Antecedents and relative performance of sourcing choices for new product development projects

Given the complexity of sourcing choices in R&D, driven by conflicting points of difference, scholars have struggled to formulate clear theoretical predictions about which sourcing choices lead to superior performance. Our study contributes to the elucidation of this question by studying both the antecedents and performance consequences (project cost and duration) of alternative sourcing choices in the context of new product development, thus bridging two rarely intersecting streams of research to discover unique insights. We draw from the transaction cost economics (TCE) and organizational learning theory to account for the interdependence of cost- and non-cost related factors in firms’ sourcing choices. Results from our empirical analysis, using data on clinical trials in the global biopharmaceutical industry, show that greater project complexity, project stage uncertainty, and prior sourcing experience determine the sourcing choices a firm makes. We also establish that alternative sourcing choices vary in their ability to minimize project cost versus project duration, and show that prior experience with a sourcing choice is an important moderator of project performance, in addition to being one of the determinants of sourcing choice.     

Complexity of Outsourcing Contracts and Ex Post Transaction Costs: An Empirical Investigation*

abstract In this article, we use Transaction Cost Economics (TCE) and the Resource‐Based View (RBV) of the firm to study outsourcing agreements. We develop an original approach of contract complexity and analyse the links among exchange hazards (i.e. specificity and environmental uncertainty), the contractual aspects of outsourcing (control, incentives, penalties, price and flexibility clauses) and the level of ex post transaction costs. Both contract complexity and ex post transaction costs are operationalized and measured. Our empirical research analyses 82 outsourcing contracts. This article uses three different dimensions (proximity to the core business, switching costs and adaptation costs) to assess the strategic importance of an outsourced activity. Our findings extend TCE's validity for the outsourcing of activities with a strategic value. Finally, this study offers an indirect measurement of ex post transaction costs. In short, to restrict vendor opportunism, contracts must contain incentives and penalties, as well as pricing and monitoring clauses.     

Modelling NPO–Government Relations: Australian case studies

Abstract

Non-profit organizations (NPOs) are major providers of services in many fields of endeavour, and often receive financial support from government. This article investigates different forms of government/non-profit funding relationships, with the viewpoint being mainly, though not exclusively, from the perspective of the non-profit agencies. While there are a number of existing typologies of government/NPO relations, these are dated and in need of further empirical analysis and testing. The article advances an empirically derived extension to current models of government/NPO relations. A future research agenda is outlined based on the constructs that underpin typologies, rather than discrete categorization of relationships.     

Assessing the contingent effects of collaboration on agility performance in buyer–supplier relationships

Several studies in the buyer–supplier relationship literature have addressed the impact of collaboration on agility performance. While some studies have concluded that collaboration leads to beneficial effects, others have questioned the positive effects of collaboration on relationship performance. Drawing on contingency theory and transaction cost economics (TCE), we seek to better understand the linkage among collaboration, trust and agility performance in a buyer–supplier relationship. Further, we study the contingent influence of requirements certainty and supplier asset specificity, two key TCE constructs in buyer–supplier relationships, on the collaboration–agility performance relationship. We show that while trust mediates the impact of collaboration on agility performance, the indirect effect of collaboration on agility performance via trust is significant only beyond a threshold level of collaboration. The theoretical implication of this result is that the performance relationship is non-linear, a result that has not been recognized in current literature. The practical implication is that organizations need to establish a certain level of collaboration before its positive impact can be realized. In addition, we show that the impact of collaboration on agility performance in buyer–supplier sourcing relationships can be positive, negative or neutral depending on the levels of trust, supplier asset specificity and requirements certainty, emphasizing the need to develop contingency theories.     

Multivariate choices and identification of social interactions

This paper considers the identification of social interaction effects in the context of multivariate choices. First, we generalize the theoretical social interaction model to allow individuals to make interdependent choices in different activities. Based on the theoretical model, we propose a simultaneous equation network model and discuss the identification of social interaction effects in the econometric model. We also provide an empirical example to show the empirical salience of this model. Using the Add Health data, we find that a student's academic performance is not only affected by academic performance of his peers but also affected by screen‐related activities of his peers.     

