Transaction Costs Research Articles

Is more digital always better? A nonlinear perspective on corporate digital transformation and OFDI

This study investigates the nonlinear impact of corporate digital transformation on outward foreign direct investment (OFDI) in the context of Chinese A-share listed companies from 2013 to 2023. Employing a nonlinear model, this study reveals an N-shaped curve relationship between digital transformation and OFDI, wherein digital transformation initially promotes, then inhibits, and finally again promotes OFDI as it advances. The findings reveal that this effect is more pronounced for non-state-owned enterprises and companies located in China's eastern region. Moreover, reduced transaction costs are a significant mechanism through which digital transformation influences OFDI. The results underscore the necessity of developing differentiated strategies to enhance digital transformation across regions and ownership types, emphasizing its role in facilitating China's global investment initiatives and contributing to the high-quality development of the Belt and Road Initiative.

Economic Substantiation of Innovative Solutions for Direct Cooperation between Manufacturers and Restaurants

The traditional supply chain management between manufacturers and restaurants is not effective enough, considering its high costs, long turnaround times and reliance on third parties, which creates challenges to profitability and agility. This study aims to find out how this system helps optimise costs and supply chain management within the restaurant industry. Data was obtained through manager interviews for some middling and high-end restaurants presenting some operational issues confronted before and after the system was installed. A sample of 50 restaurants was selected using a stratified sampling technique, targeting various restaurant categories. A structured questionnaire was designed to interview restaurant managers on operational efficiency, cost reduction, and supply chain performance. The logistics costs, transaction costs and overall efficiency improvements, among other quantitative metrics, were monitored for the first and second intervals. To achieve this, the analysis used a difference-in-difference methodology, where restaurants before and after the implementation of the system were compared concerning specific performance indicators.Data was processed using SPSS Statistics 27, ensuring accuracy and reliability in the analysis. The findings show that wastage management cost efficiency has improved to 15%, while significant decreases have also been observed regarding transaction time and logistics costs. This also resulted in a substantial decline in time-to-order delivery which positively influences operational speed. Based on these findings, it is suggested that direct trade models would benefit the restaurant business in terms of cost savings and enhanced performance. The policy recommendations include promoting digital supply chain platforms using tax credits, assisting SMEs with government-sponsored projects, and facilitating direct interaction between producers and consumers.

Parametric Analysis of Mobile Money Adoption and Women Financial Inclusion in Kogi State - Nigeria

An ever-increasing body of research and empirical evidence has demonstrated the positive impact of mobile money on individuals, households and businesses, especially in Sub-Saharan Africa, where there were almost 400 million registered accounts at the end of 2018. Mobile money reduces transaction costs for users and helps households to better manage their cash flows; it allows firms to invest and build capital over time, fostering the creation and expansion of business; and it facilitates faster and more efficient government transfers. These benefits have enabled many mobile money users to realise significant quality of life improvements. However, the impact of mobile money on women financial inclusion has not been fully analysed or investigated. To address this evidence gap, this study assesses the impact of mobile money across twenty-on (21) local governments areas of Kogi state - Nigeria. Something which, to our knowledge no previous study has done. This study explores the parametric effect of mobile money on women financial inclusion using cross-sectional data collected from 400 women across twenty-one LGAs of Kogi state in Nigeria. The probit regression results illustrate that mobile money is significant and positively related to women financial inclusion in Kogi state. In addition, economic activity positively plays a significant role in improving women financial inclusion, while gender discrimination and family financial resilience inversely reduces women financial inclusion in the state. Based on these empirical results, this study recommends the following. First, it is important that government at all level devise means to ensure and broaden usage of mobile money by of provision of communication networking, and internet services, especially in rural areas. This will go a long way in aiding and increasing individuals’ usage of mobile phone and money, hence promotion of financial inclusion among women. Secondly, there is need to enhance women economic engagement, most especially in the rural areas. This will boost their financial transactions, savings, and financial stability, thus stimulate their financial inclusion. Thirdly, while it may be unrealistic for gender equality but there is need to enforce gender discriminating law to give women sense of belonging and full participation to thrive their financial inclusion. Lastly, government at local level are also advised to increase and ensure financial stability and support families in building financial resilience. This can increase women financial inclusion.

How Do Managerial Biases Affect Foreign Market Entry Decisions?

