Transaction Costs Research Articles

Enhancing sustainability integration in Sustainable Enterprise Resource Planning (S-ERP) system: Application of Transaction Cost Theory and case study analysis

Environmental stewardship and sustainability have become critical priorities in the contemporary business environment. Corporations are integrating sustainable practices at the business process level via Sustainable Enterprise Resource Planning (S-ERP). However, a recognised shortfall of S-ERP systems lies in their potential inability to integrate sustainability metrics across all business functions holistically. To navigate this limitation, our study introduces the application of Transaction Cost Theory (TCT). By treating business processes as input-output systems, we apply this theory to quantify sustainability likelihood and overall losses. This novel approach bridges the gap, allowing for the comprehensive integration of sustainability metrics across all processes. The essence of our methodology is to leverage static input data collected by S-ERP regarding environmental impact and to extrapolate this data to provide a broader understanding of potential losses and gains. We've tested and validated this approach through two comprehensive case studies; one is about sustainable product design and development, and the other is about the sustainability evaluation of modular versus conventional construction methods. The results inform the formulation of robust sustainability policies at the business process level for systems akin to S-ERP, paving the way for more sustainable business practices.

How do cultural differences affect stock market performance after mergers and acquisitions? Empirical evidence from China

PurposeAs cross-cultural mergers and acquisitions (M&A) have learning effects on organisations, assessing their impacts on corporate performance is crucial. This study aims to explore the impact of inter-firm cultural differences on long-term post-M&A stock market performance.Design/methodology/approachThe authors select domestic M&A transactions of Chinese listed companies during 2010–2021 as the sample. Then, the authors use the partial least squares structural equation model (PLS-SEM) to construct the latent variable of cultural differences in four dimensions to explore long-term stock market performance.FindingsCultural differences first positively and then negatively impact post-M&A performance. Three transmissions mechanisms are identified: investor sentiment, takeover premiums and information disclosure quality. Further analysis reveals that acquirer stock performance improves with higher analyst coverage and non-local shareholders but worsens if there are business affiliations between the acquirer and target firms.Practical implicationsThis study can help optimise information disclosure systems in M&A transactions for regulatory authorities and aid investors’ understanding of post-M&A performance changes. Furthermore, it can improve acquirers’ understanding of the risks and opportunities in cross-cultural M&A, thereby facilitating the adaptation of management practices to the im-pacts of cultural differences.Originality/valueBy integrating the theories of resource dependence and transaction costs, this study examines the reversal effect of cultural differences between merging companies on post-M&A performance. The authors use a PLS-SEM to empirically analyse the main effects and reveal three transmission mechanisms.

Connecting human behaviour, meaning and nature.

Much of the discourse around climate change and the situation of diverse human societies and cultures in the Anthropocene focuses on responding to scientific understanding of the dynamics of the biosphere by adjusting existing institutional and organizational structures. Our emerging scientific understanding of human behaviour and the mechanisms that enable groups to achieve large-scale coordination and cooperation suggests that incrementally adjusting existing institutions and organizations will not be sufficient to confront current global-scale challenges. Specifically, the transaction costs of operating institutions to induce selfish rational actors to consider social welfare in their decision-making are too high. Rather, we highlight the importance of networks of shared stories that become real-imagined orders-that create context, meaning and shared purpose for framing decisions and guiding action. We explore imagined orders that have contributed to bringing global societies to where they are and propose elements of a science-informed imagined order essential to enabling societies to flourish in the Anthropocene biosphere. This article is part of the theme issue 'Bringing nature into decision-making'.

Unlocking the path to digital financial accounting: A study on Chinese SMEs and startups

The undeniable significance of small and medium-sized enterprises (SMEs) and startups in fostering economic development and prosperity serves as the backdrop for this study. The primary goal of this research is to determine how various factors influence the digitalization of financial accounting within SMEs and startups. An analysis is carried out using data from a cohort of 200 Chinese SMEs, all listed and sourced from the China Stock Market & Accounting Research database's financing reports from 2010 to 2020. The findings suggest that environmental, social, and governance investment and loans obtained by these SMEs positively promote digitalization. Meanwhile, financial fraud acts as a barrier to the expansion of digitalization within their financial structures. Notably, total income and transaction costs exhibit a mixed pattern of effects, acting as long-term enablers of digitalization. Moreover, the Chinese government's establishment of an electronic financial accounting standard framework and provision of incentive packages can expedite the digitalization of financial accounting in Chinese SMEs.

