Hybrid Governance Structures Research Articles

Governanças híbridas complementares aos contratos no comércio justo citrícola internacional

A maior complexidade da competitividade global e as novas estratégias dos oligopólios industriais incentivaram estudos sobre a eficácia dos modos de coordenação empresarial dos negócios que são distintos do mercado spot, como propriedades contratuais, influências em redes, compartilhamentos de recursos, formas distintas de liderança, etc. Estes mecanismos são tratados por Menard (2004) como complementares aos contratos e são denominados de governanças híbridas. O presente trabalho tem o objetivo de mostrar a governança híbrida empregada em transações entre organizações juridicamente independentes e que optaram por coordenar uma parte das atividades realizadas em conjunto. O setor escolhido é a cadeia do comércio justo internacional de suco de laranja (tradicional e orgânico) e os principais atores envolvidos são organizações de produtores brasileiros de laranja, compradores europeus e certificadores internacionais do comércio socialmente justo. Um interesse maior é dado aos mecanismos de coordenação que são complementares aos contratos e que foram ressaltadas inicialmente por Menard (2004). Esses mecanismos de coordenação se concretizam em uma autoridade privada que é voluntariamente aceita pelas partes envolvidas. Essa autoridade, que pode ser mais ou menos formal, passa a coordenar diversos fatores ligados às transações, envolvendo um tipo misto de governança entre controles e incentivos.

The Missing Link between Corporate Performance Measurement Systems and Chief Executive Officer Incentive Plans

While offering a literature review regarding several aspects and pitfalls of performance measurement and compensation literature and practice, we discuss the separation between corporate performance measurement systems (CPMSs) and incentive plans for chief executive officer (CEOIPs). Through performance measurement and compensation, organizations align competing interests and achieve management control. CPMS orient organizational actions toward organizational goals. CEOIP orient CEOs' actions toward shareholders' value. Despite the common nature (i.e., management control mechanisms) and, thus, purpose (i.e., influence on actions) of CPMS and CEOIP, both literature and practice neglect the link connecting the two mechanisms. In search for an explanation, we develop a framework that examines the link between CPMS and CEOIP under the three forms of governance proposed by transaction cost economics—namely, markets, hierarchies, and hybrids. Whereas in markets and hierarchies the control problem can be solved with a focus on one mechanism (i.e., CEOIP and CPMS, respectively), hybrid governance structures require the integration of CPMS and CEOIP. By exploring areas of integration between CPMS and CEOIP, we generate questions for future research. We expect that the integration between CPMS and CEOIP could benefit the alignment of interests and lead to more effective management control within modern organizations.

Relationship governance and learning in partnerships

PurposeRelationship learning is a topic of considerable importance for industrial networks, yet a lack of empirical research on the impact of relationship governance structures on relationship learning remains. The purpose of this paper is to analyze the impact of relationship governance structures on learning in partnerships.Design/methodology/approachThis paper contributes to the closure of the research gap by examining sample data drawn from 42 interviews on the subject of 199 customer‐supplier relationships within the Finnish metal and electronics industries. As a method, the paper applies cluster analysis and analysis of variance mean‐comparison.FindingsThe results of this paper show that balanced hybrid governance structures explain learning in partnerships, which suggests that certain combinations of relationship governance mechanisms (price, hierarchical, and social mechanism) produce the best learning outcomes in partnerships. Results suggest that managers should use hybrid relationship governance structures when governing their supplier partnerships.Research limitations/implicationsThe paper has some limitations such as limited sample size, cross‐sectional data, and difficulties due to measuring social phenomenon such as learning. Owing to the interview method being applied, research is bound to apply a sample data drawn from companies that operate in the west coast in Finland. These limitations need to be considered when applying the results.Practical implicationsThe results encourage managers to use different governance mechanisms simultaneously when managing their company's supply chain partnerships. The result emphasizes the role of active relationship management.Originality/valueThe paper is one of the first to empirically show that relationship learning is best facilitated by using various relationship governance mechanisms simultaneously. Trust needs to be complemented by hierarchical and possibly by price mechanism.

