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Relational ties or customized contracts? An examination of alternative governance choices in China

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Author Info

  • Kevin Zheng Zhou

    (School of Business, The University of Hong Kong, Pokfulam, Hong Kong)

  • Laura Poppo

    (School of Business, University of Kansas, Lawrence, USA)

  • Zhilin Yang

    (Department of Marketing, City University of Hong Kong, Hong Kong)

Abstract

As business transactions become more complex in China – an increasingly market-driven economy – are managers more likely to employ relational ties or contracts? Consistent with the view that personal institutions govern transactions in China, our analysis of 361 buyer–supplier exchanges indicates that managers rely more on relational ties as asset specificity and uncertainty increase. We also find some support that impersonal institutions govern market transactions: as uncertainty increases, managers craft more customized contracts. Surprisingly, there is no association between contracts and asset specificity. These results hold for both local and foreign firms. Journal of International Business Studies (2008) 39, 526–534. doi:10.1057/palgrave.jibs.8400363

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Bibliographic Info

Article provided by Palgrave Macmillan in its journal Journal of International Business Studies.

Volume (Year): 39 (2008)
Issue (Month): 3 (April)
Pages: 526-534

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Handle: RePEc:pal:jintbs:v:39:y:2008:i:3:p:526-534

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Cited by:
  1. Han, Jiqin & Trienekens, Jacques H. & (Onno) Omta, S.W.F., 2011. "Relationship and quality management in the Chinese pork supply chain," International Journal of Production Economics, Elsevier, vol. 134(2), pages 312-321, December.
  2. Kiran Ismail & David Ford & Qingsheng Wu & Mike Peng, 2013. "Managerial ties, strategic initiatives, and firm performance in Central Asia and the Caucasus," Asia Pacific Journal of Management, Springer, vol. 30(2), pages 433-446, June.
  3. Ju, Min & Murray, Janet Y. & Kotabe, Masaaki & Gao, Gerald Yong, 2011. "Reducing distributor opportunism in the export market: Effects of monitoring mechanisms, norm-based information exchange, and market orientation," Journal of World Business, Elsevier, vol. 46(4), pages 487-496, October.
  4. Jia, Flora Fang & Wang, Jeff Jianfeng, 2013. "Marketing channel relationships in China: A review and integration with an institution-based perspective," Journal of Business Research, Elsevier, vol. 66(12), pages 2545-2551.
  5. Berulava, George, 2013. "Do Trust-Based Relations Improve Firm’s Performance? Evidence from Transition Economies," MPRA Paper 48430, University Library of Munich, Germany.
  6. Yeung, Kwong & Lee, Peter K.C. & Yeung, Andy C.L. & Cheng, T.C.E., 2013. "Supplier partnership and cost performance: The moderating roles of specific investments and environmental uncertainty," International Journal of Production Economics, Elsevier, vol. 144(2), pages 546-559.

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