Market Governance Structures Research Articles

Natural resources, (Mis)governance, and the lack of diversification in mining regions: A reconsideration of the Dutch disease at a local level

This paper aims to refine the understanding of the resource movement effect of the Dutch disease at a local level by (1) broadening the focus to include access to natural resources and (2) considering the local role of institutions as a channel for this effect. We propose an expanded theoretical approach to evolutionary economic geography on interpath dynamics, considering the role of local institutions in access to scarce assets by integrating the conceptualization of governance structures provided by transaction cost economics. This proposed framework is applied to a case study of Calama, located within the hyper-arid Atacama Desert in the Antofagasta region of northern Chile. The case demonstrates how local inequities in access to freshwater increased permanently due to the Chilean 1981 Water Code in correlation with a temporal copper price super cycle. The results reveal how the mining sector and indigenous associations concentrated access to water rights originally inscribed in irrigation canals by small farmers through a market governance structure, constraining economic diversification through negative interpath dynamics. This research denotes the importance of considering institutional bottom-up approaches to overcome resource dependency.

Governance Structure of Rural Homestead Transfer in China: Government and/or Market?

Rapid urbanization in China has triggered the mass migration of rural populations to cities. These policies have resulted in a shortage of construction land for the urban population and in an inefficient use of rural homestead, causing a tremendous waste of rural land resources. Rural homestead transfer has been identified as a tool to solve this problem: the saved construction land can be reclaimed to cultivated land, and the construction rights are transferred to urban areas, where they can be used to build new households for the demanding population. We consider that transaction costs analysis can help understand the governance structures of the homestead processes, and provide avenues for further research and policy recommendations. Our article draws on the practices and experiences gained in three areas in rural China (Jinzhai, Yiwu, and Jiangning in the Anhui, Zhejiang, and Jiangsu Provinces, China). Based on the empirical cases and information produced from the villages and households survey, we developed an analytical framework of transaction cost. Results suggest that Yiwu has lower assets specificity, lower uncertainty, and transaction frequency, hence the market driven model played a major role. In Jinzhai, which presents higher assets specificity, higher uncertainty, and transaction frequency, the government-oriented model also played a major role. In Jiangning, where most transaction attributes are situated in the middle, the mixed-oriented model acted as a main role in the local area. Our conclusion shows that various governance structures are appropriate for different areas of rural China, which is significantly related to the local transaction attributes. We suggest promoting the governance structure which corresponds to the local resource endowment, human and residential condition, the cultural atmosphere, and also the institutional (official) atmosphere. Matched with the government or/and market governance structure, it may develop the resource allocation efficiency and improve economic performance.

The Reasons for Reputation Mechanism Failure

The word 'reputation', which is closely known in the social practice, is equal to renpin, koubei and credit (non-financial category) in Chinese language. From the perspective of Information Economics, reputation mechanism can be understood as the constraints for market participants which are committed by the probability of information transmission among the potential trading partners about when and Where some one did what. However, as an important assumption of repeated games and important guarantee of self-enforce contract, it often faces the dilemma of failure in practice. Recent problems such as food safety, fashion of overseas shopping and concerns over the quality of domestic products have all exposed the fragility of the market reputation mechanism in Chinese traditional industries to some extent. Therefore, finding out the reason for reputation failure is of great significance to society. From the point of reputation mechanism conditions, this article tries to find out what leads to reputation failure in practice, so as to put forward some thoughts for the improvement of reputation mechanism and market governance structure.

Barriers, enablers and market governance: A review of the policy landscape for repair of consumer electronics in the EU and the U.S.

