http://repub.eur.nl/res/concept/jel-D23/ Recent publications classified by JEL Code D23 en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/32667/ 2012-05-16T00:00:00Z This paper studies how social relationships between managers and employees affect relational incentive contracts. To this end we develop a simple dynamic principal-agent model where both players may have feelings of altruism or spite toward each other. The contract may contain two types of incentives for the agent to work hard: a bonus and a threat of dismissal. We find that good social relationships undermine the credibility of a threat of dismissal but strengthen the credibility of a bonus. Among others, these two mechanisms imply that better social relationships sometimes lead to higher bonuses, while worse social relationships may increase productivity and players' utility in equilibrium. Dur, A.J. Tichem, J. http://repub.eur.nl/res/pub/14437/ 2008-06-09T00:00:00Z We propose a model in which two parties select the internal organization that helps them win the election. Party choices provide incentives to the politicians who represent them. Depending on whether politicians are opportunistic or partisan, we identify four effects. First, a selection effect: intraparty competition gives parties more candidates to choose from. Second, an incentive effect: intraparty competition adds a hurdle and impacts on candidates’ incentives. Third, a trust effect: because of the incentive effect, intraparty competition is a signal to uninformed voters. Finally, with partisan preferences, an ideology effect appears. Ideology is a public good in a competitive party and induces free riding. Intraparty competition is valuable when voters are badly informed or interparty competition is weak. These results rationalize the introduction of direct primaries in the U.S., the organizational changes in Western European parties since 1960 and the organizational differences between centrist and extreme parties. Castanheira, M. Crutzen, B.S.Y. Sahuguet, N. http://repub.eur.nl/res/pub/6891/ 2005-09-06T00:00:00Z In recent years, the scope of internal auditing has broadened considerably, increasing the importance of internal auditing as part of the organization’s management control structure. This expanding role has changed the demands being put on internal auditors. Their new role requires different skills and competencies, and many organizations now need to face the choice whether to develop these broader competencies internally or to outsource internalauditing to outside service providers. This paper studies the factors associated with organizations’ internal audit sourcing decisions, building from a previous study by Widener & Selto (1999; henceforth W&S). In their study, W&S used Transaction Cost Economics (TCE) to explain the organization of internal auditing. Our study seeks to replicate their results, using newly collected data from 66 companies headquartered in the Netherlands. Our findings are supportive of W&S. Like W&S, we find asset specificity and frequency (both individually and in interaction) to be significantly associated with sourcing decisions in a regression model that explains 65% (adjusted R2 = 0.63) of the variance in outsourced internal auditing. Additional analyses reinforce the importance of these TCE variables in explaining organizations’ internal auditing sourcing behaviour. Spekle, R.F. Elten, H.J. van Kruis, A.M. http://repub.eur.nl/res/pub/1609/ 2004-09-17T00:00:00Z This chapter introduces the notion of how old economy brick-and-mortar firms are adapting their HRM policies and practices and the roles of their HR departments in light of newly introduced Web-based business-to-business transaction practices. It argues that the Internet has introduced three new business models in old economy companies: the Internet as a marketplace, the Internet as a supply chain integrator, and the Internet as a catalyst for business model redefinition. These innovative ways of organizing are providing HR with opportunities to rise to new challenges and increase their added-value to the firm. Paauwe, J. Farndale, E. Williams, A.R.T. http://repub.eur.nl/res/pub/1571/ 2004-09-08T00:00:00Z In this paper, we explore the factors that determine the longevity of firms. Five central factors were distilled from the literature: position in the supply chain, the nature of the technology used, structure, culture, and financial policy. We made an extensive case-study of the Dutch storage company Royal Pakhoed and its predecessors from the early seventeenth century to the present. We conclude that all five factors contributed to the longevity of Pakhoed, but to a different degree. Paradoxically, its dependent position in the supply chain enhanced Pakhoed's longevity because it led to a high absorptive capacity. The technology used proved to be surprisingly flexible and versatile. The structure was characterized both by centralized and decentralized features throughout the ages; decentralization enhanced