Showing papers on "Opportunism published in 2001"
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TL;DR: In this article, the authors argue that private ownership and owner management expose privately held, owner-managed firms to agency threats ignored by Jensen's and Meckling's (1976) agency model.
Abstract: Does owner management necessarily eliminate the agency costs of ownership? Drawing on agency literature and on the economic theory of the household, we argue that private ownership and owner management expose privately held, owner-managed firms to agency threats ignored by Jensen's and Meckling's (1976) agency model. Private ownership and owner management not only reduce the effectiveness of external control mechanisms, they also expose firms to a "self-control" problem created by incentives that cause owners to take actions which "harm themselves as well as those around them" (Jensen 1994, p. 43). Thus, shareholders have incentive to invest resources in curbing both managerialand owner opportunism. We extend this thesis to the domain of the family firm. After developing hypotheses which describe how family dynamics and, specifically, altruism, exacerbate agency problems experienced by these privately held, owner-managed firms, we use data obtained from a large-scale survey of family businesses to field test our hypotheses and find evidence which suggests support for our proposed theory. Finally, we discuss the implications of our theory for research on family and other types of privately held, owner-managed firms.
2,094 citations
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TL;DR: In this article, the authors summarize the findings around competitive advantages from three studies, all of which involve longitudinal empirical tests of over 200 industrial buyers and their suppliers in a variety of industries, and conclude that specialized investments facilitate the attainment of joint competitive advantages and these advantages are positively correlated with economic outcomes, organizational behavior, and expectations of continuity.
289 citations
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TL;DR: In this paper, three research theories used to explain firm boundaries are transaction cost economics, an options perspective, and a resource-based view of the firm, and the authors' integrated model addresses the degree to which each of these three perspectives explains firm boundaries for technology sourcing is contingent on managerial risk taking, which is partly determined by organizational context.
Abstract: Three research theories used to explain firm boundaries are transaction cost economics, an options perspective, and a resource-based view of the firm. The authors' integrated model addresses the degree to which each of these three perspectives explains firm boundaries for technology sourcing is contingent on managerial risk taking, which is partly determined by organizational context. The authors' results suggest that, in general, management stockholdings, firm risk orientation, and slack resource availability moderate the extent to which the perceived threat of opportunism, the threat of commercial failure, and opportunity for sustainable advantage all influence firm boundaries.
214 citations
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TL;DR: In this article, the authors provide an historical comparison of resource-based theory and five schools of thought within industrial organization economics and raise concerns about building a resourcebased theory of the firm that assumes away the problems of opportunistic behavior.
197 citations
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TL;DR: The objectives of government are pivotal to understanding the diverse negative effects of corruption on public welfare as discussed by the authors, and the objective of government is crucial to understand the negative effect of government corruption.
Abstract: The objectives of government are pivotal to understanding the diverse negative effects of corruption on public welfare. Corruption renders governments unable or unwilling to maximize welfare. In the first case, it distorts agents' decisions and limits the contractual space available to agents and the government, acting as a benevolent principal. In the second case, a corrupt principal creates allocative inefficiencies, cripples its credible commitment to effective policies, and opens the door to opportunism.
179 citations
25 Oct 2001
TL;DR: In this paper, the authors disaggregate the generic modes of governance as they are defined in Transaction Cost Economics (TCE) to increase the level of resolution of TCE in the field of hybrid and hierarchical governance by specifying (some of) the subcategories of governance within these two generic modes and relating these sub-categories explicitly to the transactions they control.
Abstract: This study is about disaggregating the generic modes of governance as they
are defined in Transaction Cost Economics (TCE). More specifically, it intends
to increase the level of resolution of TCE in the field of hybrid and hierarchical
governance by specifying (some of) the subcategories of governance within
these two generic modes and relating these subcategories explicitly to the
transactions they control. It is argued that such a disaggregation is useful for
two main reasons: (1) it may increase the accuracy of TCE's predictions and
may improve the expressiveness of its style of explanation, and (2) it may
enlarge the conceptual scope of TCE, opening up problem areas that previously
did not fit neatly into the realm of this approach.
