Institutions and Governance of Business Relationships

GRIN Verlag, 2007 - 128 páginas
Master's Thesis from the year 2007 in the subject Economics - Case Scenarios, grade: 1,3, Otto-von-Guericke-University Magdeburg, 308 entries in the bibliography, language: English, abstract: As a result of globalization, today's business environment is characterised by highly dynamic, integrated markets in which cross-cultural skills and sensitivity have become indispensable requirements for international managers. Increasing attention has been paid to various organizational and governance forms of business relationships, existing and possibly persisting within those distinctive and evolving institutional environments. As a result of China's rapid development throughout the last two decades, and the increasing influence of Chinese business practices, stretching throughout East-Asia, on world affairs, the role of Guanxi - the traditionally predominant informal, trust-based governance form - in Chinese business culture, and generally, the fundamental differences in the Chinese approach of doing business, have become topics of growing interest. While developing and integrating into the world economy, China has been experiencing observable formal institutional change on the way to setting up a framework supporting market transactions on a global scale using more control-based forms of governance. A conventional, theoretical, efficiency-based assumption has been that informal governance forms will eventually be displaced by formal ones as countries undergo transition and institutional change. However, reality has proven to be different and hence, generalizations seem to be questionable. Employing the analytical instruments provided by the New Institutional Economics, this study extends and contributes to previously existing literature on institutions' influence on governance of business relationships by researching the effects of formal institutional framework changes on the role of trust-based governance in a specific institutional environment - namely, in China, an

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List of Abbreviations
FDI Foreign Direct Investment
SOE StateOwned Enterprise
Rule of Law 2005 China in Comparison with 208 Countries
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Página 23 - How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.
Página 21 - virtually every commercial transaction has within itself an element of trust, certainly any transaction conducted over a period of time. It can be plausibly argued that much of the economic backwardness in the world can be explained by the lack of mutual confidence
Página 14 - Transaction-cost economics concurs that the transaction is the basic unit of analysis and regards governance as the means by which order is accomplished in a relation in which potential conflict threatens to undo or upset opportunities to realize mutual gains.
Página 51 - Law, measuring the quality of contract enforcement, the police, and the courts, as well as the likelihood of crime and violence...
Página 50 - Control of corruption, the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as "capture" of the state by elites and private interests.
Página 30 - Individualism pertains to societies in which the ties between individuals are loose: everyone is expected to look after himself or herself and his or her immediate family.
Página 51 - Rule of law measures the extent to which agents have confidence in and abide by the rules of society. These include perceptions of the incidence of both violent and nonviolent crime, the effectiveness and predictability of the judiciary, and the enforceability of contracts.
Página 62 - Indeed, the study of economic organization in a regime of rapid innovation poses much more difficult issues than those addressed here.
Página 118 - Wicks, AC/Berman, SL/Jones, TM (1999) The Structure Of Optimal Trust: Moral And Strategic Implications; in: Academy of Management Review, Vol.
Página 94 - G (2003): Contextual confidence and active trust development in the Chinese business environment.

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