Search results

Cultural and geographical distances create friction in multinational enterprises (MNEs), friction that indigenous firms do not experience in the same manner. This friction or liabilities of distance is conceptualized as governance costs in this chapter. Unfortunately, governance costs seem to be a rather equivocal concept, although it is one of the building blocks of internalization theory, and the raison d’être of the idea that certain kind of transactions have to be internalized to overcome the most prohibitive consequences of business activities across cultural and geographical distances. By going back to an award-winning paper, published in IBR in 2009, we put forward some nuances and reflections upon theory and findings presented in that paper, as well as upon implications and behavior of governance costs. The reason for this endeavor is grounded in the idea that theories must be challenged, empirical finding, just as well. Building upon survey data from 159 Norwegian MNEs, we explore and test six hypotheses by structural equation modeling (SEM). The results indicate that information fallacies seem to be the main driver of monitoring – and bargaining costs in the relationship between MNE HQs and their foreign subsidiaries, and thereby also the indirect driver of the observed negative effects of monitoring and bargaining on subsidiary performance. On the other hand, trust shaped by bonding activities seems to be an important factor in reducing bargaining costs and improving subsidiary performance.

This study aims to look at the relationship of external embeddedness and institutional distance (governance aspects) with the foreign subsidiary research and development (R&D) capacity. Furthermore, it examines whether these relationships are mediated by subsidiary product and process innovation, and whether institutional distance plays a moderating role in the relationship between subsidiary innovation and R&D capacity.

The authors draw on survey data from 130 foreign subsidiaries operating in Brazil and test their model using variance-based structural equation modeling.

Results suggest that subsidiary (product and process) innovation fully mediates the relationships between: subsidiary external embeddedness and R&D capacity; and institutional distance and subsidiary R&D capacity, such that the relationship is positive in case of the former and negative in case of the latter. The relationship between subsidiary product and process innovation and R&D capacity is positive and stronger at lower levels of institutional distance.

The research ignores the underlying mechanisms of the external embeddedness and institutional distance relationship with subsidiary R&D capacity. Furthermore, institutional distance based on formal governance aspects and their impacts on subsidiary innovation and R&D capacity are rarely investigated. This paper contributes with regard to these aspects.

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.

This study aims to explore the complex, multi-level institutional dynamics of smart city reforms and projects and their potential sustainability pressures on the implementation of a management accounting system in an Egyptian state-owned enterprise (SOE), which has a politically sensitive institutional character.

This study adds to institutional management accounting research using a multi-level perspective of institutional dynamics in the smart city context. Data were collected from an interpretive case study of an Egyptian SOE that was under socio-political sustainability pressures to implement a smart electricity network project in New Minya city.

Smart city projects have formed social and political sustainability pressures, which introduced the enterprise resource planning (ERP) network as a new management accounting system. A new (complex and multi-level) management accounting system was invented to reinvent the sustainable city as an “accounting city” (which appeared rhetorically as a “smart city”). “Smart” being the visibility and measurability of the sustainability performance of the collective body, which calls the city and its connectivity to different institutional levels brought out in a city network project for the ERP-enabled electricity distribution.

This study examines a single case study from a single smart city and identifies the accounting community’s need for multiple and comparative case studies to further analyse the potential impact of smart city reforms and projects on the sustainable implementation of management accounting systems.

City policymakers and managers may benefit from the practical findings of this interpretive field-based case study in planning, implementing and monitoring smart city projects and objectives.

Individual and collective well-being may be enhanced through new management accounting forms of multi-level local governance and increased political, field and organisational sustainability.

This study provides important insights into the sustainability dynamics of management accounting in achieving smart city reforms. The achievement of sustainability management accounting systems has connected to multiple ERP roles at different institutional levels, which resulted in accommodating the socio-political objectives of smart city projects.

The purpose of this paper is to verify the impacts of the transaction costs rationale on economic agents’ innovative results when they engage in European R & D networks, supplying both firms and policymakers with empirical support for improved decision making toward economic competitiveness and construction of the European research area. Furthermore, unlike many transaction cost economics assessments, the authors evaluate the existence of transaction costs following a dynamic framework of analysis (instead of using solely ex ante governance choice as a driver of inter-firm “friction” management), offering a novel perspective on these phenomena.

