Showing papers on "Opportunism published in 2004"

Uncertainty, Opportunism and Governance: The Effects of Volatility and Ambiguity on Formal and Relational Contracting

Abstract: Volatility and ambiguity are generally thought to create exchange situations more conducive towards opportunism. We examine the effectiveness of contractual and relational governance in constraining opportunism under volatility and ambiguity. We hypothesize that relational contracts will be robust to volatility but not ambiguity, whereas formal contracts will be robust to ambiguity but not volatility. The hypotheses are supported using data from 125 interorganizational relationships involving R&D for new product development. Our findings suggest that formal and relational contracts each may have advantages and disadvantages relative to the other in specific situations, so that they are not simply substitutes. The results have important implications for transaction cost and relational contracting theory, and challenge the view that relational contracts are not so susceptible to opportunism. A revised comparative governance schema is theorized for future research.

Opportunism in Multilateral Vertical Contracting: Nondiscrimination, Exclusivity, and Uniformity: Comment

Abstract: An input supplier selling to competing downstream firms would benefit from publicly committing at the outset to all contracts. Efficient commitment, however, would require complete contracts. The authors study instead bilateral contracting, without commitment regarding others' terms. Each firm then fears that the supplier might opportunistically renegotiate another's contract to increase bilateral profit at the firm's expense. The authors show that nondiscrimination clauses generally cannot curb such third-party opportunism, even with symmetric firms. To reassure firms, crude forms of commitment may be adopted. This could explain the pervasiveness of exclusivity arrangements and the striking uniformity and intertemporal rigidity of franchise contracts. Copyright 1994 by American Economic Association.

Curbing Foreign Distributor Opportunism: An Examination of Trust, Contracts, and the Legal Environment in International Channel Relationships:

Abstract: Many tenets of cross-border governance arrangements are broad-brush projections of domestic findings. To explore such generalizations, this study uses data from a large set of U.S.-based manufacturers to formulate and test propositions about limiting the potential opportunistic behavior of foreign distributors. The findings challenge two generalizations about governance arrangements in the cross-border context. The first is that a manufacturer is often handicapped disproportionately by its level of brand and scale prominence. Formal contracts as prescribed by transaction cost analysis, though negatively related to opportunism, do not have a significant effect on the alleviation of foreign distributor opportunism. The second generalization is that the joint use of trust and formal contracts is not significantly associated with opportunism. Trust and formal contracts serve different purposes. Trust makes the relationship function, and contracts institute and legitimize it. Furthermore, previous stu...

The Benefits and Pitfalls of Social Capital: Empirical Evidence from Two Organizations in the United Kingdom†

Abstract: Recently, there has been a shift in the way management scholars view the firm, from traditional models that are based on ideas of opportunism and market failure to newer knowledge-based theories that argue for a more socialized perspective. One of the key components of these theories is the notion of social capital. Social capital is the set of resources that accrue to an individual or group by virtue of their social connections. As such, it is a resource that is jointly owned. Most recent research adopts a more-is-better approach to social capital, suggesting that individuals with larger quantity of ties derive more positive benefits. However in this paper, we argue that using social capital has both benefits and drawbacks for organizations, and that these positive and negative aspects of social capital occur simultaneously. To substantiate our claim, we use data collected from sets of interviews with senior and middle managers in two organizations in the United Kingdom. Our findings indicate that while social capital has many beneficial effects with respect to information access and retrieval, community building, and underlying group norms, there are also a number of less-beneficial aspects, which are under-explored in the current empirical literature. Furthermore, we suggest that organizations must develop an understanding of the bridging and bonding elements of social capital, as these are critical for its implementation. Implications of the research findings and future research directions are discussed.

Opportunism is not the only reason why firms exist: why an explanatory emphasis on opportunism may mislead management strategy

Abstract: The object of the present essay is neither to overturn transaction cost economics nor to deny the reality of opportunism. Instead, it is to question the explanatory role of the concept of opportunism in the transaction cost analysis of Oliver Williamson and his followers. Williamson has suggested that potential or actual opportunism emerges as the source of the ‘transaction costs’ involved in monitoring and enforcing contracts. On the contrary, it is shown here that there are several additional and likely sources of contract default or incomplete performance. Williamson’s explanatory concentration on opportunism thus misidentifies the reasons for different hierarchical governance structures in the real world. As these additional sources are ignored, the emphasis on opportunism can impair a true understanding of the inner workings of the firm, and be a misleading guide for practical questions of organizational design and corporate strategy.

