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How Property Rights Matter to Firm Resource Investment: Evidence from China’s Property Law Enactment
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2022 | Organization Science | Citations: 0
Authors: He, Wenlong; Tong, Tony W.; Xu, Mingtao

Abstract: Although property-rights theory has long been used to explain firms’ ownership o ... Expand

Abstract: Although property-rights theory has long been used to explain firms’ ownership of resources, research on the channels through which property rights affect heterogeneous firms’ investment in building resources remains scarce. Leveraging a property-law enactment in China, we find that strengthening property-rights protection leads private firms to make greater intangible and tangible asset investment compared with state-owned firms and that these effects are mediated by external equity and debt financing. Further, we unpack resource heterogeneity by explicating key differences between intangible and tangible assets, and we document an alignment between asset intangibility and financing approaches such that for intangible asset investment, equity plays a larger mediation role, whereas for tangible asset investment, debt’s mediating effect is greater. We contribute to the strategy literature by using property-rights theory to link together asset intangibility and financing approaches and by showing that the strength of property-rights protection affects firms’ resource investment and shapes firm heterogeneity. Collapse

Semantic filters: property rights theory

Topics: database system asset specificity accounting organizational productivity innovation management

Methods: experimental group longitudinal research statistical hypothesis test robustness check theory development

Theories: property rights theory resource based view of the firm real options theory transaction cost economics
The Contractual Governance of Transactions Within Firms
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2022 | Organization Science | Citations: 0
Authors: Magelssen, Catherine; Rich, Beverly; Mayer, Kyle

Abstract: A central theoretical premise is that firms internalize transactions that are no ... Expand

Abstract: A central theoretical premise is that firms internalize transactions that are not suited for formal contracting. Yet, there is growing evidence that firms rely on formal contracts to govern some of their transactions within the firm. This paper discusses why firms use formal contracts between units within the firm and develops propositions for when formal contracts arise. Internalization does not eliminate transactional problems, and informal agreements for transactions between units often suffer from problems in understanding what the other unit will do and whether it will do what it promises. We argue that many of the features that make formal contracts valuable tools for market exchange are beneficial within firms, even if court enforcement of the contract is not possible. We suggest that formal contracts between units serve as communication and commitment devices that address coordination and incentive problems within the firm by providing clarity and credibility on the rights allocated to the units in the transaction. Funding: Support for this research comes from the London Business School. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2021.1536. Collapse

Semantic filters: property rights theory

Topics: data breach organization structure

Methods: theory development qualitative interview

Theories: transaction cost economics property rights theory agency theory
Contracting Beyond the Market
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2021 | Organization Science | Citations: 1
Authors: Odziemkowska, Kate; Dorobantu, Sinziana

Abstract: Despite growing engagements between firms and nonmarket stakeholders—such as loc ... Expand

Abstract: Despite growing engagements between firms and nonmarket stakeholders—such as local communities and nongovernmental organizations —research has yet to examine the emergence of formal contracts between them. Given that a very large number of such contracts are theoretically possible but only a small number exist, we seek to understand what factors explain the use of contracts to govern some relationships between firms and nonmarket stakeholders but not others. We draw on transaction cost economics to study transactions wherein a nonmarket stakeholder provides a firm access to a valuable resource and to understand when these transactions are governed by formal contracts. We propose that, when a firm makes site-specific investments, a stakeholder’s use rights to the resource sought by the firm, the negative externalities generated by its use, and the stakeholder’s capacity for collective mobilization increase holdup risk for the firm and therefore the probability of a contract. We collect novel data on the location of indigenous communities and mines in Canada to identify a plausible exhaustive set of indigenous communities “at risk” of signing a contract with a mining firm. We test our hypotheses by relying, respectively, on historically assigned property rights over lands, the mine-community colocation in a watershed and proximity on transportation routes, and archival records of community mobilization events. We find support for our propositions by examining which of the 5,342 dyads formed by 459 indigenous communities and 98 firms signed 259 contracts between 1999 and 2013. Collapse

Semantic filters: property rights theory

Topics: asset specificity database system logistics management

Methods: conjoint analysis statistical hypothesis test logistic regression archival research nonlinear regression analysis

Theories: property rights theory transaction cost economics stakeholder theory
WILL RENTING SUBSTITUTE BUYING? DRIVERS OF USER INTENTION TO PARTICIPATE IN RENTAL-COMMERCE

2019 | European Conference On Information Systems | Citations: 0
Authors: Fota, Anne; Wagner, Katja; Schramm-Klein, Hanna

Abstract: In recent years, consumer consumption has undergone massive change. Different co ... Expand

Abstract: In recent years, consumer consumption has undergone massive change. Different consumption forms, such as collaborative consumption or access-based consumption, are on the rise in the environment of the sharing economy. A relatively new field is rental-commerce, in which users rent everyday products via an online website for a fixed period of time and a fixed (e.g. daily or monthly) price. To investigate this new phenomenon, we examined what drives inexperienced users to take part in rental-commerce. Our results showed that sustainability, economic benefits, trust, safety, complexity, and knowledge of rental-commerce serve as predictors of the intention to rent products via a rental-commerce website. Surprisingly, knowledge of terms of use has no significant influence on this behavioral intention. As such, rental-commerce retailers should pay special attention to these results and highlight the advantages to determine users’ willingness to take part in this business model. Collapse

