INTER-ORGANIZATIONAL RELATIONSHIPS IN CHINA: CHANGES IN GOVERNANCE STRUCTURES FOR RAW MATERIAL PROCUREMENT, 1988-1993
This paper examines the evolving modes of organization used by Chinese enterprises to ensure reliable supplies of raw materials during a period when China's economic system was undergoing a transformation from centrally planned to market allocation of resources. Due to the lack of reliable legal constraints on opportunistic behavior, personal connections (guanxi) were cultivated as a means to reduce transaction costs in inter- enterprise relationships during the late 1980s. In transactions characterized by extreme uncertainty and asset specificity, these informal safeguards were supplemented with new forms of governance, including compensation trade and minority ownership, in order to more formally cement buyer-supplier relationships. As continued economic reforms in the 1990s decreased the level of uncertainty associated with raw materials transactions, some of these new modes of governance began to be phased out. This longitudinal case study illustrates how various informal and structural safeguards may be used to reinforce inter-organizational relationships under uncertainty and provides support for the universality of transaction cost sensitive development of inter-organizational relationships.
Year of publication: |
1996-07-18
|
---|---|
Authors: | Whitcomb, Laura L. ; Li, Cheng |
Institutions: | California State University, Los Angeles, School of Business and Economics |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Business Ethical Values in China and the U.S
Whitcomb, Laura L., (1998)
-
Business Ethical Values in China and the U.S
Whitcomb, Laura L., (1998)
-
Rebuilding South Central Los Angeles: Myths, Realities, and Opportunities
Larson, Tom,
- More ...