The transaction cost economics theory of the family firm: family-based human asset specificity and the bifurcation bias

We develop a transaction cost economics theory of the family firm, building upon the concepts of family-based asset specificity, bounded rationality, and bounded reliability. We argue that the prosperity and survival of family firms depend on the absence of a dysfunctional bifurcation bias. The bifurcation bias is an expression of bounded reliability, reflected in the de facto asymmetric treatment of family vs. nonfamily assets (especially human assets). We propose that absence of bifurcation bias is critical to fostering reliability in family business functioning. Our study ends the unproductive divide between the agency and stewardship perspectives of the family firm, which offer conflicting accounts of this firm type's functioning. We show that the predictions of the agency and stewardship perspectives can be usefully reconciled when focusing on how family firms address the bifurcation bias or fail to do so.

The integration substitute : the role of controls in managing human asset specificity

As the integration solution to the problem of specific assets cannot be replicated on human asset specificity because slavery is illegal, economic theory states that control systems substitute for integration through a balanced structure to help align diverse interests. To understand the intricate design features of the balance, we examine a case-study firm. For low human asset specificity, the restriction and segregation of usable decision rights link with standards. However, incentives are traced to individuals only to the extent task deviations do not create relevant future costs that are difficult to be self-corrected. For high specificity, incentives are related to outputs rather than outcomes, because outcome variations reduce the attractiveness of maintaining the balance. Subjective assessment is used as an efficient alternate ‘balancing’ solution and decision control is shared when available subjective data are inadequate.

The Impact of Human Asset Specificity on the Sourcing of Application Services

The question concerning the circumstances under which it is advantageous for a company to outsource certain information systems functions has been a controversial issue for the last decade. While opponents emphasize the risks of outsourcing based on the loss of strategic potentials and increased transaction costs, proponents emphasize the strategic benefits of outsourcing and high potentials of cost-savings. This paper brings together both views by examining the conditions under which both the strategic potentials as well as savings in production and transaction costs of developing and maintaining software applications can better be achieved in-house as opposed to by an external vendor. We develop a theoretical framework from three complementary theories and test it empirically based on a mail survey of 139 German companies. The results show that insourcing is more cost efficient and advantageous in creating strategic benefits through IS if the provision of application services requires a high amount of firm specific human assets. These relationships, however, are partially moderated by differences in the trustworthiness and intrinsic motivation of internal versus external IS professionals. Moreover, capital shares with an external vendor can lower the risk of high transaction costs as well the risk of loosing the strategic opportunities of an IS.

Asset specificity and behavioural uncertainty as moderators of the sales growth : employment growth relationship in emerging ventures

Sales growth and employment growth are the two most widely used growth indicators for new ventures; yet, sales growth and employment growth are not interchangeable measures of new venture growth. Rather, they are related, but somewhat independent constructs that respond differently to a variety of criteria. Most of the literature treats this as a methodological technicality. However, sales growth with or without accompanying employment growth has very different implications for managers and policy makers. A better understanding of what drives these different growth metrics has the potential to lead to better decision making. To improve that understanding we apply transaction cost economics reasoning to predict when sales growth will be or will not be accompanied by employment growth. Our results indicate that our predictions are borne out consistently in resource-constrained contexts but not in resource-munificent contexts.

Asset specificity and behavioral uncertainty as moderators of the sales growth-employment growth relationship in emerging ventures

New venture growth is a central topic in entrepreneurship research. Although sales growth is emerging as the most commonly used measure of growth for emerging ventures, employment growth has also been used frequently. However, empirical research demonstrates that there are only very low to moderately sized correlations between the two (Delmar et aL, 2003; Weinzimmer, et al., 1998). In addition) sales growth and employment growth respond differently to a wide variety of criteria (Baum et al., 2001; Delmar et al., 2003). In this study we use transaction cost economics (Williamson, 1996) as a theoretical base to examine transaction cost influences on the addition of new employees as emerging ventures experience sales growth. \\le theorize that transaction cost economics variables will moderate the relationship between sales growth and employment growth. W'e develop and test hypotheses related to asset specificity, behavioral uncertainty, and the influence of resource munificence on the strength of the sales growth/ employment growth relationship. Asset specificity is theorized to be a positive moderator of the relationship between sales growth and employment growth. When the behavioral uncertainty associated with adding new employees is greater than that of outsourcing or subcontracting, it is hypothesized to be a negative moderator of the sales growth/employment growth relationship. We also hypothesize that resource scarcity will strengthen those relationships.