continuity in several cases. The company's culture has been always rather 'open', but it restricted the range of successful diversification beyond storage and warehousing. A conservative financial policy helped one of Pakhoed's main predecessors to survive throughout the nineteenth century, but this factor seems to have been of relatively minor importance after the Second World War. Driel, H. van Volberda, H.W. Eikelboom, S. http://repub.eur.nl/res/pub/6650/ 2004-04-08T00:00:00Z This article analyzes under which conditions a manager can motivate a junior worker by verbal communication, and explains why communication is often tied up with organizational choices as job enlargement and collaboration. Our model has two important features. First, the manager has more information about a junior's ability than the junior himself. Second, the junior's effort and ability are complements. We show that the manager has an incentive to exaggerate the junior's ability. We discuss two ways in which the manager can make credible statements about the junior's ability. First, the senior can delegate a task to the junior for which it is important that the junior has a correct perception of his ability. Information is shared through a costless signal. Second, the senior can spend more time on a junior she perceives as able than on a junior she perceives as less able. Information is then shared through a costly signal. Swank, O.H. Visser, B. http://repub.eur.nl/res/pub/6656/ 2004-02-24T00:00:00Z Organizational theory has construed complexity as an objective characteristic of either the structure or the behaviour of an organization. We argue that to further our understanding it should be understood in terms of human cognition of a structure or behavior. This cognitive twist is illustrated using two theoretical approaches, whose relationship is discussed. Fioretti, G. Visser, B. http://repub.eur.nl/res/pub/6702/ 2003-07-07T00:00:00Z How much does a nation spend on resources to 'grease the wheels of trade'? To examine this question the Dutch economy is used as an exemplary case as the Netherlands are known as a nation of traders. This image was derived in the seventeenth century from successes in long distance trade, shipping and financial innovations. Despite its historical background in trading the potential to 'truck and barter' has never been adequately measured. In this paper we present a first attempt in measuring and describing the Dutch transaction sector. Measurement by means of occupational data points out that approximately 25 percent of Dutch workers are employed in transaction jobs, and 29 percent if one includes transport and distribution tasks. From a historical perspective this may seem large, but we make the case that traditional sector categories underestimate the true trading character of an economy. Furthermore, we find that in enhancing transactions cities or agglomerations remain important, suggesting that face-to-face trade remains an important element of modern transactions. In contrast to the history of immigrants in the Netherlands, the main immigrant groups of today do not fulfill a brokerage function in bringing about trade between different cultures. Dalen, H.P. van Vuuren, A.P. van http://repub.eur.nl/res/pub/265/ 2003-01-10T00:00:00Z Management of intellectual capital is an important issue in knowledge intensive organizations. Part of this is the composition of the optimal project portfolio the organization will carry out in the future. Standard methods that guide this process mostly focus on project selection on the basis of expected returns. However, in many cases other strategic factors should be considered in their interdependence such as customer satisfaction, reputation, and development of core competences. In this paper we present a tool for the selection of a project portfolio, explicitly taking into account the balancing of these strategic factors. The point of departure is the intellectual capital scorecard in which the indicators are periodically measured against a target; the scores constitute the input of a programming model. From the optimal portfolio computed, objectives for management can be derived. The method is illustrated in the case of R&D departments. Daniels, H.A.M. Jonge, B. de http://repub.eur.nl/res/pub/237/ 2002-10-22T00:00:00Z Transaction value analysis (TVA) integrates the concepts of resource heterogeneity and transaction cost economics into a single framework, which emphasizes both value creation and value claiming in firms' vertical integration decisions. Using a TVA perspective, we develop hypotheses to explain the firm's intent to outsource application services. A sample of 178 firms in the publishing and printing industry in The Netherlands is used to test the hypotheses. This paper finds that firms take both value-creation and value-claiming motivations into consideration, with value creation having on average a dominating impact, thus substantiating the TVA framework. However, we also find that if the risks