Governing from the middle: the C40 Cities Leadership Group

PurposeThis study aims to analyze city networks as they face the challenges of global warming. It seeks to introduce the notion of “governance from the middle” as an alternative to traditional intergovernmental policy. This is developed by focusing on the particular experiences of the C40 Cities Leadership Group and discussing its prospects and risks.Design/methodology/approachCCI works with a number of commercial banks, institutional investors, international financial institutions and other capital providers to design financing programmes and source capital.FindingsThe C40 Group illustrates some fundamental traits of city networks with a hybrid governance structure, combining traditional public institutional structures with market‐based arrangements, organizationally and qualitatively governing from the middle. Critical factors in this dynamic are the use of an external implementing body, providing new organizational opportunities for the network, and the prominence given to an integrated procurement process, which develops incentive structures for action and effectively connects actors at various levels of society. The latter emphasis on market‐incentives as a template for action is an innovative governance feature but not the panacea many want. The complex nature of the governance arrangement itself, the structural asymmetries among its members, and the diversified set of issues the network intends to address are all factors that remain to be researched.Originality/valueThe study provides new perspectives on the conceptual discussions about governance by introducing the notion of “governance from the middle”. These allow us in turn to continue research about the role of market‐arrangements in linking global and local ambitions. This could have a decisive policy impact on climate governance in general.

Fiducia e contratto nelle relazioni tra imprese agro-alimentari: elementi teorici ed evidenza empirica

The paper aims at examining the hypothesis that the trust-oriented rules in the institutional environment and the specific internal antecedents of trust enlarge the range of stability of hybrid governance structures. Expanding on a previous analytical framework (Martino, 2007; Fritz et al., 2008), the study focuses on the contracting basis of hybrids and the centrality of trust to the existence of hybrids structures (Hofstede, 2006). Menard and Valceschini (2005) show that the emergence hybrids characterizes the change of Agri-Food sector. Trust is a complex concept addressed under different analytical views. Scholars seem to often interpret trust in terms of rules for social interaction. Thus, under a transaction cost perspective, the trust issue can also be conceived in terms of the relationship between the institutional environment and governance structures, emphasizing the fact that trust-oriented rules tend to modify the parameters of the basic economic calculus (Williamson, 1993). Deakin et al. (2001) have pointed out that compliance with terms of contracts is central to trust, but also that contract adherence is tempered by flexibility beyond and outside the contract. On the other hand, the institutional forces constraints and channel contractual behaviour opening options for cooperative behaviour. Our analysis recognizes that trust-oriented rules can be identified in the institutional environment and that trust could emerge as a consequence of the influences of specific factors acting within given governance structures as antecedents of trust. We namely identify as sources of trust three basic factors acting as antecedents to trust within a hybrid structure: information exchange; control; risk aversion. These antecedents are thought of as exogenous variables determining the emergence of trust, which in turn is conceived here as an endogenous variable (Fritz et al., 2008). The analytical extent of our conjecture is intended to contribute to the understanding of the variety of the organizational forms in the AgriFood System (Saccomandi, 1998). The study also includes a case study designed to provide an example of the analytical framework proposed. The paper is organized as follows. In the paragraph 2 the objective of the study is presented with a brief discussion of the method adopted. In the paragraph 3 are illustrated the conceptual premises of the study: the diffusion of the hybrid structure in the Agri-Food chains and the concept of trust. Then the roles of the institutional environment and of the trust conditional to governance structure (Fritz et al., 2008) are examined. The thesis of the study is then proposed and it is introduced a tentative classification of the outcomes of the interaction between the institutional environment and the factors of the conditional trust. In the paragraph 4 it is presented the brief case study which concern a retailer involved in a system of relationship both at national and local level, entailing long term supply contracts. In the last paragraph are presented the final remarks of the study and the limits. Potential future research could address research questions related to the influence of the institutional environment rules, while a more extensive data collection is requested in order to test the prediction proposed.

