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This paper aims to clarify ambiguous results from previous research on the relationship between contextual factors, trust and supply chain governance (SCG).

This study carried out a systematic literature review in 11 databases, with articles published until 2018. Afterward, this study conducted a thematic analysis in 60 articles to address the contextual factors, governance structures and trust approaches raised in previous research.

The thematic analysis revealed that seven contextual factors influence the choice of contractual and relational mechanisms in supply chains: relationship history, environmental uncertainty, perceived risk, perceived justice, asset specificity, power asymmetry and interdependence. The findings explained the ambiguous results of past research by proposing that contractual and relational governance are complementary and that the presence of trust (affective and competence-based) moderates the relationship between contextual factors and SCG.

This research advances the SCG literature by proposing trust (affective and competence-based) as a moderating variable that fosters governance mechanisms in supply chain relationships.

This chapter addresses social embeddedness effects on ex ante management of economic transactions. We focus on dyadic embeddedness, that is the history of prior transactions between business partners and the anticipation of future transactions. Ex ante management through, for example, contractual arrangements is costly but mitigates risks associated with the transaction, such as risks from strategic and opportunistic behavior. Dyadic embeddedness can reduce such risks and, hence, the need for ex ante management by, for instance, making reciprocity and conditional cooperation feasible. The chapter presents a novel theoretical model generating dyadic embeddedness effects, together with effects of transaction characteristics and management costs. We stress the interaction of the history of prior transactions and expectations of future business. Hypotheses are tested using new and primary data from an extensive survey of more than 900 purchases of information technology (IT) products (hard- and software) by almost 800 small- and medium-sized enterprises (SMEs). Results support, in particular, the hypotheses on effects of dyadic embeddedness.

The goal of interfirm contract research is to examine how formal contracts impact transaction success, firm relationships, and ultimately individual and collaborative firm performance when two or more firms interact. Most contract literature uses an economic lens to examine contracts: the property rights perspective, agency theory, and TCE. Property rights-based contract research (Coase, 1960; Demsetz, 1967; Alchian & Demsetz, 1973; Cheung, 1969) examines how efficient property rights assignment mitigates ex ante hazards. Similarly, agency theory-based contract research (e.g., Ross, 1973; Jensen & Meckling, 1976; Harris & Raviv, 1979) investigates how incentive alignment between the principal and agent leads to the mitigation of ex ante hazards. In contrast, TCE-based research (Williamson, 1975, 1985) examines contractual safeguards to mitigate both ex ante and ex post hazards (e.g., Joskow, 1985, 1987, 1990; Crocker & Reynolds, 1993). Because the three economic perspectives dominate, most research addresses how contracts are used to mitigate ex ante or ex post hazards. Therefore, many topics still need to be investigated to enhance our understanding of interfirm contracting.

Transaction cost economics (TCE) has received extensive attention from a variety of disciplines, but it holds a particularly central place in strategic management. The focal issues examined by TCE, vertical integration and interfirm governance (including contract design), are important determinants of firm performance – the central issue in the field of strategy. While several extensive reviews of empirical work in TCE have been undertaken, one key issue has received relatively little attention – construct validity in TCE empirical research. The purpose of this chapter is to highlight some of the challenges of operationalizing key transaction cost predictions and provide some ideas for better measuring core constructs such as asset specificity, uncertainty, and frequency.

Investigates the differences in protocols between arbitral tribunals and courts, with particular emphasis on US, Greek and English law. Gives examples of each country and its way of using the law in specific circumstances, and shows the variations therein. Sums up that arbitration is much the better way to gok as it avoids delays and expenses, plus the vexation/frustration of normal litigation. Concludes that the US and Greek constitutions and common law tradition in England appear to allow involved parties to choose their own judge, who can thus be an arbitrator. Discusses e‐commerce and speculates on this for the future.

The aim of this research is to determine how trust might moderate the effect of asset specificity on the contractual choice.

The sample is drawn from the qualified appellation of origin (DOCa) Rioja wine market. A binomial logit was used as the primary technique for investigation of the hypothesis for the final sample size of 68 observations (34 oral contracts and 34 written contracts).

