By William D. Nelson
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Extra info for Advances in Business & Management: Volume 2 (Advances in Business and Management)
Transaction management translates theoretical knowledge of the economic theory of transaction costs (which combines parts of the macro oriented theories of institutional economics, industrial organization and international economics) to a practical decision method. Transaction management creates value in a globalizing world by promoting a further fragmentation of production. It implies that companies in transaction economies will increasingly be engaged in the orchestration of production and in the 'make or buy' and location decisions with respect to outsourcing of tasks.
For example, in the United Kingdom it is common to write down every detail, while in other cultures, like the Dutch, it is customary to just write down the rough outline of the agreement and to fill in the details later, during the fulfilment of the agreement. These differences can lead to misunderstandings. ). Cooray and Ratnatunga (2001) illustrate the problem in an interesting account of the troublesome co-operation between a Japanese customer and an Australian producer. They show how cultural differences lead to completely different perceptions about how to build a co-operative relationship.
Two types of trust can be distinguished: formal trust and informal trust. Both types are important in international trade. 3. Another distinction is between calculative trust and moral trust. Although at first sight calculative trust, which is considered to stem from rational behaviour, seems to be linked to formal trust, whereas informal trust can be identified with moral trust, this may not be true. In fact, many types of informal trust also stem from rational behaviour in the sense that cheating brings about less gains than the costs of loss of reputation.
Advances in Business & Management: Volume 2 (Advances in Business and Management) by William D. Nelson