Strategic Management of International Subcontracting

2011 ◽  
pp. 297-307
Author(s):  
Yue Wang
Keyword(s):  
Supply Chain ◽  
Strategic Management ◽  
Transaction Cost ◽  
Empirical Research ◽  
International Business ◽  
Multinational Enterprises ◽  
Cost Model ◽  
Governance Structure ◽  
Complex Nature ◽  
Relational Contract

Research on international subcontracting has been policy-oriented and industry-focused. There is a lack of understanding of the phenomenon from strategic management and international business perspectives. This article conceptualizes international subcontracting as a type of relational contract formed by buyers and suppliers from different countries, aiming to facilitate the sourcing of products or components with buyer-specific requirements. It builds a transaction cost model for studying the strategic choice of international subcontracting as an intermediate governance structure, sitting between arm’s length outsourcing arrangement and vertically integrated multinational enterprises (MNEs). A set of propositions are developed to aid future empirical research and to provide managers with some guidelines for organizing supply chain across borders. The model also allows managers to examine the complex nature of a range of subcontracting relationships and identify the specific mechanisms that can be used to preserve and manage the dyadic principal-subcontractor exchanges.

Strategic Management of International Subcontracting

2010 ◽  
pp. 1924-1934
Author(s):  
Yue Wang
Keyword(s):  
Supply Chain ◽  
Strategic Management ◽  
Transaction Cost ◽  
Empirical Research ◽  
International Business ◽  
Multinational Enterprises ◽  
Cost Model ◽  
Governance Structure ◽  
Complex Nature ◽  
Relational Contract

Research on international subcontracting has been policy-oriented and industry-focused. There is a lack of understanding of the phenomenon from strategic management and international business perspectives. This article conceptualizes international subcontracting as a type of relational contract formed by buyers and suppliers from different countries, aiming to facilitate the sourcing of products or components with buyer-specific requirements. It builds a transaction cost model for studying the strategic choice of international subcontracting as an intermediate governance structure, sitting between arm’s length outsourcing arrangement and vertically integrated multinational enterprises (MNEs). A set of propositions are developed to aid future empirical research and to provide managers with some guidelines for organizing supply chain across borders. The model also allows managers to examine the complex nature of a range of subcontracting relationships and identify the specific mechanisms that can be used to preserve and manage the dyadic principal-subcontractor exchanges.

Strategic Management of International Subcontracting

2011 ◽  
pp. 1219-1229
Author(s):  
Yue Wang
Keyword(s):  
Supply Chain ◽  
Strategic Management ◽  
Transaction Cost ◽  
Empirical Research ◽  
International Business ◽  
Multinational Enterprises ◽  
Cost Model ◽  
Governance Structure ◽  
Complex Nature ◽  
Relational Contract

Research on international subcontracting has been policy-oriented and industry-focused. There is a lack of understanding of the phenomenon from strategic management and international business perspectives. This article conceptualizes international subcontracting as a type of relational contract formed by buyers and suppliers from different countries, aiming to facilitate the sourcing of products or components with buyer-specific requirements. It builds a transaction cost model for studying the strategic choice of international subcontracting as an intermediate governance structure, sitting between arm’s length outsourcing arrangement and vertically integrated multinational enterprises (MNEs). A set of propositions are developed to aid future empirical research and to provide managers with some guidelines for organizing supply chain across borders. The model also allows managers to examine the complex nature of a range of subcontracting relationships and identify the specific mechanisms that can be used to preserve and manage the dyadic principal-subcontractor exchanges.

Impacts of non-GMO standards on poultry supply chain governance: transaction cost approach vs resource-based view

2016 ◽  
Vol 21 (6) ◽  
pp. 743-758 ◽  
Author(s):  
Houda Ghozzi ◽  
Claudio Soregaroli ◽  
Stefano Boccaletti ◽  
Loïc Sauvée
Keyword(s):  
Supply Chain ◽  
Transaction Cost ◽  
Genetically Modified Organisms ◽  
Animal Feed ◽  
Governance Structure ◽  
Empirical Literature ◽  
Governance Structures ◽  
Resource Based View ◽  
Content Type ◽  
Cost Approach

