Template-Type: ReDIF-Paper 1.0
Author-Name: Speklé, R.F.
Author-Name-Last: Speklé
Author-Name-First: Roland
Author-Name: van den Bogaard, M.A.
Author-Name-Last: van den Bogaard
Author-Name-First: Michel
Title: Reinventing The Hierarchy, The Case Of The Shell Chemicals Carve-Out
Abstract: This paper reports on a major portfolio restructuring at Shell. The restructuring involved the divestment of a significant part of Shell?s highly integrated chemical business. We study this event and -particularly- the related control issues, using Transaction Cost Economics (TCE) as our basic frame of reference. Our analysis shows that many of the problems encountered by Shell in this process are strongly related to asset specificity and the need for adaptive mutual coordination and integration. In a situation in which asset specificity is high and where adaptive responses are important, TCE reasoning suggests internal (hierarchical) governance to prevail because of its superior ability to foster coordinated adaptation. Shell, however, opted for hybrid control. But our analysis demonstrates that the new, intendedly hybrid structure mimics the hierarchy in almost all fundamental respects, and that it functions in an intrinsically hierarchical way. These findings are in line with TCE, and our study provides an illustration of the relevance of TCE in making sense of control.
Creation-Date: 2002-06-04
File-URL: https://repub.eur.nl/pub/206/erimrs20020604175652.pdf
File-Format: application/pdf
Series: RePEc:ems:eureri
Number: ERS-2002-52-F&A
Classification-JEL: L22, M, M41
Keywords: case research, management control, transaction cost economics
Handle: RePEc:ems:eureri:206