Choice Of Governance Structure Research Articles

Choosing innovation alliance governance structure: The roles of performance feedback and top management team characteristics

Abstract While the importance of innovation alliance for high-technological firms is well-documented, existing literature provides little guidance on the role of performance feedback in an alliance governance structure choice. Drawing on performance feedback theory, this study sheds light on the association between performance deviating (either above or below) from firms’ social aspirations and the governance structure choice of innovation alliances. Using an unbalanced panel of Chinese biopharmaceutical firms spanning from 2007 to 2020, we find that firms experiencing negative performance feedback prefer a non-equity innovation alliance structure, whereas those with positive performance feedback are more likely to adopt an equity one. The strength of these relationships is contingent on top management team average tenure and educational-level diversity. Our findings both provide theoretical and practical insights into guiding how firms under different states of performance feedback select alliance governance structures.

Factors affecting the choice of governance structure along the vegetable value chain in Bangladesh

Analyzing governance structure is considered important when designing development interventions in the value chain. The objective of this paper was to explore the governance structure (GS) in cauliflower and tomato value chain, specifically the types of GS followed by the farmers and factors behind these choices. The two-stage random sampling procedure was used to collect data from 100 farmers whereas 60 traders were surveyed purposively for this study. Multinomial logit model was used to analyze the factors affecting farmer’s choice of GS. Trader’s perceptions regarding internal and external governance as well as good governance indicators were assessed by utilizing non-parametric test. Cauliflower and tomato farmers were involved in practicing spot market, relational, farmer’s association and outgrowing scheme-based GS. The results showed that the probability to choose relational, outgrowing scheme and farmer’s association-based GS were significantly affected by education of farmers, distance to the nearest market, access to extension services, access to price information, trust commitment, transaction specific investment, preferences of diversification, farm size, transactional uncertainty, and access to producer’s cooperative. Wilcoxon-Mann-Whitney-U test established trader’s dissimilation towards governance indicators. The study suggests that smallholder farmers need to be well organized and coordination mechanisms among all stakeholders should be increased.

Напрями підвищення ефективності управління територіальною громадою

Розглянуто особливості управління територіальною громадою в сучасних умовах. Показано необхідність підвищення якості управління як передумови надання якісних послуг населенню територіальних громад. Запропоновано врахування певних принципів у процесі формування організаційної структури управління. Проведено аналіз видатків на утримання апарату управління в різних територіальних громадах. За результатами аналізу запропоновано підходи до підвищення ефективності управління на місцевому рівні.

Impact of corporate governance on capital structure: mediating role of cost of capital

PurposeThis paper contributes to the existing literature by extending the empirical work on the relationship between corporate governance and capital structure by analyzing the mediating role of cost of capital in the non-financial firms listed on the Pakistan Stock Exchange (PSX).Design/methodology/approachThe sample for this study includes non-financial firms listed on the Pakistan Stock Exchange (formerly Karachi Stock Exchange) for the period of 2004–2016. Based on 1800 firm-year observations, three approaches of panel data analysis are applied for the step-wise analysis of the underlying study. Firstly, Pooled OLS is applied. Secondly, fixed and random effect panel regression followed by the Hausman test to check the unobservable individual heterogeneity of the data. Hausman test indicates that the fixed-effects model is the most appropriate model for the sample panel data.FindingsThe study's findings are that board size, board composition, CEO/Chair duality, institutional ownership and managerial ownership have statistically significant direct effect on the firm's financing decisions. However, CEO/Chair duality, institutional ownership and managerial ownership have significant indirect effect on firm's capital structure decisions. The interesting finding of the paper is on the evidence of mediating role of cost of capital in the nexus of corporate governance and capital structure. Moreover, some conventional determinants of capital structure, including the firm's size, asset structure of the firm, profitability, business risk and growth, are found as determinants of capital structure decisions of the firms.Research limitations/implicationsThere are a few limitations to our study which could be addressed by upcoming research. We did not include all the four mechanisms of corporate governance including board structure, audit structure, compensation structure and ownership structure. However, we used only five important attributes including board size, board composition and CEO/Chair duality form board structure, managerial ownership and institutional ownership form ownership structure of corporate governance as our explanatory variables to examine their impact on the capital structure choices of the firms. Future studies may fill this research gap by involving some other attributes of corporate governance and analyzing their effectiveness and impact on value relevant capital structure decisions. Further, due to limited time and resources, we only tested the mediating role of cost of capital, hence, future researchers can analyze the mediating and moderating roles of different variables which may influence the relationship between corporate governance and capital structure choices of the firms.Practical implicationsThe study has many valuable guidelines and practical implications for the financial managers of the corporations. Our results will facilitate the policymakers in setting their corporate governance policies and practices and making the value relevant capital structure decisions in compliance with the implications of corporate governance mechanism. In addition, our study provides the empirical evidence in accordance with the argument that good governance practices, particularly the voluntary disclosures by the firm may reduce the information asymmetry which, ultimately, reduces the agency cost and the cost of capital for the firm. However, while deciding the financial policy of the corporations, managers can use our findings in order to assess the effectiveness of corporate governance practices employed by the firm in achieving the optimal capital structure at which the weighted average cost of capital is at its minimum level.Originality/valueThis paper contributes to the literature by investigating the mediating role of the cost of capital in the relationship between corporate governance and capital structure decisions of the firms. This paper provides empirical evidence that corporate governance indirectly affects capital structure decisions through the mediating role of cost of capital.

