient transactional arrangements for procuring coal and gas this study examines the evolution of major influences on the incentives for choosing among different transactional forms we find that the asset specificity hypothesis continues to be an important explanation for transactional arrangements in fuel acquisition the degree of asset specificity in a fuel supply arrangement is a function of technological factors of inherent market characteristics and of regulatory rules the expanding role of more flexible fuel supply arrangements in gas and to a lesser extent coal markets is a natural response to current regulatory and technological trends

asset specificity and the fear of exploitation if asset specificity renders the investing party dependent ex post why would the ex ante willingness to make relationship specific investments vary we show how specific investments generate both positive and counter negative cooperative incentives we also observe the influences of trust and time horizon on these incentives which are aggregated to derive the specific investments effect sie our result suggests that while the fear of exploitation increases proportionally to the magnitude of specific investments and the attendant quasi rents it grows exponentially with the deterioration of inter personal trust and or inter temporal time horizon contexts

price adjustment in long term contracts the case of coal in two recent papers i examined the effects of relationship specific investment on the duration of contracts negotiated between electric utilities and coal suppliers that work demonstrated that when relationshipspecific investment is important for a cost minimizing supply relationship contracts are frequently utilized that specify ex ante the terms and conditions of trade over many future years in this article i examine the characteristics of the price adjustment provisions specified in these long term coal contracts i utilize a sample of about 250 coal contracts to analyze the structure of formal price adjustment provisions in coal contracts in order to determine the factors that affect initial negotiated contract prices and to examine actual transaction price behavior over time there has been much recent theoretical work as well as some related empirical work that has focused on the benefits of long term contracts when relationship specific investments are important 2 there has also been some theoretical work that focuses on the contractual arrangements that may be chosen to mitigate opportunism problems and guard against

multitask agency and contract choice an empirical exploration the multitask agency problem is examined empirically using contracts between private integrated oil companies and their service stations in the city of vancouver the empirical tests assess how variations in the characteristics of one task affect the choice of agent compensation scheme for another comparative statics from the model predict that higher powered incentives will be offered for gasoline sales when the secondary activity is not highly complementary with gasoline retailing where complementarity is measured by the cross price demand effect the covariation in uncertainty and the degree of effort substitutability copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

contract renewal under uncertainty abstract the incentive to adjust prices is considered from a bilateral perspective in a setting where changes in outside opportunities drive the incentive to renew contracts and costs preclude continuous renewal a model encompassing several contract forms is formulated and the existence of an equilibrium to the bilateral renewal game is established prices display inertia and the incumbent contract is found to be more resistant to changes in outside opportunities the larger the costs of contract renewal the variability of outside opportunities and the lower the discount rate the model is shown to match a number of empirical observations on contracts

price formats for branded components in industrial markets an integration of transaction cost economics and the resource based view in this paper we propose an approach to show how the capability based perspective of the resource based view of the firm can be integrated with the comparative governance approach of transaction cost economics to shed light on governance issues in interfirm relationships we argue that transacting parties create value not only through the employment of partner specific investment and coordination activities but also through the employment of heterogeneous firm specific resources that each firm brings to the relationship and that in turn governance structures reflect a discriminating alignment with these two distinct forms of value creating activities and resources our thesis is empirically tested in the context of industrial original equipment manufacturers employing branded component contracts with independent component vendors specifically we investigate the conditions under which the price terms for branded components are agreed upon more fixed ex ante versus negotiated more flexible ex post our results offer two insights first the chosen governance form reflects a trade off between safeguarding and adaptation motives even among parties engaged in cooperative relationships second valuable firm specific resources that preexist outside of the exchange relationship are at stake in these cooperative yet contractually incomplete relationships they together with relationship specific investments and activities have a significant impact on governance design

national culture and strategic change in belief formation this paper studies strategy related beliefs in five organizations in hungary with substantial foreign participation we find that one of the strongest determinants of similarity of beliefs was being a member of the functional area favored by the strategic change the effect of being in the favored area was greater than the effect of all other individual characteristics including nationality

