The Choice Of Governance Structure And Stability

Governance is the means by which to establish order, thereby to mitigate potential conflicts and realize mutual benefits. Governance Structure (GS) is a kind of order arrangements under which transactions get effectively accomplished. The essence to research on governance structure is to explore order arrangement of transactions. Nowadays, basic theory foundations and research frameworks of GS are initially established and researches on hybrid governance (Hybrids) both theoretical and empirical, are getting further. The thesis' objective is to systemize GS theories and explore inherent stability mechanism of Hybrids for obtaining a deeper understanding about complicated economic organizations. Meanwhile, by means of empirical research towards silk worm cocoon transactions, it also provides a deeper theoretical horizon about Hybrids, widens research on GS theory application.There is a hypothesis that people are bounded rational and opportunistic, transaction deserves governing. Using three critical dimensions for describing transaction, Asset Specificity, Uncertainty and Frequency, we select appropriate GS to match transactions possessing different attributes for improving transactions efficiency and realizing first-order-economizing, which we call beforehand governance. Markets, Hybrids and Hierarchies conform to different transaction attributes. In reality, GS selection has its inherent rules. Hybrids get most affected by Uncertainty. If we can not confine uncertainty within certain range, Hybrids has its possibility to slide to Markets or Hierarchies. However, Hybrids could get stabilized by continual transactions and credible commitment. The measures taken for stabilizing GS by each trade side are called Ex-Post governance.As GS of silk worm cocoon transaction is not compatible, the efficiency of cocoon transaction in China is low, which mainly shows as follows: Supply-Demand balance can't be gotten, cocoon market quotation changes frequently and amplitude of fluctuation is large. Sales suspension and insane purchase of cocoon shift in turns, which cause silk industry's turbulence or even devastate its developments. Cocoon market failure mainly takes appearances as bellows: Sellers(peasants) benefit losses led by monopsony; insufficient public goods supply; efficiency declination caused by externality; adverse selection induced by information asymmetry .The cocoon war exploded under governance of national monopsony market, whose typical features are: buying up bids up prices, insane purchases and government interfere into benefit conflicts. Market and government malfunction could be responsible for the war and the root is cocoon transaction and GS don't match well.In cocoon transaction, frequency is high and large amount of Specialty Asset is referred to among buyers and sellers. Due to natural and market risks, cocoon transaction uncertainty is high. By means of questionnaire, case study and calculation analysis, it illustrates:1. Efficiency of cocoon transaction is low under conditions of Market, because that cocoon transactions will unavoidly slide to monopsony and fully competitive market will not exist.2. Under circumstances that cocoon manufacture is agricultural and silk reeling manufacture is industrial, their vertical integration can't be realized, which means Hierarchies can not arise between the two manufacture processes.3. Considering transaction attributes, cocoon transaction matches well with Hybrids, in other words, Hybrids is a better option over Markets.Under the circumstance that monopsony and fully competitive conditions, Hybrids hold no possibility to arise, therefore government can not protect corporations' monopsony status, but has to attach some governance towards cocoon transactions. Through comparison analysis on Japan, India and Brazil, we find that cocoon transaction GS in Japan and Brazil are now implementing Hybrids, while India is implementing Markets bidding under governance. There is no Hierarchies exist in silk worm cocoon transaction.If cocoon transaction MG is effective, it can bring us cooperative surplus. Under the circumstance that Hybrids is stable, cocoon quality is improved and maintains at a high level, peasants benefits improve, moods are stable and optimistic about silk industry future. The profit of corporations is largely improved because high quality cocoon helps to decline materials and energy consuming, enhances production efficiency and produce high quality raw silk, which helps corporations establish well-known trademarks, build benign image in related industry. No matter historical or transverse comparison, districts where Hybrids get better processed have an overwhelming advantage in cocoon quality, corporations profits and peasants benefits over that governed by Markets.Due to inequality of business scale, Hybrids of cocoon transaction should definitely be established and processed by corporations. The precondition to maintain Hybrids' stability is that the corporations keep their promise first. While the adhesion contracts are incomplete, we need to make them fully comprehended and accepted by peasants, get continuous betterment through practice to stabilize Hybrids. The manage system established by corporations functions both as supplying technological services and discerning peasants opportunism. Through enterprises' culture building, "investment in human relations" and so on, corporations enhance peasants favorable impression towards themselves, improve cooperative possibilities with them. The cooperative relation with peasants will get more and more stabilized through continuous tit-for-tat strategy. Hybrids' stability will strengthen as corporations and peasants' Specialty Asset improve. The promised protective price services as two functions, firstly it can prevent peasants quit transactions, secondly it avoids peasants' opportunism behavior. Cocoon transaction Hybrids creates cooperative surplus, the excess payment which peasants get from corporations is actually a cooperative surplus corporations share with peasants, with the objective to get maximum profit based on long-term plan by stabilizing cooperative relations with peasants.