Governance structures for public infrastructure projects: Public–private management regimes, contractual forms and innovation

The choice of appropriate governance structures for public infrastructure projects is a major challenge for governments. The extant literature provides ample theoretical support to analyse various public–private management regimes for public infrastructure service delivery, but there is little discussion on the innovation incentives of specific contractual forms and their welfare implications under different management regimes. Our research aims at providing answers to the following research questions: who should manage different tasks in public infrastructure delivery – public, private or public–private partnership (PPP)?; how should these tasks be managed to foster innovation and enhance welfare?. We explore these using a multi-period analytical model that analyses innovation incentives induced by six contractual forms under five management regimes. We derive conditions under which specific governance structures maximise welfare. Our analysis reveals that PPPs induce optimal innovation and maximise welfare if governed through revenue-sharing concessions for user-payment type services and fixed-price annuity type contracts for no-user-payment type services. The risk share of the private partner and the shadow cost of public funds strengthen the case for PPPs while transaction costs weaken it. These results generate novel insights for policymakers to design effective governance structures and set new research directions in public infrastructure governance.

The Impact of Global Dynamic Capabilities on Governance Structure Choice of Partnership: The Moderating Effect of Ambidexterity

Research on multinational inter-organizational relationships has demonstrated that the capabilities of small and medium sized enterprises (SMEs) can be developed via partnerships, but at present, we lack studies that relate the development of such capabilities to the management of business governance structure. This study provides a new perspective on internationalized SME marketing strategies in the global context. Using a dynamic capability view of firms, the study develops hierarchical regression models linking global dynamic capabilities and governance structure. This study empirically verifies the research framework from 206 internationalized SME Taiwanese firms. The results confirm previous studies that indicate positive correlations between market orientation, learning orientation, and global dynamic capabilities. The results also indicate that the development of global dynamic capabilities impacts the choice of governance structure in firms. Our study suggests that internationalized SMEs strategically manage their autonomy and strategic options by choosing combinations of different relationship types while they decide to develop global marketing capabilities and global design capability, or both. The study also found that market orientation and learning orientation act as enabling mechanisms for building global dynamic capabilities.

Governance Choice in Dyadic Relationships and Performance - A Transaction-Cost Theory Meta-Analysis

The choice of optimal governance structure to control an exchange relationship is most critical for the success of organisations. Yet, scholars debate what constitutes optimal governance, and specifically how the core governance constructs of transaction-cost theory (TCT) – market, hierarchy and hybrid – relate to a broader notion of governance that includes various mechanisms like contractual or procedural coordination. Following calls for a more fine-grained analysis of governance structure, we test the predictions of TCT with a novel model that consists of governance modes and governance mechanisms as distinct, yet complementary control instruments to jointly structure transactions in dyadic exchange relationships. To illustrate the distinct performance-effects of governance choice, we meta-analytically synthesise 198 samples from different streams of management literature containing 54,734 dyadic inter- and intra-organisational organisational relationships between 1960 and 2014. Our evidence shows that governance mechanisms are generally positively related to performance, yet substantially influenced by moderating-effects – both by specific transaction-cost conditions and the governance mode the transaction is embedded in. As predicted, we find that governance mechanisms work especially well for market-based governance, compared to hierarchies or hybrids. Specifically, our results show that for transactions that occur under conditions of governance “voids” – i.e. when relationships are governed by insufficiently integrated modes according to predictions of TCT – governance mechanisms work particularly well to control the exchange. With our findings we contribute to transaction-cost theory and the broader literature on organisational controls and governance decisions.