This general idea ties together the two substantive parts of this study. The
first of these starts from the empirical observation that hybrid structures
sometimes survive conditions of substantial uncertainty -an observation that
does not go particularly well with received TCE-, and examines two cases of
hybrid contracting in such conditions. It is argued that both cases are examples
of a hitherto ignored subcategory of governance that, once identified,
restores TCE's ability to explain this observation. The second part brings
TCE's explanatory apparatus to bear on issues of management control. It is
shown that TCE supports a detailed study of control issues, and that it has
much to offer to the explanation of control structure variety within (and
beyond) the hierarchy.
Hybrid contracting and uncertainty
There is a growing body of empirical evidence showing that sometimes, hybrid
structures are chosen for transactions that combine substantial asset specificity
with significant uncertainty. This evidence meets uneasily with TCE.
Extant TCE suggests that for such transactions, hierarchical governance with
its distinctive blend of cooperation-inducing features and sequential adaptation
is uniquely suited. The hybrid form, on the other hand, is considered
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infeasible in conditions of uncertainty, because it requires a fairly complete
ex ante explication of the particulars of the transaction.
In this study, I argue that TCE's somewhat overstated position on the infeasibility
of hybrid contracting in conditions of uncertainty is best be rectified by
taking a closer look at the mechanisms of governance on which apparently
uncertainty-resistant hybrids rely. It may very well be that extant TCE puts
too much emphasis on compliance arrangements, and that there are in fact
different (configurations of) control mechanisms available to the hybrid form
to mitigate opportunism.
An analysis of two generalized cases of hybrid contracting in conditions of
asset specificity and uncertainty (outsourcing in the Japanese automobile
industry and venture capital financing) revealed the contours of a subcategory
of the hybrid mode that, unlike its more familiar compliance-focused counterpart,
allows substantial contractual incompleteness. This subcategory
invokes both market-based incentives and intensive exchange of information.
The market-based incentives foster behaviour congruence without requiring
performance goals or standards to be specified in advance, whereas information
exchange and the resulting transparency allow significant direct control
over the actions of the contracting partner during the process of contract
execution. The combination of the two facilitates harmonious interim adjustment
and correction, and in both cases, this configuration of governance
devices seemed an efficient solution to the relevant contractual problems.
Transaction Cost Economics and Management Control
One of the quintessential problems of management control (MC) as a field of
scholarly inquiry is to explain control structure variety within and between
organizations. However, previous theorizing in MC has not been able to address
this issue fully satisfactorily. In this study, I suggest that substantial
progress can be made by applying TCE to the issue at hand. MC shares its
central problem - explaining control- with TCE, albeit that the former requires
a higher level of resolution. The logic of TCE, however, is receptive to refinement,
and supports a detailed study of control issues at the level of organizational
subsystems. At that analytical level, I propose a transaction cost
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theory of MC. This theory specifies the composition of various archetypal
control structures, and links these to the kind of activities they are expected
to control.
The argument runs as follows. The nature of the organizational activities and
the contributions from organizational participants that are required to perform
these activities can be defined discriminatingly through their scores on
three dimensions: (1) the extent to which the contributions are susceptible to
up front programming; (2) the degree of asset specificity; and (3) the intensity
of ex post information impactedness. Given bounded rationality and
opportunism, these features are predictably associated with distinctive control
problems that need to be dealt with. The various control archetypes
differ in their problem-solving ability, which makes them appropriate for the
governance of some contributions, but not for others. Moreover, they differ in
respect of cost, and ultimately, an empirically observable alignment of a
contribution with a control archetype can be explained by delineating the
relative efficiency properties of the match, either quantitatively or - more
likely- in a qualitative way.
This theoretical approach has some qualities that make it worth considering.
For one, it is empirically testable. Furthermore, its relatively simple theme
seems to speak to a wide empirical domain, and can be used to make sense of
a large set of remarkably different control structures in a consistent and
coherent way. And finally, the proposed theory offers a practicable procedure
to handle the issue of defining the organizational goals that MC is supposed to
serve, and an operational way to address control structure effectiveness.
