Specific investments, cognitive resources, and specialized nature of research production in academic institutions: why shared governance matters for performance

New institutional economics (NIE) studies institutions and how they emerge, operate, and evolve. They also include organizational arrangements, intended as modes of governing economic transactions. Universities offer an exciting ground for testing the role of different institutional arrangements (governance forms) in coordinating (academic) transactions. In a context of contractual incompleteness where production is characterized by a highly specialized nature and requires the cooperation among co-essential figures, we argue that shared governance models (versus models with more concentrated authority) foster idiosyncratic investments in human capital and promotes performance. From the evolutionary viewpoint, we explain why institutions based on shared governance have developed within universities. The normative question of how universities should be governed is a debated issue in the literature. Since the 1980s, the new public management paradigm provides a theoretical framework that suggests analyzing university like firms. It is based on the firm's archetypical conception as top-down hierarchical organizations and as a descending sequence of principal–agent problems. We advance a different interpretation of the university–firm analogy leveraging on the NIE and its developments. To empirically analyze our hypothesis, we collected original data from Italian universities in 2015. We find that more shared decision-making processes are correlated with better research performance.

Why Do Some IOs Expand their Policy Portfolio?

Chapter 5 explains change in an IO’s policy portfolio. The model is in two steps. In a first step, the extent to which an IO is grounded on an incomplete contract determines its responsiveness to exogenous shocks. Second and causally prior to this, contractual incompleteness is feasible only when the participants share norms that can allay fears of exploitation. Around three-quarters of the IOs in our sample exhibit change in their policy portfolios over the past sixty years, yet their trajectories vary widely. A model that specifies an IO’s contractual basis and its prior normative conditions explains more than half of the variance in the policy portfolio over time.

Effective contracting for high operational performance in projects

Purpose The purpose of this paper is to examine combinations of contract clauses in order to ascertain which combinations correlate to high operational performance (OP). Design/methodology/approach Two hypotheses were formulated from contracting theory and tested on data collected from 45 projects. Fuzzy set qualitative comparative analysis was used and validated with multiple regression and simulation. Findings The hypotheses were tested to determine whether combinations of classical, relational, and/or associational contract clauses correlate to high OP. The results show that whereas high OP correlates to combinations of relational and associational contract clauses, classical and relational clauses should not be combined. Research limitations/implications Directions are proposed to guide future research in order to produce a more nuanced testing of contractual complementarity. Practical implications The managerial implications of the findings include a more thorough understanding of the use of contract clauses and of which clauses managers should combine to achieve high OP. Originality/value This study contributes to the theory of contractual incompleteness and complementarity, specifically in the context of project contracting. The analysis produced two theoretical implications: first, that better performing contracts are created when combining relational and associational contract clauses; and second, that in projects, relational and classical contract clauses are not complementary with regards to realizing high OP.

The Transaction-Cost Approach

This chapter develops a transaction-cost model of the internalization decision of multinational firms. A key organizational decision of firms is the extent of control that firms choose to exert over the production of the different parts and components in their value chain. In many circumstances, ownership of the input producer's physical assets is the key method to enhance such control. For this reason, this decision is often dubbed “internalization.” The transaction-cost theory has arguably been the leading paradigm in the analysis of the internalization decision in international environments. In line with this theory, it is typically perceived that vertical (or lateral) integration is an effective way for firms to deal with situations of contractual incompleteness in international transactions, in which it may be hard to provide incentives to subcontracted producers.

Contractual incompleteness in an extensive-form game under perfect information using Stackelberg model

The paper presents the explanation of contractual commitments which are renegotiation-proof, based on “strategic default”. Under this, financial contracts must provide incentives of their own so that the parties would honor the agreement. We investigates the reach of this type of commitment within the general class of extensive form games. The result is that a renegotiation-proof contract exists which commits against every deviation from the equilibrium which would induce a revenue acceleration. AMS Subj. Classification: 91A40, 91A20 .