pretia ex machina prices and process in long term contracts aimong the primary motives for writing contracts identified in both the law and economics literatures is the desire to protect against the hazards inherent to exchange where one or both parties have invested in reliance or relationship specific assets in support of the transaction because such investments have a higher value in their intended than in their next best use parties have an incentive to engage in haggling or other forms of opportunism in hopes of influencing the distribution of the resulting quasi rents contracts promote efficiency by securing the distribution of those rents ex ante thereby avoiding costly repetitive bargaining over the terms of trade and reducing the risk for each party of relying on the performance of the other in reality this description of the role and functioning of contracting is oversimplified as a number of legal and economic scholars have emphasized contracts are not the precise mechanically enforced documents often encountered in economic theory 2 indeed contracts are extremely

cross border asset holdings and comovements in sovereign bond markets we analyze the importance of different asset holdings for the interdependence of the yield curves in the euro area using a spatial var model we find that the cross border holdings of long term deb

take or pay contract robustness a three step story told by the brazil bolivia gas case abstract neo institutional economics nei has long shown that take or pay top long term contracts provide a robust framework for safeguarding the interests of both upstream and downstream parties in the gas industry the case of gas trade between brazil and bolivia presents an opportunity to re examine empirically and to review the robust nature of the top framework over time this case reveals that the positions of the contractors actually change giving rise to a veritable lifecycle of the contractual arrangement such a contract can be seen to span three successive phases the first phase of the contract cycle begins when it is signed allowing the investments to begin the second phase starts when investments have been completed and the actual trade in gas begins the third phase of the contract cycle comes when the increasing flow of gas comes close to saturating capacity and the volume levels for downstream market volume have been reached these three contract phases are thus distinguished by how robust the alignment of the parties interests is the added value of the paper is then both empirical and analytical the case study provides a brand new lifecycle analysis of the performance of top long term contracting into an nei framework

transaction costs and contractual incompleteness the case of electricite de france abstract this paper explores the incompleteness of inter firm contracts through the lens of recent developments in transaction cost economics we built a non truncated contract database representing all the relationships of electricite de france edf with its coal carriers over the period 1977 1997 we tested and corroborated most propositions derived from transaction cost theory relating contractual incompleteness to transaction characteristics even when we considered the complete set of the theory s propositions by endogeneizing the asset specificity at stake in transactions to our knowledge this kind of test has never been conducted before

the strategic alliance of the biotechnology firm this article applies the relevant theories of firm organization and inter firm relationships in the high tech environment to explain the institutional reasons that firms choose between internal or external approaches particularly this study tries to understand to what extent and in what way strategic alliances have impacts on individual firms organizational structure financial structure and firms activities also it tries to find out what type of firms tend to benefit most from alliances and thus use more inter firm agreements the theoretical findings are that due to liquidity constraint and asymmetric information reasons young research intensive firms need to use more alliances to survive in the fast changing high technology industry the empirical analysis employs 3 year panel data and finds that the results are consistent with the theoretical predictions

transactional characteristics institutional environment and joint venture contracts this study examines how transactional characteristics and the institutional environment influence contractual governance for international joint ventures ijvs unlike previous studies that view joint venture contractual governance as a unidimensional construct clause specificity thus causing a debate upon whether ijv contracts should be more specific contractual governance herein is defined as a three dimensional construct that includes the extent to which contractual terms are clearly specified term specificity possible contingencies are accounted for contingency adaptability and joint venture parties are legally bound to the contract contractual obligatoriness our analysis of ijvs in china suggests that term specificity and contractual obligatoriness increase when the proprietariness of resources to be invested in the ijv or the incompleteness of the host country s legal system increase contractual obligatoriness appears to be an increasing function of economic exposure and environmental volatility whereas contingency adaptability in a contract rises when interparty dependency investment uncertainty and knowledge proprietariness intensify or when environmental hazards escalate these results suggest that an ijv contract if structured multidimensionally as above can curtail opportunism and guide venture evolution at the same time these contractual dimensions should not be prefixed but properly aligned with transactional and institutional characteristics this alignment has strong implications in reducing transaction costs and spurring ijv evolution in the complex and volatile institutional environment