Drivers of participation in collective arrangements in the agri‐food supply chain. Evidence from Italy using a transaction costs economics perspective

AbstractThe analysis of institutions in the agro‐food sector is gaining momentum since it represents a complex and relevant area of study as concerns intermediate‐product markets. Traditionally there has been a problem of organization among farmers mainly due to the reluctance to pool decisional and property rights on input and/or output. Following the Transaction Costs Economics framework, the paper aims to investigate which are the main drivers of the collective forms of organization in the Italian agro‐food system, paying particular attention to transaction costs’ attributes and to the increasing role played by the institutional environment as well. The choice to join a cooperative or producer organization is therefore conceptualized as a governance structure choice. In this regard, based on the Italian version of the Farm Accountancy Data Network, econometric models are estimated in order to account for the two organizational alternatives under investigation.

Public–private partnerships as a governance response to sustainable urbanization: Lessons from China

This paper proposes public–private partnerships (PPPs) as a governance response to achieve sustainable urbanization. We first articulate an analytical framework on sustainable PPPs from three perspectives—resources, institutional roles, and institutional rules-in-use—and then apply it to examining China's PPP experience and identifying the ways to steer China's PPP development toward sustainability. Our analyses show that an off-balance-sheet treatment is critical for PPPs to function as a sustainable financing approach; the choice of PPP governance structure- is a tradeoff between safeguarding public values and improving efficiency; and PPP policy design should shift from a finance-oriented or an efficiency-oriented to a sustainability-oriented approach. An examination of China's PPP developmental trajectory yields some significant policy implications for achieving sustainable urbanization through PPPs: achieving off-balance-treatment, differentiating private-finance initiatives and concessions, supporting underdeveloped areas, actively involving private enterprises, using joint ventures extensively, facilitating public participation, and adopting value-for-people tests. As China has become the world's biggest laboratory for PPP development, the upgrade of China's PPP policies can have significantly impacts on sustainable urbanization.

Transaction Costs in the Automotive Sector: Transactional Attributes, Behavioral Assumptions and Theoretical Limitations

Objetivo: O objetivo no presente artigo foi compreender como a escolha das estruturas de governança pelas montadoras para obtenção das suas autopeças é influenciada pelos custos de transação. Método: Para atender o objetivo proposto, foi realizada uma pesquisa de natureza qualitativa, do tipo descritiva e com recorte transversal nos anos de 2016 e 2017. Os dados primários foram coletados a partir de entrevistas semiestruturadas com agentes de três montadoras automotivas e da Federação das Indústrias do Estado do Paraná (FIEP). Originalidade/Relevância: Pela Economia dos Custos de Transação (ECT), diante da presença de autopeças de elevada especificidade no setor automotivo, a integração vertical seria a estrutura mais eficiente. No entanto, questiona-se se essa é a realidade no referido setor, dado que movimentos de integração e desintegração são identificados na literatura. Analisa-se, assim, a força do atributo de transação como fator determinante para a escolha da estrutura de governança. Resultados: Para os casos estudados, não foram encontrados indícios robustos que justifiquem a escolha pela integração vertical ou pela contratação, considerando os pressupostos da ECT (base teórica do estudo), uma vez que em ambas estruturas são observadas autopeças de elevada especificidade. Contribuições teóricas/metodológicas: Conclui-se que o elevado nível de especificidade, por si só, não justifica a escolha pela integração vertical ou pela contratação nas montadoras investigadas, sendo necessárias abordagens teóricas complementares para compreender as decisões sobre as fronteiras da firma. Contribuições sociais / para a gestão: A opção pela complementaridade teórica para compreensão dos fenômenos, notadamente associados às decisões de integrar ou não atividades, pode auxiliar os gestores em suas decisões operacionais e estratégicas.

Asset specificity, intensity of coordination, and the choice of hybrid governance structures

Purpose The purpose of this paper is to discuss the relationship between the existence of asset specificity and the architecture of the hybrid governance structures adopted by horticultural smallholders from the Brazilian region of Serra Fluminense. Design/methodology/approach This paper uses a negative binomial regression model to analyze 567 transactions carried out by horticultural smallholders from the Brazilian region of Serra Fluminense. Starting from the insights of Oliver Williamson’s transaction cost economics, an indicator is constructed with the goal to capture the degree of intensity of coordination from the adoption of diverse bundles of coordination mechanisms in a governance structure. Findings The results show that higher levels of human and physical asset specificity affect the intensity of coordination of the transactions in the sample, leading to the adoption of hybrid forms with more complex bundles of coordination mechanisms. Research limitations/implications This paper adds to a growing literature that studies the architecture of complex governance structures. However, its empirical conclusions are exploratory. Originality/value The contribution of this paper is twofold. First, quantitative empirical studies that analyze the diversity of hybrid forms in the same industry are relatively rare. This contribution also presents a theoretical discussion that might inform scholars dealing with similar research challenges.