135 citations
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TL;DR: In this paper, the authors argue that the established academic conceptualizations of internationalization are unsatisfactory in not addressing this overriding requirement for growth and propose that consideration of opportunism may be a better way to gain understanding of retailer activity than trying to fit activity into deterministic strategic models.
Abstract: Europe in recent years has witnessed an increase in the amount of cross-border operations by retailers. The retail sector has undergone substantial structural change characterized by the emergence of a group of rapidly-growing large retailers, a redefinition of the balance of internalized and externalized functions and a need to respond to the cultural variety present in Europe that becomes evident as retailers move out of their domestic markets. The over-arching requirement for these large retailers is to grow and gain scale economies. Internationalization of operations has become a requirement for these large firms. It is argued that the established academic conceptualizations of internationalization are unsatisfactory in not addressing this overriding requirement for growth. There is great variety in the international activity in retailing, with the absence of pattern being one of the few generalities. It is proposed that consideration of opportunism may be a better way to gain understanding of retailer activity than trying to fit activity into deterministic strategic models. The experiences of five West European retailers entering and building retail networks in Poland is provided as evidence for this view. Suggestions are made for future work exploring this issue of opportunism as a process in international retailing.
133 citations
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TL;DR: In this paper, the authors make a useful distinction between the everyday personal relationships within a group-the activity of networking itself-and the "institutional arrangements" which are produced by this activity, including custom and contractual devices designed to discourage malfeasance.
Abstract: organization studies, and business history.2 Despite the scepticism of some-that networks are exceptional or transient phenomena, a sign of market failure in young economies-it is now widely argued that networks are an integral part of economic activity, which is moulded by social, cultural, and political influences as well as by market mechanisms.3 Some authors have made a useful distinction between the everyday personal relationships within a group-the activity of networking itself-and the 'institutional arrangements' which are produced by this activity, including custom and contractual devices designed to discourage malfeasance.4 Moral attitudes and value systems shared by members of a network, as well as rules and regulations, can reduce the risk, and therefore also the cost, of commercial transactions. Few economic actors rely solely on either institutional arrangements or a generalized morality to guard against the risk of opportunism, free riding, or cheating. Instead they prefer to deal with individuals of known repute and to base their decisions to trade on information about reputation from reliable sources, and on their own past dealings with the same individuals. However, the greater the level of trust, the greater the potential gain from malfeasance. Thus, institutional arrangements for contract enforcement are seldom dispensed with entirely.5 In general terms it can be said that business networking
102 citations
01 Jan 2001
101 citations
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TL;DR: In this paper, the authors conducted a survey in a Sino-Hong Kong business negotiation environment and found that respondents perceived that there are four dimensions within the guanxi concept, i.e. opportunism, dynamism, business interaction, and protectionism.
Abstract: Guanxi has been a popular research topic but commentators do not have consensus on its ethical and positioning aspects. Attempts to tackle these two aspects and the problem of guanxi and favor according to a survey in a Sino‐Hong Kong business negotiation environment. Respondents perceived that there are four dimensions within the guanxi concept, i.e. opportunism, dynamism, business interaction, and protectionism. According to these four dimensions, they can be segmented into three clusters, i.e. the preserver, the wiser, and the braver. Different clusters have different psychological approaches to Sino‐foreign negotiation but there is no difference in their perceptions towards the relationship between guanxi and favor. Concludes that guanxi is basically ethical and it can be used as a positioning strategy in China. However, there is some evidence to suggest that guanxi and favor are sensitive and situation‐specific, but further research is needed to confirm these claims.
91 citations
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TL;DR: It is shown that behavior which satisfies none of the standard consistency assumptions can be both invulnerable and maximally opportunist, and two conditions which, combined with maximal opportunism, imply the existence of a choice function rationalized by an ordering and satisfying the sure thing principle are presented.