On the contribution of stereochemistry to human ITPK1 specificity: Ins(1,4,5,6)P4 is not a physiologic substrate

Ins(1,4,5,6)P4, a biologically active cell constituent, was recently advocated as a substrate of human Ins(3,4,5,6)P4 1-kinase (hITPK1), because stereochemical factors were believed relatively unimportant to specificity [Miller, G.J. Wilson, M.P. Majerus, P.W. and Hurley, J.H. (2005) Specificity determinants in inositol polyphosphate synthesis: crystal structure of inositol 1,3,4-triphosphate 5/6-kinase. Mol. Cell. 18, 201-212]. Contrarily, we provide three examples of hITPK1 stereospecificity. hITPK1 phosphorylates only the 1-hydroxyl of both Ins(3,5,6)P3 and the meso-compound, Ins(4,5,6)P3. Moreover, hITPK1 has >13,000-fold preference for Ins(3,4,5,6)P4 over its enantiomer, Ins(1,4,5,6)P4. The biological significance of hITPK1 being stereospecific, and not physiologically phosphorylating Ins(1,4,5,6)P4, is reinforced by our demonstrating that Ins(1,4,5,6)P4 is phosphorylated (K(m) = 0.18 microM) by inositolphosphate-multikinase.

The TOC-ABC choice debate for product mix decisions : introducing asset specificity as an alternate explanation

Though constructed with different purposes, the theory of constraints and activity based costing systems pose a choice problem in respect of product mix decisions. We believe that the existing explanation of short versus long run criterion to explain firms' choice between these two systems is incomplete and offer an alternate explanation based on asset specificity. We argue that the extent to which specialized resources are deployed to make products in a mix determines the choice. We present a 2*2 matrix stating that when asset specificity is high, a firm is likely to choose ABC instead of TOC since ABC makes a large portion of costs visible to enable control. However, the choice is likely to be a TOC-ABC combination when the manufacture of asset specific products is also constrained by bottlenecks.

Antiaggregatory and proangiogenic effects of a novel recombinant human dual specificity anti-integrin antibody

BACKGROUND: beta(3)-Integrins are involved in platelet aggregation via alpha(IIb)beta(3) [glycoprotein (GP)IIb-GPIIIa], and in angiogenesis via endothelial alpha(V)beta(3). Cross-reactive ligands with antiaggregatory and proangiogenic effects, both desirable in peripheral vasculopathies, have not yet been described. OBJECTIVES: In vitro and in vivo characterization of antiaggregatory and proangiogenic effects of two recombinant human Fab fragments, with emphasis on beta(3)-integrins. METHODS: Recombinant Fab fragments were obtained by phage display technology. Specificity, affinity and IC(50) were determined by immunodot assays, enzyme-linked immunosorbent assay (ELISA), and Scatchard plot analysis, and by means of human umbilical vein endothelial cells (HUVECs). Functional analyses included ELISA for interaction with fibrinogen binding to GPIIb-GPIIIa, flow cytometry for measurement of activation parameters and competitive inhibition experiments, human platelet aggregometry, and proliferation, tube formation and the chorioallantoic membrane (CAM) assay for measurement of angiogenic effects. RESULTS: We observed specific and high-affinity binding to an intact GPIIb-GPIIIa receptor complex of two human Fab autoantibody fragments, with no platelet activation. Dose-dependent fibrinogen binding to GPIIb-GPIIIa and platelet aggregation were completely inhibited. One Fab fragment was competitively inhibited by abciximab and its murine analog monoclonal antibody (mAb) 7E3, whereas the other Fab fragment bound to cultured HUVECs, suggesting cross-reactivity with alpha(V)beta(3), and also demonstrated proangiogenic effects in tube formation and CAM assays. CONCLUSIONS: These Fab fragments are the first entirely human anti-GPIIb-GPIIIa Fab fragments with full antiaggregatory properties; furthermore, they do not activate platelets. The unique dual-specificity anti-beta(3)-integrin Fab fragment may represent a new tool for the study and management of peripheral arterial vasculopathies.