Abstract Many strategies have been proposed to support the transition to a Circular Economy (CE). In most cases, circular design and product life-extension practices specify repair as an essential element. In both the EU and the U.S., policymakers are attempting to increase the amount of repairs made, through the introduction of recent EU Ecodesign regulation changes and proposed US Right to Repair legislation. This review explores the current policy landscape for repair services by first outlining legal and market barriers to stakeholder participation in repair activities, and which stakeholders are affected. The review reveals a wide range of fundamental obstacles to both supply and demand of repair, including Intellectual Property, Consumer, Contract, Tax and Chemical laws, along with issues of design, consumer perceptions and markets. Subsequently, the current and proposed policy solutions to address barriers and increase repair activities are reviewed. A comparative assessment of the EU and the U.S. is followed by a discussion on the current repair market governance structure, which is found to be primarily centralized (i.e. repair services concentrated with manufacturers), with possible implications for upscaling repair. New policy proposals challenge this governance. Introducing the concept of a Repair Society Framework as a market transformation tool, we comprehensively discuss the current state of repair and provide an outlook for research and policy in this area.

The Rise and Impact of Financial Capitalism: A Sociological Analysis of New Forms of Capitalism

Compared with Karl Polanyi’s first Great Transformation, the emergence of the even more influential financial capitalism can be called the second Great Transformation. The global expansion of financial capitalism has extended its power beyond the remit of nation-states as governments, firms, families and individuals are increasingly guided and reshaped by financial markets, producing a trend toward the financialization of social life. An important social consequence is the ever more marked separation of financial markets from society, a separation that has gradually eroded the power of the state, trade unions and civil society and aggravated the employment crises, the polarization of rich and poor and the structural inequality of developed capitalist countries. In the face of society’s erosion by financial capital, the West has taken measures of social self-protection, but these have so far had little effect. To establish a new financial and market governance structure at the global level that will effectively cope with the negative impact of financial capitalism is a long and arduous task.

BEHAVIORAL ASSUMPTIONS AND ATTRIBUTES OF TRANSACTION IN THE DAIRY PRODUCTION CHAIN IN GOIÁS STATE, BRAZIL

The present study aims to analyze the behavioral assumptions of agents of the dairy chain and to identify the influences that such behaviors have on transaction costs, taking into account the relationship between the Mixed Farming Cooperative of Bela Vista de Goias (Cooperbelgo) and its members. Attributes of transactions and market governance structure present in the dairy production chain are also described, taking into consideration the study region that is the municipality of Bela Vista de Goias, Goias state, Brazil, based in the principles of the New Institutional Economics (NIE). The study was done through exploratory and descriptive research, based on the case study, using statistical data, documents, and literature review. It was mainly observed that behavioral assumptions and transaction attributes do not increase the amount of transaction costs in the dairy chain since the relations between cooperative and its members are characterized by high frequency, reliability, loyalty, and scarce presence of opportunistic behaviors and uncertainties. As a case study, results may not be simply extrapolated to other different realities. As a case study, results may not be simply extrapolated to other different realities but are useful to exemplify how the behavioral assumptions and the attributes of transactions may influence the magnitude of transaction cost in a real agri-food chain. Cooperative arrangements create trust among agents, reducing the risk for transaction cost promoting behaviors such as opportunism. Provides information about one of the most growing dairy regions in Brazil.

Financial Mismatch, Assets Specificity and Capital Structure

At present, the problem of financial mismatch poses great challenge to China’s financial market. Financial mismatch blurs the market governance structure of debt financing, thus distorting the relationship between asset specificity and capital structure. This paper investigates companies listed on the A-share of Shanghai and Shenzhen Stock Exchange from 2012 to 2017. It tests the existence of financial mismatch and the impact of financial mismatch on asset specificity and capital structure. Empirical results show that the impact of financial mismatch on the relationship between asset specificity and capital structure of sample companies exhibits no differences in ownership. Both state-owned listed companies and private companies face the same degree of financial mismatch issues, which leads to changes in the property-specific governance structure of assets, and asset specificity is positively related to capital structure.