Transaction Costs and Efficiency in Design-Build Contracting: Empirical Evidence from the Transportation Infrastructure Sector in Oregon

Design-build (DB) contracting as a type of public–private partnerships (PPPs) has been widely used as an alternative to the traditional contracting-out and the in-house provisions for the delivery of infrastructure in the United States. The research question this article seeks to answer is whether the efficiency motive helps explain the use of DB contracting compared to traditional contracting-out, the design-bid-build (DBB), in public infrastructure delivery. By using the transaction cost economics approach, I assessed whether DB contracting is selected to minimize transaction costs in certain infrastructure transactions that would later lead to more efficient results for those infrastructure transactions. By employing a two-stage empirical strategy (the nonparametric data envelopment analysis and the instrumental variable two-stage least squares regression approach), I examined 59 bridge and combination bridge-roadway projects in Oregon that were completed during 2005–2015 using both DB and DBB contracting. I found that when the transaction is complex, the assets in the transaction are specific, and the size of the transaction is large, the use of DB contracting significantly increases the efficiency score by 46 percentage points. The findings suggest that the transaction costs economizing motive underlies the choice of governance structure in public service deliveries.

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

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.

Geographical Diversity of Alliance Portfolio and Firm Innovation: The Roles of Resource Characteristics and Governance Structures

This paper explores how geographical diversity of an alliance portfolio benefits resource-based firm innovation. We propose that there are inverted U-shaped relationships between geographical diversity of an alliance portfolio and a firm’s radical and incremental innovation. In addition, resource characteristics and alliance governance structures are considered as important moderators between geographically diverse alliances and innovation. Relevant resources of alliance partners help focal firms to acquire valuable resources from different locations, thus improving organizational capabilities and achieving innovation. Governance structure choices concentrate on opportunism and transaction cost in coordinating resource sharing and recombination activities, which determine focal firms’ cost of knowledge management and then innovation outcome. Our research could advance the literature on alliance portfolio diversity by studying how firms use their alliance portfolio from diverse locations to recombine resources and then to enhance innovation, which remains less explored.

Hierarchy versus Flat: The Effect of Governance Structures on Conflict in Development Cooperatives

Development organizations attempting to alleviate poverty increasingly utilize market-based approaches. These efforts consist of identifying unmet market opportunities and organizing local individuals into cooperatively owned enterprises to collectively exploit these opportunities. However, such cooperatives often struggle with high levels of intra-group conflict that hinder their functioning and long-term sustainability. Existing theory suggests that the choice of governance structure can play an important role in mitigating conflict, but a longstanding debate exists as to whether flat versus hierarchical governance structures are more efficacious. To add further understanding to this debate, we conducted a field experiment involving 40 newly formed development cooperatives within rural Ghana that were randomly assigned to either a flat or hierarchical structure. The quantitative results of our field experiment and subsequent qualitative data suggests that flat structures lead to higher levels of collective psychological ownership, which in turn resulted in lower levels of conflict as compared to hierarchical structures. However, our results also suggest that the extent to which flat governance structures are more effective depends on the salience of informal governance structures.

22 Years of Governance Structures and Performance: What Has Been Achieved in Agrifood Chains and Beyond? A Review

Although the existing literature has shown that the choice of governance structure plays a key role in inter-organizational performance, the nature of construct measurability still remains equivocal. The diversity of terminologies used means that the full potential of most studies may be lost in the confusion of indistinctive and misapplied terms. To better understand the relationship between governance structures and performance, a descriptive systematic review was conducted on the extant literature; essentially, to provide a comprehensive point of reference for researchers interested in this research area and to identify future research gaps. A simple analytical framework—Search, Appraisal, and Synthesis—was used to extract data. A total of 110 peer-reviewed journal articles were identified and analyzed. The results indicated that different governance structures are positively related to performance except for the spot market. The findings provide strong evidence that under certain circumstances, the contractual governance structure is negatively related to performance. Whereas in other circumstances, there is a positive interaction. Furthermore, the results revealed that numerous proxy indicators have been used to measure governance structures and performance. Overall, this study provides new insights on the relationship between governance structures and performance in the agrifood sector and beyond. The contribution of the study, implications, and suggestions for future research outlook are discussed in relation to governance structures and performance.