Eksplorasi Fundamental Cryptocurrency dalam Volatilitas Harga

This research aims to comprehensively explore the fundamental factors that influence cryptocurrency price volatility, and apply them to adoption, regulation and investment strategies. The fundamental factors explained include supply, demand, mining activity, transaction fees, block size, blockchain technology, and context mechanisms. This research uses a qualitative and quantitative approach with literature study and secondary data analysis. The research results show that cryptocurrency price volatility is significantly influenced by the interaction of supply and demand, mining activity as reflected in the hash rate, as well as transaction costs and block size in the blockchain network. Additionally, blockchain technology and the context mechanisms used also contribute to price volatility. High price volatility hinders the use of cryptocurrencies as a stable medium of exchange and investment instrument.

Cross-cryptocurrency return predictability

Using data from Binance, we find strong evidence of cross-cryptocurrency return predictability. The lagged returns of other cryptocurrencies serve as significant predictors of focal cryptocurrencies. The results are robust across various methods, including the adaptive LASSO and principal component analysis. Furthermore, a long-short portfolio formed on the past returns of cryptocurrencies can generate a sizable return out-of-sample after accounting for transaction costs. Overall, our findings corroborate cross-cryptocurrency return predictability and are consistent with the spillover effect mechanism, where common shocks among cryptocurrencies coupled with the limited attention of investors lead to slow information diffusion across coins.

Does the sticky relationships of global value chains help stabilize employment? Evidence from China

Global production beyond borders is becoming an invisible force for stabilizing employment, and the behaviour of firms featuring transnational corporations has become critical to the development of production. In this paper, we construct a systematic quantitative analytical framework of measuring global value chain (GVC) sticky relationships and analyze the steady growth of employment from the perspective of inter-firm interactions firstly, furthermore, provide the latest evidence from China. Our findings show that: multiple interactions between firms for that participate GVC contribute to the development of the GVC sticky relationships and promotion of employment growth, the GVC sticky relationship accounts for approximately 17.32 % of the total employment in China, and domestic GVC sticky relationship activities have become an important force in stabilizing and promoting employment growth in China, it surpasses cross-border GVC employment since 2008. Furthermore, we characterize the shape of GVC sticky relationships and find that the circle-structure relationship effect has greater potential to stabilize employment in China, particularly in the sectors of ICT, wholesale and retailor. Therefore, mitigating the transaction costs of participating in GVC by reducing institutional barriers in the process of firms' interactions is significant for maintaining the employment stability.

Shareholding Land Readjustment Led by Local Government During Peri-Urbanization: The Case of Zhaoqing, China

This paper focuses on a new model of land readjustment integrated with shareholding in Zhaoqing, China. It determines whether this innovation reduces transaction costs throughout the land development process. To cope with the uncertainty during rapid urbanization in peripheral areas, shareholding land readjustment provides opportunities for the original landowners to share the long-term sustainable land value increment. This is accomplished through a shareholding platform built by local government and a closely associated state-owned enterprise, with a guarantee of short-term fixed compensation. Shareholding land readjustment holds great promise in connecting plan implementation with land property exchange issues in the Global South.

Transaction costs of ineffective legal intervention restricting land ownership in the vicinity of airports: the example of the Polish compensation scheme in the context of environmental regulations

Transaction costs of ineffective legal intervention restricting land ownership in the vicinity of airports: the example of the Polish compensation scheme in the context of environmental regulations

The Readiness of the Malaysian Construction Industry for E-tendering After COVID-19 Pandemic

E-tendering implementation can bring significant benefits such as cost savings, transparency in contract and maximize the efficiency and resources to the construction industry. E-tendering also allows users to participate through internet where this increases the competition, lower down transaction cost and minimize the time consumption and errors in the bidding processes. This study determines the readiness level of E-tendering to the Malaysian construction industry so that the construction industries are capable to overcome the possible issues and enhance their implementation of E-tendering in Malaysia. The research applied mixed methodology. 89 respondents have participated in the questionnaire while five respondents were interviewed in the interview sessions. The results showed that E-tendering organization’s attitudinal readiness has several factors such as foresee the construction tendering practice trends, aware if the introduction of E-tendering is by the government, interested in E-tendering, foresee the increasingly importance of E-tendering to company and good knowledge of IT. The organization’s physical readiness has factors such as software facilities, network access, investment in IT, computer infrastructure and technical staff. The results can be used by policies makers to promote the adoption of E-tendering among the potential practitioners in Malaysia where this can improve the efficiency in construction projects tendering process.