an empirical investigation of procurement contract structures this article presents a model of procurement contracting with asymmetric cost information and investigates whether two of the model s predictions are consistent with actual contracts between hospitals and california s medicaid program the article first tests for the presence of a fixed price payment region where medicaid s payments are independent of hospitals actual but unobservable production costs and then tests whether the size of the fixed price region depends upon expectations about hospitals costs to conduct these tests the article must first estimate hospitals unobservable costs attributable to medicaid patients the article finds evidence of a fixed price region but cannot confirm that the size of the fixed price region depends upon expectations about hospitals costs

the market for tradable renewable energy credits abstract as states seek to foster the development of renewable energy resources some have introduced renewable portfolio standards rpss which require retailers of electricity to derive a specified amount of their energy supply from renewable energy resources rpss in texas arizona wisconsin and nevada allow for or require the use of tradable renewable energy credits the price of such credits is expected to reflect the cost premium for generating electricity from renewable resources relative to the market price of conventionally generated electricity using the market to trade renewable energy credits exposes buyers and sellers to risks of imperfect information poor performance and opportunism these risks can be managed through contractual arrangements and regulatory requirements pertaining to property rights in credits pricing term of the contract and assurance of performance

specific investments flexible adaptation and requirement contracts i introduction in bilateral procurement relationships ex post opportunism may cause underinvestment in relationship specific investments as is shown by klein et al 1978 and williamson 1985 in such situations long term contracts can help to mitigate this so called hold up problem in a world of positive transaction costs long term contracts are necessarily incomplete 1 an inflexible incomplete contract may lead to ex post maladaptation in the presence of uncertainty as in williamson 1985 therefore a transaction cost economizing contract needs to provide both incentives for efficient relationship specific investments and flexibility for efficient adaptation 2 in a simple hold up model with contractible cost related variables i show that efficient adaptation and investments can be achieved through a requirement contract which gives the buyer the right to decide on how much to buy ex post and contains a price provision with a two part tariff structure including a fixed component and a unit charge that may vary with quantities and cost related variables this result provides a formal explanation of contractual arrangements observed in vertical procurement relationships formally my result can be viewed as an extension of williamson s 1983 hostage model in which only the seller makes investments the procurement quantity is fixed and there is no cost uncertainty my result is also related to previous formal studies on the take or pay contracts as in hubbard and weiner 1986 crocker and masten 1988 and masten 1988 in a simpler model without cost uncertainty and specific investments they show that a unilateral options contract with a take or pay feature gives the buyer the right incentives to make efficient quantity decisions particularly crocker and masten 1988 and masten 1988 emphasize the take or pay contract s ability to induce efficient adaptation another related paper is by bos 1996 who shows that when the production cost is contractible a target cost pricing contract that requires the seller to share a portion of the cost overrun can achieve the first best outcome the rest of the article is organized as follows section ii provides the background of the issue studied section iii lays out the model and characterizes the first best benchmark section iv derives the optimal contract section v concludes ii background a growing recent literature has attempted to find contractual solutions to the hold up problem most of the papers in the literature use hart and moore s 1988 classical model or its variation in that model there are two risk neutral firms a buyer and a seller of an intermediate good each firm can before production make a relationship specific investment to enhance the future value of the good in the case of the buyer or to reduce the production cost of the good in the case of the seller neither the investments nor the value nor the cost of the intermediate good are contractible ex ante in the absence of a contract there will generally be underinvestment some of the contractual solutions to the underinvestment problem rely on complex direct revelation mechanisms that utilize private or unverifiable information to implement efficient investments as in for example rogerson 1992 and maskin and tirole 1999 but they are not robust to renegotiation several articles have focused on contracts that make explicit use of ex post renegotiation to achieve efficiency particularly aghion et al 1994 chung 1991 and edlin and reichelstein 1996 show that simple fixed price fixed quantity contracts may suffice to achieve the first best outcome such contracts are in general not efficient ex post but as long as mutually beneficial renegotiation of the initial contract is allowed both ex ante and ex post efficiency can be achieved either by a properly designed renegotiation game as in aghion et al

a cross national assessment of the values of latin america managers contrasting hues or shades of gray we draw upon studies from the social sciences to develop and test hypotheses about similarities and differences in the importance of values among managers in 12 latin american countries using the rokeach value survey data from 1015 owner managers of small businesses indicated convergence among values relating to group interests but significant variation among values serving individual interests in addition several groups of countries were identified as culturally similar whereas brazil and mexico remained culturally discrete the results suggest that common perceptions of latin america as a culturally homogeneous region are stereotypical and incorrect and that divergence in the importance of values can explain differences in business phenomena across the region