Global Ownership Strategy of Japanese Multinational Enterprises: A Test of Internalization Theory

Abstract: * This study examines determinants of the global ownership strategy of 444 Japanese manufacturing firms as of 1999, in a test of internalization theory. * The test results showed the efficiency of internalization determinants, such as R&D intensity, international experience, cultural distance and political risk, thus explaining the global ownership strategy of Japanese multinational enterprises (JMNEs) without the support of control variables. Key Results * Internalization theory clearly showed its explanatory and predictive power regarding the global ownership strategy of JMNEs. * We also found a distinctive ownership strategy of large JMNEs and keiretsu firms, one we labeled 'pseudo-internalization.' Both large and keiretsu JMNEs preferred to form joint ventures not only with local firms but also with sogo shosha (general trading companies) and with other Japanese firms including the keiretsu members. ********** Many researchers examined the international ownership strategy of Japanese firms, focusing especially on determinants affecting the choice between joint ventures and wholly-owned subsidiaries (Hennart 1991, Padmanabhan/Cho 1996, Delios/Beamish 1999, Lu 2002). They tried to discover transaction-cost determinants in the ownership choices of JMNEs. The findings of these studies, however, were not consistent despite their using similar data, such as that published by Toyo Keizai. For instance, their test results for the effect of R&D intensity on the entry choice between full ownership and joint ventures (JVs) were not coherent. The R&D intensity of a firm drew our attention since it is a core tenet operationalized to denote the knowledge or skill level of a firm that is likely to face imperfect market conditions. Therefore, if the role of R&D intensity in the choice of Japanese entry modes remains vague, the validity of internalization theory, which has been rigorously confirmed using databases consisting of US MNEs (Gatignon/Anderson 1988, Gomes-Casseres 1989), can be questioned. The objectives of this study are to evaluate the relevancy of internalization theory to the global ownership strategy of JMNEs, and to investigate why there are differences in the results among previous studies on the subject. Using the largest number of samples, this paper reviews and tests how well the archetypal internalization theory explains the recent global ownership strategy of JMNEs. In addition, a distinctive global ownership strategy of JMNEs will be revealed through examining the influence of keiretsu membership on the choice of entry mode. We used the year-end data for 1999 which was also published by Toyo Keizai. The following sections briefly review the literature on underlying theories of determinants of global ownership for JMNEs. Following this, hypotheses are presented and developed. The subsequent section explains the research methodology and describes the measurements of the variables. Then the statistical results are presented, which leads to the discussion and conclusion. Transaction Cost Economics and Internalization Theory Coase (1937) has raised and answered the question of why firms exist when factors of production are governed by the price mechanism. He was the first to recognize that "there is a cost of using the price mechanism" (Coase 1937, p. 390). Williamson (1975) traced the causes of transaction costs in contractual relations to the joint conditions of bounded rationality (1) and opportunism (2). He articulated that bounded rationality mattered only under conditions of uncertainty and/or complexity. Moreover, the mere identification of opportunistic inclination in human behavior is not sufficient to assume that all market activities are flawed due to the axiom of perfect competition. Under the conditions of perfect competition, opportunistic posturing proves impossible. Therefore, only when opportunism is joined with a small-numbers condition will serious transactional difficulties arise. …

