Exploring the dimensions and transactional outcomes of incomplete business contracts

With an increased emphasis on outsourcing and shortening business cycles, contracts between firms have become more important. Carefully written contracts contribute to the efficiency and longevity of inter-firm relationships as they may constrain opportunism and are often a less costly governance mechanism than maintaining complex social relationships (Larson 1992). This exploratory examination adds to our understanding of how incomplete contracts affect interorganizational exchange. First, we consider the multiple dimensions of contract constraints (safeguards). We also investigate the extent that constraints affect decisions to enforce the relationship by delaying payments, and whether the decision is efficient. Finally, we examine the extent the constraints are effective (and ineffective) at reducing transaction problems associated with enforcement. Based on 971 observations of transactions using explicit, written terms and other secondary data in the context of IT transaction in The Netherlands we test our research propositions.

Learning to share knowledge in the Italian motorsport industry

The paper outlines a perspective on learning how to share knowledge in the context of inter-firm networks and highlights the essential role of participation in collaborative activities. This perspective suggests that knowledge sharing is not something achieved through the simple transfer of resources, but rather is an ongoing social accomplishment in which network firms constitute and re-constitute knowledge while engaging in collaborative activities. Empirical support for this view is offered by an in-depth and multiyear study of the development of collaborative relationships between a leading racing car manufacturer and its suppliers in the Italian motorsport industry. The study shows that knowledge is generated over time through the instigation of three knowledge sharing processes: the promotion of a culture of working together, co-location and the use of resident engineers, and shared education and training.

Networks of learning : how motorsport companies collaborate and share knowledge:evidence from the UK and Italian motorsport industries

The motorsport industry is a high value-added and highly innovative business sector. The UK’s leading racing car manufacturers are world class centres of research, development and engineering. However, individual firms in the sector do not have the range and depth of capabilities to compete independently in motorsport’s dynamic and competitive environment. Industry attention has therefore progressively focused on how networks of collaborating firms can work together to develop new products, improve business processes and reduce costs. This report presents findings from a three year Cardiff Business School study which examined the ways in which firms collaborate as part of wider networks. The research involved gathering data from over 120 firms in the UK and Italian motorsport sectors.

A comparative evaluation of the legislative controls on unfair terms and exemption clauses in consumer and business contracts in England and Brazil

The purpose of the present study is to make a comparative evaluation of the legislative controls on unfairness in the context of B2B, B2C and small businesses contracts in England and Brazil. This work will focus on the examination of statutes and relevant case law which regulate exemption clauses and terms on the basis of their ‘unfairness’. The approach adopted by legislation and courts towards the above controls may vary according to the type of contract. Business contracts are more in line with the classical model of contract law according to which parties are presumably equals and able to negotiate terms. As a consequence interventions should be avoided for the sake of freedom of contract even if harmful terms were included. Such assumption of equality however is not applicable to small businesses contracts because SMEs are often in a disadvantageous position in relation to their larger counterparties. Consumer contracts in their turn are more closely regulated by the English and Brazilian legal systems which recognised that vulnerable parties are more exposed to unfair terms imposed by the stronger party as a result of the inequality of bargaining power. For this reason those jurisdictions adopted a more interventionist approach to provide special protection to consumers which is in line with the modern law of contract. The contribution of this work therefore consists of comparing how the law of England and Brazil tackles the problem of ‘unfairness’ in the above types of contracts. This study will examine the differences and similarities between rules and concepts of both jurisdictions with references to the law of their respective regional trade agreements (EU and the Mercosul). Moreover it will identify existing issues in the English and Brazilian legislation and recommend lessons that one system can learn from the other.

The law and finance of share repurchases in Europe

This article analyses the impact of the EU market abuse law on share repurchases. We find that the Member States' previous rules differed considerably, and therefore it can be said that the Regulation on share repurchases has provided uniformity as to the availability of a safe harbour for share repurchases. The picture, however, gets more difficult to assess if we consider our findings on the actual effect of the law. Our results do not confirm a “simple law and finance story“ according to which market participants would have just reacted as expected by the new legal rules. Rather, it seems to be the case that the value of legal certainty and the positive signal of common legal rules have also had an impact on the propensity to repurchase own stock.

Stock repurchases and treasury share sales:do they stabilize price and enhance liquidity?

Can companies reduce the volatility and increase the liquidity of their stocks by trading them? In the context of the Italian stock market, where companies have far more leeway to sell as well as buy their own stocks than in the U.S., the answer is yes. We examine the effects of trading (open-market share repurchases and treasury shares sales) on liquidity (bid–ask spread) and volatility (return variance). Further, we examine the impact of shareholder approvals of repurchase programs on liquidity and volatility. We find clear evidence that trading increases liquidity and reduces volatility. These results are consistent with our analysis of the motives Italian companies give for making share repurchases.

How contracts and enforcement explain transaction outcomes

This study considers the influence of contracts on enforcement and the subsequent performance impact of aligned and misaligned enforcement. We define enforcement as a corrective action aimed at remedying problems occurring in the transaction. First we explain the role of contracts and show that at the component level, contracts can both increase and decrease enforcement. Building on an alignment perspective and accounting for the endogeneity of enforcement, we use these contractual components and variables related to enforcement to predict the occurrence of enforcement. We use such predictions to show that aligned enforcement results in higher performance. We also show that the performance impact of misaligned enforcement is relatively greater for transactions where enforcement is not expected. We conduct the study using a unique dataset reporting on 971 business transactions across a wide range of industries.