Local Political Corruption: Potential structural malfunctions at the central–local,local–local and intra-local levels

Abstract

Despite growing preoccupation on the part of both the public and researchers with the concept of political corruption and the ‘corruption eruption’ phenomenon, research studies addressing corruption in local government are few and far between. This exploratory research offers a theoretical conceptualization of institutionalized corruption in local government, and identifies structural factors that lead to such corruption. Further, this study empirically assesses institutional corruption at the local level and its correlation to attitudes and characteristics of local authorities and their populations, based on a survey of 1,709 residents of 156 local authorities in Israel and data on the local authorities from a separate database. This article proposes a model according to which local corruption arises from structural factors at three levels: the central–local level (relations between local authorities and the central government); the local–local level (competition between local authorities) and the intra-local level (factors relating to the performance of local councils and local democracy). Our analyses reveal correlations among characteristics of the local authority and community, residents' perceptions of local performance and perceptions of local corruption. Implications of the findings in light of strategies conventionally employed against corruption in local government are discussed.     

The fed model: The bad,the worse,and the ugly

The negative relationship between stock market P/E ratios and government bond yields seems to have become conventional wisdom among practitioners. However, limited empirical evidence and a misleading suggestion that the model originated in the Fed are used to support the model's plausibility. This article argues that the Fed model is flawed from a theoretical standpoint and reports evidence from 20 countries that seriously questions its empirical merits. Despite its widespread use and acceptance, the Fed model is found to be a failure both as a normative and as a positive model of equity pricing.     

Co-Production in Developing Countries: Insights from the community health workers experience

Abstract

Co-production nowadays ranks high in global development strategies of international and philanthropic organizations. Although long-standing experiences in developing countries can provide a relevant contribution to the co-production theory, it is necessary to verify what contextual and conceptual conditions might alter the existing theoretical models. This article makes a theoretical contribution by modelling propositions that can withstand logical and empirical scrutiny. The literature is reviewed to identify key co-production concepts, their interrelationships, and the underlying assumptions. A longitudinal case study is analyzed to expand the existing theoretical propositions. Policy implications for scaling-up programmes are drawn.     

Transaction cost economics and corporate governance: the case of CEO age and financial stake

Agency theory provides a valuable lens for understanding the role and importance of many varied governance mechanisms. We argue that transaction cost economics (TCE) provides a complementary theoretical lens for studying corporate governance because it illuminates the various contingencies that moderate the importance of alternative governance mechanisms. Using agency theory, we argue and find evidence that the confluence of advancing CEO age and large CEO stock holdings will cause the CEO to become overly risk‐averse. Moreover, we use TCE to more fully explicate the ensuing performance consequences as well as the contextual factors that critically moderate this relationship. Copyright © 2010 John Wiley & Sons, Ltd.     

Relationship governance mechanisms and collaborative performance: A relational life-cycle perspective

Governance mechanisms protect the investments involved in transactions and thereby facilitate and promote sustainable and cooperative relationships; however, the empirical results of prior research concerning the relationship between governance mechanisms and collaborative performance are inconsistent. Based on transaction cost economy (TCE) and social exchange theory (SET), a relational life-cycle framework that considers the dynamic evolution of collaborative relationships and re-examines the relationship between governance mechanisms and collaborative performance was developed in this study. Evidence from 124 manufacturers in Taiwan indicates that the effects of governance mechanisms on collaborative performance differ according to the current life-cycle phase. In the exploration phase, contractual control exerts a positive impact on cooperative performance. In the buildup and maturity phases, relational control remains positively associated with collaborative performance, whereas the impact of contractual control is insignificant. In the decline phase, both contractual control and relational control have an insignificant impact on collaborative performance. Herein, we discuss the implications of our empirical findings and their relevance to managers.     