mitigating contractual hazards unilateral options and contract length in this article we consider the ways in which the desire for efficient low cost adaptation to change influences the tradeoff between the design and duration of long term contractual relationships we examine the distortions in contract terms occasioned by nonprice competition for natural gas in the presence of wellhead price regulation deviations from optimal contract incentives significantly raise the cost of being bound to long term agreements and shorten the duration of contracts the approach we adopt suggests a method for empirically assessing the efficiency of alternative contracting practices and legal standards

cross national empirical generalization in business services buying behavior we examine cross national generalization of the relative importance of factors that affect supplier selection and level of usage for global business services providers tests indicate that the majority of the response coefficients for a model of foreign exchange markets are equal across the four countries studied u s canada u k and germany inter country differences in buyer response seem most related to competitiveness and identifiable country specific institutional factors

why hold ups occur the self enforcing range of contractual relationships one of my most enjoyable intellectual experiences was working with armen alchian on the klein crawford and alchian 1978 hold up paper in this paper i extend the basic framework presented in that paper pointing out what i now consider to be its shortcomings and providing insights into the nature of hold ups and the form of contracts chosen by transactors to avoid hold ups the major analytical extension entails combining hold up analysis with my work on private enforcement because private enforcement capital is limited and written contract terms are necessarily imperfect transactors must optimally combine court enforced written terms together with privately enforced unwritten terms to define what i call the self enforcing range of their contractual relationship hold ups occur when unanticipated events place the contractual relationship outside the self enforcing range this probabilistic framework where transactors enter contractual relationships knowing that a hold up may take place but believing that the expected gains from trade outweigh the expected rent dissipating costs associated with the hold up risk is shown to have important implications for understanding the structure of contracts adopted by transactors in the marketplace i why do hold ups occur i begin with a simple example that illustrates the basic economic forces involved in a hold up assume that a builder constructs a house on a piece of land the builder does not own but rather only leases short term after the initial land lease expires the landowner could hold up the builder by raising the land rent to reflect the costs of moving the house to another lot this example illustrates all the hold up factors emphasized in klein crawford and alchian a the builder has made an investment that is highly specific to a particular piece of land and b the landowner has taken advantage of the incompleteness of the contract that governs the relationship in particular the fact that the lease does not cover future years to c expropriate the quasi rents on the builder s specific investment the obvious question is why anything like this would ever occur that is why would someone be so naive as to build a house on land for which they had only a short term lease our primary goal in klein crawford and alchian was not to explain the existence of hold ups but rather the institutions adopted by transactors to avoid hold ups for example we would expect that builders anticipating a potential hold up problem would decide to purchase the land or at least to sign a long term ground lease before starting construction however we do present some examples in the paper of hold ups that actually occurred the implicit reason we give for the occurrence of these hold ups is transactor ignorance apparently transactors are not always smart enough to choose the contractual arrangement that would eliminate the hold up problem oliver williamson provides a similar but much more explicit answer to the question of why hold ups occur when defining opportunism he states by opportunism i mean self interest seeking with guile this includes but is scarcely limited to more blatant forms such as lying stealing and cheating opportunism more often involves subtle forms of deceit more generally opportunism refers to the incomplete or distorted disclosure of information especially to calculated efforts to mislead distort obfuscate or otherwise confuse 1 for example the hold up may have occurred in our illustrative house construction example because the landowner deceived the builder with a low up front land rental price and vague promises about the future relying on the ability of one transactor to take advantage of the naivete or ignorance of another transactor is a highly unsatisfactory way to explain the incidence of hold ups simple examples of deception such as a builder constructing a house on land that is only rented short term rarely if ever occur

the international business ethics index european union the present study expands the systematic measurement of consumers sentiments towards business ethical practices to the international arena data for the business ethics index bei were gathered in three countries of the european union uk germany spain the germans were the most pessimistic while the british were the most optimistic about the future ethical behaviour of businesses