Servitization capabilities for advanced services:a multi-actor perspective

Servitization is the process by which manufacturers add services to their product offerings and even replace products with services. The capabilities necessary to develop and deliver advanced services as part of servitization are often discussed in the literature from the manufacturer’s perspective, e.g., having a service-focused culture or the ability to sell solutions. Recent research has acknowledged the important role of customers and, to a lesser extent, other actors (e.g., intermediaries) in bringing about successful servitization, particularly for use-oriented and results-oriented advanced services. The objective of this study is to identify the capabilities required to successful develop advanced services as part of servitization by considering the perspective of manufacturers, intermediaries and customers. This study involved interviews with 33 managers in 28 large UK-based companies from these three groups, about servitization capabilities. The findings suggest that there are eight broad capabilities that are important for advanced services; 1) personnel with expertise and deep technical product knowledge, 2) methodologies for improving operational processes, helping to manage risk and reduce costs, 3) the evolution from being a product- focused manufacturer to embracing a services culture, 4) developing trusting relationships with other actors in the network to support the delivery of advanced services, 5) new innovation activities focused on financing contracts (e.g., ‘gain share’) and technology implementation (e.g., Web-based applications), 6) customer intimacy through understanding their business challenges in order to develop suitable solutions, 7) extensive infrastructure (e.g., personnel, service centres) to deliver a local service, and 8) the ability to tailor service offerings to each customer’s requirements and deliver these responsively to changing needs. The capabilities required to develop and deliver advanced services align to a need to enhance the operational performance of supplied products throughout their lifecycles and as such require greater investment than the capabilities for base and intermediate services.

Contracts for the sale of land and personal property:the equitable interests of the purchaser

As property lawyers, we are all familiar with the general principle that a contract for the sale of land, which is capable of specific performance, operates in equity so as to confer a trust on the purchaser pending completion of the sale. Although some controversy exists as to the exact nature of the trust, it is well established that, upon exchange of contracts, equity will ‘‘treat that as done which ought to be done’’1 with the consequence that the purchaser acquires equitable ownership even though full (legal) title to the land will not pass until completion (and registration). As land is unique, specific performance is readily available in the context of sales of land where damages would, clearly, not be an adequate remedy. The same cannot be said for contracts for the purchase of personal property where invariably the subject matter is not unique and where a substitute can easily be acquired in the open market. In circumstances, however, where the property is unique or scarce (for example, a rare painting or vintage car), the maxim that ‘‘equity treats as done that which ought to be done’’ may be invoked so as to confer on the seller an equitable obligation to transfer the property to the purchaser in fulfilment of the contract. Where, therefore, the contract is specifically enforceable in this way, the seller, it is submitted, will again hold the property on trust for the purchaser where, as in a contract for the sale of land, there is an interval between the date of the contract and completion of the sale. The notion that a seller holds personal property upon trust for the purchaser pending completion of the sale is admittedly controversial, but this article seeks to argue that the same principles governing equity’s intervention in sales of land should apply in the context of sales of personalty. It is submitted that equity’s role in imposing a trust on the vendor both in relation to sales of land and personalty may be important in safeguarding the interests of the purchaser prior to, as well as after, completion of the transaction.

How many contracts in an auction sale

Making sense of auction sales, in terms of English contract law, is no easy task. Despite the common perception of hammers hitting blocks, signifying the creation of the basic sale contract,1 a typical auction sale necessarily involves the making of several forms of contract other than the obvious primary sale agreement. The purpose of this article, therefore, is threefold, namely, to (1) examine these various forms of contractual relationship2 which may come into existence as a result of a traditional (face to face) auction sale; (2) consider specifically the selling of land at public auction with a view to advocating a change in the law requiring the formality of writing for sales contracts of land for both private and public auctions, and (3) compare briefly the contractual elements of an online ascending model of auction sale typified by the eBay phenomenon.

Optimising market share and profit margin:SMDP-based tariff pricing under the smart grid paradigm

Smart grid technologies have given rise to a liberalised and decentralised electricity market, enabling energy providers and retailers to have a better understanding of the demand side and its response to pricing signals. This paper puts forward a reinforcement-learning-powered tool aiding an electricity retailer to define the tariff prices it offers, in a bid to optimise its retail strategy. In a competitive market, an energy retailer aims to simultaneously increase the number of contracted customers and its profit margin. We have abstracted the problem of deciding on a tariff price as faced by a retailer, as a semi-Markov decision problem (SMDP). A hierarchical reinforcement learning approach, MaxQ value function decomposition, is applied to solve the SMDP through interactions with the market. To evaluate our trading strategy, we developed a retailer agent (termed AstonTAC) that uses the proposed SMDP framework to act in an open multi-agent simulation environment, the Power Trading Agent Competition (Power TAC). An evaluation and analysis of the 2013 Power TAC finals show that AstonTAC successfully selects sell prices that attract as many customers as necessary to maximise the profit margin. Moreover, during the competition, AstonTAC was the only retailer agent performing well across all retail market settings.

Share.TEC Portal: How the Metadata Repositories of Educational Resources Meet the Users’ Expectations

This is an extended version of an article presented at the Second International Conference on Software, Services and Semantic Technologies, Sofia, Bulgaria, 11–12 September 2010.

Exclusive contracts in bilaterally duopolistic industries

The purpose of this article is to analyze the incentives of manufacturers to deal exclusively with retailers in bilaterally duopolistic industries with brand differentiation by manufacturers. With highly differentiated products exclusive contracts are shown to generate higher profits for manufacturers and retailers, who thus have an incentive to insist on exclusive contracting. However, if the products are close substitutes no exclusivity will emerge in equilibrium.