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Author: Michaela Isabel Höhn
Publisher: Springer Science & Business Media
ISBN: 3642027911
Category : Business & Economics
Languages : en
Pages : 134
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Book Description
Supply relations are often governed by so-called relational contracts. These are informal agreements sustained by the value of future cooperation. Although relational contracts persist in practice, research on these types of contract is only emerging in Operations and Supply Chain Management. This book studies a two-firm supply chain, where repeated transactions via well-established supply contracts and continued quality-improvement efforts are governed by a relational contract. We are able to characterize an optimal relational contract, i.e., to develop policies for supplier and buyer that structure investments in quality and flexibility in a way that no other self-enforcing contract generates higher expected joint surplus. A second goal is to compare the performance of different returns mechanisms in the context of relational contracting (quantity flexibility and buy-back contracts). Industry studies motivate the presented model.
Author: Michaela Isabel Höhn
Publisher: Springer Science & Business Media
ISBN: 3642027911
Category : Business & Economics
Languages : en
Pages : 134
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Book Description
Supply relations are often governed by so-called relational contracts. These are informal agreements sustained by the value of future cooperation. Although relational contracts persist in practice, research on these types of contract is only emerging in Operations and Supply Chain Management. This book studies a two-firm supply chain, where repeated transactions via well-established supply contracts and continued quality-improvement efforts are governed by a relational contract. We are able to characterize an optimal relational contract, i.e., to develop policies for supplier and buyer that structure investments in quality and flexibility in a way that no other self-enforcing contract generates higher expected joint surplus. A second goal is to compare the performance of different returns mechanisms in the context of relational contracting (quantity flexibility and buy-back contracts). Industry studies motivate the presented model.
Author: Michaela Isabel H Hn
Publisher:
ISBN: 9783642027925
Category :
Languages : en
Pages : 140
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Book Description
Author: Peng Guo
Publisher: Springer Nature
ISBN: 9811655138
Category : Law
Languages : en
Pages : 198
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Book Description
This book provides fair and acceptable solutions to hardship issues in long-term relational supply contracts. This book uses an approach to strike a balance between the traditional approach underlying classical contract law which emphasises the almost absolute prevalence of the principle of pacta sunt servanda and a flexible approach that is based on the principle of clausula rebus sic stantibus. This book argues for an emerging principle of pacta sunt servanda bona fide on the basis of the relational contract theory. Additionally, this book demonstrates how good faith can serve as a foundation for imposing a duty to renegotiate on the parties. The aim of this book is rather to propose how relational contract theory can be applied to the analysis of specific legal rules in general. Lastly, this boos highlights how the duty to renegotiate and the power to adapt a contract can be further developed upon the occurrence of hardship, based on good faith and the relational nature and characteristics of a long-term relational supply contract. This book explores and enriches the existing research on relational contract theory concentrates primarily on its application in domestic contract laws, particularly in the regulation of long-term contracts in American contract law. As an outcome this book provides a more feasible and satisfactory approach for courts or arbitral tribunals to undertake when facing hardship issues in international contract disputes. Overall, hardship themes, long-term relational supply contracts and good faith are examined extensively.
Author: David Frydlinger
Publisher: Springer Nature
ISBN: 3030650995
Category : Business & Economics
Languages : en
Pages : 327
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Book Description
Today’s business environment is constantly evolving, filled with volatility, uncertainty, complexity and ambiguity and driven by digital transformation, globalization, and the need to creating value through innovation. These shifts demand that organizations view contracting through a different lens. Since it is impossible to predict every what-if scenario in a transactional contract, organizations in strategic and complex partnerships must shift to a mindset of shared goals and objectives built upon a strong foundation of transparency and trust, working together to mitigate risk much better than merely shifting risk to the weaker party. Contracting in the New Economy helps you to not only develop this mindset – but also offers the practical tools needed to embrace the social side of contracting, enabling your organization to harness the value creating potential of formal relational contracts. Briefly sharing the theoretical foundations that prove relational contracting works, it goes well beyond theory by providing powerful examples of relational contracting principles in practice. In addition, the authors provide a practical and proven approach for helping you to put relational contracting theory into practice for your own relationships. First by providing a framework for approaching any contracting situation and helping organizations finding the best contract model for each situation. And then by sharing five proven steps you can take to create an effective relational contract for you own strategic and complex business relationships. For anyone involved in developing contracts —lawyers, in-house counsels, contract managers, C-level managers, procurement officers, and so on — this book will empower you to create powerful cooperative alliances that will help you reach —and surpass — your business goals in today’s dynamic new environment.
Author: Sridhar Tayur
Publisher: Springer Science & Business Media
ISBN: 1461549493
Category : Business & Economics
Languages : en
Pages : 851
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Book Description
Quantitative models and computer-based tools are essential for making decisions in today's business environment. These tools are of particular importance in the rapidly growing area of supply chain management. This volume is a unified effort to provide a systematic summary of the large variety of new issues being considered, the new set of models being developed, the new techniques for analysis, and the computational methods that have become available recently. The volume's objective is to provide a self-contained, sophisticated research summary - a snapshot at this point of time - in the area of Quantitative Models for Supply Chain Management. While there are some multi-disciplinary aspects of supply chain management not covered here, the Editors and their contributors have captured many important developments in this rapidly expanding field. The 26 chapters can be divided into six categories. Basic Concepts and Technical Material (Chapters 1-6). The chapters in this category focus on introducing basic concepts, providing mathematical background and validating algorithmic tools to solve operational problems in supply chains. Supply Contracts (Chapters 7-10). In this category, the primary focus is on design and evaluation of supply contracts between independent agents in the supply chain. Value of Information (Chapters 11-13). The chapters in this category explicitly model the effect of information on decision-making and on supply chain performance. Managing Product Variety (Chapters 16-19). The chapters in this category analyze the effects of product variety and the different strategies to manage it. International Operations (Chapters 20-22). The three chapters in this category provide an overview of research in the emerging area of International Operations. Conceptual Issues and New Challenges (Chapters 23-27). These chapters outline a variety of frameworks that can be explored and used in future research efforts. This volume can serve as a graduate text, as a reference for researchers and as a guide for further development of this field.