Boundaries in the Study of Organization

Abstract: The concept of boundaries as relational processes has been central and ubiquitous in the social sciences, especially in areas such as the formation of individual, group or national identities, the creation of class, ethnic or gender inequalities, or the social construction of professions, knowledge and science itself. A key theme running through these literatures is how symbolic resources are used to create, perpetuate, or challenge institutionalized differences or inequalities by creating distinctions between ‘us’ and ‘them’, the legitimate or illegitimate, the acceptable or unacceptable, the in or out (Lamont & Molnar, 2002). A central focus of study has thus been how ‘symbolic boundaries’ (Lamont, 2001), particular classification systems enshrined in cognitive schemata have very real consequences in forming and sustaining corresponding social boundaries. In the management literature, however, there has been little serious and concerted study of the formation, properties and consequences of boundaries per se as complex, shifting, socially constructed entities. Organizational boundaries are often treated as socially and organizationally unproblematic, to be determined by considerations of economic efficiency, as, for example, in the case of transaction cost economics (Williamson, 1985), advancing a perspective originally proposed by Coase (1937). From a transaction cost perspective, for example, new technologies such as the internet can either enlarge or shrink firm boundaries through their effects on production costs that influence whether a productive task is outsourced or carried out internally (Afuah, 2003). The property rights approach (Grossman & Hart, 1986) has also been very influential in the theorizing of boundaries. In this approach, the boundaries of the firm are determined by the common ownership of assets that grants the owner bargaining power when issues of incomplete contracting, opportunism or hold-up problems emerge.

Holding China Together: The Cadre Evaluation System at the Grass Roots: The Paradox of Party Rule

Abstract: The Chinese party-state shares with other large, hierarchical organizations significant agency problems; local agents of the state tend to behave opportunistically, contrary to the interests of their principals.1 Such agency problems stem from conflicts of interest between principals and agents and from information asymmetries that typically characterize principal-agent relations.2 State officials in China employ a formal evaluation system (kaohe zhidu) to control the behavior of their subordinates. Drawing on principal-agent theory, this paper contends that the nature of the evaluation system helps to explain dysfunctional aspects of policy implementation at the grass roots and that problems with policy implementation, in turn, help to explain subsequent changes in the evaluation system itself. This characterization is consistent with adaptive learning on the part of principals. In the final section, the chapter argues that, paradoxically, even as the evaluation system has exacerbated problems in policy implementation, it has simultaneously contributed to the durability of rule by the Chinese Communist Party (CCP). Indeed, the relative stability of CCP rule, in contrast to the loss of power by communist parties in other former socialist states and contrary to claims of pervasive political decay in China,3 demands explanation. The chapter begins by providing some background on the development of the cadre evaluation system since the initiation of reform in 1978, arguing that changes in cadre evaluation represent an early and important element

Time‐span and risk of partner opportunism in strategic alliances

Abstract: The temporalities of opportunism – a term that generally means “self‐interest seeking with guile” – have not been adequately examined in the literature. This article suggests that opportunism is a variegated phenomenon that can be better appreciated by exploring the role of its temporal dimension. Adopting this temporal approach, the article proposes a framework of partner opportunism in strategic alliances that incorporates the two fundamental dimensions of time and risk. It then discusses four types of partner opportunism in this comprehensive time‐risk framework. Finally, the article indicates directions for further research.

Globalization, Ethics, and Opportunism: A Confucian View of Business Relationships

Abstract: Opportunism impacts the behavior of firms in market situations where they purchase goods and services externally and create dependency relationships with other firms. Opportunism as a business issue is addressed in economics and marketing literature as an important factor in transaction cost analysis and market governance. Management and business ethics scholars, however, do not address this issue in depth, if at all.The recent bankruptcy of MCI WorldCom highlights some of the risks inherent in a world economy where customers and companies of one society are dependent upon the business practices of partner companies in other societies. Telecommunications customers and companies in Asia, Europe and other places, who depended upon MCI WorldCom for connections to North America, now have important areas of their business in jeopardy because of the uncertainty about the fate of a critical business partner.MCI WorldCom’s situation appears to be the result of an attempt to obtain personal gain, at the expense of others, by at least one senior manager. This is called opportunism. Williamson (1985) defined opportunism as “self-interest seeking with guile.” It can wreak havoc with companies, customers, stock markets and economies and is demonstrated regularly in press accounts of misstatements on financial reports and other ways senior managers use their positions to enhance their personal wealth and influence.This paper will focus on the ethical issues surrounding business relationships and how Confucianism, with its focus on trust, reciprocity and mutual benefit in relationships, can offer a moral foundation to the inter-firm arrangements that are so much a part of the contemporary business landscape.