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TL;DR: Short-term contracting has three principal uses in the governance of the public sector: (a) contracting with service providers after a tendering/bidding process; (b) contract with the CEOs of the incorporated public enterprises; and (c) negotiating with executive agencies about what they should deliver.
Abstract: One can look at the arrival of New Public Management and the extensive public sector reforms inspired by this theory from many angles. Here we examine the shift from long-term contracting, typical of bureaucracy and traditional enterprises, to short-term contracting, borrowed from private sector governance methods. Short-term contracting has three principal uses in the governance of the public sector: (a) contracting with service providers after a tendering/bidding process; (b) contracting with the CEOs of the incorporated public enterprises; and (c) contracting with executive agencies about what they should deliver. Theoretical analysis, supported by substantial empirical evidence, suggests that short-term contracting eliminates the extensive post-contractual opportunism connected with long-term contracting, but is vulnerable to precontractual opportunism. Short-term contracting is not just another public sector reform fad, but constitutes a new tool for government which increases efficiency when handled with prudence.
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TL;DR: In this paper, the corporate governance aspects of a regulatory program aimed to lure Israeli issuers listed only on U.S. markets to dual-list on the Tel Aviv Stock Exchange are considered.
Abstract: This Paper considers the corporate governance aspects of a regulatory program aimed to lure Israeli issuers listed only on U.S. markets to dual-list on the Tel Aviv Stock Exchange. It is a companion to another paper, which analyzes the international regulatory implications of that project (see http://papers.ssrn.com/sol3/papers.cfm?abstract_id=240888). The program provides a rare opportunity to analyze the role of managerial opportunism in foreign listing transactions. In its unique setting, most of the commonly cited motivations for foreign listing are held constant and the costs associated with foreign listing are largely sunk costs. From the vantage-point of most Israeli U.S.-listed issuers, the differences in disclosure duties under the Israeli regime originally intended for them and the American foreign issuer regime refer to corporate governance issues. The staunch resistance from the business and financial sectors to any additional disclosure under Israeli regulation is consistent with managerial reluctance to become subject to a more exacting corporate governance framework. This resistance also sheds light on the role managerial opportunism may play in legislative processes that relate to corporate governance and supports arguments about path dependence in corporate governance systems.
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01 Jan 2001TL;DR: Transact cost economics as mentioned in this paper is an alternative mode of governance with the main purpose of which is to economize on transaction costs, and it originates with path-breaking contributions by Karl Llewellyn (1931) on contract law; John R. Commons (1932) on the need to come to terms with the three conditions of conflict, mutuality and order; Ronald Coase (1937) on need to make provision for positive transaction costs; and Chester Barnard (1938), on the neglected importance of coordinated adaptation.
Abstract: Hierarchies and markets are herein described as alternative modes of governance, the main purpose of which is to economize on transaction costs. It originates with path-breaking contributions by Karl Llewellyn (1931) on contract law; John R. Commons (1932) on the need to come to terms with the three conditions of conflict, mutuality and order; Ronald Coase (1937) on the need to make provision for positive transaction costs; and Chester Barnard (1938) on the neglected importance of coordinated adaptation. These fundamental ideas were joined and operationalized in the 1970s as Transaction Cost Economics took shape and has been a work in progress since. Not only does a predictive theory emerge, but a large and growing empirical research literature that is broadly supportive has taken shape. Public policy ramifications proliferate.
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TL;DR: In this paper, the authors extend their previous efforts to incorporate achievements of the New Institutional and Transaction Cost Economics to the agrarian sphere, and estimate prospects for organizational modernization, and determine effective boundaries of market, private, public, and mixed modes for Agrarian transacting.
