Please enable JavaScript.

Coggle requires JavaScript to display documents.

Transactions, Incomplete Contracts, Coordination, Vertical Relations,…

- - - - When principal is risk neutral, numerator is 1, so compensation is a constant. Principal takes all risk, agent - no risk. y (other performance information) adds no value.
      - G'(x-S(x,y))/U'(S(x,y) = Lambda
    - - Term gets added to the Lambda. A fixed compensation will make the agent shirk, compensation needs to be based on x and y as well.
      - y needs to be information in addition to x to be useful
      - y needs to be something that agent effort 'a' can affect
- - - - Problems
        
        Information Asymmetry
        
        Nodes know own demand (Anand &M 1997, Nault 1998, Nault & Deter 1994, Nault and Dexter 2006,), or own productivity (Harris et al)
        
        Nodes do not know HQ's production cost (A&M1997)
        
        HQ does not know node's productivity
        
        Externalities
        
        Node's investment increases other nodes profits and HQ profits, leads to under-investment(Nault 1998, Nault and Dexter 1994, Nault and Dexter 2006)
        
        What should investment levels be for nodes and HQ?
      - General Setup1: There are investment complementarities between HQ and nodes. But each doesnt know the other's investment level. CA sets m,t. Org forms include Hierarchical, decentralized, mixed (Nault papers)
      - General Setup 2: Nodes place orders with HQ, or report productivity with HQ (A&M1997, Harris et al 1982)
      - Findings
        
        IS reduces coordination cost
        
        Collocation can be good. But if info can be moved through IS, decisions can be made at either end
        
        Using revelation theorem, nodes can be made to reveal true productivity
        
        t=0 is ideal, to reduce horizontal externality
        
        Sharing of information between supply chain partners can increase efficiency of supply chain
- - - - Location
      - Physical asset
      - Human Asset
      - For market (buying), as specificity increases, governance cost increases relative to making. Production costs are assumed to always be lower in the market. Net, making starts to look better
      - IT reduces in-house production costs as well as transaction costs, favoring both markets and hierarchies, net impact is inconclusive
  - - - FOC: FB: Marginal Benefit = Marginal Cost
      - FOC: Marginal increment in Shapley value = Marginal Cost
      - Comparing the above, there is underinvestment
  - - - Does IT synchronize externally oriented functions like marketing and Supply chain, with internally oriented functions like Manufacturing
      - Does IT enhance manufacturing's coordination with supply chain and marketing in order to increase manufacturing's performance
    - - 3 Direct effects, interactions, controls and Inverse Mills Ratio
  - - - Do electronic linkages reduce the bullwhip effect?
      - Defn: Bullwhip effect is defined as the amplification of demand variability from a downstream site to an upsteam site
      - Hypothesis justification: IT reduces coordination costs : Cost of exchange and processing information. 2) Monitoring costs 3) Increasingly standardized, reducing asset specificity 4) Order batching
    - - EL use with supplying industries tends to reduce bullwhip effect
      - EL use with buying industries tend to increase bullwhip effect
      - IT seems to mitigate this effect
    - - Buyers have more options when using EL, they can switch, causing variance in demand