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An experimental research on governance mechanisms for cost of value chain

An experimental research on governance mechanisms for cost of value chain Purpose – The purpose of this paper is to discuss the governance mechanism of overcoming or solving three problems: cooperation problem, coordination problem and appropriation problem. Also to raise the value chain cost efficiency and to elevate the value chain competitive advantage. Design/methodology/approach – The methodology is the experimental study. The authors design an experience simulating the transaction process across firms to explore the separate and joint governance effects of trust and incentive on the cost of value chain. Findings – According to the experimental results it is found that the high level of trust between firms and the incentive based on the joint interests of value chain can effectively mitigate or avoid the cooperation, coordination and appropriation problems, and thus have significant governance effects on the cost of value chain. Incentive is out of effect when a much lower level of trust across firms exists, which reflects that there is a significant complementary relationship between trust and incentive mechanisms. Research limitations/implications – The research limitation is that the practical experience and the cognition of experimenters of the researchers will influence the conclusion of the experiment, so the research on the influences of other factors must be deepened. Originality/value – The paper's value is in setting out a value chain cost management theory frame, demonstrating trust and incentive as two kinds of governance mechanism in the value chain cost management mechanism, adopting experiment method to verify the above theory, and providing the relevant behavior evidence for future research. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Nankai Business Review International Emerald Publishing

An experimental research on governance mechanisms for cost of value chain

Nankai Business Review International , Volume 3 (2): 20 – Jun 1, 2012

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Publisher
Emerald Publishing
Copyright
Copyright © 2012 Emerald Group Publishing Limited. All rights reserved.
ISSN
2040-8749
DOI
10.1108/20408741211244479
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to discuss the governance mechanism of overcoming or solving three problems: cooperation problem, coordination problem and appropriation problem. Also to raise the value chain cost efficiency and to elevate the value chain competitive advantage. Design/methodology/approach – The methodology is the experimental study. The authors design an experience simulating the transaction process across firms to explore the separate and joint governance effects of trust and incentive on the cost of value chain. Findings – According to the experimental results it is found that the high level of trust between firms and the incentive based on the joint interests of value chain can effectively mitigate or avoid the cooperation, coordination and appropriation problems, and thus have significant governance effects on the cost of value chain. Incentive is out of effect when a much lower level of trust across firms exists, which reflects that there is a significant complementary relationship between trust and incentive mechanisms. Research limitations/implications – The research limitation is that the practical experience and the cognition of experimenters of the researchers will influence the conclusion of the experiment, so the research on the influences of other factors must be deepened. Originality/value – The paper's value is in setting out a value chain cost management theory frame, demonstrating trust and incentive as two kinds of governance mechanism in the value chain cost management mechanism, adopting experiment method to verify the above theory, and providing the relevant behavior evidence for future research.

Journal

Nankai Business Review InternationalEmerald Publishing

Published: Jun 1, 2012

Keywords: Governance; Trust; Value chain; Incentive; Governance on cost of value chain; Experimental study

References