Abstract: In this paper we extend our previous efforts to incorporate achievements of the New Institutional and Transaction Cost Economics to the agrarian sphere. First, we demonstrate that Bulgarian agrarian economy is a Transaction cost economy, and clarify various types of transacting costs in transitional conditions. Next, we describe existing structures for governing of agrarian transactions, and evaluate their costs minimizing and incentive potential. Lastly, we estimate prospects for organizational modernization, and determine effective boundaries of market, private, public, and mixed modes for agrarian transacting. Neoclassical scenario for transformation of previous communist model ("free market plus private ownership") has not worked in Bulgarian agriculture. Transition has changed "rules of the game" but it has not made agrarian agents "more rational" and "less opportunistic". Consequently costs for new property rights and institutional development, and for market and private modes of individual transacting, have taken a good part of all social expenditures. High assets dependency, big uncertainty, low appropriability, and less frequency have determined a specific transitional structure of agrarian transacting. Less market transacting, big reliance on informal relationships at large scale, great extent of "over" integrated modes, part time farming and production cooperation phenomenon, block of all classes of transactions etc, all have come to existence. Besides, a large number of inefficient or contradictory third party (e.g. Government, Non-governmental organizations, international assistance etc) involvements in agrarian transacting have been in place. All this has deformed substantially emerging farming system, and domination of primitive and "gray" structures, little sustainability of large business and cooperative farms, significant distortion of national agrarian capital, and backward technological "development", have come to agenda. Low efficiency of public in-house organization and limited budget sources would restrict Government direct intervention in agrarian transactions. Agrarian policy should be toward exploring potential of market, private, and cooperative modes through new property rights provision, institutional and infrastructural support, improving law and contract enforcement, market information, extension education, assisting farmers association etc. Less expensive modes for trilateral governance (coordination, control on opportunism, incentives for specific investments) with active involvement of private sector and farmers organizations are to be preferred.
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TL;DR: In this article, the authors examine the law and economics of downside arrangements in venture capital contracts and evaluate the risk of exposure to issuer opportunism in downside situations, reviewing contract terms employed in VC transactions and the caselaw on preferred stock.
Abstract: This paper examines the law and economics of downside arrangements in venture capital contracts. Downside protection for a venture capitalist means two things-first, power to replace the firm's managers (or alternatively, to force sale or liquidation of the firm), and, second, power to protect the venture contract itself from opportunistic amendment. Recent empirical work by Kaplan and Stromberg shows that venture capital investments possess this protection in varying degrees, depending on the mode of their participation and the governing contracts' terms. The venture capitalist remains vulnerable in a significant number of cases, lacking voting and boardroom control and relying entirely on terms articulated ex ante in the preferred stock contract. In these cases, there arises a risk of exposure to issuer opportunism in downside situations. The paper evaluates this risk, reviewing contract terms employed in venture capital transactions and the caselaw on preferred stock. A mixed picture emerges. The terms of venture capital contracts improve in significant respects on those of traditional preferred stock contracts. But they are not perfect and offer incomplete protection from issuer opportunism. Meanwhile, the caselaw is as hostile as ever. Delaware has taken the lead, sustaining a classic case of preferred stock victimization in a venture capital context. The paper criticizes this approach as a matter of both contract law and contract economics. Contract law's good faith duty can be used to protect venture capital preferred without a cognizable risk of unproductive judicial interference in corporate affairs. Furthermore, under the economics of incomplete contracts, where subject matter is noncontractible a blanket presumption against ex post intervention on the ground of forced contract is incoherent. Drawing on the control transfer model of Aghion and Bolton, the paper shows that efficient results and the interests of senior securityholders are aligned in a larger set of cases than previously supposed. Accordingly, when disputes between venture capitalists and entrepreneurs come to court, a rote presumption favoring the common stockholder is not defensible on efficiency grounds.
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TL;DR: In this paper, the authors present evidence that private interests of managers, controlling shareholders, and other insiders affect corporate actions and the structure of the legal system, and that such interests have a significant effect on both aspects in the growingly important context of foreign listing.
