involved in transactional governance, with the constraint that it must be addressed to economywide samples of firms from different countries.

# **II.3  The Surveys and Raw Responses**

Our question was posed to owners and top managers of a total of 3,430 firms in Argentina, Bolivia, Ecuador, Paraguay, Peru, and Uruguay, as part of a regular cycle of WBES in 2017 and 2018.<sup>41</sup> The WBES samples of firms are designed to be nationally representative of nonagricultural, non-extractive, formally registered, private firms with at least five employees.<sup>42</sup> The survey used a stratified design with simple random sampling.<sup>43</sup> Table 1 displays the raw response percentages for the six sub-parts of each of the two identical questions, one on suppliers and one on customers. Patterns emerge even at this level of analysis. Respondents tend to regard first- and second-party enforcement (i.e., trust and mutual interest) as most effective, while regarding others as less effective.<sup>44</sup> Much analysis could be conducted using the types of information in Table 1. However, the governance of transactional relations likely involves the coordinated use of different agents. As

> 41 While these countries are quite similar from a global perspective, there are important differences across them in terms of economic development, quality of institutions, natural resource endowments, etc. Similarities between countries do not impede our main aim of providing a method of empirically characterizing firms' governance structures. See Appendix A.5 for detailed timing of each survey.

> 42 The survey universe comprises the following sectors as per ISIC Rev. 3.1: the entire section D covering manufacturing (twodigit codes 15 through 37), section F covering construction (code 45), section G covering wholesale and retail trade as well as repair of motor vehicles, motorcycles and personal and household goods (codes 50 through 52), section H covering hotels and restaurants (code 55), and section I covering transport, storage and communications (codes 60 through 64). Formal registration usually refers to registration with tax agencies or in general firm registries. The universe includes partially privately owned firms and excludes fully state-owned firms. The sources of the sampling frames for these WBES were: for Argentina – Dun & Bradstreet 2016, for Bolivia – Economic Census, updated by Encuestas y Estudios consulting group 2016, for Ecuador – Superintendencia de Compañías Valores y Seguros del Ecuador 2016, for Paraguay – Directorio General de Empresas y Establecimientos 2015, for Peru – the combination of Top 10mil 2011, Registro Mype Callao 2010, Registro Mype 2012 and SUNAT (Hacienda) 2011, and for Uruguay – Instituto Nacional de Estadística 2015.

> 43 Full details of the methodology can be found at http://www.enterprisesurveys.org/methodology. Stratified random sampling was used, with strata based on firm size, geographical location, and economic sector. The data includes sampling weights. All results are obtained using these weights and thus refer to the entire population of pertinent establishments in the six countries. 44 Hadfield and Bozovic (2016) have argued in the context of innovation-oriented interactions that legal contracts are valuable in planning transactions, even if the parties have no intention of using the contract in a formal legal setting. In this case, respondents would not identify the use of such a contract with the effectiveness of the legal system, but rather with first- or second-party mechanisms (i.e., trust and mutual interest).

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