Purpose Following a negative attitude of consumers toward genetically modified organisms (GMOs) and the spaces left by the labeling legislation on GMOs of different countries, some retailers and processors introduced their own non-GMO standards, with the intention of avoiding the presence of GMOs in their products. This paper aims to understand how the implementation of these new retailer-driven standards affects governance structures along the supply chain and the determinants of such change focusing on transaction cost approach (TCA) vs resource-based view (RBV). Design/methodology/approach The non-GMO introduction is investigated as a case study in the poultry industry of France and Italy. The case relies on data primarily collected from interviews with the main actors at five stages of the supply chain from the retailer up to animal feed and crop production. Findings Findings indicate that the introduction of non-GMO products had different impacts on the transactions along the supply chain, generally leading to more integrated relationships. Theoretical relevance depends on the observed transaction and the type of governance structure considered. Interestingly, only RBV explains the shift toward hierarchical governance when this is observed. Originality/value This paper contributes to the empirical literature highlighting the upstream effects caused by the adoption of new standards. On the theoretical side, building on Conner and Prahalad’s (1996) seminal work and leveraging on the concepts of opportunism, “potential” superior knowledge and strategic importance of an activity, this research suggests a comparative framework for identifying governance structures and their determinants under TCA and RBV.

scholarly journals Supply Management: A Transaction Cost Economics Framework

2012 ◽  
Vol 7 (2) ◽  
pp. 139-147 ◽  
Author(s):  
Reza Mohammady Garfamy
Keyword(s):  
Economic Theory ◽  
Supply Chain ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Governance Structure ◽  
Analytical Framework ◽  
Supply Management ◽  
Vertical Coordination ◽  
Contractual Relations ◽  
Limited Scope

Abstract Transaction Cost Economics (TCE) is an economic theory that provides an analytical framework for investigating the governance structure of contractual relations within a supply chain. The purpose of this paper is to examine existing research in an effort to understand the potential effects of transaction costs on the vertical coordination of a supply chain. The paper arrives at many insights into how supply chains are organized under different governance structures. These insights can certainly be shared via the development and introduction of related propositions. The conceptual typology of contractual relations developed herein can help researchers better understand the scope of both the problems and the opportunities associated with supply management. It will be of value, therefore, not only to researchers who desire to expand their research into this area, but also to those who have already investigated this topic in isolation or with limited scope.

scholarly journals The bullwhip effect in Brazilian supply chain of organic products: an analysis from the perspective of transaction cost theory

2019 ◽  
Vol 10 (3) ◽  
pp. 1015
Author(s):  
Paolo Edoardo Coti-Zelati ◽  
Mauricio Jucá de Queiroz ◽  
Davi Lucas Arruda de Araújo
Keyword(s):  
Supply Chain ◽  
Supply Chain Management ◽  
Strategic Management ◽  
Transaction Costs ◽  
Conceptual Model ◽  
Transaction Cost ◽  
Bullwhip Effect ◽  
Transaction Cost Theory ◽  
Chain Management ◽  
Organic Products

This paper deals with the to the supply chain strategic management of organic products. The objective of this study is to propose a model that integrates the concepts of supply chain management (SCM), transaction costs theory (TTC) and bullwhip effect in supply chain of organic products generating propositions that will direct future empirical research. Therefore, this paper proposes that the SCM and TTC can contribute in reducing the distortion of perception of demand along the supply chain of organic products. A conceptual model relating the three variables studied was elaborated and three theoretical future empirical investigations to propositions in order to solve the problem of the bullwhip effect, namely the distortion of perception of demand along the supply chain of organic products.

Location, Competitiveness, and the Multinational Enterprise

2009 ◽  
Author(s):  
Alan M. Rugman ◽  
Alain Verbeke
Keyword(s):  
International Business ◽  
International Economics ◽  
Multinational Enterprises ◽  
Multinational Enterprise ◽  
Complex Nature ◽  
Business Research ◽  
Relative Contribution ◽  
Economics Literature ◽  
International Business Research ◽  
Intellectual Foundations

This article provides an overview of the key insights resulting from recent international business research on the interactions between location advantages and the competitiveness of multinational enterprises (MNEs). It consists of four main sections. First, the evolution of the location advantage concept in the international economics literature is discussed. Here, it appears that the international economics literature has substantially broadened its analytical scope in the last few decades. However, the field of international business research had gone even further in its analysis of the interactions between location and MNE competitiveness because of its in-depth focus on the actual behaviour of MNEs. The complex nature of location advantages for MNEs is discussed in more detail in the second section. The third section describes the intellectual foundations of a spatial analysis of MNE activities. Finally, the fourth section discusses the relative contribution of home country specific advantages (CSAs) and host CSAs to MNE competitiveness.