A Capabilities Perspective on the Evolution of Firm Boundaries: A Comparative Case Example from the Portuguese Moulds Industry

Abstract: The issue of vertical firm boundaries continues to attract interest both for economics and management research. The transaction cost economics approach, emphasizing transaction-specific assets and opportunism in order to explain discrete 'make-or-buy' decisions, dominates the literature. Nevertheless, alternative perspectives, developed under the guise of the capabilities, competence or knowledge-based theories of the firm, have gained attention recently. They focus on the evolutionary dynamics of boundaries in the context of the division of labour among firms in an industry and on what is to be divided and co-ordinated - i.e., productive knowledge. The conceptual links between this line of research, which some refer to as neo-Marshallian, and the Industrial Networks approach are explored in this paper. The paper emphasizes both a vision of firms as sets of direct and indirect capabilities, developed and combined in different ways over time, and the connectedness between inter-firm relationships. The discussion is illustrated with the cases of two firms, which are contrasted in terms of the dynamic evolution of their boundaries. The analysis made supports the argument that firms' vertical boundaries reflect their relationships with specific counterparts and the way they address through time the division and integration of knowledge through the configuration of direct and indirect, counterpart specific, capabilities.

Efficiency of Agrarian Organizations

Abstract: The goal of this paper is to incorporate achievements of the New Institutional and Transaction Costs Economics to analysis of efficiency of agrarian organizations in transitional economies. That modern framework for analysis of agrarian organizations is based on their role to govern transactions between individual agents. Since governing (coordination, organization) of transactions is associated with significant costs (for finding best prices and partners, for negotiation and contracting, for monitoring and enforcement of contract terms, for adjustment and re-negotiation according to changed conditions of exchange, for dispute resolutions etc.), the economic efficiency of agrarian organizations has to assess not only their capacity to minimize the production costs, but their potential to economize transacting costs as well. Initially, main kinds of transactions of the managers of agrarian transactions (farms entrepreneurs) are clarified as land, labor, service, inputs, and finance supply; marketing; and collective actions. After that, the alternative market, non-market, and mixed modes for organization of different types of agrarian transitions are identified. Next, various types of costs associated with each form of transacting are determined. And then, the comparative efficiency of different governance structures is estimated according to (minimum) transacting costs criteria. One direction for evaluation of comparative efficiency of governing structures is based on direct assessment of items of costs for transaction in different organizations. However, that manner is often restricted since: difficulties (or impossibility) to measure absolute level of transaction costs; opposite dynamics of different items of costs in various organizations; great use of complex (and interlinked) rather than pure modes in transitional agriculture; and not existence (missing) of alternative form for organization (the base for comparison). Another direction is through comparative structural (qualitative) analysis of alternative governing forms. Firstly, critical factors of transactions in particular institutional environment are identified. These factors affect transaction costs variation, and they are associated: with behavioral characteristic of agrarian agents (bounded rationality, tendency for opportunism, building of reputation, risk aversion, level of trusts); and with economic dimensions of individual transactions (frequency, uncertainty, assets specificity and appropriability). Secondly, assessment is made on effective potential of alternative organizational modes to: minimize bounded rationality of agrarian agents and uncertainty associated with transacting; to appropriate and protect private rights and investments from possible opportunism; to recover long-term investments for organizational development through high recurrence of transactions between same agents; to exploit economy of size and scale on specific for relationship with a particular partner capital etc. Third, principal matrix of generic organizational modes is build for effective governance of transactions with different combination of critical dimensions: free market mode is effective to carry out transactions with high appropriability and low assets specificity; the special contract form is appropriate for transactions with high frequency, and increased uncertainty and assets specificity; the internal integration can manage effectively repeated transactions with high capital dependency and big uncertainty; the hybrid and public modes are the most effective forms for occasional transactions with low appropriability and high assets specificity. Finally, effective horizontal and vertical boundaries of every specific form within each generic modes could be determined through comparison of their potential to explore economy of size (scale) on specific or (and) specialized assets, and their comparative efficiency to minimize bounded rationality and to control opportunism of counterparts.

Allocating Decision Rights on the Shop Floor: A Perspective from Transaction Cost Economics and Organization Theory

Abstract: This paper explores the links that the allocation of decision rights on the shop floor maintains with labor transaction attributes and several structural traits of the firm. The approach is based on the transaction cost apparatus and harnesses the theoretical and empirical background provided by organization theory. Data are presented from a wide field survey in the Spanish food and electronics industries (Standard Industry Classification (SIC) 20 and 36). Evidence not only verifies the influence of firm size, property, age, and unionism, but also shows that the allocation of decision rights is related to a particular mix of labor transaction traits. Specifically, one of the most important results is that employer opportunism offers greater explanatory power than employee opportunism.

