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| Assets specificity, Uncertainty and Governance Modes: An Empirical Study based on Transaction Cost Economics |
| CHEN Can |
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Abstract The governance modes of exchange include formal contractual governance and informal relational governance. There are many factors influencing governance modes. Asset specificity and uncertainty are the two main factors that have been widely discussed in literature. But there is no consensus result about their effects yet. This article tries to analyze the effects of assets specificity and uncertainty on the governance of the exchange between Chinese agribusiness and farmers. In this special context, we find that relational governance is more effective than contractual governance to handle the hazards from assets specificity and uncertainty in the mass. However, when the physical assets specificity increases, more contractual governance should be applied.
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Received: 30 August 2012
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Corresponding Authors:
CHEN Can
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2013, Vol. 1 
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