scholarly journals Examining the interface between supply chain governance structure choice and supply chain performances of dairy chains in Ethiopia

2018 ◽  
Vol 21 (8) ◽  
pp. 1061-1081
Author(s):  
Tadesse Kenea Amentae ◽  
Girma Gebresenbet ◽  
David Ljungberg
Keyword(s):  
Supply Chain ◽  
Transaction Cost ◽  
Structural Equation ◽  
Goodness Of Fit ◽  
Governance Structure ◽  
Food Chains ◽  
Governance System ◽  
Governance Model ◽  
Supply Chain Governance ◽  
Structure Choice

Recently, the concept of supply chain management has been applied in the food chains with the idea of transforming agribusiness through networking and trustful partnership in the food chains. In this regard, it is important to consider the empirical knowledge of the interface among the variables of factors in the supply chain governance structure choices, the chain actors’ choice of governance models, and the effects of these on the supply chain performances. The aim of this study was to empirically verify the relationships between factors existing in the business scenarios, the chain actors’ governance structure choice, and supply chain performances of dairy chains in Ethiopia. The chains were assessed using the survey data that were collected from 215 chain actors and analyzed using structural equation modelling and IBM SPSS and IBM AMOS of version 24 software. The data collected were tested for the Cronbach’s alpha reliability test for the internal consistency and using the different model goodness of fit measure tests. The results showed that the transaction cost, trust, and uncertainty significantly (P<0.001) predicted the chain actors’ supply chain governance model choice. On the other hand, uncertainty, willingness to collaborate, and collaborations advantages explained trust significantly (P<0.001). The correlations analysis among the factors showed that there existed negative significant correlation between transaction cost and willingness to collaborate. The correlation between willingness to collaborate and collaborative advantages was found positive and significant. Similarly, the correlation between uncertainty and transaction specific investments was found positive and significant. Moreover, chain actors’ supply chain governance structure choice significantly explained the supply chain performances, such as efficiency, flexibility, level of dairy losses, and level of integrations in the dairy chains. Promoting established dairy chain governance system, either through dependable relational governances or through formal contractual structure has been found improving the performances of the studied dairy chains.

Governance of supplier-customer relations: An empirical review

2007 ◽  
Vol 158 (12) ◽  
pp. 406-416
Author(s):  
Jon Bingen Sande
Keyword(s):  
Transaction Cost ◽  
Empirical Research ◽  
Customer Relations ◽  
Transaction Cost Economics ◽  
Exchange Theory ◽  
Forest Industry ◽  
Relational Contracts ◽  
Relational Exchange ◽  
Exchange Relationships ◽  
Relational Exchange Theory

The forest industry is riddled with exchange relationships. The parties to exchanges may have diverging goals and interests, but still depend upon each other due to non-redeployable specific assets. Formal and relational contracts may be used to deal with the resulting cooperation problems. This paper proposes a framework based on transaction cost economics and relational exchange theory, and examines to what extent empirical research has found formal and relational contracts to deal with three different governance problems. To that end, I review the results from 32 studies in a range of settings. These studies generally support the view that exchanges characterized by high degrees of specific assets should be supported by formal and relational contracts.

scholarly journals Firms' Choice of Regulatory Instruments to Reduce Pollution: A Transaction Cost Approach

2004 ◽  
Vol 6 (3) ◽  
pp. 1-20 ◽  
Author(s):  
Magali Delmas ◽  
Alfred Marcus
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Command And Control ◽  
Governance Structure ◽  
Governance Structures ◽  
Negotiated Agreements ◽  
Regulatory Instruments ◽  
Market Opportunities ◽  
And Control

This paper compares the economic efficiency of firm-agency governance structures for pollution reduction using transaction costs economics. Two governance structures are analyzed with the transaction costs approach: command and control regulation (CCR) and negotiated agreements (NAs). We propose that the choice of governance structure depends on the strategies firms pursue given the attributes of their transactions and their market opportunities. The application of transaction cost economics analysis leads to different choices of regulatory instruments. Firms in more mature, stable industries are likely to choose command and control, while firms in new, dynamic sectors are more likely to opt for negotiated agreements. Frequency of transactions is a key factor in firm choice.

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