structure and price adjustments in long term contracts the case of coking coal trade in the asian pacific market abstract much of the trade in resource goods takes place within a framework of long term contracts in this paper contract structure and price adjustments are analysed by using samples of long term coking coal supply contracts between japanese importers and coal mines in australia canada and the usa long term contracts have been widely used in japan s coking coal imports although the contracts signed in recent years have been shortened and are more flexible the empirical analyses show that while in general contract prices have tracked market prices japan s coking coal import prices have been considerably stabilized by using long term contracts

retail contracting theory and practice we summarize a number of regularities that arise in the empirical literature on contractual relationships between manufacturers and their exclusive resellers we do this using studies of traditional and business format franchise relationships as well as studies of salesforce integration decisions some of the patterns that we uncover are consistent with a standard incentive cum insurance theory of organization while others are not we brie y review some theoretical extensions that seem promising in terms of reconciling seeming con icts between theory and practice i introduction manufacturers of retail products must decide whether to sell their products to consumers themselves vertical integration or to sell via independent retailers vertical separation when manufacturers do not perform the sales function internally but want exclusive retailers they usually choose some form of franchising 1 many theories attempt to explain the choice of retail organizational form moreover a considerable body of empirical evidence concerning this choice is accumulating we attempt to evaluate this econometric evidence and relate it to the theories to accomplish this task we assess studies of franchising arrangements as well as studies of sales force organization in industrial settings the paper is organized as follows in the next section we highlight a number of regularities that arise in the empirical literature on retail contracting in particular we nd that i risk is positively related to the use of high powered incentives vertical separation ii the importance of the agent s eiort in production is positively related to the use of high powered incentives

contract renegotiation and rent re distribution who gets raked over the coals policy shocks affect the rent distribution in long term contracts which can lead to such contracts being renegotiated we seek an understanding of what aspects of contract design in the face of a substantial policy shock affect the propensity to renegotiate we test our hypotheses using data on u s coal contracts after the policy shock of the 1990 clean air act amendments contracts are divided into two categories those that were renegotiated following the shock and those that were not characteristics of the contract are used to explain whether or not the contract was ultimately renegotiated results provide guidance on rent re distribution and contract renegotiation more generally and are applicable to contemporary policy issues such as climate change legislation

what do facilitating practices facilitate an empirical investigation of most favored nation clauses in natural gas contracts long term contracts often include most favored nation clauses mfns which are nondiscrimination guarantees that obligate a buyer or seller to treat all trading partners symmetrically in pricing decisions recent theoretical work has shown that such clauses can facilitate tacit collusion by increasing the cost of selective price changes aimed at attracting new business an alternative view is that mfns serve to facilitate efficient price adjustment in extended exchange relationships we test these competing hypotheses using data from long term natural gas contracts many of which employ mfns our conclusion is that the pattern of mfn adoption in conjunction with the structure of the nondiscrimination regions and the parallels with other nonstrategic price escalation provisions lends strong support to the efficiency rationale

regulation and contract design the impact of relationship specific investment a primary explanation for variation in contract structure is the extent to which contracting parties make investments specific to their transaction investment decisions are typically endogenous in contract choice however frustrating attempts at causal verification i analyze the impact of a major environmental regulation the clean air act amendment of 1990 on coal procurement strategies of u s utilities i exploit a key feature of the amendment s design to define a difference in difference model that is arguably less susceptible to endogeneity concerns i find wide support for the theoretical prediction reduced specificity leads to shorter length fixed price contracts

the structure of payments as a way to alleviate contractual hazards in international technology licensing this article proposes an empirical model in which the option of choosing between royalties fixed payments or a combination of the two is made to mitigate contractual hazards in licensing contracts we examine licensing contracts between spanish and foreign firms during the 1960s and early 1970s using a new data source of 925 contracts the link between patenting and licensing is also analyzed the work provides evidence to support the hypothesis that the moral hazard problem truly influences the type of payment established in arm s length contracts when there is an important technological gap between unaffiliated firms this study also shows that the payment chosen depends on the size of the licensee firm copyright 2009 the author 2009 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

management style and productivity in two cultures global competition has motivated an increasing number of united states firms to set up production facilities in mexico this study examines productivity and management style differences in a mexican maquiladora operation and its u s parent plant likert s system 4 theory was used as the theoretical basis of comparison as hypothesized significant differences were found in the management systems while productivity at the two facilities was equal