A Capabilities Perspective on the Evolution of Firm Boundaries: A Comparative Case Example from the Portuguese Moulds Industry*

Abstract: The issue of vertical firm boundaries continues to attract interest both for economics and management research. The transaction cost economics approach, emphasizing transaction-specific assets and opportunism in order to explain discrete ‘make-or-buy’ decisions, dominates the literature. Nevertheless, alternative perspectives, developed under the guise of the capabilities, competence or knowledge-based theories of the firm, have gained attention recently. They focus on the evolutionary dynamics of boundaries in the context of the division of labour among firms in an industry and on what is to be divided and co-ordinated – i.e. productive knowledge. The conceptual links between this line of research, which some refer to as neo-Marshallian, and the Industrial Networks approach are explored in this paper. The paper emphasizes both a vision of firms as sets of direct and indirect capabilities, developed and combined in different ways over time, and the connectedness between inter-firm relationships. The discussion is illustrated with the cases of two firms, which are contrasted in terms of the dynamic evolution of their boundaries. The analysis made supports the argument that firms’ vertical boundaries reflect their relationships with specific counterparts and the way they address through time the division and integration of knowledge through the configuration of direct and indirect, counterpart specific, capabilities.

Patents and pills, power and procedure: The North-South politics of public health in the WTO

Abstract: Developing countries have limited control over the distributional and substantive dimensions of international institutions, but they retain an important stake in a rule-based international order that can reduce uncertainty and stabilize expectations. Because international institutions can provide small states with a potential mechanism to bind more powerful states to mutually recognized rules, developing countries may seek to strengthen the procedural dimensions of multilateral institutions. Clear and strong multilateral rules cannot substitute for weakness, but they can help ameliorate some of the vulnerability that is a product of developing countries’ position in the international system. This article uses the contemporary international politics of intellectual property rights (IPRs) as a lens to examine North-South conflicts over international economic governance and the possibilities of institutional reform. Lacking the power to revise the substance of the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), developing countries, allied with a network of international public health activists, subsequently designed strategies to operate within the constraining international political reality they faced. They sought to clarify the rules of international patent law, to affirm the rights established during the TRIPS negotiations, and to minimize vulnerability to opportunism by powerful states. In doing so the developing countries reinforced global governance in IPRs.

Employee relations in the non‐union hotel industry: a case of “determined opportunism”?

Abstract: This paper examines employee relations management in a non‐union sector, showing how employers in the hotel industry remain relatively free to manage in an arbitrary and determined fashion, in spite of an increasingly wide net of statutory employee rights. These management practices are effected in the way the workforce is structured, and in the differential treatment of workers in the same organisation. Notably “peripheral” unskilled workers, which are in the majority, are subjected to a more “hard” form of human resource management and are made more vulnerable from lack of eligibility to employment protection rights. Employers are not constrained from dismissing workers and fail to comply with many minimum legal requirements or observe the law in spirit. “Determined opportunism” represents an extreme instance of a “retaining control/cost‐control” style of management.

How Do German Contracts Do as Much with Fewer Words

Abstract: German business contracts are much shorter than their American counterparts. They also avoid the worst excesses of legalese that American contracts are known for. But they seem to work as well as United States contracts. We seek to understand how German business contracts could do as much with fewer words. Our explanation is predicated on an account of what contracting does. Contracting aims to create a bigger transactional pie in a world where parties' incentives are misaligned and they need to coordinate the production of information, specify future rights, duties, and procedures, and allocate risks. The task of contracting thus has both adversarial and non-adversarial components. The German system permits considerable economics in the adversarial sphere; the economics extend to the non-adversarial sphere as well. The economies take the form of a reduction in transaction costs: transaction documents in Germany are far less custom-tailored to particular parties and their transactions than they are in the United States. Yet parties are not sacrificing much in the way of "getting the deal they want." This is because much custom-tailoring in the U.S. reflects (a) a costly attempt to constrain opportunism using contract language, and (b) a failure to create and accept "good enough" solutions to non-adversarial (and some adversarial) issues parties commonly face. We argue that German contracting does better on both these fronts. It does better at constraining opportunism more cheaply, by cutting short the "arms race" in which U.S. transacting parties and their lawyers too often engage in their negotiation and drafting of contracts. It also does better at creating and using "good enough" standardized solutions to common non-adversarial (and some adversarial) issues. But the German system has its costs. Parties may indeed compromise somewhat on getting, or at least specifying, "exactly the deal they want." And, more importantly, the German system may ultimately be unsustainable: The arms race in customizing contract provisions may be impossible to constrain in the more diffuse transactional community that European integration and globalization are bringing about; with enough customization, the benefits to using and developing standardized provisions diminish greatly.