Teoria dos custos de mensuração no setor automotivo

Esta pesquisa objetivou compreender como a escolha pelas estruturas de governança é realizada, considerando aspectos de mensuração, de direitos de propriedade e de disponibilidade de informações nas relações de montadoras e seus fornecedores diretos de autopeças. Para tanto, traçou-se uma pesquisa teórico-empírica, qualitativa e descritiva. Foram realizadas entrevistas semiestruturadas com os gerentes de logística, de compras e de qualidade das montadoras, localizadas no estado do Paraná, bem como com os gerentes de logística de empresas fornecedoras diretas e coordenadores da indústria automotiva da Federação das Indústrias no Estado do Paraná (FIEP). Dentre os resultados, constatou-se que a integração vertical se dá na presença de ativos específicos (design, estamparia, motor e câmbio) que apresentam elevada dificuldade de mensuração por envolverem a identidade das montadoras. Observou-se também que as demais autopeças, mesmo com elevada especificidade, são transacionadas pela contratação, desde que não apresentem dificuldades de mensuração. Conclui-se então que o nível de especificidade não é suficiente para explicar as decisões pelas estruturas de governança no setor, indicando a necessidade de considerar aspectos de mensuração para obter adequada compreensão de suas fronteiras.

Governance structure choice in the supply chain of broiler chickens: an empirical study in Central Java, Indonesia

This study aims to clarify the dominant factors (which can be defined as antecedent factors) influencing the structure choice in the supply chain governance of traders and middlemen of broiler chickens. This study has utilised closed-ended questionnaires with a five-point Likert scale distributed to several traders and middlemen of broiler chickens in the traditional town market in Semarang City of Central Java Province. One hundred and twenty-five copies of the questionnaire were administered to the traders of broiler chickens in these marketplaces: North Johar, Central Johar, South Johar, Bulu, Karangayu, Peterongan, and Jatingaleh. Additional information was collected through follow-up telephone interviews and archive records. Data acquired from the questionnaire were processed using structural equation modelling (SEM). The findings indicate that the transaction cost economy and the collaborative advantage have a significant positive effect on the level of integration; in this case, the effect of the transaction cost economics is stronger than that of collaboration advantages. The findings also suggest that the transaction cost economics significantly depends on uncertain conditions between traders and the middlemen; whereas, the collaborative advantage significantly depends on uncertain conditions and collaboration capability.

Governance structure choice in the supply chain of broiler chickens: an empirical study in Central Java, Indonesia

This study aims to clarify the dominant factors (which can be defined as antecedent factors) influencing the structure choice in the supply chain governance of traders and middlemen of broiler chickens. This study has utilised closed-ended questionnaires with a five-point Likert scale distributed to several traders and middlemen of broiler chickens in the traditional town market in Semarang City of Central Java Province. One hundred and twenty-five copies of the questionnaire were administered to the traders of broiler chickens in these marketplaces: North Johar, Central Johar, South Johar, Bulu, Karangayu, Peterongan, and Jatingaleh. Additional information was collected through follow-up telephone interviews and archive records. Data acquired from the questionnaire were processed using structural equation modelling (SEM). The findings indicate that the transaction cost economy and the collaborative advantage have a significant positive effect on the level of integration; in this case, the effect of the transaction cost economics is stronger than that of collaboration advantages. The findings also suggest that the transaction cost economics significantly depends on uncertain conditions between traders and the middlemen; whereas, the collaborative advantage significantly depends on uncertain conditions and collaboration capability.

Firm age, corporate governance, and capital structure choices

Do the effects of corporate governance on corporate capital structure choices change as a public firm ages? First, we address the direct effects of firm age and governance features on both its decisions to use debt and how much debt to employ. Our analysis reveals a number of novel results. While firm age is positively correlated with the use of debt, it is negatively correlated with how much debt a firm uses. We also find that the effects of firm age on how much debt a firm uses is primarily due to the interaction between firm age and its governance features. The more power that insiders possess, the less debt that the firm uses as it ages. We interpret our evidence as implying that over time, managers allow their risk preferences to dominate their firm capital structure decisions when they are protected from discipline.