Blockchain-driven framework for construction waste recycling and reuse

Conventional management mechanisms for construction waste recycling and reuse (CWRR) often cause considerable information asymmetry, inadequate government supervision, and imperfect incentive mechanisms, resulting in frequent illegal dumping and landfilling of construction waste and relatively low recycling rates. To address these issues, we introduce blockchain technology to CWRR. The design science research methodology was adopted to identify the main steps in functional requirement identification and blockchain framework development for CWRR. To explain how blockchain can improve the CWRR process, a conceptual model for the functional requirements of the proposed framework was constructed using qualitative analysis. A blockchain-driven framework was developed to overcome practical barriers in the CWRR industry. Based on scenario simulation results, the proposed framework had execution and transaction costs of $4.735 and $1.276, respectively, and latency performance at the millisecond level. The results indicate that (1) based on specific problems systematically identified from CWRR practices, the proposed framework can address practical barriers in the CWRR industry more directly; (2) the CWRR industry can use blockchain technology to achieve information sharing, comprehensive government supervision, and effective incentive mechanisms and (3) the blockchain-driven framework has high efficacy and can promote efficient CWRR and high-quality development of CWRR industry chain. This management model is conducive to forming a collaborative CWRR industry chain that can lead to broader adoption of blockchain technology across industries.

Testing the Weak Efficient Market Hypothesis of Chinese Stock Market--Based on the Market Performance of Representative Stock Investment Portfolios in the HS300 Index

Chinas domestic stock market has developed very quickly overall in the more than 30 years since it was established, but information effectiveness in the Chinese stock market still faces multiple problems, so testing the weak efficient market hypothesis of the Chinese stock market is a good way to test its information quality and give investors relevant advice. This article selected representative stocks from the HS300 index, gathered the stocks historical data, used the index model to construct an optimal portfolio, and used another part of historical data to test if the portfolio has continuous excess return compared with the market portfolio and risk-free asset. The article finds excess return for the optimal portfolio during a long period and cannot prove that the Chinese stock market is weak and efficient. This result will provide a certain theoretical basis for investors who use technical analysis for stock investment and may also indicate that many issues still need to be addressed in the Chinese stock market, such as information asymmetry, high transaction costs, and insufficient regulation.

The Influence of the Financial System on the Puzzle of Corporate Financing Decisions: Review

The main purpose of this study is to conduct a literature review on the influence of country-specific characteristics of financial systems on corporate financing decisions, to help complete the complex puzzle on the problematic of capital structure theories. Recently, several international studies have analysed the convergence of firms’ financing decisions according to countries’ financial system, but, in terms of literature review, it becomes necessary to establish the interconnection between the explanatory theories of capital structure and empirical studies in explaining the financing behaviour of firms in different countries. Following this, the methodology of this paper was based on summarizing the empirical literature in a non-systematic way, verifying in several international studies that the capital structure is influenced by the specific characteristics of the country’s financial system, in which the efficiency of the function of financial intermediaries contributes to reducing transaction and information costs, helping to complete the understanding about the similarities and differences in the financing choices of firms in different countries.

Economic Fundamentals and Real Exchange Rate in African Oil Producing Countries: Evidence from Asymmetric Cointegration

The role of exchange rates is very important in the international market and the variability of exchange rates both in the case of appreciation or depreciation is directly connected with the economic performance of a country. Exchange rate variations in oil-producing countries in Africa have been too high resulting in volatilities due to domestic and foreign shocks. High volatility of exchange rate may translate into reduction of trade flows, foreign direct investment, and instability in both interest rates and inflation rates. Several studies on the relationship between economic fundamentals and exchange rates focused more on Africa or country-specific with limited focus on African oil-producing countries using asymmetric cointegration. Therefore, this study examines the relationship between some economic fundamentals and real exchange rates in oil-producing countries in Africa. The dynamics panel non-linear autoregressive distributed lag and linear autoregressive distributed lag were used to investigate the relationship between economic fundamentals and real exchange rate (RER). The NARDL result shows evidence that there exists both short and long-run asymmetric relationship between economic fundamentals and RER. The study recommended that policymakers in these countries pay more attention to their macroeconomic policies to reduce the production and transaction costs of foreign direct investment (FDI).

Digital transformation and supply chain efficiency improvement: An empirical study from a-share listed companies in China.

This article thoroughly examines the influence of digital transformation on the efficiency of corporate supply chains. As global economic integration accelerates and technological innovations deepen, digital transformation has become key to enhancing core corporate competitiveness. This research, utilizing data from A-share listed companies in China between 2007 and 2022, analyzes how companies improve supply chain efficiency through digital transformation. Furthermore, the study establishes a theoretical framework that demonstrates how digital transformation facilitates supply chain efficiency from the perspectives of internal governance and external competition. The research indicates that digital transformation plays a key role in significantly enhancing supply chain efficiency. Furthermore, the results of the mechanism analysis confirmed that digital transformation contributes to enhancing corporate supply chain efficiency by improving the level of corporate governance and the degree of market competition. The study also finds that the effect of digital transformation on supply chain efficiency varies with different corporate backgrounds, indicating its heterogeneous impact. Lastly, an analysis of economic consequences shows that the increased supply chain efficiency resulting from digital transformation can reduce future external transaction costs, strengthening the company's market position and financial performance. This research provides strategic guidance for firms to develop robust strategies amid the digital wave and offers strong policy recommendations for promoting digital supply chain management and enhancing market adaptability.