the importance of work goals an international perspective the paper probes into the basic question of what individuals seek from working results from a representative sample of the labor force in seven countries n 8192 showed that the two most dominant work goals are interesting work and good pay these were consistent internationally across different organizational levels between the genders and among different age categories

contractual flexibility rent seeking and renegotiation design an empirical analysis of information technology outsourcing contracts this paper examines renegotiation design in contracts for outsourced information technology it services whereas prior literature in information systems has highlighted the likelihood of ex post rent seeking engendered by renegotiation we build upon literature on incomplete contracts to posit that renegotiation can be pareto improving by incorporating contingencies revealed ex post research on contract renegotiation has been hampered by two sets of challenges the lack of appropriate data and empirical challenges in identification we circumvent this problem both by appropriate data collection and by employing an identification strategy to address alternate causal explanations we propose a measure pareto improving amendments to assess renegotiation outcomes that enhance the value from outsourcing by hazard equilibration and by incorporating learning using a unique sample of 141 it outsourcing contracts we examine the role of decision rights delineated ex ante in enabling pareto improving amendments and in resolving the trade off between adaptation and rent seeking we find that flexibility provisions termination for convenience rights and contractual rights whereby vendors are granted rights to reuse know how are associated with pareto improving amendments the results are robust to potential endogeneity of contractual provisions when parties have feasible foresight and to the possibility of adverse selection in the sample we also examine alternate explanations from the literature on contractual breach implications for practitioners and researchers are discussed this paper was accepted by sandra slaughter information systems

interfirm cooperation in strategic relationships the role of formal contract in this paper we use a large database of more than 3 700 strategic relationships in force between french firms in 2003 to study the way they achieve cooperation we find that cooperation is enhanced by a partner s reputation and the perceived balance of the relationship our results also suggest that while formal contracts have a negative impact on ex post cooperation when relationships are simple contracts are an enhancing factor of cooperative behaviors as soon as the intrinsic hazards of the relationship require higher ex ante contractual safeguards to secure agreements as a result formal contracts can on the one hand have a pernicious effect on the willingness of firms to implement cooperative behaviors and on the other and under precise circumstances appear a prerequisite allowing the emergence of ex post interfirm cooperation

a cross national study of managerial values this study investigated cross national differences in managerial values a total of 567 managers from twelve nations participated in the study managerial values were assessed by means of rokeach s value survey factor analysis of the eighteen instrumental values included in rokeach s value survey revealed four underlying value dimensions the value dimension that included the instrumental values broadminded capable and courageous was ranked as the most important value dimension by managers from all twelve nations national differences were found on three of the four value dimensions

hedging in coal contracts under the acid rain program tradable permit schemes introduce uncertainty into the cost of regulatory compliance due to the permits uncertain price regulated firms can hedge this uncertainty through their contracts for fuel procurement data on coal contracts are used to estimate how the option not to be delivered higher sulfur coal is priced results show that under a tradable permit scheme coal prices are reduced for an increase in the sulfur bound controlling for reductions in price due to higher delivered sulfur content jel q48 q53

the rigidity of prices this paper uses evidence on individual transaction prices to analyze price behavior the evidence shows that for many transactions pricesremain rigid for periods exceeding one year the rigidity of price ispositively correlated with industry concentration for several productsthe correlation of price changes across buyers is low the paper alsoinvestigates the relationship between price rigidity price change andthe length of time a buyer and seller have been doing business together the author interprets the evidence as emphasizing the importance of nonprice rationing and the inadequacy of models in whichprice movements alone clear markets copyright 1986 by american economic association

a cross cultural comparative study of managerial job attitudes effective managerial performance is influenced by the types of rewards which managers seek in their work environment and by their perceptions of the degree to which their job expectations are being satisfied this research provides empirical evidence on the nature of job related values and outcomes in 4 countries canada france japan and the uk the survey data reveal that the types of job outcomes sought by managers differ significantly from one culture to another the results should be of practical value to companies seeking to develop more effective management motivational devices in the countries studied moreover the approach and methodology may provide a useful model for further cross cultural studies