Semantic filters: property rights theory

Topics: behavioral intention website usage intention collaborative consumption sharing platform

Methods: partial least squares regression survey statistical hypothesis test structural equation modeling PLS tool

Theories: endowment effect property rights theory
Explaining Multisourcing Decisions in Application Outsourcing

2018 | European Conference On Information Systems | Citations: 2
Authors: Krancher, Oliver; StÃ, Matthias

Abstract: Multisourcing—the delegation of interdependent tasks to multiple vendors—is rece ... Expand

Abstract: Multisourcing—the delegation of interdependent tasks to multiple vendors—is receiving increasing attention in practice and in research. Yet, we know little about the circumstances under which organizations choose multisourcing. In this paper, we draw on incomplete contracting theory and the knowledge-based view to explain multisourcing decisions in application projects. We test our model using a comprehensive dataset of 1093 sourcing decisions made by Swiss public organizations. The results provide strong support for the model. We find that clients choose multisourcing more frequently when (1) the project is large, (2) the software is client-specific and the project is large enough, (3) client and vendor lack joint experience, (4) the client seeks knowledge, (5) the technology is not proprietary, and (6) the client is experienced in outsourcing. While these findings support common views that clients choose multisourcing in response to opportunistic threats and to knowledge needs, the findings also shed light on prerequisites for multisourcing. Collapse

Semantic filters: property rights theory

Topics: outsourcing database system IT project IS sourcing procurement management

Methods: logistic regression hierarchical linear modeling descriptive statistic theory development archival research

Theories: knowledge based theory of the firm transaction cost economics property rights theory
An Empirical Analysis of Intellectual Property Rights Sharing in Software Development Outsourcing

2017 | Management Information Systems Quarterly | Citations: 19
Authors: Chen, Yuanyuan; Bharadwaj, Anandhi; Goh, Khim

Abstract: Software development outsourcing (SDO) contracts are plagued with ex post opport ... Expand

Abstract: Software development outsourcing (SDO) contracts are plagued with ex post opportunism and underinvestment problems. Property rights theory (PRT) argues that appropriate property rights allocation between vendors and clients can reduce opportunism and incentivize relation-specific investments. We conduct an in-depth content analysis of 171 real SDO contracts and empirically examine how project attributes and contract parties’ bargaining power affect the allocation of intellectual property rights (IPR). We find that clients retained more IPR when software development was modularized whereas they shared more IPR with vendors in contracts that incorporated greater use of a vendor’s proprietary software. Greater levels of task complexity were associated with more IPR sharing with vendors. We also find that the responsiveness of IPR to project attributes varied across the different types of intellectual assets. For example, vendors were more likely to obtain redeployment rights of know-how if they were contracted for novel software development projects. However, clients were less likely to cede ownership of data and confidential information embedded in software customization projects. We control for a variety of firm and transaction characteristics and the results we obtain here are robust to concerns of endogeneity bias. Keywords: Software development, outsourcing, contract design, intellectual property rights allocation, property rights theory, incomplete contracts Collapse

Semantic filters: property rights theory

Topics: price management task complexity systems development outsourcing IT development project

Methods: qualitative coding qualitative content analysis Chow test robustness check econometric modeling

Theories: property rights theory transaction cost economics
The Role of User Psychological Contracts in the Sustainability of Social Networks.
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2017 | Communications of the Association for Information Systems | Citations: 0
Authors: Montclair State University; Mamonov, Stanislav; Koufaris, Marios; Baruch College; Benbunan-Fich, Raquel; Baruch College

Abstract: Many emergent ventures, such as social networks, leverage crowd-sourced informat ... Expand

Abstract: Many emergent ventures, such as social networks, leverage crowd-sourced information assets as essential pillars supporting their business models. The appropriation of rights to information assets through legal contracts often fails to prevent conflicts between the users and the companies that claim information rights. In this paper, we focus on social networks and examine why those conflicts arise and what their consequences are by drawing on psychological contract theory. We propose that intellectual property and privacy expectancies comprise core domains of psychological contracts between social networks and their users. In turn, perceived breaches of those expectancies trigger a psychological contract violation. We use the exit, voice, loyalty, and neglect typology to define the user behavioral outcomes. We evaluated our framework by surveying 598 Facebook users. The data support our framework and indicate that perceived breaches of privacy and intellectual property rights generate the affective experience of a psychological contract violation, which is strongly associated with exit intentions. Collapse

Semantic filters: property rights theory

Topics: privacy social network intellectual property Facebook information exchange

Methods: survey theory development partial least squares regression cross sectional research theoretical contribution

Theories: contract theory privacy calculus theory property rights theory
Information Technology Outsourcing: Asset Transfer and the Role of Contract

2017 | Management Information Systems Quarterly | Citations: 0
Authors: Young Bong, Chang; Gurbaxani, Vijay; Ravindran, Kiron

Abstract: Information technology outsourcing (ITO) is the predominant mode of acquiring in ... Expand