Theorization of New Practices in Emerging Organizational Fields

Executive Summary Organizational actions are subject to multiple interpretations by the constituents of organizational field and are often prone to lose legitimacy in an uncertain environment. To ensure that organizational practices are given meaning in a deliberate way, actors resort to ‘theorization’. The institutional theory literature looks at theorization as a legitimacy seeking strategy. IT defines the goal of theorization as mobilizing support and justifying new courses of action. By linking legitimacy, theorization, and emerging field, this article explores the question of how do the organizations theorize a new practice in an emerging field. Emerging organizational field is distinguished from a mature organizational field across four dimensions: extent of interactions among organizations, defined structure of domination and pattern of coalition among organizations, information sufficiency within the organizational field, and existence of commonly shared purpose among organizations. Theorization would focus on two important questions for justifying a new practice: ‘base of legitimacy’ and ‘audience for seeking legitimacy’. The article argues that in an emerging field, organization would theorize new practices with variants of moral and pragmatic legitimacy as base and would target the constituents of normative and market governance structure as the intended audiences. The article presents four propositions linking each of the dimensions of the emerging organizational field. It suggests that organization would theorize new practices by focusing on exchange, procedural, structural, and consequential legitimacy. The article contributes to existing literature by linking the characteristics of the emerging field to focus and audience of theorization strategy. With the growing prevalence of hybrid organizations, organizations are commonly exposed to multiple and even contradictory institutional demands. Understanding the focus of theorization and the intended audience can help these organizations to be more persuasive in seeking legitimacy.

Governance structures in smallholder pig value chains in Uganda: constraints and opportunities for upgrading

This paper analyses governance structures in Uganda’s smallholder pig value chains by applying the New Institutional Economics framework. It utilises cross sectional and qualitative survey data from randomly selected pig value chain actors in 4 districts. A multinomial logit model is applied to assess the determinants of vertical integration among pig traders. The findings indicate that most relationships at the pig production node of the value chain are based on spot market governance structures supported by personal relationships and trust. Live pig traders are mostly vertically integrated. High integration levels of the pig traders are positively influenced by access to market information, value of investments in the value chain, and dedicated asset specificity in terms of backyard slaughter premises. Upgrading opportunities in the value chain in the form of value addition strategies, policy implementation and promotion of business models that link producer organisations to quality inputs and service suppliers through contractual arrangements are identified.

Investment Treaty Arbitration and Market Governance: A Principled Approach to Assessing Regulatory Action

The world is characterised by intertwined global value chains and regional clusters of economic activity. ‘Globalisation’ as a concept must be unpacked to show how economic activity is in fact carried out, so as to understand how market governance structures must be designed. Economic regulation of markets in a global context should proceed in a principled fashion according to general principles of law. Both economic theory (institutional economics and welfare economics) and legal doctrine (global administrative law and constitutionalism) support the need for rules that govern markets and guide appropriate regulatory responses. The object of that regulation should be the promotion of economic welfare, not simply the protection of property, as if it were an absolute right. The ‘right to regulate’ markets is recognised by the principled approach but views it from the broader perspective of the governance of social institutions, which requires a realistic assessment of both market and government failure. The public law values of transparency and accountability, through the use of public reason, are built into the three foundational principles of subsidiarity, proportionality and rationality. These principles help us design well-suited regulatory systems through their articulation in the Principles of Best Practice Regulation. This paper bring a fresh perspective to the question of when state regulatory action amounts to the (indirect) expropriation of property of an investor.

Leadership capacity in two Brazilian regional tourism organisations

Purpose – This paper examines the leadership practices of two Brazilian regional tourism organisations (RTOs) using an exploratory case study. Design/methodology/approach – The research adopts an embedded case study approach, permitting the comparison of the leadership phenomenon in the “Instituto Estrada Real” (the IER) and the “Associação Circuito do Ouro” (the ACO). Semi-structured interviews (n=14) were undertaken to gather information from the RTOs' executives and actors/followers influenced directly by RTO leadership in order to obtain their perceptions about leadership practice. Findings – Four leadership themes emerged: capacity to produce results, capacity to mobilise followers, articulation and communication of goals and actions, and articulation of roles and responsibilities. The findings are discussed in regards to the hierarchical and market governance structures of the two RTOs and the implications for leadership practice. The interviewees identified that transactional forms of leadership dominated the hierarchical governance structure of the ACO and that it was able to mobilise effectively other levels of government. However, this leadership does not deliver results at the speed required by the private sector. The IER is a market-led governance structure and its leadership practices effectively mobilised the private sector. However, it was found to operate in isolation from government and other key tourism stakeholders. Originality/value – This paper draws together the regional tourism management and leadership literature, making both theoretical and applied contributions to regional tourism leadership.