How legacy firms can introduce radical and disruptive innovations: theoretical and empirical analyses.

Abstract: The article discusses research pertaining to how legacy firms can introduce both radical and disruptive innovations. The technological opportunism of strategic business units has a positive impact ...

Managing Relational Exchanges

Abstract: The authors propose an analytic model that deals with both behavioral considerations between exchange partners and the determination of relational marketing efforts over time. On the basis of the behavioral marketing literature, they consider three main factors that drive the levels of relational commitments between two exchange partners: the trust/distrust component, the opportunism component, and the relational marketing effort of the seller. Incorporating these factors in a well-known model used in appliedmathematics for “love dynamics,” the authors claim that the issue of managing relational exchanges is an optimal control problem. Their analysis shows that the seller’s optimal policy for determining relational marketing effort over time is either time-invariant or time-variant, depending on whether or not the exchange partners are conservative and the structural and contextual environment of the relationship remains unchanged over time.

Staging of Venture Financing, Investor Opportunism, and Patent Law

Abstract: Ventures are often financed in several stages. Stage financing provides a real option valuable when facing external uncertainty. However, stage financing may also induce investor opportunism, if the property rights on an invention are not sufficiently protected. We look at the case where the incumbent investor demands a greater share on the venture's return before financing the next stage. If the entrepreneur does not agree, the investor might use the idea for his own purposes. This threat may force the entrepreneur to continue under less favorable financial terms. As a consequence, however, she might choose an effort level that is too low (underinvestment). Investor opportunism is less likely to occur, if investor's residual cash-flow-rights are contingent on verifiable 'milestones' in the previous stage. Such provisions are quite common. The impact of patent law is important. So far, it has primarily been seen as an instrument balancing the trade-off between setting incentives to innovate and limiting the monopoly power of patent holders. I argue there is an additional goal of patent law: Namely, mitigating conflicts of interest in the venture financing process, thereby making innovations more likely.

R&D Risk-Taking in Strategic Alliances: New Explanations for R&D Alliances in the Biopharmaceutical Industry (1)

Abstract: * In the biopharmaceutical industry, there are seven sequential stages of RD we find seven stages in the biopharmaceutical industry. In this industry, the earlier stages of RD such alliances pose a challenge because firms come from different cultural and institutional environments (Kostova 1999). We examine the effects of the three above factors on the level of R&D risk undertaken in alliances. We argue that these factors may affect the perceived risk of opportunism in alliances. Perceived risk of opportunism is one's assessment of the likelihood that the other party to the alliance may fall to cooperate in good faith (i.e., one partner tries to take advantage of the other partner). Previous ties reduce the perception of the risk of opportunism, because firms tend to believe in the goodwill of proven partners with whom they have a history of cooperation. Equity arrangements have a similar effect since firms tend to believe that potential opportunistic behavior will be deterred through shared ownership and close monitoring (Parkhe 1993). Finally, international alliances involve partner firms from different national backgrounds, which complicate the inter-firm relationship and hence increase the perceived risk of opportunism. We make a distinction between perceived risk and risk-taking behavior (Sitkin/Weingart 1995). …

Does trust matter for R&D cooperation? A game theoretic examination

Abstract: The game theoretical approach to R&D cooperation does not investigate the role of trust in the initiation and success of R&D cooperation: it either assumes that firms are non-opportunists or that the R&D cooperation is supported by an incentive mechanism that eliminates opportunism. In contrast, the present paper focuses on these issues by introducing incomplete information and two types of firms: opportunist and non-opportunist. Defining trust as the belief of each firm that its potential collaborator will respect the contract, it identifies the trust conditions under which firms initiate R&D alliances and contribute to their success. The higher the spillovers, the higher the level of trust required to initiate R&D cooperation for non-opportunists, while the inverse holds for opportunists.