Governance and Coordination in Brazilian Beef Alliances: An Analysis Based on Transaction Cost and Relational Approaches

The research aimed at finding the link between the governance structures and the coordination in Brazilian beef alliances. The paper provides a review of the literature on the coordination of the Brazilian and International beef agribusiness system that shows the importance of adequate governance to the system’s players. The theoretical analysis is based upon the transaction cost economics in order to identify the transactions’ dimensions and on the concepts of relative scope and embeddedness to find the density of relations among agents. The analytical model makes use of the transactions cost dimensions – asset specificity, uncertainty and frequency in order to explain the choice for the alliance hybrid governance structure. The governance specificities of each alliance that arise from the leadership profile – cattle producers, breed association, pack industry, retailer – are explained by the combined analysis of members’ relative scope and embeddedness. The research methodology was based on multiple case studies with data obtained through interviews with alliances’ managers. The study found evidence that agents’ coordination is strengthened in same basis by cattle producers’ leadership in a horizontal network of dense relations, and also through retailer vertical control.

E‐business strategy in Western Europe: offshore BPO model perspective

PurposeThe purpose of this paper is first, to investigate the effective governance structure in early stage of offshore business process outsourcing (BPO), especially in the case where service provider's language is different from client's language, and second, to explore some of the conditions at the adoption of BPO that are likely to influence the shape of the governance structure.Design/methodology/approachGround theory building methodology that builds theory in a grounded and inductive fashion is used for this study. First, a genetic framework to analyze offshore BPO governance structure is derived from extant literature. Then, the framework is applied to an exploratory case analysis to explore an effective form of the governance mechanism.FindingsThe hybrid governance structure consists of inter‐organizational coordination mechanisms, inter‐organizational systems and social control. Companies that wish to offshore their business process should select the service providers that can facilitate setting up such hybrid governance structure.Originality/valueAs offshore BPO is expected to be booming in the next few years, this study helps both academics and practitioners to understand the effective governance structure of offshore BPO.

Managing outsourcing process: applying six sigma

PurposeThe decision to manage an outsourced project is easy but to provide client satisfaction is a difficult process. Outsourcing has been broadly accepted due to the extensive and useful business need they provide, even in those situations where the planning/decision support paradigm provided by the system poorly fits the business. The purpose of this paper is to propose an effective modeling methodology for managing the process of outsourced projects for the clients.Design/methodology/approachThe paper proposes a cimosa, O3ML and business outsourcing process using DMADV methodology ‐‐ an effective modeling methodology for managing the process of outsourced projects for clients.FindingsThe hybrid governance structure consists of inter‐organizational coordination mechanisms, inter‐organizational systems and social control. Companies that wish to offshore their business process should select the service providers that can facilitate setting up such hybrid governance structure.Research limitations/implicationsThe limitations of managing the outsourced paradigm (IT or business process), i.e. redesigning work and assigning responsibilities, need to be clearly recognized if they are to be dealt and delivered with in an effective manner.Practical implicationsSix sigma is a business process improvement strategy, which essentially checks that the performance of the business is according to the needs of the client. The end‐user of a product or service is a client and thus the deliverable of a project should be according to the needs of the client.Originality/valueThe paper is of value in proposing an effective modeling methodology for managing the process of outsourced projects for clients.

Productivity, Focus and Property Rights

We show the scope of the firm is determined by three parameters: the relationships between assets at the margin (whether the assets are complementary or substitutes at the margin), the marginal productivity of the agents with their asset, and the focus effect (when assets are substitutes at the margin, focusing on fewer assets increases the incentives of the agents). In the Property Right Theory of Grossman, Hart and Moore (Grossman and Hart, Journal of Political Economy, 1986, and Hart and Moore, Journal of Political Economy, 1990, hereafter GHM), ownership of an asset provides “residual rights of control.” This can improve the ex-post bargaining power of the owner and, thus, creates ex-ante incentives to invest. Therefore, ownership provides incentives. But, why should asset ownership be so central to the production activity? After all, most productive agents in an economy do not own assets and most asset owners (shareholders) do not produce. In this paper, we view property rights as the privilege to access (or use) an asset and the ability to exclude (veto) others from using it. Ownership of an asset is defined as having both of these benefits. Under GHM, ownership provides control. Integrating Rajan and Zingales’ (RZ) intuition that access provides power (Quarterly Journal of Economics, 1998), we define control over an asset as access, provided that no one else has veto. In this conception (compatible with both GHM’s and RZ’s intuitions), access gives control and veto removes control from the other agents. This allows for a more general view of the idea of control of an asset, thereby expanding the set of available contracts. Applying the framework developed by Hart and Moore (1990), we highlight the specific roles access and veto can take to mitigate inefficiencies in ex-ante investment. Complementarity or substitution between assets at the margin, marginal productivity of the agents with their asset, and the focus effect determine the optimal allocation of access and veto and, hence, the scope of the firm. Thus, we rationalize many observed governance structures. Outside ownership, joint ownership, partnerships, hybrid governance structures can all be optimal. Int Adv Econ Res (2008) 14:352 DOI 10.1007/s11294-008-9159-6

