By R. E Snodgrass
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Extra resources for Insects
Williamson and his disciples did not reject the orthodox framework outright, therefore, but merely amended it. They remained faithful to the basic principle that, over the medium and long term, market competition compelled all firms to act in an allocatively efficient manner. Whatever autonomy the firm appeared to enjoy in its short-term decision-making processes, the reality was that it was severely constrained by the need to survive in the long term. What they argued, however, was that the mechanism by which the exchange was managed was as important a part of the strategic agenda of the firm as was its choice of partner.
The acquisition of supply chain and market power may be the surest route to business success in the longer term, but in the short term this may be difficult or even counterproductive. Firms also need, therefore, to equip themselves to deal with transactions undertaken in conditions of interdependence and independence. 3, Power, rents and critical assets 23 1111 2 3 4 5 6 7 8 9 1011 1 2 3111 4 5 6 7 8 9 20111 1 2 3 4 5 6 7 8 9 30111 1 2 3 4 5 6 7 8 9 40111 1 2 3 4 45111 interdependence exists when the relative scarcity and utility of the resources held by both buyer and supplier are high.
14 1111 2 3 4 5 6 7 8 9 1011 1 2 3111 4 5 6 7 8 9 20111 1 2 3 4 5 6 7 8 9 30111 1 2 3 4 5 6 7 8 9 40111 1 2 3 4 45111 Supply chains, markets and power The solution to this dilemma was for both firms to create close ties with one another so as to minimise the risk of opportunism or, where it occurred, to spot it early and punish it. This involved the building of credible commitments into the relationship. These might be principally of two types. First, while one party only made the dedicated investment, the other party could post a bond that it would forfeit if it attempted to act opportunistically.