Data consist of firm-level information from Eureka’s Final Reports (1995-2006) for Spanish, Italian, French, British and German firms. Empirical assessments were performed through a two-step approach of direct and indirect effects of network management and potential sources of disturbances. Ordinal regressions were applied in order to identify transaction costs’ relevance as drivers of firms’ technological and commercial outcomes, as well as on managerial quality of alliances. Statistical controls include microeconomic and project-specific variables.

Results highlight the role played by transactional aspects as drivers of companies’ outcomes and managerial complexity. Furthermore, the authors find robust evidence that formal ex ante governance structures are incapable of satisfactorily addressing dynamic disturbances that take place within R & D networks. Whereas such findings are directly related to existing transaction costs, the authors find no support for the usual variables attributed to increased complexity in international inter-firm relationships.

Self-selection issues are inherently related to the research instrument (i.e. Eureka’s Reports), while further firm-level data could not be obtained since confidentiality issues protected companies’ names and sectors. Also, network-level data are not available, allowing the evaluation of individual perceptions only.

While literature addresses the issue of transaction costs in R & D networks via theoretical assumptions and rough proxies, this assessment offers an in-depth evaluation of a set of valuable indicators with direct implications for researchers, managers and policymakers. Main contributions concern the identification of dynamic interactions (and their respective disturbances) as a key feature of the overall performance of R & D networks, stressing the non-linearity of economic processes in these hybrid relationships, an issue that has been poorly tackled by previous empirical investigations.

This study aims to (1) validate the efficacy of contractual and relational governance in enhancing operational performance and (2) explore the influence of product complexity on the effectiveness of these governance mechanisms, thereby determining the optimal approach for varying levels of product complexity.

By utilizing a comprehensive theoretical framework encompassing transaction cost economics, social exchange theory and contingency theory, this research explores the intricate interplay between governance mechanisms, product complexity and operational performance, drawing insights from a dataset comprising 246 responses within Mainland China’s manufacturing sector. To rigorously test the proposed hypotheses, this study employed a hierarchical regression analysis.

The findings of this study are summarized as follows: (1) while both contractual governance and relational governance have a significant impact on operational performance, relational governance is found to be more effective than contractual governance in enhancing operational performance; and (2) the moderation effect of product complexity is evident, as it weakens the impact of contractual governance while simultaneously enhancing the positive influence of relational governance on operational performance.

The study uncovers a moderation effect of product complexity on the relationship between governance mechanisms and operational performance. This finding adds an original contribution to the literature by highlighting how product complexity can interact with governance strategies, providing practical insights for industries dealing with varying levels of product complexity.

To improve the understanding of the inter‐organizational dynamics of the dyadic relationships between a buyer and provider of logistics services (TPL dyads).

Analyzes the preparation, implementation, and operation of a particular case of third party logistics (TPL) arrangements. Based on a single case study of a dyadic relationship, the paper confronts the static view of the transaction cost approach and the agency theory on “governance structures” and “contracts” by showing how “relationship governance” emerges and develops over time.

TPL dyads are subject to both controllable and non‐controllable forces of change, which may not always have a positive effect on the logistics performance or the relationship itself. Inter‐organizational dynamics not only relate to learning, competence development, or adaptation, as suggested by other studies, but also to how the dyadic relationships are governed. As the dyad accumulates experience over time, changes will occur in the balance between the two parties in terms of goal congruence and risk preferences, which has a strong influence on the nature of contracts and other safeguards governing the relationship. Similarly, explanatory power of theories applicable to inter‐organizational settings may vary as relationships emerge and develop over time. Focus on core competencies as the logic of outsourcing is followed by a period characterized by a principal‐agent relationship. To ensure further prosperity of the relationship, the two companies must direct their efforts towards the logic of the network approach.

Contributes to a cross‐disciplinary fertilization of the SCM field, in particular inter‐organizational relationships.