Make versus Buy Philanthropy: Managing Firm-Cause Relationships for Strategic and Social Benefit

ABSTRACT This article uses transaction cost analysis (TCA) to explore different approaches to corporate philanthropic governance, and the firm and market factors that favor one form of governance over another. Specifically, it examines the conditions under which a firm might choose to enter into an arm's length relationship with an existing charitable organization (i.e., a market governance structure), develop a partnership with an existing charitable organization (i.e., a hybrid governance structure), or form its own self-branded or firm-owned charity (i.e., a hierarchy governance structure). Research propositions and a conceptual framework concerning these conditions are developed to assist firms looking to increase the sustainability of their philanthropic initiatives.

The modes of provision of prison services in a comparative perspective

This paper aims to compare the performance of two modes of provision of prison services: public, and with the participation of private companies. There are few empirical studies concerning the alternative modes of governance in this sector, which differs from other public utilities in that there is an absence of network externalities and scale economies. In addition, an understanding of informal institutions is crucial for the performance of the service provider, either public or private. In this paper, we build a comparative analysis of two case studies of similar correctional facilities, one public and the other outsourced to a private company under the supervision of civil servants (hybrid governance structure), both located in the same region of Brazil. We found that the privately operated facility has achieved better performance indicators (in terms of number of escapes, riots, deaths, assistance to inmates etc.) than the public facility, which in part refutes the arguments of Hart, Shleifer and Vishny (1997) against private participation in prison services. We conclude that the reasons for these differences are related to lower levels of administrative controls; to the presence of civil servants within the privately operated prison, which contributes to reducing information asymmetries; to greater incentives for the private operator: to monitor employees, to bypass local judiciary constraints and to fulfill contractual obligations.

The option‐creating institution: a real options perspective on economic organization

AbstractThis paper proposes a dynamic framework of economic organization called the option‐creating institution (OCI) model. The claim is made that firm, market, and hybrid governance structures emerge from the need for flexibility in an uncertain world. Each governance structure uniquely provides strategic real options that allow capitalist‐entrepreneurs, with unique risk preferences, to better organize their economic activities. The real options perspective on economic organization is developed by drawing insights from the exchange and coordination perspectives. It is proposed that this real options perspective matches practicing decision makers' intuition and that an inductive OCI model will offer a prescriptive guide. Copyright © 2008 John Wiley & Sons, Ltd.

Contractual choice and food safety strategy: Empirical findings in the Italian poultry sector

Abstract Analysis of contract choice is related here to the contracting nature of hybrid governance structures. First, recent research results on the organization of food safety supply are summarized and some remarks about contracting are proposed, providing the theoretical premises of the study. The approach of empirical analysis is concerned with transactions between farmers and processors in Italian poultry supply chains. The contract arrangement is classified as a hybrid structure, and growers’ preferences regarding contract terms are analysed by a choice experiment. Final remarks take into account the role of contract attributes in ensuring the degree of food safety, and give a tentative organizational explanation of the degree of safety supplied. Potential lines of future research are mentioned.

Exploring the transaction dimensions of supply chain management

It is argued that firm cooperation in Supply Chain Management (SCM) can be classified as a hybrid governance structure in a new institutional sense. Using a key informant survey, exploratory data on transaction dimensions and supply chain management were gathered and analysed. The findings suggest that the implementation of such a cooperation is not a binary choice but rather a matter of varying degrees. All factors commonly associated with influencing transaction costs (asset specificity, uncertainty and frequency) are significantly higher for firms with more fully implemented supply chain management, making a more integrated solution advantageous. Additionally, the data suggest a strong influence of transaction frequency on the degree of asset specificity and uncertainty.

