Why do firms make and buy? Efficiency, appropriability and competition in the                 trucking industry

He, Daifeng; Nickerson, Jack A.

doi:10.1177/1476127006061031

Cited by 49 publications

(45 citation statements)

References 20 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Literature on plural (or dual) forms of distribution and procurement has developed in activities such as industrial distribution (Dutta et al, 1995), restaurant chains (Bradach, 1997), haulage companies (He and Nickerson, 2006), the purchasing of component by equipment manufacturers (Heide, 2003) or the procurement of raw material by metal forming companies (Parmigiani, 2007). Four explanations are consistently found in this literature, which appears somehow to contradict the "discrete alignment" hypothesis of TCE (Williamson, 1991).…”

Section: Plural Governancecontrasting

confidence: 39%

Quality management and contractual incompleteness: grape procurement for high-end wines in Argentina

Codron

Étienne

Rousset

2013

Journal on Chain and Network Science

View full text Add to dashboard Cite

Sourcing grapes from independent growers for use in top quality wines sold on the international market is a major organisational challenge for corporate wineries. Our paper adds to the small existing literature addressing these coordination issues in the New World wine sector, by going deeper into the specifics of the contracts, as well as the "transaction cost economising" argument. Based on a case-study carried out in the Argentine province of Mendoza, this article presents an in-depth analysis of the technical process, in order to identify the contractual hazards posed by asset specificity, measurement costs, and non-contractible actions. Drawing on contract completion and dual sourcing literature, it analyses the contractual and non contractual mechanisms (price incentives, grower monitoring, allocation of decision rights to the winery, role of backward integration into production) used to govern such grape transactions. Through our analysis, we were able to arrive at four main conclusions. Firstly, most agreements are still verbal, with the exception of occasional written contracts, limited to a few legal provisions. It became clear to us that this approach to forging agreements is not always adequate in managing the inherently complex interactions between grape varieties, soil, farming practices and wine-making processes in high-end wine production. Secondly, extensive decision rights are allocated to wineries, to deal with incompleteness. These are key decisions to be taken during the cropping and harvesting process. Thirdly, pricing is generally kept flexible, with grape prices negotiated ex-post. This means that trade imbalances tend to be resolved in the long term. Winegrowers also benefit from financial rewards to compensate for allocations. Finally, any potential opportunistic behaviour by wineries with regards to asset specificity (in particular yield limitation) and allocation of rights is kept at bay by mechanisms such as winery reputations and credit third-party guaranty. This type of behaviour by growers is similarly deterred through monitoring and vineyard ownership on the part of the wineries.

show abstract

Section: Plural Governancecontrasting

confidence: 39%

Quality management and contractual incompleteness: grape procurement for high-end wines in Argentina

Codron

Étienne

Rousset

2013

Journal on Chain and Network Science

View full text Add to dashboard Cite

show abstract

“…Further contemporary advances in this field have shown that the plural form phenomenon goes beyond the coexistence of company‐owned and franchised units in the franchising sector. It in fact encompasses a wide range of situations, both in the procurement of inputs across different sectors (Carlton, ; Monteverde and Teece, ; He and Nickerson, ; Parmigiani, ; Parmigiani and Mitchell, ; Ménard et al ., ) and in the distribution of products (Dutta et al ., ; Heide, ). This finding seems to hold across different sectors and distinct institutional and competitive environments.…”

Section: Plural Forms: Stable or Transitory Phenomenon?mentioning

confidence: 99%

Surveying the Economics of Plural Modes of Organization

Raynaud

Schnaider

Saes

2019

Journal of Economic Surveys

View full text Add to dashboard Cite

Why do firms concomitantly rely on more than one organizational arrangement to procure/distribute a given input/product? In this paper, we systematically review and discuss the extensive path undergone by the literature exploring this issue: the so‐called plural forms. We address two main questions: how to explain the coexistence (and often the prevalence) of plural forms in many types of businesses? Are plural forms stable or a transitory phenomenon? We describe the most prominent motivations identified in the economics and management literature that drive firms to adopt plural forms and show that their vast majority are related to the mitigation of various types of agency/transaction costs. We also demonstrate that most of the available pieces of empirical evidence suggest the stability of plural forms over time. We conclude by demonstrating the path that has been trailed by the most recent developments.

show abstract

“…2 He and Nickerson (2006) show that bi-sourcing mitigates the problems of capacity utilization and deadhead loss. Puranam et al (2006) show bi-sourcing due to the presence of internal and external scale constraints and the synergic benefits from different procurement modes.…”

Section: Introductionmentioning

confidence: 98%