Real Options, International Entry Mode Choice and Performance

abstract    Recent scholarship suggests that combining insights from real option theory with transaction cost economics may improve decision-making models. In response to this suggestion we develop and test a model of international entry mode choice that draws from both perspectives. Examining samples of Dutch and Greek firms entering Central and Eastern European markets, we found that adding real option variables to a transaction cost model significantly improved its explanatory power. Additionally, firms that used the combined real option/transaction cost predicted choices had significantly higher levels of subsidiary performance satisfaction than firms that did not. Our results suggest that effective managerial decision-making may involve more than mere transaction cost minimization considerations; real option value creation insights also appear to influence the success of decision outcomes.     

The performance of performance appraisal systems: understanding the linkage between appraisal structure and appraisal discrimination complaints

Abstract

Employee perceptions of the fairness of performance evaluations are critical to the success of any appraisal system. Research on performance management includes extensive studies on how bias emerges in the appraisal process. Despite this, there is no empirical evidence linking formal discrimination complaint filings – a key measure of bias - and performance appraisals. To close this gap, we conduct an empirical analysis using information on appraisal systems and discrimination complaints from the US federal government. Our findings suggest that agencies with better-designed appraisal systems will experience higher appraisal-related discrimination complaints, contrary to expectations. In particular, an expansion of training and voice opportunities are associated with an increase in appraisal discrimination complaints, while increased differentiation between performers is not consistently associated with complaints. For managers struggling with performance management, it may be better to spend time on improving performance-focused interpersonal communication rather than redesigning appraisal systems.     

Sketching Out a Model of Innovation,Face-to-face Interaction and Economic Geography

Abstract

This paper investigates the links between face-to-face interaction, the promotion of innovation, and the location behaviour of innovative firms. While face-to-face contact is an essential feature of most innovation behaviour, the importance of the frequency of face-to-face contact for innovation varies significantly according to different firm types. We therefore construct a simple optimization model in order to examine the relationship between the frequency of face-to-face interaction, the costs of land use, and the location of innovative firms. This allows us to distinguish between the types of firms which will be clustered together in space in order to foster innovation, from those innovating firms which will be more geographically dispersed. It will be seen that the model produces theoretical results which are largely consistent with both orthodox neo-classical urban economic models of location and also with much of the theoretical and empirical literature on the geography of innovation. Importantly, however, many aspects of the location of innovative firms which cannot be predicted on the basis of orthodox urban economic models are captured by this model.     

Scale development and validation of Transaction Cost Economics typology for contracts: A systems thinking approach

A variety of contract typologies that exist in the literature are helpful in the exploration of different approaches in contractual relations, but only when measured with the right instruments. Although Transaction Cost Economics (TCE) has a distinct, high-level, and abstract typology for contracts, it still lacks a measurement scale. In this paper, a measurement scale for the TCE contract typology (classical, neo-classical, and relational contracts) was developed and validated, using systems thinking approach and experimental design to contribute to the empirical tests of TCE within the contracting realm. First, the antecedents of contract selection within the TCE literature were analyzed using the systemigram technique to visualize and parse out complex relationships that lead to contract selection. The analysis of the TCE Systemigram helped the development of the scale and revealed the need to revisit the risk neutrality assumption embedded in TCE. Second, a measurement scale for the TCE contract typology (classical, neo-classical, and relational contracts) was developed adhering to the original texts of seminal papers and reviews from the TCE literature. Third, the 14-item measurement scale was validated using a series of three vignette-based experimental studies.Key messageThis research explores the antecedents of the TCE contract typology and develops a measurement scale for essential characteristics of classical, neo-classical, and relational contracts, as defined in TCE, using systems thinking approach and a novel vignette-based experimental design.     

The Influence of Network Management and Complexity on Network Performance in Taiwan,Spain and the Netherlands

Abstract

Using survey data of respondents involved in spatial planning projects in Taiwan, Spain and the Netherlands (n = 678), this article examines the influence of network management strategies and complexities (examined with regard to differences in perception of problems and solutions, and unexpected events) on perceived network performance. This theory-driven, empirical research shows that the effect of network management strategies on perceived performance is stronger than the impact of unexpected events or actors’ differences in perceptions of problems and solutions. We find this result in all the three countries. Our model explains 19.1 per cent of the variance in the perceived network performance.     