Dynamic capabilities exploitation of market and hierarchy governance structures: An empirical comparison of Taiwan and South Korea

This empirical investigation reports on the role of drivers of dynamic learning mechanisms (DLMs) in exploiting dynamic capabilities (DCs) of market and hierarchy governance structures. Using a sample of 367 Taiwanese market and 210 South Korean hierarchy organizations, this study differentiates the role of drivers of DLMs in these organizations to provide more robust insights into DCs exploitation in polar governance structures. This study posits that learning intent and embedded learning are important primary antecedent drivers of DCs exploitation. The findings reveal that manager integration power, external linkages, codification of experience, and ambiguity are key drivers of DCs exploitation in market governance structures. External linkages, repeated practice, codification of experience, and ambiguity are key drivers of DCs exploitation in hierarchy governance structures. These results show that DCs exist in specialized learning routines and that DCs exploitation is based on organizational DLMs. This study highlights an influential innovation routine view of DCs exploitation and proposes a clear theoretical model of DCs exploitation via the exploitation of various drivers of DLMs.

Financial crises: a culture of complacency

The aim of this paper is to consider the role of complacency in financial crises over the last two decades, with a closer look at the ongoing Subprime Mortgage Financial Crisis. The theme of complacency and the concept of financial crisis are both explored. Financial crises are better understood by explaining their economic drivers and the fundamental role of complacency in the various transmission mechanisms involved. These drivers are then illustrated by means of recent selected financial crises including the Crash of 1987, the East Asian Financial Crisis of 1997, the Long Term Capital Management Crisis of 1998, the Dot.Com Crash of 2000, and the current Subprime Mortgage Financial Crisis. The paper concludes that complacency not only underlies but plays a pivotal role in recent financial crises. Complacency increases during periods of economic stability, leading to some departure from rational investment decisions, an effect which is then compounded by herding behaviour. Further, with regard to the governance of markets, complacency is both institutional and institutionalised. Finally, adding to this culture of complacency is the irrational belief that crises are unique and therefore cannot be spotted in advance or even in their early stages. To address this culture of complacency, remedies lie in the re-education of key players and the provision of better financial information, a rethink of market governance structures, and some recognition that the transmission mechanisms are both recurring and predictable.

Global imbalances and a trade‐finance‐nexus

PurposeThis paper inquires into the root causes of global imbalances from an international trade perspective. The purpose of the paper is to establish a conceptual framework that links financial market governance, international trade and financial market integration, and to derive implications for the global financial crisis.Design/methodology/approachIn order to analyze global imbalances, the paper draws on a theoretical Heckscher‐Ohlin‐Samuelson international trade model, in which it compares two open economies, solely differing in their financial market governance structures. Building on these findings, the paper extends the analysis to the role of financial market frictions in propagating global imbalances into excessive lending in high‐income economies.FindingsTo that extent, it argues that global imbalances are due to impasses in international production. This paper argues that countries seeking to suppress real appreciation have engaged in financial repression, which has, via financial globalization, translated into excessive expansion of financial service sectors in flexible market economies.Research limitations/implicationsIn order to derive a tractable framework, the abstract from inter‐temporal aspects and from an in‐depth analysis of financial modelling issues. Owing to the static nature of the set‐up, the analytic link between global imbalances and the global financial crisis is intuitive.Practical implicationsGiven that differences in national financial market governance influence the direction of international capital and trade flows, it argues for more international policy coordination in preventing future crisis.Originality/valueThe unique feature of the contribution is that it links financial market governance and international trade to international financial market integration in a tractable theoretical framework.

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.