Abstract: To what extent do private interests of managers, controlling shareholders, and other insiders affect corporate actions and the structure of the legal system? This Article presents evidence that such interests (hereinafter “managerial opportunism,” for brevity) have a significant effect on both aspects in the growingly important context of foreign listing. Modern analyses of the corporate form invariably revolve around the agency problem,1 and “corporate governance” is widely understood today to constitute the means for coping with this problem.2 Shleifer and Vishny, for instance, provide a thorough review of the theoretical and empirical literature on the relations between corporate governance and the agency problem.3 In particular, they discuss the interplay between legal rules and shareholding structures as alternative means for curbing adverse
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TL;DR: In this paper, the authors develop the concept of "good agent character", by which they mean agent character that serves the firm profitability by embodying the firm-specific fairness norms.
Abstract: Agency problems beset firms and prompt opportunistic behavior by employees. Opportunistic behavior redistributes value, whereas cooperative behavior creates value. Firm-specific fairness norms typically promote the firm’s efficiency by increasing cooperation and decreasing opportunism. Firm-specific fairness norms best promote efficiency when supported by reputation effects and when the firm’s agents internalize the norms. People who internalize norms acquire good character. We will develop the concept of “good agent character,” by which we mean agent character that serves the firm’s profitability by embodying the firm’s fairness norms. Good agent character conveys an advantage to superiors and subordinates in forming cooperative relations with other people who can read character.
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01 Jan 2001
TL;DR: In the post-socialist countries of the former Soviet Union, trust and confidence in public institutions and institutions has been examined in a wide range of studies as discussed by the authors. But the focus of these studies was on the impact of the past on societies moving from socialism to market democracy.
Abstract: Two conflicting stories are told about the impact of the past on societies moving from socialism to market democracy. The first recognizes the overall failures of the planned economies but points to cooperation between family and friends as a means of coping with a dysfunctional system. This sense of community has been broken up by the move to the market and to democracy leading to a loss of trust and an increase in opportunism. The second sto ry stresses the socialist governments’ lack of legitimacy – a fact that led citizens to assume that official state actors were self-serving and that rules were irrational. Individual horizons were limited by the difficulties and risks of impersonal, arms-length dealings. The new democratic governments inherited a citizenry with low levels of trust in public institutions and with the habit of relying on inter -personal relations, not public institutions and laws. The first story argues for policies that reinf orce interpersonal trust, and the second, for policies that develop trust and confidence in the impartiality and competence of the state. The topic of honesty and trust in the post -socialist societies touches on issues central to the transition process and its eventual outcome. The issue sits at the intersection of institutional and legal analysis, on the one hand, and the study of norms and public attitudes, on the other. Survey work from the region provides a fairly comprehensive picture of the attitudes of citizens and the managers of business firms in the post -socialist countries. This work also sheds some light on private sector and official behavior and on the nature of public and private institutions. Qualitative evidence from interviews and focus groups provides insight into the way households and businesses cope. Nevertheless, we know less than we would like about the actual operation of government institutions and about private sector organizations and informal groups. The rapidity of year -to-year changes leaves the analyst with questions about what has actually happened and unsure about the proper recommendations for reform. Most recent work shows a sharp divergence between the countries of the former Soviet Union (except for the Baltics) and those that came under Soviet influence only after the Second World War. There are exceptions and interesting cross -country variations, but as a general rule, the countries geographically closer to Western Europe are also closer to Western Europe in political, legal, and economic development than the countries farther east. This suggests that the most
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TL;DR: In this article, the authors studied the differences in regulatory design choices and performance outcomes across sectors, under the umbrella of similar nation-specific institutional characteristics (the same federal government producing reform during a short period of time (1990-95).
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TL;DR: In this paper, a public choice analysis predicts opportunism by representatives at the expense of "rationally ignorant" voters and a transactions costs approach suggests that electoral competition can offer protection when voters rely on "party signal" as a low cost information source.
Abstract: Increasing concern about political ‘sleaze’ prompted the establishment, in 1995, of the Standing Committee of Standards in Public Life and the announcement, in 1999, of proposals to reform political party finance in the UK. A ‘public choice’ analysis predicts ‘opportunism’ by representatives at the expense of ‘rationally ignorant’ voters. It commends constitutional constraints to restrict the range of policy options open to representatives. By contrast, a ‘transactions costs' approach suggests that electoral competition can offer protection when voters rely on ‘party signal’ as a low cost information source. If voters reduce transactions costs by relying on party signal, politicians have an incentive to maintain party reputation. Representatives are more willing than might otherwise be anticipated to accept the need for regulation if this serves to protect reputation.