of opportunism in outsourcing contracting are high, value creation becomes the less important factor in make-or-buy decisions. Furthermore, the paper shows that the need for flexibility is a major driver of governance choice for value-creation as well as for value-claiming motivations. Implications and future research directions are discussed. Verwaal, E. Verbeke, W.J.M.I. Commandeur, H.R. http://repub.eur.nl/res/pub/6813/ 2002-05-28T00:00:00Z This paper analyses the relationship between organizational complexity ( the degree of detail of information necessary to correctly assign agents to positions), robustness (the relative loss of performance due to mis-allocated agents), and performance. More complex structures are not necessarily more profitable, but are less robust. One of the least complex structures always performs worst. Superior organizational performance may vanish completely due to mis-allocated agents. Organizational performance can be enhanced through training agents; re-assigning them when adequate knowledge about their characteristics is obtained through monitoring; simplifying the organizational structure; and influencing the environment. The trade-offs involved are analysed. Visser, B. http://repub.eur.nl/res/pub/176/ 2002-03-06T00:00:00Z In this paper, I present and discuss a theory of management control based on Transaction Cost Economics. This theory specifies the composition of various archetypal control structures, and links these to their respective habitat. These are: (1) arm's length control; (2) machine control; (3) exploratory control; and (4) boundary control. The gist of the argument is that activities predictably differ in the control problems to which they give rise, whereas control archetypes differ in their problem-solving ability, and that alignments between the two can be explained by delineating the efficiency properties of the match. This approach has some interesting qualities. Its relatively simple theme seems to speak to a wide empirical domain, and can be used to make sense of a large set of different control practices. Furthermore, it offers a practicable way to address control structure effectiveness. Finally, the approach is empirically testable. Spekle, R.F. http://repub.eur.nl/res/pub/11497/ 2002-01-01T00:00:00Z This paper presents a transaction costs analysis of the firm size and export intensity relationship. We submit that relation-specific investments and the costs of safeguarding these investments play a significant role in export relationships. Firm size related differences with respect to these factors are used to explain the different relationships between firm size and export intensity that have been found in previous studies. The theoretical framework is tested empirically, and support is found for different industries. Verwaal, E. Donkers, A.C.D. http://repub.eur.nl/res/pub/6871/ 2001-04-04T00:00:00Z This paper examines the relationship between organization contextual variables and human resource management (HRM) practices in small firms. The proposed model is based on an integration of theoretical perspectives, including the resource-based approach, institutional theory, transaction cost economics (TCE), and concepts from strategic management. The model is explored empirically, with qualitative and quantitative analyses of data collected from a sample of sixteen small Dutch firms. Specific contextual variables examined include company size, the presence of a collective labor agreement, having a large firm associate, either as supplier, purchasing group or franchiser, and the company's strategic orientation toward growth (growth strategy). An important finding is the significance of having a large firm associate. Companies with a large firm associate are more likely to report having employer-based training programs. As predicted, company size is associated with more formal HRM practices, including greater regularity of performance appraisal and greater likelihood of employer-based training. A weak relationship is found between a more growth-oriented strategy and greater formality of these two HRM practices. Predictions based on collective labor agreements are not supported. The paper concludes that the findings warrant further research on the relationship between organization contextual variables and the formalization of HRM practices, although a clearer definition of the latter variable is needed in future research. Kok, J.M.P. de Uhlaner, L.M. http://repub.eur.nl/res/pub/77/ 2001-02-26T00:00:00Z This paper presents a unifying theory, explaining the different relationships between firm size and export intensity that have been found in previous studies. We propose that transaction costs economies and different types of resources induce a moderating effect on the firm size and export intensity relationship. Data on international businesses in the Netherlands are used to test the theoretical framework empirically, and support is found for different industries. Verwaal, E. Donkers, A.C.D.