Structuring residual income and decision rights under internal governance: results from the Hungarian trucking industry
The paper offers a property rights and monitoring cost explanation for the allocation of residual income and decision rights between the carriers and truck drivers under internal governance. First, by applying the property rights theory, we argue that the structure of residual income rights depends on the importance of noncontractible (intangible) assets of the truck driver to generate residual surplus. The more important the truck driver's intangible knowledge assets, the more residual income rights should be transferred to him. Second, we controlled for the monitoring costs as an additional explanatory variable of the allocation of residual income rights. According to agency theory, the variable proportion of the driver's income should be higher where monitoring costs are higher. Third, we investigate the relationship between residual income and residual decision rights under internal governance. If the contractual relation is governed by an employment contract, residual decision and residual income rights may be substitutes because, under fiat, a certain incentive effect of the governance structure may result either from the allocation of high-powered incentives or the transfer of residual decision rights to the driver. These hypotheses were tested by using data from the Hungarian trucking industry. The data provide partial support for the hypotheses. Copyright © 2005 John Wiley & Sons, Ltd.
Volume (Year): 26 (2005)
Issue (Month): 5 ()
|Contact details of provider:|| Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976|
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.:
- Michael D. Whinston, 2001. "Assessing the Property Rights and Transaction-Cost Theories of Firm Scope," American Economic Review, American Economic Association, vol. 91(2), pages 184-188, May.
- Woodruff, Christopher, 2002. "Non-contractible investments and vertical integration in the Mexican footwear industry," International Journal of Industrial Organization, Elsevier, vol. 20(8), pages 1197-1224, October.
- Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 1-29, February.
- Francine Lafontaine & Margaret E. Slade, 1998. "Incentive Contracting and the Franchise Decision," NBER Working Papers 6544, National Bureau of Economic Research, Inc.
- Francine Lafontaine, 1992. "Agency Theory and Franchising: Some Empirical Results," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 263-283, Summer.
- Benito Arruñada & Manuel González-Díaz & Alberto Fernández, 2004.
"Determinants of organizational form: transaction costs and institutions in the European trucking industry,"
Industrial and Corporate Change,
Oxford University Press, vol. 13(6), pages 867-882, December.
- Benito Arruñada & Manuel González & Alberto Fernández, 2004. "Determinants of organizational form: Transaction costs and institutions in the European trucking industry," Economics Working Papers 767, Department of Economics and Business, Universitat Pompeu Fabra.
- Jack A. Nickerson & Brian S. Silverman, 2003. "Why aren't all Truck Drivers Owner-Operators? Asset Ownership and the Employment Relation in Interstate for-hire Trucking," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(1), pages 91-118, 03.
- George P. Baker & Thomas N. Hubbard, 2004. "Contractibility and Asset Ownership: On-Board Computers and Governance in U. S. Trucking," The Quarterly Journal of Economics, Oxford University Press, vol. 119(4), pages 1443-1479.
- Harvey S. James Jr, 2000. "Separating contract from governance," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(2), pages 47-61.
- James A. Brickley & Frederick H. Dark & Michael S. Weisbach, 1991. "An Agency Perspective on Franchising," Financial Management, Financial Management Association, vol. 20(1), Spring.
- Arora, Ashish & Gambardella, Alfonso, 1990. "Complementarity and External Linkages: The Strategies of the Large Firms in Biotechnology," Journal of Industrial Economics, Wiley Blackwell, vol. 38(4), pages 361-379, June. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:wly:mgtdec:v:26:y:2005:i:5:p:295-305. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.