In this practitioner-focused study, we discuss how cognitive biases impair foreign market entry decisions. Focusing on three factors that are central to the evaluation of foreign markets: cost, control, and uncertainty, we explain how decision-making biases undermine their assessment and the ways in which the biases can be mitigated. Specifically, overconfidence bias and the sunk cost fallacy negatively affect the estimation of entry costs which can be mitigated by a strong governance structure and independent reviews; anchoring and confirmation biases undermine the assessment of an appropriate level of control requiring the use of systematic decision frameworks and decision extension tools; and representativeness and availability biases limit the comprehension of environmental uncertainty suggesting mitigation strategies such as the challenging of internal assumptions and devil’s advocacy. By explicating how managerial biases turn into flawed assessments of foreign markets, our study uncovers the mechanisms that explain and potentially remedy cognitive pitfalls during internationalization.

Effects of Contractual and Relational Governance on Project Performance: The Role of BIM Application Level

This study aims to explore the moderating role of Building Information Modeling (BIM) between project governance and project performance. The theoretical foundation of this research is rooted in transaction cost economics. The data come from the construction industry in China’s Sichuan province. A dataset comprising 175 survey responses was subjected to analysis through the Partial Least Squares (PLS) method. The findings confirm that contract completeness and contract flexibility positively influence project performance, and trust in relational governance also has a positive impact on project performance. Additionally, the level of BIM application moderates the relationships between contract flexibility and trust with project performance. However, a significant positive relationship between contract completeness and project performance was not observed. These findings establish a groundwork for transitioning project governance research from a static to a dynamic viewpoint, thereby facilitating the practical implementation of BIM technology. As a result, this study enriches the academic comprehension of governance amidst digital transformation and provides actionable suggestions for fostering efficient governance practices within a technologically progressive landscape.

Is the Chinese stock market efficient? Evidence from a combined liquidity trading strategy

PurposeThis study examines the stock market efficiency in China to offer trading strategy guidance to investors and efficiency evaluation insight to policymakers.Design/methodology/approachThis study examines the stock market efficiency in China with a new combined liquidity trading strategy by blending technical analysis into a liquidity buy-and-hold strategy.FindingsOur results show that the combined strategy generates significant excess returns in the whole sample period, suggesting that the Chinese stock market is not consistent with the weak form efficient hypothesis. In addition, the combined strategy yields more significant risk-adjusted excess returns after the 2004 split-share reform, indicating the stock market efficiency in China does not exhibit a distinct upgrade after the reform. Our further test results reinforce the main conclusions after taking transaction costs, market states, short-selling reform and other issues into consideration.Originality/valueOur study contributes to the literature in two ways: First, we shed light on the mixed documented results about the market efficiency form in China. Second, we contribute to the mixed relation between the 2004 split-share reform and market efficiency in China.

Blockchain‐IoT: A revolutionary model for secure data storage and fine‐grained access control in internet of things

AbstractWith the rapid expansion of the Internet of Things (IoT), cloud storage has emerged as one of the cornerstones of data management, facilitating ubiquitous access and seamless sharing of information. However, with the involvement of a third party, traditional cloud‐based storage systems are plagued by security and availability concerns, stemming from centralized control and management architectures. A novel blockchain‐IoT model that leverages blockchain technology and decentralized storage mechanisms to address these challenges is presented. The model combines the Ethereum blockchain, interplanetary file system, and attribute‐based encryption to ensure secure and resilient storage and sharing of IoT data. Through an in‐depth exploration of the system architecture and underlying mechanisms, it is demonstrated how the framework decouples storage functionality from resource‐constrained IoT devices, mitigating security risks associated with on‐device storage. In addition, data owners and users can easily exchange data with one another through the use of Ethereum smart contracts, fostering a collaborative environment and providing incentives for data sharing. Moreover, an incentive mechanism powered by the FileCoin cryptocurrency is introduced, which motivates and ensures data sharing transparency and integrity between stakeholders. Furthermore, in the proposed blockchain‐IoT model, the proof‐of‐authority system consensus algorithm has been replaced by a delegated proof‐of‐capacity system, which reduces transaction costs and energy consumption. Using the Rinkby Ethereum official testing network, the proposed model has been demonstrated to be feasible and economical, emphasizing its potential to redefine IoT data management.

Truthful multi-unit double auction with transaction costs and sellers’ changing marginal costs

It is well-known that lots of sellers offer discounts for large orders because of decreasing marginal costs and large productive capacities. Then some procurement platforms provide ways for small buyers to cooperate with their procurements and get discounts from these sellers. Moreover, these transactions will incur pair-related transaction costs. Generally, buyers values and sellers’ costs are private information. Then a critical problem faced by the platforms is to induce the buyers (sellers) to reveal their values (costs) truthfully and to match the supplies and demands efficiently. To solve this problem, we design a multi-unit double auction mechanism based on the padding method where the buyers bid their values and the sellers submit their marginal costs of different quantities, and the platform selects the winners, allocates the transactions, and sets the transaction prices for both sides. We show that the mechanism is budget-balanced, individually rational, incentive-compatible, and asymptotically efficient. For the special case with zero transaction costs, we further simplify the mechanism and get some new findings. We further conduct numerical studies to compare our mechanism with four commonly used mechanisms to demonstrate its advantages and examine the impacts of some parameters on the performance of our mechanism. Finally, we consider the cases with general marginal cost structure as well as private quantity information, respectively.