determinants of managerial performance a cross cultural comparison of the perceptions of middle level managers in four countries this paper examines differences in what affects managerial performance of middle level managers in four countries china n 204 india n 184 the philippines n 220 and the united states n 176 important differences were predicted and found in factors affecting managerial performance as perceived by the respondents while east west differences exist significant differences are noted among the three asian countries specifically chinese and american managers represented two extremes in their beliefs about what determines managerial performance of middle level managers both filipino and indian managers were found more similar to their u s counterparts than their chinese counterparts implications of the findings are discussed

institutional constraints and organizational changes the case of the british rail reform this paper analyzes how institutional constraints determine organizational choices and investments decisions more precisely we examine how private parties adjust when policymakers impose a mode of organization with no or very little consideration for some major characteristics of the transactions that arrangement is intended to support our analysis uses original data related to the reform of the british rail industry notwithstanding their specific aspects the problems raised by the radical transformation of this sector in the mid 1990s carry important lessons about what happens when a misaligned arrangement is implemented in a context that requires interfirm coordination

ronald coase and methodology ronald coase wrote two great theoretical articles that earned him the nobel prize the nature of the firm in 1937 and the problem of social cost in 1960 he also wrote many articles dealing with the methodology of economics often in the setting of a discussion of a particular economist such as adam smith or alfred marshall the methodological articles will be my particular focus here

looking for a theory of the firm future challenges in this paper we present the main developments of the theories of the firm rooted in coase s coase r h 1937 the nature of the firm economica new series 4 386 405 seminal article we show that the two important topics of the nature and boundaries of the firm as well as the internal organization of the firm give place to essential contributions we present those contributions and their limits and then their possible developments finally we introduce the papers of this issue

the quantity flexibility contract and supplier customer incentives consider a supply chain consisting of two independent agents a supplier e g a manufacturer and its customer e g a retailer the latter in turn serving an uncertain market demand to reconcile manufacturing procurement time lags with a need for timely response to the market such supply chains often must commit resources to production quantities based on forecasted rather than realized demand the customer typically provides a planning forecast of its intended purchase which does not entail commitment benefiting from overproduction while not bearing the immediate costs the customer has incentive to initially overforecast before eventually purchasing a lesser quantity the supplier must in turn anticipate such behavior in its production quantity decision this individually rational behavior results in an inefficient supply chain this paper models the incentives of the two parties identifying causes of inefficiency and suggesting remedies particular attention is given to the quantity flexibility qf contract which couples the customer s commitment to purchase no less than a certain percentage below the forecast with the supplier s guarantee to deliver up to a certain percentage above under certain conditions this method can allocate the costs of market demand uncertainty so as to lead the individually motivated supplier and customer to the systemwide optimal outcome we characterize the implications of qf contracts for the behavior and performance of both parties and the supply chain as a whole

managerial behaviors and job performance a successful manager in los angeles may not succeed in hong kong few studies have attempted to examine how american managers actually manage while on assignment in foreign countries or the effectiveness of these managerial behaviors this study compared the self reported managerial behaviors of american expatriate managers in hong kong to a sample of american managers in the u s and hong kong chinese managers in hong kong the results from the study indicated that american expatriate managers in hong kong exhibit very similar managerial behaviors to the sample of managers in the u s however while these managerial behaviors were positively related to job performance for the managers in the u s they were not related to job performance for the expatriates in hong kong nor were these managerial behaviors related to job performance for hong kong chinese managers in hong kong

formal contracts in the presence of relational enforcement mechanisms evidence from technology development projects formal contracting addresses the moral hazard problems inherent in interfirm deals via explicit terms designed to achieve incentive alignment alternatively when firms expect to interact repeatedly relational mechanisms may achieve similar results without the associated costs however as we now know from a growing body of theoretical and empirical work the resulting intuition that relational mechanisms will be substituted for formal ones whenever possible does not generally hold the extent to which firms substitute relational mechanisms for formal ones in the presence of repeated interaction is an empirical question that forms the basis of this paper we study a sample of 52 joint technology development contracts in the telecommunications and microelectronics industries and devise a coding scheme to allow empirical comparison of contract terms counter to the above intuition but consistent with recent research we find that a firm s contracts are more detailed and more likely to include penalties when it engages in frequent deals whether with the same or different partners our results suggest complementarity between formal and relational contracts and have implications for optimal contracting particularly in high technology sectors