1 / 26

Law, Economics and Organization in Proactive International Contracting

Law, Economics and Organization in Proactive International Contracting. A presentation at the Future Law, Lawyering, and Language - Helping People and Business Succeed May 13, 2003 Helsinki by Associate professor, dr.juris Petri Keskitalo The faculty of Law, University of Tromsoe.

ahmed-haney
Download Presentation

Law, Economics and Organization in Proactive International Contracting

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Law, Economics and Organization in Proactive International Contracting A presentation at the Future Law, Lawyering, and Language - Helping People and Business Succeed May 13, 2003 Helsinki by Associate professor, dr.juris Petri Keskitalo The faculty of Law, University of Tromsoe

  2. Law, Economics and Organization Key features: - human actors: > are boundedly rational >> economize >>> contracts are always incomplete > are sometimes opportunistic > are able to plan with foresight >> ex ante design of contracts that create credible commitments is essential - central economic problem for organizations is adaptation > the adaptive needs of transactions differ > the adaptive capacities of alternative mechanisms for the governance of transactions differ > transaction costs matter

  3. Firm: the black box Firm

  4. Governance mechanism Transaction Cost Economics-analysis of transactions by Oliver E. Williamson: - Markets - Hierarchies - Hybrids Nature of business - Asset specificity - Frequency of transactions - Uncertainty

  5. Contract: a ”black box” full of legal provisions? Contract

  6. Contract provisions

  7. Contract provisions Contract type

  8. Contract provisions Contract type Governance mechanism

  9. Contract provisions Contract type Governance mechanism Nature of business

  10. Contract provisions Contract type Governance mechanism Nature of business

  11. GOVERNANCE MECHANISMS: HIERARCHY GOVERNANCE MARKET GOVERNANCE Firm A Organization Contracts

  12. GOVERNANCE MECHANISMS: HIERARCHY GOVERNANCE MARKET GOVERNANCE Contracts Organization Firm A MARKET ADAPTATION POWER SYMBIOSIS GOVERNANCE Contractual hierarchies COOPERATIVE ADAPTATION

  13. Firm A TRANSNATIONAL BUSINESS : S T R A T E G I E S

  14. Firm A TRANSNATIONAL BUSINESS : Direct export sales S T R A T E G I E S DIRECT SALES

  15. Firm A TRANSNATIONAL BUSINESS : Direct export sales S T R A T E G I E S DIRECT SALES Retailer INDIRECT SALES Sales Agent

  16. Firm A TRANSNATIONAL BUSINESS : Direct export sales S T R A T E G I E S DIRECT SALES Retailer INDIRECT SALES LICENSING Franchise Sales Agent License agreement

  17. Firm A TRANSNATIONAL BUSINESS : Sales office Direct export sales Subsidiary S T R A T E G I E S DIRECT SALES ESTABLIHMENT ABROAD Joint Venture Retailer INDIRECT SALES LICENSING Franchise Sales Agent License agreement

  18. Firm A TRANSNATIONAL BUSINESS : G O V E R N A N C E M E C H A N I S M S Sales office Direct export sales Subsidiary Joint Venture Retailer Franchise Sales Agent License agreement

  19. Firm A TRANSNATIONAL BUSINESS : G O V E R N A N C E M E C H A N I S M S Sales office Direct export sales Subsidiary MARKET GOVERNANCE Joint Venture Retailer Franchise Sales Agent License agreement

  20. Firm A TRANSNATIONAL BUSINESS : G O V E R N A N C E M E C H A N I S M S Sales office Direct export sales Subsidiary MARKET GOVERNANCE Joint Venture Retailer SYMBIOSIS GOVERNANCE Franchise Sales Agent License agreement

  21. Firm A TRANSNATIONAL BUSINESS : G O V E R N A N C E M E C H A N I S M S Sales office Direct export sales Subsidiary POWER GOVERNANCE MARKET GOVERNANCE Joint Venture Retailer SYMBIOSIS GOVERNANCE Franchise Sales Agent License agreement

  22. Firm A TRANSNATIONAL BUSINESS : G O V E R N A N C E M E C H A N I S M S Sales office Direct export sales Subsidiary POWER GOVERNANCE MARKET GOVERNANCE Joint Venture Retailer SYMBIOSIS GOVERNANCE Franchise Sales Agent License agreement

  23. LE&O-lessons for Proactive International Contracting: - Predict eventual problems and choose governance mechanism for the transaction - Fine-tune the chosen governance mechanism according to the ex post-adaptive needs of the transaction + incentive intensity + contractual safeguards - Remember cost effectiveness considering negotiating, designing, monitoring and enforcement of contracts + efficient use of default legal norms + efficient use of legal standards + knowledge of empirical findings in the LE&O-literature - Protect transaction-specific investments against opportunism

  24. The Power Point-presentation is available at: www.jus.uit.no/ansatte/keskitalo/Proactive LE&O.pps

  25. The end

More Related