Understanding Ethical Concerns Involving Vulnerable Human Participant Populations in Medical Research: Mixed-Method Analysis of Liberian Ebola Survivors' Experiences in PREVAIL I-VII.

Background: As the number of large-scale outbreaks continues to rise worldwide, clinical trials are increasingly engaging disease-affected peoples within the Minority World (nations with over 80% poverty rates). Yet global health research inadequately addresses potential ethical issues of including impoverished, disease-affected populations and their contextual vulnerabilities in medical research. Objective: This paper presents a mixed-method analysis from our 2022 semi-structured survey capturing the experiences of Liberian Ebola Virus Disease (EVD) survivors serving as study participants in the Partnership for Research on Ebola Virus in Liberia (PREVAIL) clinical trials. Methods: Firstly, we conducted an extensive literature review of the scholarship related to biomedical research and ethical standards protecting study participants to inform our survey method and design. Applying a theoretical framework on vulnerability, we then qualitatively explored the survey responses of 19 EVD survivors' perceptions and experiences taking part in PREVAIL, including their expectations, treatment, delivered benefits, and quality of care. We further quantitatively codified their statements for underlying themes of reported negative experiences against standard ethical regulations in biomedical research, conducting a statistical analysis to inform generalizability. Most of the 19 survivors reported facing extreme ongoing vulnerabilities related to their disease status, including physical impairments, psychosocial stress, and socio-economic inequity. Results: Initially, the survivors tended to experience a sense of hope and pride in volunteering for PREVAIL. One in five participants reported benefiting from PREVAIL's regular medical diagnoses. However, most of their survey responses indicated prevalent negative shared experiences, including continually being confused or misinformed of their study participant rights, roles, and benefits; being burdened by heavy participation transaction costs; and repeated incidents of poor treatment and discrimination by PREVAIL staff after initial recruitment. PREVAIL participant satisfaction ranking is negatively correlated with receiving insufficient financial compensation (r = -0.51), extensive time requirements for each medical visit (-0.40), and being poorly treated by clinical staff (-0.67).

The effect of transactional costs and competitive tendering on public procurement performance

The study determines the influence of transactional cost and competitive tendering on procurement performance. This study adopted an explanatory research design relying on primary source of data. Purposeful sampling technique was employed to obtain a sample size of 142 respondents. The findings of the study established that transactional cost has a positive and significant influence on procurement performance. Competitive tendering has a positive and significant influence on procurement performance. Competitive tendering has a positive and significant influence on transactional cost. This study is to help industries to understand that transactional costs and competitive tendering play a crucial role in achieving cost efficiency in public procurement.

Financial hedging incentive contracts in global supply chains: A distributionally robust approach

AbstractThis paper developed a global supply chain with a supplier and a retailer in different countries. When exchange rate and demand risks are concentrated in retailer, a distributionally robust approach is used to formulate an optimized robust ordering strategy. Furthermore, the effect of financial hedging incentive contracts on the robust decisions and the profits of the global supply chain is explored. Our findings show that the correlation between exchange rate and demand does not affect the robust decisions of retailer. The effectiveness of financial hedging incentive contracts depends on the trade‐off between transaction costs of financial hedging and the degree of supplier incentives and the growth rate of order quantity.

Greek history

The new paradigm of ancient economic history that has dominated the last twenty years is based on New Institutional Economics; its key concepts are growth and transaction costs. It has succeeded in proving that the ancient economies were not static and in documenting the significance of ancient markets; but by excising labour, slavery, and exploitation from discussion, the conceptual limits of this paradigm are becoming apparent to more and more people. The volume edited by John Weisweiler on debt in the ancient Mediterranean and Near East is solid evidence that an alternative, non-neoliberal, paradigm is currently in the process of formation.1 The book is obviously an attempt to assess the validity of David Graeber's blockbuster book on debt for the study of ancient economic and social history.2 As with the volume on citizenship presented below, the fact that this collection of twelve essays ranges temporally from the archaic period to the early middle ages and includes Greek, Roman, and Near Eastern societies is an excellent illustration of a growing and encouraging trend in our discipline. This is a highly stimulating volume. The essays explore: the nexus between coinage, slavery, and warfare in various ancient societies; how quantified social obligations colonized various social, political, and intellectual fields; and whether Graeber's concept of the Axial Age is valuable for the study of ancient history. Perhaps unsurprisingly, Graeber's model seems to fit best the world of ancient empires (Roman, late Roman, and Sassanian), but seems to make less sense for the world of Greek poleis. This illustrates, yet again, the need for Greek historians to think seriously about the peculiarities of the Greek world and the appropriate comparisons.