Transaction Costs in the Trading System of Cashew Nuts in the North of Benin: A Field Study

Cashew nut trading is an activity with growing economic importance in the north of Benin. Among the cost categories supported by the trading actors are transaction costs to which rare empirical studies have been devoted. Therefore, based on the theoretical concept this article empirically analyzes the importance of the transaction costs generated by cashew nut trading in the north of Benin. The empirical data were collected in two villages. Using a paired‐sample T test this study shows that the transaction costs are relatively important, but are not the major cost category. The average “production cost” is higher than the average transaction cost incurred by the trading actors. Although the transaction costs are on average lower than the other costs category, they are viewed by most actors (82 percent) as a serious constraint in the trading system due to moral hazard problems arising from the existence of these costs. By analyzing the specific factors that influence the magnitude of the transaction costs borne by the actors, the article shows that some socio‐cultural and environmental characteristics of the actors are determinant of the level of transaction costs incurred.     

Organizational climate and workplace efficiency

Abstract

The subject organization of this article is the government employment agency in Sweden. The agency is a key component of the national labour market focusing specifically on placing the unemployed and job-seekers in work. The agency also administers the processes of providing benefits to the unemployed.

We describe the agency, its work and some of its special features and its workforce. We discuss how these features impact on organizational climate and performance. We outline the characteristics of a cadre organization, and particularly how features of this type of organization influence workplace climate. We discuss the ways in which workplace climate contributes to workplace performance. Finally, we review two empirical studies of the agency and its workforce and use data from these studies to augment our discussions.

The agency is a real-life organization managing real world issues. Complexities abound. We attempt to unravel some of these complexities.     

Environmental Change, Leadership Succession and Incrementalism in Local Government

A theoretical model of strategic budgetary choices in local government is developed and tested. The model assumes that expenditure decisions are a function of changes in environmental circumstances and the characteristics of local leaders. Environmental change is operationalized through measures of workload, munificence and regulatory controls. Leadership succession is defined as the turnover in managerial and political élites. These environmental and leadership variables are included in a multivariate statistical model of budgetary incrementalism. The model is tested on the spending decisions of 402 English local authorities from 1981 to 1996. The empirical results suggest that the extent of budgetary change is influenced strongly by environmental change but weakly by leadership succession. Furthermore, environmental constraints became tighter during the study period. The characteristics of public sector organizations that impose limits on the strategic choices of new leaders are identified.     

Organizational commitment in the context of multinational corporations: a critical review and directions for future research

Abstract

The antecedents and outcomes of organizational commitment (OC) have been studied extensively over the last three decades. While the majority of research has focused on the OC of employees working in organizations based in a single country or region, studies have also emerged examining the OC of employees working in multinational corporations (MNCs). However, there has been no attempt to comprehensively review and synthesize the literature in this area, limiting our understanding on how to effectively manage OC in MNCs. The present study conducts a systematic review of empirical literature on OC in the MNC context. We review literature on the theoretical foundations, antecedents and outcomes of OC in MNCs, and evaluate empirical papers that expand our understanding of the nomological network of constructs to which OC is related in the MNC context. Building on the review, we then present a future research agenda, which targets opportunities for empirical and theoretical advancement of research on OC in the MNC setting.     

A Theoretical Foundation for the Nelson–Siegel Class of Yield Curve Models

Yield curve models within the popular Nelson–Siegel class are shown to arise from formal low‐order Taylor approximations of the generic Gaussian affine term structure model. Extensive empirical testing on government and bank‐risk yield curve datasets for the five largest industrial economies shows that the arbitrage‐free three‐factor (Level, Slope, Curvature) Nelson–Siegel model generally provides an acceptable representation of the data relative to the three‐factor Gaussian affine term structure model. The combined theoretical foundation and empirical evidence means that Nelson–Siegel models may be applied and interpreted from the perspective of Gaussian affine term structure models that already have firm statistical and theoretical foundations in the literature. Copyright © 2013 John Wiley & Sons, Ltd.