Inter-Organizational Trust as a Shift Parameter in the Extended Transaction Cost Framework: A first Application to the LNG Industry
AbstractThis paper provides an empirical analysis examining the effect of both transaction characteristics and the institutional environment on governance choice. Using a dataset of 237 corporate-specific value chains in the global LNG industry, we introduce inter-organizational trust as a shift parameter. Following transaction cost economics, it is hypothesized that specific investments under uncertainty provide incentives to integrate vertically. Second, it is argued that inter-organizational trust changes the relative costs of vertical integration and non-integration and supports less hierarchical organizational structures. These economic relationships are tested based on probit and ordered probit models. Estimation results provide broad support for both propositions.
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Bibliographic InfoPaper provided by European University Institute in its series RSCAS Working Papers with number 2010/18.
Date of creation: 29 Jan 2010
Date of revision:
Inter-organizational trust; liquefied natural gas; shift parameter; transaction cost economics; vertical integration;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-02 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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