The Magnitude Of The Informal Remittances Flow To Kenya: An Augmented Gravity Model Approach.

Background: In Kenya remittances are now a proper source of external finances. Kenya received $4.19 billion in form of diaspora remittances in year 2023. Over the years, remittances are proving to be more stable, well diversified and are promising more growth relative to foreign direct investments, official development assistance, private capital and exports. On the micro scale the remittances are helping achieve Kenya’s developmental goals of having a globally competitive human resource and an adequately and decently housed population as outlined in the country’s development blueprint - The Kenya Vision 2030. Though the remittances are these important, official remittance data in Kenya, as well as in many African countries, only include remittances sent through formal channels such as banks and Money transfer Operators. Remittances through the informal channels such as hawalas and hundis are not recorded. This means that the recorded remittances are grossly understated impeding the capacity of policy makers to design appropriate policies aimed at encouraging remittances. The study employed panel data analysis and a thought experiment on remittance data between 2013Q1 and 2022Q4. Through a thought experiment, the study asks what impact a reduction of the costs of sending remittances would have on remittances if the transaction costs were reduced to that of the informal channels of sending remittances. The analysis revealed that the size of the informal remittances in Kenya is between 20% and 26% of the formal remittances. On the determinants of remittance flows to Kenya, the study establishes that Kenyan migrants send more when the economic freedoms and economic conditions improve in their host nations but send less when economic freedoms back at home improve. Accurately measuring informal emittances in Kenya is vital for creating effective government policies. This data would reveal the true extent of remittances' impact on the economy, allowing policymakers to develop strategies that fully utilize their potential for development. By encouraging people to send money through official channels, the government can increase tax income, improve access to financial services, and better monitor these transactions. Additionally, understanding the size of informal remittances is essential for combating financial crimes like money laundering and ensuring that resources are used efficiently

The Influence of Deleveraging the Excessive Debt Firms on Investment Efficiency

Under China's deleveraging policy scenario, this study analyzes the deleveraging effect of excessive leverage firms on investment efficiency and the influence of arbitrage risk on the deleveraging effect. The results show that deleverage lowers over-investment and, to some extent, alleviates under-investment. Deleverage can further bolster corporate performance while boosting investment efficiency. In addition, arbitrage risk in the capital market negatively moderates the impact of deleveraging on investment efficiency, specifically through the transaction cost mechanism. Arbitrage risk weakens the deleveraging effect on investment efficiency mainly through managerial catering to short-term investor sentiment. This study provides capital structure literature with new evidence by examining whether deleveraging to the firms’ expected capital structure influences investment efficiency. We also provide evidence that capital markets moderate the deleveraging effect by arbitrage risk.

Current state of tourism services for tourists: a study in Hanoi City, Vietnam

Assessing tourist satisfaction has become a hot topic for tourism research in recent years. Many studies have shown that improving tourist satisfaction not only has a positive impact on service providers and destination reputation, but also increases tourist loyalty, lowers price elasticity, lowers future transaction costs, and increases production efficiency (Chen et al., 2012; Nguyen Trong Nhan et al., 2014). Some other studies have also shown that improving tourist satisfaction will stimulate word-of-mouth advertising (Ekinci, 2004; Gonzalez et al., 2007; cited by Chen et al., 2012). Therefore, assessing tourist satisfaction is very important, it helps to find out the existing problems, limitations or strengths of service quality from the perspective of tourists, thereby finding solutions to contribute to improving the ability to provide better and better services. Hanoi as the capital, the economic - political - social center of Vietnam. Therefore, the tourism - hotel industry not only attracts tourists but also diplomatic, business and economic - political - social event participants. Hanoi has great potential for tourism - hotel with hundreds of famous landscapes, historical and cultural relics, traditional craft villages, festivals. In terms of natural tourism resources, Hanoi is famous for Huong Tich as "Nam Thien De Nhat Dong". A series of lakes such as West Lake, Hoan Kiem Lake, Dong Mo, Suoi Hai, Quan Son, not to mention the potential of mineral water resources. Hanoi also has many scenic spots around the foot of Ba Vi mountain, creating branded eco-tourism resorts such as Ao Vua, Vua Ba, Khoang Xanh, Suoi Tien, Thac Da, Thac Nga, Ba Vi National Park, etc. Keywords: Satisfaction, Tourists, Service Quality.