Land Readjustment: An Innovative Urban Experiment in China

Conventionally, urban renewal initiated by the private sector is not that different from other trading activities. A developer purchases property rights from the suppliers, who are the property owners of the renewal site, in the open market for a price. Once the deal is done, the suppliers are out of the picture and the developer moves on to the renewal project and starts replacing the existing structure with new buildings for a better use. The developer would prefer not to have the individual owners involved in the renewal process for various reasons such as management problems and profit sharing. From an institutional economic perspective, this is a classic example of market governance structure as the asset is non-specific to a certain extent and the developer is not integrating the supplier (property owners) into the firm. However, on some rare occasions, the developer may adopt a bilateral firm governance structure by incorporating the individual property owners. This, in the context of rural land renewal, has been known as the land readjustment model. Based on the theoretical framework of institutional economics and transaction cost theory, this paper explores the rationale behind the developer and even the public authority choosing to adopt this model in the process of urban renewal by examining two examples in two very different cities in China.

Time to get in: The contrasting stories about government interventions in information technology standards (the case of CDMA and IMT-2000 in Korea)

By analyzing the contrasting stories between the CDMA case and the IMT-2000 case in Korea, this paper examines the conditions for government intervention in information technology standardization . In these two cases, although the government had tried to induce information technology innovation by using de jure standardization, different results occurred. In the CDMA case, the government led the overall innovation process by getting compliance from private companies, whereas in the IMT-2000 case, the government faced resistance from private companies and, thus, did not achieve the intended results for information technology innovation. Why did similar standardization policies applied to similar cases bring about different results? From empirical evidence, we conclude that the success of government intervention in de jure standard-setting in information technologies is contingent on the following conditions: (1) technological conditions, related to technology knowledge and technology cycle; (2) market conditions, concerned with market governance structure and market prospects for technology; and (3) conditions for government capability, which provide technology knowledge and guarantee the technology market. All those conditions are the variables in determining a government-friendly environment and securing more compliance from private enterprises in information technology innovation through de jure standard-setting.

The Laws of the Markets

1. On the Role of Accounting in the Structuring of Economic Behaviours: Peter Miller (The London School of Economics and Political Science). 2. Title not yet available: Michel Callon: (Ecole Nationale Superieure des Mines, Paris). 3. Does the State make the Market or the Market, the State? The Cosmologies of Railroad Kings in the United States and France: Frank Dobbin (Princeton University, USA). 4. The Proliferation of Social Currencies: V. Zelizer (Princeton University, USA). 5. Markets as Institutions: An Ethnographic Approach: Mitchel Abolafia (State University of New York). 6. The Contribution of Social Sciences to the Construction of Markets: The Case of Marketing: Frank Cochoy (Uiversiti de Toulouse). 7. Karl Polanyi Revisited: On the Great Transformation: Bruno Latour (Ecole des mines de Paris). 8. On the Constructions of Boundaries between the State and the Market: John Law (Keele University, UK). 9. The Politics of Industrial Policy and the Non--Market Governance Structure: The Case of Japan: Bai Gao (Duke University, USA). 10. How Economists Contribute to the Construction of Markets: The Case of the Cement Industry: Hervi Dumez and A. Jeunemaitre (Ecole Polytechnique, Paris). 11. Shifting Boundaries and Social Construction in the Early Electricity Industry 1876--1910: Mark Granovetter (Stanford University, USA). 12. Recombinant Property in Eastern European Capitalism: David Stark (Cornell University, USA). Index

Regulating Power: The Economics of Electricity in the Information Age

1. Introduction. 2. The Actors in the Market Governance Structure. 3. The Regulatory Process: Principals, Agents, and Information Flows. 4. The Dynamics of Inter-Utility Cooperation. 5. Model-Limited Choice and the Determination of the Need for Generation Capacity. 6. Non-Utility Generators and Markets for Power 7. Breaking the Paradigm of Unfettered Growth: the Development of the Conservation Option. 8. The Changing Paradigm of Planning. 9. Toward a Positive Theory of Regulation. 10. Conclusions.