The evidence presented in this paper points to the fact that asset specificity, the most important characteristic in transaction cost economics, will not be a strong predictor of the level of contract formalisation for transactions that enjoy a high level of trust.

This study has important limitations that imply caution in generalising the findings. First, the agrarian legal framework is likely to alter the effectiveness of formal contracts as governance devices. Another limitation of this analysis is that it is not a dynamic analysis and, hence, it does not consider the possibility of trust emerging over time.

It is suggested that the possession of trust between contractual parties allows them to reduce transaction costs without resorting to a high level of contractual formalisation.

This paper is useful for practitioners and academics in the field of contractual choice. The research provides some initial insight into the moderating influence of trust on the relationship between asset specificity and level of contractual incompleteness in the viticulture sector.

This study aims to investigate farmer preferences regarding sales contracts for durum wheat in Italy.

The authors consider that contracts are formed by an organisational entity that is in charge of transferring decision and property rights based on reductions in transaction costs. The empirical analysis presents a discrete choice experiment with three distinct models that was performed by a survey of 160 wheat farmers in southern Italy.

The results show that contractual terms affect the probability of both a contract being signed and allocating decision rights due to their effects on price, technology and quality.

This study provides some insights on which contractual attributes could support the wider use of contracts along the durum wheat supply chain in Italy.

The paper reveals that contracts are relevant not only to the coordination of agri-food chains because of price stabilisation but also due to their impacts on technology and quality strategies.

The purpose of this paper is to analyse farmers' contracting choice in the Hungarian milk sector, employing transaction cost economics framework.

The authors focus on some key determinants of farmers' contracting choices using milk producer survey data. Different semi parametric and semi non parametric discrete choice models are applied to investigate the type of contracts, duration, number of contractors, incentives provided in the contract and business history of farmers and buyers.

Main results confirm that contract‐specific investment is a strong predictor explaining contract choice and contract design. Although trust is an important factor, the authors' estimations however report some counterintuitive results. Farm size is also significantly associated with contracts and contractual arrangements. Vulnerability to opportunistic behaviour also depends on partner change switching costs and farmers' bargaining power.

This is a recent study that investigates the role of contracts between producers and processors, significantly contributing to the limited literature on contractual relationships in transition agricultures.

Strategic alliances have a variety of governance structures that can be broadly classified as joint ventures, minority equity alliances, and contractual alliances. This paper seeks to empirically examine the roles of four key determinants of governance structure choice, namely, joint R&D and joint marketing objectives, alliance management experience, and international partners.

Several hypotheses are developed regarding governance structure choice and are tested with data from 765 alliances. A multinomial logistic regression (logit) model is used for statistical analysis, with five control variables.

All hypotheses are supported, so that the roles of alliance objectives, alliance management experience, and international partners are demonstrated as being significant as determinants of governance structure choice in alliances.

Limitations stem from the data being from a single source, one that also relies on press announcements that may be biased toward larger alliances.

Briefly, alliance managers should find it useful to assess the relative presence of the four determinants of structural choice studied in this investigation in order to make an informed selection of the appropriate governance structure.

The study contributes to the knowledge of the key determinants of governance structure choice in strategic alliances by examining empirically, with a large sample of alliances from various industries, the significant roles of four factors, namely, joint R&D and joint marketing objectives, alliance management experience, and international partners.

This article posits that the effect of political hazards on the choice of market entry mode varies across multinational firms based on the extent to which they face expropriation hazards from their potential joint-venture partners in the host country (the level of contractual hazards). As political hazards increase, the multinational faces an increasing threat of opportunistic expropriation by the government. Partnering with host-country firms that possess a comparative advantage in interactions with the host-country government can safeguard against this hazard. However, as contractual hazards increase, the potential benefit to the joint-venture partner of manipulating the political system for its own benefit at the expense of the multinational increases as well, thereby diminishing the hazard-mitigating benefit of forming a joint venture. A two-stage bivariate probit estimation technique is used to test these hypotheses on a sample of 3,389 overseas manufacturing operations by 461 firms in 112 countries.