Exploring the Transaction Dimensions of Supply Chain Management

It is argued that firm cooperation in supply chain management can be classified as a hybrid governance structure in a new institutional sense. Using a key informant survey, exploratory data on transaction dimensions and supply chain management was gathered and analyzed. Findings suggest that the implementation of such cooperation is not a binary choice but rather a matter of varying degrees. All factors commonly associated with influencing transaction costs (asset specificity, uncertainty and frequency) are significantly higher for firms with more fully implemented supply chain management, making a more integrated solution advantageous. Additionally, the data suggests a strong influence of transaction frequency on the degree of asset specificity and uncertainty.

Cooperation Costs, Governance Choice and Alliance Evolution*

abstract While researchers in alliance management have identified the duality of cooperation and control within alliances, comparative governance scholars have not yet developed a coherent framework for relating the costs of cooperation to governance choices. This paper proposes a theory of cooperation costs highlighting the importance of joint task complexity, interpartner diversity, equity and strategic implications on the perception of alliance value and the formation and evolution of hybrid governance structures. A tolerance frontier is used to predict conditions for alliance failure both ex ante and after formation, as well as conditions under which an alliance will evolve once formed. The framework is illustrated through an analysis of the initial structuring and subsequent changes in the NedCar alliance between Mitsubishi Motors and Volvo, and implications for further research are discussed.

Organizational Learning in Teams and Networks

Do teams of high-skilled employees, globally connected to each other within the multinational company, provide potential for organization learning? Do the models of Teams and Networks serve as new concepts for business measurement? This paper links social-psychological aspects of teamwork to the hybrid governance structure business networks. The underlying assumption is that high-skilled human resources - as part of the company's total human capital stock - is the crucial value driver in large international corporate organizations. Transfer pricing, therefore, is advised to reflect non-quantitative information in its analyses. Descriptive information on a global consulting firm is employed for a case study to support the arguments. The result is a proposal on network organization as a promising business model with respect to cross-border transfer pricing and business measurement.

New marketing channels for food quality products in Norway

Marketing is an important and challenging competitive instrument for small-scale quality food producers. Traditional commercial channels may be unprofitable and small-scale food producers often lack access to a highly concentrated retail sector. In this situation a number of strategic alliances between farmers and between farmers and other public and private actors have emerged. The aim of this paper is to discuss and compare initiatives to develop alternative marketing channels for small-scale specialty food producers. The three examples of emerging channels we investigate are (i) the ‘new’ farmers markets, (ii) retail initiatives where local producers deliver their produce directly to shops, and (iii) companies founded by large cooperatives to market specialty products. Recent research has justified that such initiatives can be conceptualized as hybrid governance structures, i.e. complex structures that entail properties of both market and hierarchy. We pay particular attention to the problem of quality enforcement in emerging marketing channels.

How Does Trade Sale Privatization Work? Evidence from the Fixed-Line Telecommunications Sector in Developing Economies

This research examines the of privatization transaction strategy on enterprise performance in developing economies. Focusing on trade sale privatization, we use an event-driven data strategy and time-series regression techniques on data covering fixed-line telecommunications operators between 1980 and 1998. The results show performance benefits are realized when privatization trade sales introduce large-block foreign shareholdings and hybrid forms of governance, such as joint ventures or consortia. These hybrid governance structures capture more complex ownership during privatization restructuring, particularly when compared with the dispersed shareholdings of share issue privatization, which show no discernable effect on performance. We argue traditional financial models are too focused on large-scale market-driven mechanisms at the expense of institution-building mechanisms, and as such fail to capture important contributors to performance improvement. We advance a comparative institutional lens to better understand how firms effects matter for privatization restructuring and performance.

The New Institutional Economics of Antitrust and Regulation

Hybrid governance structures between markets and hierarchies in many industries, e.g., in energy and telecommunications, challenge antitrust and regulation policy. The paper focusses on the theoretical and methodological basis provided by the New Institutional Economics (NIE) for analyzing the economics of complex vertical and horizontal coordination problems. It sketches the specific view of NIE at industrial organization, antitrust and regulation, discusses three current issues - the European antitrust policy concerning complex vertical contracts, regulatory reform of the electricity industry and the allocation of regulatory competencies in the EU - and presents some implications of NIE for economic policy making, research and advisory activities.