
- What are the main types of market governance mechanism?.
- TCE (transaction cost economics) demonstrates that the governance between independent firms can be crafted by the degree of asset specificity (Ouchi, 1980; Williamson, 1985; Lai, 1990; Stump and Heide, 1996), that is, transactions of the high asset-specificity form should be governed by the hierarchy governance mechanism; transactions of the low asset-specificity type should be governed by the market governance mechanism..
- Are there any other interesting aspects about this article?.
- Buyer-to-supplier governance alone is not sufficient to drive positive change of supplier’s social and ethical conduct..
- What are some of the reasons why it is insufficient?.
- If only simply deploying code monitoring, buyers from AEs may defend their brands or reputation against NGO or customer criticism, but cannot actively pursue meaningful improvement of supplier’s compliance..
- Can you tell me more about the mechanism?.
- The overall reliance on buyer-to-supplier governance may create a system in which a supplier’s main objective is to pass the audit, rather than address the substantive issues that are the focus of the audit..
- Is there anything else that is notable?.
- In market governance, opportunism in interorganizational relationships may be controlled through threats (Gundlach et al., 1995)..
- What types of threats?.
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Even though, as a result, buyers from AEs must be aware that an emphasis on market governance (i.e. threatening, monitoring, or inspecting) may actually be more costly in the long run (Roth et al., 2008).