Adaptive Governance: The Role of Loyalty
AbstractThis paper is concerned with the governance of vertical interfirm relations, i.e. relations between buyers and their suppliers on industrial, intermediate-goods markets. Networks of interacting, adaptive buyers and suppliers are viewed as complex adaptive systems (Holland and Miller 1991), which we study using computer simulations. Starting from a static transaction cost economic perspective, our model is extended with allowance for loyal behavior and for trust to build up and with temporal and network embeddedness of relations. The paper analyzes how relations develop in time: actors making and breaking relations, on the basis of evaluations of expected profitability and loyalty. When allowance is made for adaptation of the relative weights attached to each of these criteria, the result is that buyers adaptively shift the weight from profitability to loyalty. This is an especially interesting and strong result, because the fitness measure on which adaptation is based is profit only.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Santa Fe Institute in its series Research in Economics with number 98-06-048e.
Date of creation: Jun 1998
Date of revision:
Contact details of provider:
Postal: 1399 Hyde Park Road, Santa Fe, New Mexico 87501
Web page: http://www.santafe.edu/sfi/publications/working-papers.html
More information through EDIRC
Transaction costs; governance; loyalty; artificial adaptive agents;
Other versions of this item:
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.:
- Weisbuch, Gerard & Alan Kirman & Dorothea K. Herreiner, 1996.
Discussion Paper Serie B
391, University of Bonn, Germany.
- Tomas Klos, .
"Decentralized Interaction and Co-adaptation in the Repeated Prisoner's Dilemma,"
Computing in Economics and Finance 1997
88, Society for Computational Economics.
- Klos, Tomas B., 1997. "Decentralized interaction and co-adaptation in the repeated prisoner's dilemma," Research Report 97B33, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
- Nooteboom, B., 1996. "Trust, opportunism and governance: A process and control model," Open Access publications from Tilburg University urn:nbn:nl:ui:12-376064, Tilburg University.
- PÃ©li, GÃ¡bor & Nooteboom, Bart, 1996.
"Simulation of learning in supply partnerships,"
97B04, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
- Holland, John H & Miller, John H, 1991. "Artificial Adaptive Agents in Economic Theory," American Economic Review, American Economic Association, vol. 81(2), pages 365-71, May.
- Riordan, Michael H. & Williamson, Oliver E., 1985. "Asset specificity and economic organization," International Journal of Industrial Organization, Elsevier, vol. 3(4), pages 365-378, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel).
If references are entirely missing, you can add them using this form.