Outsourcing and benchmarking in a rural public hospital : does economic theory provide the complete answer?

INTRODUCTION: The ideology and pronouncements of the Australian Government in introducing 'competitive neutrality' to the public sector has improved efficiency and resource usage. In the health sector, the Human Services Department directed that non-clinical and clinical areas be market tested through benchmarking services against the private sector, with the possibility of outsourcing. These services included car parking, computing, laundry, engineering, cleaning, catering, medical imaging (radiology), pathology, pharmacy, allied health and general practice. Managers, when they choose between outsourcing, and internal servicing and production, would thus ideally base their decision on economic principles. Williamson's transaction cost theory studies the governance mechanisms that can be used to achieve economic efficiency and proposes that the optimal organisation structure is that which minimises transaction costs or the costs of exchange. Williamson proposes that four variables will affect such costs, namely: (i) frequency of exchange; (ii) asset specificity; (iii) environmental uncertainty; and (iv) threat of opportunism. This paper provides evidence from a rural public hospital and examines whether Williamson's transaction cost theory is applicable. d into an analysis that relies solely on transaction

Standard business reporting in Australia : efficiency, effectiveness, or both?

The benefits of using eXtensible Business Reporting Language (XBRL) as a business reporting standard have been widely canvassed in the extant literature, in particular, as the enabling technology for standard business reporting tools. One of the key benefits noted is the ability of standard business reporting to create significant efficiencies in the regulatory reporting process. Efficiency-driven cost reductions are highly desirable by data and report producers. However, they may not have the same potential to create long-term firm value as improved effectiveness of decision making. This study assesses the perceptions of Australian business stakeholders in relation to the benefits of the Australian standard business reporting instantiation (SBR) for financial reporting. These perceptions were drawn from interviews of persons knowledgeable in XBRL-based standard business reporting and submissions to Treasury relative to SBR reporting options. The combination of interviews and submissions permit insights into the views of various groups of stakeholders in relation to the potential benefits. In line with predictions based on a transaction-cost economics perspective, interviewees who primarily came from a data and report-producer background mentioned benefits that centre largely on asset specificity and efficiency. The interviewees who principally came from a data and report-consumer background mentioned benefits that centre on reducing decision-making uncertainty and decision-making effectiveness. The data and report consumers also took a broader view of the benefits of SBR to the financial reporting supply chain. Our research suggests that advocates of SBR have successfully promoted its efficiency benefits to potential users. However, the effectiveness benefits of SBR, for example, the decision-making benefits offered to investors via standardised reports, while becoming more broadly acknowledged, remain not a priority for all stakeholders.

Understanding Everyday Homes of Urban Communities: The Case of Local Streets (Hawari) of Old Cairo

This paper aims at investigating architectural and urban heritage from the socio-cultural point of view, which stands on the human asset of traditional sites such as the hawari of old Cairo. It analyzes the social practice of everyday life in one of the oldest Cairene hawari, Haret al-Darb al-Asfar. The focus is on architectural and spatial organization of outdoor and indoor spaces that coordinate the spatial practices of local community. A daily monitoring of people’s activities and interviews was conducted in an investigation of how local people perceive their built environment between the house’s interior and the outdoor shared space. It emerges that people construct their own field of private spheres according to complex patterns of daily activities that are not in line with the classical segregation between private and public in Islamic cities. This paper reports that the harah is basically a construct of social spheres that are organized spatially by the flexible development of individual buildings over time and in response to changes in individuals’ needs and capabilities. In order to achieve sustainability in old urban quarters, the paper concludes, the focus should be directed towards the local organization of activities and a comprehensive upgrading of deteriorating buildings to match the changing needs of current population.