The Political Agenda of Organizations

Abstract: Individualism and collectivism, egoism and altruism, are interwoven threads that make up the social fabric of all organizations. In consequence, political behavior is an integral part of organizational life. These two interconnected characteristics of human behavior - conformism and opportunism - account for most of the actions and interactions that take place in organizations every day. This volume examines all kinds of organizations from a political perspective, analyzing them in terms of social power and politics. It presents several theories of power and compares them as it scrutinizes the political layout of organizations. For ease of understanding, the book applies the language of political games to describe organizational politics in terms borrowed from the realm of sports, such as contesters, playgrounds, encounters, rules of the game, strategies and tactics, scores, and victories and defeats. It thoroughly analyzes the concepts of social power and social influence from various points of view. Samuel also outlines the variety of political games that are played in the realm of organizations, listing nine types of games in which individual level politics, group level politics, and organizational level politics take place. While scrutinizing the political layout of organizations, he also demonstrates how major issues dealt with through processes of decision-making turn into political agendas within organizations. And finally, he addresses the issue of managerial politics, drawing upon research that shows how managers influence their subordinates, and how executives conduct power struggles and political maneuvers to defend their lucrative positions. The Political Agenda of Organizations is an enlightening analysis of the power and influence in business organizations and will be of interest to sociologists and other social scientists as well as students of management and business administration.

Accounting for the alignment of interest and commitment in interfirm transactional relationships

Abstract: textControl in interfirm transactional relationships has, inter alia, the purpose of mitigating potential opportunistic behaviour. For an individual actor the power-base to exercise control over the (output of) the behaviour of another actor in the relationship is a contractual arrangement. From a contractual perspective control systems are designed, thus providing contractual instruments to align interests and to prevent future opportunistic behaviour from occurring. Transaction cost economics proves to be a powerful tool for designing these instruments, which from this theoretical perspective are based on 'credible commitments' and 'credible exit threats'. The paper argues that the design and potential use of these instruments are efficient in the presence of the legitimate mistrust for which they have to compensate. However, given fundamental uncertainty, these designs do not suffice in attenuating opportunism and have to be complemented by trust building. Drawing on insights from cognitive social psychology and sociology, the paper clarifies that in self-regulating processes of rational interaction guided by a principle of enlightened self-interest, trust is built via mutual relational signalling. Partners voluntarily and deliberately signal to each other that they are trustworthy. The paper argues and gives evidence that instrumental control system design embedded in an institutional environment and atmosphere is a necessary flank for a trust building process to work properly. The (interrelated) roles of accounting in a contractual realm as well as in self-regulating processes of relational signalling are examined.

Self-Policing in Politics: The Political Economy of Reputational Controls on Politicians

Abstract: List of Figures and Tables ix Acknowledgments xi Introduction 1 Chapter 1 What is Opportunism and How Do We Control It? 15 Chapter 2 How Reputations Control Cheating in Economics and Politics 38 Chapter 3 Problems in the Market for Legislators 55 Chapter 4 Hypotheses, Measurement, and Data 71 Chapter 5 Constraining Opportunism through Self-Policing 85 Chapter 6 Reputational Capital and Job Security or, If Trustworthy Legislators Are at a Premium, Are They Paid One? 103 Chapter 7 Weaknesses in Reputational Controls 124 Conclusion 139 Appendix 1 Most Important Characteristic for Legislator to Possess: Examples of Category Content 151 Appendix 2 Examples of Categories of Employment 153 Appendix 3 Codes for Identifying Faithful Agents 154 Appendix 4 Lifetime Judicial Appointments: 1965-1996 156 Appendix 5 Examples of Prestigious Post-Elective Employment Positions 157 Appendix 6 Electoral Defeat and Post-Elective Employment for Senators in the Analysis 158 Notes 159 References 169 Name Index 177 Subject Index 179