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TL;DR: In this article, a comparison of resource-based theory and transaction costs theory is made, with the focus on the deployment and combination of specific inputs while transactions costs theory focuses on the avoidance of opportunism.
Abstract: This paper summarizes and comments on Conner (1991) which contributes to the strategic management area by providing an historical comparison of resource-based theory and five schools of thought within industrial organization economics. Conner (1991) argues that the fundamental distinction between resource-based theory and transaction costs theory is that resource-based theory focuses on the deployment and combination of specific inputs while transactions costs theory focuses on the avoidance of opportunism. I offer three responses to this claim. First, Conner's distinction was not central to the resource-based literature at the time the article was published. Second, I raise concerns about building a resource-based theory of the firm that assumes away the problems of opportunistic behavior. Third, I offer an alternative view of the fundamental similarities and differences between resource-based theory and transaction costs theory.
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TL;DR: In this article, the authors apply principal-agent theory to identify problems arising from incomplete information and possible opportunism among managers, shareholders, creditors, and employees, and find that more cooperative relations may continue to prevail at the level of industrial production in Japan, premised on expansive information sharing and participation.
Abstract: Over the last decade or so, elaborate theoretical and empirical analyses of 'varieties of capitalism' have been developed, mainly to contrast Anglo-American models with those in East Asia and - especially - Europe. Corporate governance, broadly defined as relations among a range of stakeholders in firms, provides a useful focal point in testing and refining these analyses, especially in relation to Japan and the issue of convergence or divergence on Anglo-American models. Parts II-IV of this paper apply principal-agent theory to identify problems arising from incomplete information and possible opportunism among managers, shareholders, creditors and employees. It finds considerable realignment of manager and shareholder interests, even more change to Japan's main bank system of corporate governance, and less obvious - but significant - transformations in employment relations. Although differences are therefore apparent in these three major components of corporate governance, the degree of convergence towards more arm's length control mechanisms characteristic of Anglo-American models is more pronounced than expected by some theorists of 'varieties of capitalism'. However, Part V suggests that more cooperative relations may continue to prevail at the level of industrial production in Japan, premised on expansive information-sharing and participation, in turn suggesting that more than opportunism is at work. The Japanese state may also be moving in this direction, implying a more positive assessment of seemingly indecisive policy-making over the last decade. This could further set the stage for new forms of corporate governance to emerge, similarly characterised by forthright information-sharing among new stakeholder participants. Key issues are therefore whether Japan as a whole is moving towards more openness in information flows and participation by various socio-economic groups, and whether this is driven purely by concerns about opportunism or by other normative considerations. These issues are common to the US and Britain as well, suggesting a deeper level of convergence in Japan. But how they are resolved could well play out quite differently, leaving important divergences. In this conclusion, and generally by suggesting some possible tensions as well as coherence among important dimensions of contemporary capitalist systems, this paper therefore questions some other tenets of 'varieties of capitalism' theories developed so far.
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TL;DR: In this paper, no rookies on rookies were used to rank students in higher education, and no Rookies on rookies was used to evaluate the performance of the students' programs.
Abstract: (2001). No Rookies on Rookies. The Journal of Higher Education: Vol. 72, No. 4, pp. 453-477.
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TL;DR: In this paper, the authors describe how these exchanges are organized in an institutional environment and focus on the dual effect of this environment - as with any other specialized resource, institutions may be used for expropriation purposes.