Abstract: Information technology outsourcing (ITO) is the predominant mode of acquiring information systems services, providing clear evidence that the economics of service delivery favor external service providers over in-house information systems departments. An interesting feature of many large ITO arrangements is that the production assets necessary for service delivery are transferred to the vendor. The argument in favor of such asset transfers, based in property rights theory, is that they are necessary to incentivize vendors to continue to invest in transaction-specific assets to improve service. On the other hand, transaction cost economics predicts that transferring such assets increases bilateral dependence and will elevate the risk of post-contractual opportunistic behavior. The contracting challenge in this context is to specify the terms of exchange to achieve the client’s objectives for outsourcing while managing the risks of asset transfer. We develop a theoretical framework to derive propositions on contract design in the presence of asset transfer. We identify the importance of contractual clauses that mitigate the associated risks and the complementary role of compensation mechanisms, specifically the pricing scheme and IT-related performance incentives. We have compiled a unique dataset that allows us to test our propositions by comparing ITO contracts that include asset transfer to those that do not. We find that asset transfer does significantly affect contract design, manifested in the inclusion of clauses that protect both clients and vendors. Outsourcing objectives are more likely to be met when contracts include compensation mechanisms that complement asset transfer. Collapse

Semantic filters: property rights theory

Topics: outsourcing price management IT investment switching cost anonymity

Methods: data transformation factor analysis exploratory factor analysis literature study survey

Theories: transaction cost economics property rights theory
The Value of Community Clouds for Collaboration in the Public Sector

2015 | Americas Conference on Information Systems | Citations: 0
Authors: Labes, Stine; Hahn, Christopher

Abstract: The public sector has discovered cloud computing technologies and therefore dema ... Expand

Abstract: The public sector has discovered cloud computing technologies and therefore demands an adequate cloud provisioning model. The community cloud seems to be a good balance between safety and trust as well as efficiency, cost reduction, and competitiveness for public facilities. Following this presumption, we analyzed the network potential for cooperation in the public sector. First, we reviewed the scientific literature around this concept and clarified the term ‘community cloud’. Then, we conducted a study of network theories to derive common values that are addressed in cooperation. We developed a framework that characterizes a network and assesses its specific network value. For evaluation purposes, we applied the framework to community cloud implementations in the public sector and discussed the results regarding the network value. The research findings reveal basic network values for community clouds in the public sector and will serve as analysis and assessment guidelines. Collapse

Semantic filters: property rights theory

Topics: cloud computing usability social influence economies of scale database system

Methods: literature study design science design artifact testing design guideline

Theories: social network theory transaction cost economics evolutionary theory game theory new institutional economics
Information Technology In Innovation Activity Of The Firm: Theory And Synthesis

2013 | European Conference On Information Systems | Citations: 0
Authors: Dong, John Qi; Karhade, Prasanna; Rai, Arun; Xu, Sean Xin

Abstract: In light of information technology (IT) increasingly leading to enterprise trans ... Expand

Abstract: In light of information technology (IT) increasingly leading to enterprise transformation in contemporary firms, we aim to build a theory of IT-enabled capabilities in innovation activity of the firm. For so doing, we extensively review almost five hundred innovation studies in organization and IS literature and conduct a thematic analysis to identify theoretical underpinnings of innovation research. Based on a solid understanding of the literature, we then derive a typology of different perspectives on innovation activity to categorize the themes (theoretical underpinnings). From an angle of enterprise transformation, we view innovation as a form of organizational change aiming to improve certain organizational outcomes. Accordingly, innovation activity is characterized based on the theoretical underpinnings taking different perspectives about organizational change processes, such as resource lifecycle process, teleological search process, evolutionary adaptation process, and dialectical synthesis process. Corresponding to these perspectives, four IT-enabled capabilities are theorized: IT-enabled resource operation capability, IT-enabled objective management capability, IT-enabled knowledge absorption capability, and IT-enabled information transparency capability. We develop a theoretical framework with several propositions explaining how these IT-enabled capabilities facilitate innovation activity in different perspectives, and the mechanisms leading to certain organizational outcomes. Directions for future research are discussed. Collapse

Semantic filters: property rights theory

Topics: innovation management organizational change digital innovation database system knowledge creation

Methods: theory development literature study qualitative content analysis business process modeling literature sample

Theories: transaction cost economics property rights theory agency theory contract theory organizational theory

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Found 15 articles

How Property Rights Matter to Firm Resource Investment: Evidence from China’s Property Law Enactment

The Contractual Governance of Transactions Within Firms

Contracting Beyond the Market

WILL RENTING SUBSTITUTE BUYING? DRIVERS OF USER INTENTION TO PARTICIPATE IN RENTAL-COMMERCE

Explaining Multisourcing Decisions in Application Outsourcing

An Empirical Analysis of Intellectual Property Rights Sharing in Software Development Outsourcing

The Role of User Psychological Contracts in the Sustainability of Social Networks.

Information Technology Outsourcing: Asset Transfer and the Role of Contract

The Value of Community Clouds for Collaboration in the Public Sector

Information Technology In Innovation Activity Of The Firm: Theory And Synthesis