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Mapping the landscape of transactions : the governance of business relations in Latin America (English)

To what extent do firms use trust, law, and third-parties to ensure fulfillment of agreements to transact? How do they combine these mechanisms to form transactional governance structures? How do answers to these questions vary across countries? Generating the relevant data requires constructing a survey question answerable by any firm, anywhere. The question is administered in six South American countries. Applied to the resultant data, latent class analysis (LCA) estimates classes that correspond to the transactional governance structures that firms employ to support implementation of agreements. Without imposing an a priori model, LCA discovers meaningful governance structures. Bilateralism appears in all governance structures. Law is never used alone. Bilateralism and formal institutions are sometimes complements, never substitutes. Within-country regional variation in the use of bilateralism and law exceeds cross-country variation. LCA provides the posterior probabilities that each firm uses each governance structure, facilitating testing hypotheses consequent on Williamson's discriminating-alignment agenda.

Details

  • Author

    Francis,David C., Karalashvili,Nona, Murrell,Peter

  • Document Date

    2018/08/22

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS8564

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Latin America,

  • Region

    Latin America & Caribbean,

  • Disclosure Date

    2018/08/22

  • Disclosure Status

    Disclosed

  • Doc Name

    Mapping the landscape of transactions : the governance of business relations in Latin America

  • Keywords

    composite question is; process of development; types of firms; absence of evidence; law and society; formal legal arrangement; pattern of trade; context of innovation; supplier relations; legal system; mutual interest; legal institution; legal support; cross-country data; legal mechanism; consistent estimate; ceteris paribus; statistical measure; firm size; cross-country variation; research agenda; causal effect; representative sample; descriptive statistic; transaction cost; business relationship; economics literature; factor analysis; support agreements; survey questions; resolving problem; model specification; survey design; class size; comparable data; individual response; production input; research program; sampling design; survey implementation; indicator function; marginal increase; log-likelihood function; consumer relation; standard approach; corporate governance; trained interviewer; trade credit; statistical technique; productive use; rigorous procedure; legal contract; simple model; statistical theory; Social Sciences; statistical results; product quality; country-level indicator; similar way; sample mean; local contractor; summary statistic; survey data; enforcement mechanism; institutional rule; social clubs; bayes theorem; estimation method; statistical analyses; personal relationship; social structure; contract enforcement; data availability; legal sanction; classical view; business economics; geographical location; Emerging economies; emerging economy; ample evidence; exchange regime; trade network; economic sector; development policy; open access; regional variation; selection bias; thought process; natural way; marginal probability; graphical representation; standard error; confidence interval; enforceable contract; existing knowledge; random sampling; institutional framework; parsimonious model; legal enforcement; court congestion; governmental officials; enforcement cost; arbitration mechanism; conservative assumption; cross-country study; skilled labor; standard deviation

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Citation

Francis,David C. Karalashvili,Nona Murrell,Peter

Mapping the landscape of transactions : the governance of business relations in Latin America (English). Policy Research working paper,no. WPS 8564,Paper is funded by the Knowledge for Change Program (KCP) Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/524361534957836994/Mapping-the-landscape-of-transactions-the-governance-of-business-relations-in-Latin-America