Abstract: Human beings increase their productivity by specializing their resources and exchanging their products. The organization of exchange is costly, however, because specialized activities need coordination and incentives have to be aligned. This work first describes how these exchanges are organized in an institutional environment. It then focuses on the dual effect of this environment - as with any other specialized resource, institutions may be used for expropriation purposes. They enjoy specialization advantages in safeguarding exchange but they also make possible new forms of opportunism, causing new costs of exchange. Three perverse tendencies are identified: In the legal field, there is a surplus of mandatory rules and, at the same time, a deficit in default rules. Second, courts' activity is biased against the quasi-judicial role of the parties and the market. Third, Market enforcement is based on reputational assets that are badly exposed to opportunism.
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TL;DR: In this paper, the authors examine several instances where Congress and the Federal Communications Commission have created opportunities for stakeholders to exploit differences in regulatory treatment, such as common carrier versus private carrier, basic versus enhanced services and incumbent local exchange carrier versus market entrant.
Abstract: This article examines several instances where Congress and the Federal Communications Commission have created opportunities for stakeholders to exploit differences in regulatory treatment. Such asymmetry in regulatory requirements have destabilized or reduced the potential for full and fair competition, because they tilt the competitive playing field in favor of one class of stakeholder. The article examines a number of semantically driven regulatory dichotomies, e.g., common carrier versus private carrier, basic versus enhanced services and incumbent local exchange carrier versus market entrant with an eye toward determining whether technological convergence and regulatory opportunism defeats the possibility of establishing a dual track regulatory regime. Additionally the article scrutinizes several marketplace anomalies resulting when a regulatory dichotomy triggers a diversion or inflow of funds based on an operator's regulatory classification and its adeptness at exploiting arbitrage opportunities. The article concludes with suggestions on how legislators and regulators might curb regulatory opportunism by abandoning the strategy of classifying carriers based on static technological or economic definitions.
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01 Feb 2001
TL;DR: In this article, the determinants of a neutral third party intervention in complex transaction relations are examined, based on a data sample which gives detailed information about 880 market contracts and co-operation projects.
Abstract: This study examines the determinants of a neutral third party’s intervention in complex transaction relations. At its basis there rules the idea that the way through courts in order to get control of opportunism risks is often inefficient and that it would be better to let a third party intervene in functions of supervision and arbitration. The analyses of a third party’s intervention are based on a data sample which gives detailed information about 880 market contracts and co-operation projects. There is a tendency to often let a third party intervene if transaction parties intend to carry out especially high specific investments. Furthermore, third parties play a special role in respect of enforcing different contractual regulations or institutional arrangements. A third party intervenes, for example, in the following cases: if several (equal) partners are involved in a transaction, if hostages have to be exchanged or if sanctions have to be decided.
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TL;DR: In this paper, the authors used OLS with diversification, management ownership, and performance variables to find evidence of managerial opportunism in French diversifying acquisitions and found that the faint traces of manager opportunism vanishes when they consider a non recursive relation between the variables.
Abstract: We are looking for traces of managerial opportunism in french diversifying acquisitions. Indeed, following various theories, diversification is seeking by managers. Furthermore, recent empiric evidences show that corporate diversification is value destructive for shareholders. Using classical OLS methodology with diversification, management ownership and performance variables, we find some evidence of managerial opportunism. But classical methodology presents two shortages. First, it supposed a unique sense of causality. In particular, firm diversification is supposed to impact firm performance without considering the inverse relationship (from performance to diversification). This one-way analysis can create biases in the estimated results. Second, this OLS methodology doesn?t permit to take simultaneously the relationship between our variables. Noticing that this classical methodology is not well adapted to the problem, we submit our data to a system of simultaneous equations. Using this system, according to us better adapted, the faint traces of managerial opportunism vanishes. This is the case in particular because the negative impact of diversification on performance disappears when we consider a non recursive relation between the variables. We derive others surprising results from our simultaneaous equations framework. Management stake in the equity can influence or be influenced by the performance depending on wether the performance is measured at the firm or at the operation (acquisition) level. Together, these results suggest that we have to be cautious when searching for managerial opportunism in sample and statistical studies. If manager opportunist inclination can be suspected in this kind of studies, it has to be distinguished from manager opportunist behavior which is far more difficult to exhibit.