The Use and Evolution of Governance Designs in Transnational Transactions – An Evolutionary Angle on Coping with Uncertainty

Abstract:     
International business research points to the uncertainty in transnational commerce that is often aggravated by the dynamism and complexity inherent in global transactions. This paper addresses the evolution of private governance designs in the typical situation of absent public law of the nation state in international commerce. The following research question is addressed: What are the governance designs in use and what are the drivers of their evolution? Empirical research, conducted in two completely different industries (timber trade and outsourcing of software development) reveals evolutionary mechanisms and particular governance modes that are preferably chosen by the transaction partners.

Keywords: Governance designs, Transnational commerce, Institutional evolution, Lex mercatoria, Path dependence, Co-evolution of governance modes

JEL Classification: K33, L22, M2

working papers series