Author: Gian Luigi Albano
Publisher:
ISBN:
Category :
Languages : en
Pages : 34
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Book Description
We show how repeatedly awarded procurement contracts where unverifiable quality dimensions are relevant can be reinterpreted as relational contracts between a buyer and a contractor that is threatened by a potentially less efficient competitor. We compare two scenarios: 1) Under freedom of choices the (public) buyer freely chooses the contractor, the price and the (unverifiable) quality it should stick to, 2) in a competitive discretionary tendering the buyer evaluates differently the bids of the suppliers by means of a handicap, based on the firm's past performance. We show that, if firms' costs are common knowledge, relational discriminatory tenderings replicates the results of long term contracting (freedom of choice). The handicap ensures the existence of a relational contract under which the buyer selects the more efficient firm and pays it a price higher than its cost, and the firm delivers the required quality. This outcome is an equilibrium when thecost of quality is not too high, and the players' discount factor and the valuation of quality are not small. A self-enforcing relational contract entails an handicap which is closer to the difference between the firms' specific-cost, the lower is the variable cost of quality and the higher is the players' discount factor.
Author: Gian Luigi Albano
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
We show how repeatedly awarded procurement contracts where unverifiable quality dimensions are relevant can be reinterpreted as relational contracts between a buyer and a contractor that is threatened by a potentially less efficient competitor. We compare two scenarios: 1) Under freedom of choices the (public) buyer freely chooses the contractor, the price and the (unverifiable) quality it should stick to, 2) in a competitive discretionary tendering the buyer evaluates differently the bids of the suppliers by means of a handicap, based on the firm's past performance. We show that, firms' costs are common knowledge, relational discriminatory tenderings replicates the results of long term contracting (freedom of choice). The handicap ensures the existence of a relational contract under which the buyer selects the more efficient firm and pays it a price higher than its cost, and the firm delivers the required quality. This outcome is an equilibrium when the cost of quality is not too high, and the players' discount factor and the valuation of quality are not small. A self-enforcing relational contract entails an handicap which is closer to the difference between the firms' specific-cost, the lower is the variable cost of quality and the higher is the players' discount factor.
Author: Francisco Brahm
Publisher:
ISBN:
Category :
Languages : en
Pages : 41
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Book Description
Relational contracts are key to supply chain collaboration. The literature has focused on the role of trust stemming from prior business with current suppliers. However, the role of expected future business volume on the make-or-buy decision has been relatively neglected. This paper contributes to the literature by examining how the level of expected future business volume affects the make-or-buy decision, that is, the choice to produce the product or service internally rather than to outsource it. Using regression analysis of secondary data from 12,272 construction projects and controlling for endogeneity, our results show that expected future business volume promotes outsourcing and that this impact is larger when the level of prior business with external suppliers is stronger and there is more specificity in the relationship. Our results are consistent with a game theoretic logic in which informally promising future interactions to sustain collaboration is more credible to external suppliers than to internal units because the former can use their assets elsewhere. Also, our results suggest that trust stemming from prior business reinforces the calculativeness logic that stems from the expectation of future business.
Author: Fabrice Defever
Publisher:
ISBN:
Category : Contracts
Languages : en
Pages : 46
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Book Description
Headquarters and their specialized component suppliers have a vital interest in establishing long-term collaborations. When formal contracts are not enforceable, such efficiency-enhancing cooperations can be established via informal agreements, but relational contracts have been largely ignored in the literature on the international organization of value chains. In this paper, we develop a dynamic property rights model of global sourcing. A domestic headquarter collaborates with a foreign input supplier and makes two decisions in every period: i) whether to engage in a costly search for a better partner, and ii) whether to make a non-binding offer to overcome hold-up problems. Our key result is that the possibility to switch partners crucially affects the contractual nature of buyer-supplier relationships. In particular, some patient firms do not immediately establish a relational contract, but only when they decide to stop searching and thus launch a long-term collaboration with their supplier. From our model, we develop an instrumental variable estimation strategy that we apply using transaction-level data of fresh Chinese exporters to the US. We obtain empirical evidence in line with the theoretical prediction of a positive causal effect of match durations on relational contracting.
Author: Mariya Bondareva
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
We model the interaction of a single buyer with a single supplier within a market in a developing country with homogeneous local suppliers and homogeneous buyers from developed nations. The buyer sources a product from a supplier and then inspects and sells it on the market, subject to quality standards such as regulations about chemical content. Suppliers decide how much effort to exert to ensure compliance with quality standards. Buyers are assumed to comply with con-tracts because they are based in countries with strong legal systems. We assume that legal enforcement of the supplier's contractual obligations is not possible. We model the interaction be-tween buyer and supplier as a repeated game in which the partnership can be terminated by the buyer if the supplier refuses to pay penalties for quality violations. After termination, the buyer and supplier each search for a new business partner. We model the interaction between buyer and supplier using relational contacts in which penalties for quality failures are set so that the supplier voluntarily pays them. We show that optimal relational contracts have dynamic form in this set-ting because the value of the outside option available to the parties, if the relationship is terminated, is determined by the contract terms. We characterize the properties of the optimal dynamic equilibria and analyze the use of third-party quality certifications within this framework.