Big data application and corporate investment decisions: Evidence from A-share listed companies in China

Based on a natural language processing (NLP) method and annual reports from A-share listed companies in China from 2011 to 2020, this paper constructs a big data index for the corporate level and studies the impact of big data on corporate investment decisions. The study finds that big data significantly improves corporate investment decisions. From the perspective of index decomposition, data mining and mobile service are found to significantly improve corporate investment efficiency, while algorithm development and intelligent manufacturing mainly enhance the corporate investment level. The study also notes that heterogeneity may exist due to differences in financial, innovation, and legal environments. In terms of mechanisms, big data can positively influence corporate investment decisions by improving R&D investment and reducing transaction costs.

Navigating transatlantic power dynamics in ICT standardization – The case of ETSI

Standards are the foundation of global trade facilitating the compatibility and interoperability of goods and services through institutional coordination to reduce transaction costs, shape technological choices, and market access. Such private transnational rulemaking has faced increased competition in key technological sectors. In Europe, ETSI has been critical for the European telecommunications market in the aftermath of liberalization of national monopolies as Europe sought to enhance market power to attract European and non–European firms to develop key technological standards. With the standardization strategy in 2022, the European Union has requested the revision of internal governance and operating norms of ETSI to strengthen European economic interests and social values. This has generated concern in the United States over the increase in government–based membership at the expense of a more open model. As international leadership in standards continues to be challenged by China, the US and EU have highlighted the importance of values–based standards. This has generated efforts to promote cooperation with strategic partners. The reform of ETSI could be viewed as a defensive strategy at odds with its globally oriented model of standards development and may undermine its legitimacy as a leading open and inclusive standards body in the field.

Convexity in Real-time Bidding and Related Problems

We study problems arising in real-time auction markets, common in e-commerce and computational advertising, where bidders face the problem of calculating optimal bids. We focus upon a contract management problem where a demand aggregator is subject to multiple contractual obligations requiring them to acquire items of heterogeneous types at a specified rate and where they will seek to fulfill these obligations at minimum cost. Our main results show that, through a transformation of variables, this problem can be formulated as a convex optimization problem, for both first and second price auctions. The resulting duality theory admits rich structure and interpretations. Additionally, we show that the transformation of variables can be used to guarantee the convexity of optimal bidding problems studied by other authors, who did not leverage convexity in their analysis. The main point of our work is to emphasize that the natural convexity properties arising in first and second price auctions are not being fully exploited. Finally, we show direct analogies to problems in financial markets: the expected cost of bidding in second price auctions is formally identical to certain transaction costs when submitting market orders, and that a related conjugate function arises in dark pool financial markets.

Construction and Application of the Double Game Model for Direct Purchase of Electricity by Large Consumers under Consideration of Risk Factors

With the development of global clean energy and the implementation of carbon emission reduction policies, the direct purchase of electricity by large consumers has been increasingly promoted as a special form of electricity trading. Therefore, on the basis of the completion of low-carbon emission reduction targets in each country, how to rationalize the electricity purchase by large consumers in the electricity market so as to reduce their electricity purchase costs has become the main target of attention in each country. Currently, there are fewer studies in existing research on the direct electricity purchase strategy of large consumers under the consideration of the weight of consumption responsibility and risk. Based on this, this paper constructs a dual-game model for direct electricity purchase by large consumers based on the Stackelberg game and non-cooperative game theory. The concept of value at risk is further introduced, and the optimal strategy of direct electricity purchase by large consumers is proposed. The results of this study show that when market players make decisions on the purchase and sale of electricity, power suppliers will increase their biddings to obtain the highest returns, and large consumers can reduce the transaction costs by combining the medium- and long-term market with the spot market to purchase electricity. In the choice of electricity purchase market, with the increasing risk factor, large consumers shift from the risky spot market to the less risky medium- and long-term market and option market. This paper provides a reference for the issues of power suppliers’ contract bidding and large consumers’ electricity purchase strategy in the medium- and long-term contract transactions.

How does digital transformation promote supply chain diversification? From the perspective of supply chain transaction costs

Companies must implement digital transformation to achieve supply chain diversification with the current volatile economic conditions, which is crucial for their survival and as a fundamental measure to ensure industrial supply chain resilience and security. Based on A-listed companies, this paper systematically examines the impact of digital transformation on supply chain diversification, exploring the underlying mechanism of this effect from the transaction cost perspective. This paper reveals that digital transformation can significantly promote upstream suppliers, downstream customers, and the whole supply chain diversification. This impact operates mainly through the reduction effects of supply and demand coordination and inventory transportation costs.