Patent pool and dominant design: An empirical study of patent pool from MPEG-LA

A patent pool is a marketing alliance that licenses technology to manufacturers. We build on previous research on patent pools that have mainly focused on transaction cost theory to explore the impact of patent pools on innovation. Our results show that the pool's influence on the dominant design depends on the technical characteristics of both the patent pool and the licensor. We found an inverted U-shaped relationship between the age of the patent pool and the dominant design. The difficulty of technology development and the number of licensors in the pool actively moderate the relationship between the age of the patent pool and the dominant design. Our research also found that when licensors are vertically integrated, the dominant patent pool design increases as the pool grows.

Hedging political risk in international portfolios

We show that internationally diversified portfolios carry sizeable political risk premia and expose investors to tail risk. We obtain political efficient frontiers with and without hedging political risk using a portfolio selection model for skewed distributions and develop a new asymptotic inference test to compare portfolio performance. Politically hedged portfolios outperform a broad market index and the equally weighted portfolio for US, Eurozone, and Japanese investors. Political risk hedging is not subsumed by currency hedging, and the diversification gains of politically hedged portfolios persist under currency hedging and transaction cost frictions. Hedging political risk induces equity home bias but does not fully explain the puzzle.

Doing good in times of need: Green finance policy and strategic corporate social responsibility

This study investigates the effect of a green finance policy on the corporate social responsibility (CSR) activities of firms in heavily polluting industries. Based on the 2017 policy of the People's Bank of China (PBC), which incorporates green finance into its macroprudential assessment system, we employ the difference-in-differences method to show that firms in heavily polluting industries have significantly improved their CSR performance after the implementation of the PBC's green finance policy. In response to the negative effect of the PBC's policy on their financial position, affected firms strategically engage in CSR activities in the hope that appearing socially responsible will help them recover from their adverse position. Furthermore, firms in heavily polluting industries that enhance their CSR performance after the PBC's policy have benefited from reduced bank credit transaction costs and have obtained more bank loans. The improvement in CSR performance is mainly concentrated in firms that are non-state-owned, small in size, highly dependent on external financing, and receiving more media attention. Overall, this study reveals a social consequence of the PBC's green finance policy on the CSR performance.

Supply chain network centrality and corporate greenwashing behavior

This paper examines the impact of supply chain network centrality on corporate greenwashing behavior. Using data from Chinese listed companies, we find that supply chain network centrality suppresses corporate greenwashing behavior, and the impact mechanism is that supply chain network centrality alleviates corporate financing constraints and inhibits managerial myopia. We also find that relationship between supply chain network centrality and corporate greenwashing behavior is more significant among corporations in heavily polluting industries, weaker industry competition, and higher transaction costs. This paper extends the governance factors of corporate greenwashing behavior to the level of supply chain network relationships.

The political logic of just transition policies

ABSTRACT A ‘just transition’ calls for compensations to fossil fuel workers whose jobs will be lost because of the clean energy transition. The ethical case for a just transition acknowledges the hardship of vulnerable workers. In contrast, I examine the political case for a just transition. The logic of such a case remains hazy and under-theorized. I draw on the insights of ultimatum games to understand the strategic dimension of the relation between governments and fossil fuel workers. In a successful just transition, the government compensates workers in exchange for their exit from the fossil fuel industry. This ensures a faster clean energy transition. Yet the prospects of such an agreement depend on several parameters: the quality of outside options available to workers, their cost of mobilization, and the climatic benefits that the government obtain from a fossil fuel phaseout. I show that a government's credibility is also critical. This theoretical exercise helps make sense of several otherwise puzzling patterns in just transition policies and offers guidance on critical policy issues. Key policy insights Just transition policies can break the carbon deadlock by incentivizing the exit of fossil fuel workers. The ability of the government to induce the exit of labour depends on climatic benefits, fossil fuel wages, outside option wages, and anti-government mobilization costs. Lack of government credibility, which can be caused by political risks, capacity constraints, or low trust, reduce the prospects of phaseouts and increase their cost. Unions play an ambiguous role: they increase wages and reduce mobilization costs, but can improve outside options, solve coordination failures, and reduce transaction costs. Fossil fuel firms can and do use financial and non-financial strategies to reduce the mobility of their workers.