This paper examines the reasons behind firms considering backsourcing. While firms experience problems with their outsourcing activities, backsourcing emerges as an alternative solution. Firms primarily take cost considerations into account when reconsidering their outsourcing practices, but this only scratches the surface. A deeper analysis is needed, since cost increases arise from issues such as quality defects and cooperation problems. Even though production costs are low, outsourcing always implies transaction costs. Therefore, firms must implement a landed cost analysis before making their outsourcing decision. However, transaction costs occur from lack of competence, difficulties in communicationand problems in working relationships. This paper intends to focus on these underlying elements, since backsourcing is not only a matter of increased costs. Based on five interviews this study identifies these underlying elements. Findings suggest that backsourcing has emerged due to lack of monitoring and control systems as well as communication difficulties. Excessive focus on the core competence of the firm will also increase the risks of backsourcing. This paper also suggests that backsourcing may arise from business opportunities, since internal and external conditions change.

Bakgrund: De svenska företagens lånebaserade finansiering har historiskt sett mestadels utgjorts av banklån framför företagsobligationer. Efter finanskrisens start 2008, och fram till och med fjärde kvartalet år 2012, har den svenska företagsobligationsmarknaden vuxit med drygt 60 procent. I media framställs en bild där regelverket Basel III har gjort och kommer göra företagsobligationsmarknaden till en viktigare finansieringskälla för svenska företag. En studie om företagsobligationsmarknaden efterfrågas av Svenskt Näringsliv. Syfte: Syftet med studien är att kartlägga och utifrån institutionell teori analysera hur de ekonomiska förutsättningarna för den svenska företagsobligationsmarknaden har förändrats sedan år 2008. Genomförande: För att uppnå studiens syfte har ett kvalitativt tillvägagångssätt tillämpats. Empirin har samlats in genom semistrukturerade intervjuer med aktörer på företagsobligationsmarknaden. En intervjuguide utformades med grund i institutionell ekonomisk teori, med fokus på transaktionskostnader. Samma teoretiska referensram har sedan använts för att analysera den insamlade empirin. Slutsats: Tiden innan år 2008 kännetecknades av att företagen valde banklån. Detta för att bankerna kunde hantera banklån till låga transaktionskostnader. Institutionella förändringar sedan år 2008 har lett till att transaktionskostnaderna sänkts på företagsobligationsmarknaden. Företagsobligationer har således blivit ett bättre alternativ för många företag, även fast små företag fortfarande är utestängda från marknaden. / Background: Swedish corporates’ debt financing have historically mostly consisted of bank loans instead of corporate bonds. Since the beginning of the financial crisis of 2008, leading up to the fourth quarter of 2012, the Swedish corporate bond market has grown by over 60 per cent. Media coverage of the market presents a picture where the corporate bond market has become an important source of financing as a result of the legal framework Basel III. A study of the corporate bond market has been requested by the Confederation of Swedish Enterprise. Aim: The purpose of the study is to identify and, by the use of institutional theory, analyse how the market conditions in the Swedish corporate bond market have changed since the year of 2008. Completion: To achieve the purpose of the study a qualitative research method has been applied. Empirical data have been collected through semi-structured interviews with stakeholders in the Swedish corporate bond market. An interview guide was designed from an institutional theory perspective with a focus on transaction costs. The same theoretical framework has been used to analyze the empirical data. Conclusion: Before the year of 2008, debt financing was characterised by bank loans. This was the result of the banks’ ability to keep transaction costs low. Since the year of 2008, institutional changes have decreased transaction costs on the Swedish corporate bond market. Corporate bonds have become a more attractive alternative for many companies, even though small companies are still excluded from the market.

Most studies view transaction costs and constraints separate in the mean-variance framework. As such, I evaluate the benefits of holding and turnover constraints in the presence of transaction costs on Swedish Asset Returns. In theory, the benefits should be limited when transaction costs are included in the portfolio rebalancing problem. By using the model developed by Mitchell and Braun (2003), my results indicate that there are benefits of holding constraints in the mean-variance optimization. The main issue with the long-only portfolio is its lack of diversification. The strategy allocates the majority of the investment in 15 out of 100 assets. By imposing holding constraints, the portfolio becomes more diversified while reducing turnover volume and increasing Sharpe ratio. I find that the homogenous 1/N holding constraint increases monthly Sharpe ratio performance by 50 percent over the entire sample. However, the results are not consistent over all samples and not statistically significant. Further, turnover constraints only marginally increase performance, which more likely originates from the increase in diversification.

This book deals with the inner life of the capitalist firm. There we find numerous conflicts, the most important of which concerns the individual employment relationship which is understood as a principal-agent problem between the manager, the principal, who issues orders that are to be followed by the employee, the agent. Whereas economic theory traditionally analyses this relationship from a (normative) perspective of the firm in order to support the manager in finding ways to influence the behavior of the employees, such that the latter – ideally – act on behalf of their superior, this book takes a neutral stance. It focusses on explaining individual behavioral patterns and the resulting interactions between the actors in the firm by taking sociological, institutional, and above all, psychological research into consideration. In doing so, insights are gained which challenge many assertions economists take for granted.

Retail centres are a visible sign of developed capitalist societies and make an appreciable contribution to these economies. For the firms involved in supplying air conditioning maintenance to retail centres, governance structures (that incorporate the make-or-buy decision and the decision concerning the nature of the exchange relationship) are fundamental business decisions. The absence of literature in this area creates a research opportunity to undertake a theoretical and empirical investigation into the determinants of the governance of air conditioning maintenance in Australian retail centres. The research objectives revolve around a microeconomic theory (Transaction Cost Economics) and two related theories – one from strategic management (Resource-Based Theory) and one from a power-based perspective (Resource Dependency Theory). In terms of the make-or-buy decision, an integrative framework of vertical integration is developed that aims to create a clearer understanding of the conditions under which Transaction Cost Economics (TCE) and Resource-Based Theory (RBT) are dominant. This approach is encouraged by the similarity of the assumptions made in TCE and RBT concerning rationality and which envisage a short term approach to profits. If a wider view is taken, that includes supply chains in which firms take a longer term approach to profits, then Resource Dependency Theory (RDT) can also be considered as a complementary theory to TCE. In order to test TCE on the issue of the nature of the exchange relationship, TCE's contractual schema is developed, along with a new type of asset specificity (Ongoing Asset Specificity). Case studies and a nationwide postal survey are used to collect data from multiple sources, comprising 51 interviews, the collection of documentary information, as well as 18 completed case study questionnaires and 205 useable survey questionnaires. Multiple research methods allow the relative strengths of different methods to be combined to more effectively test the hypotheses. Pattern matching and regression analysis are the main techniques used to analyse the data. The results provide a successful testing of the integrative framework of vertical integration. That is, this framework is shown to be more powerful in accounting for the make-or-buy decisions in the supply chains in this thesis, than the singular deployment of either TCE or RBT. With regard to the nature of the exchange relationship decision, the results also support the development of TCE's contractual schema and Ongoing Asset Specificity. Through the incorporation of these developments, TCE outperforms RDT across all of the internal and external exchanges in the supply chains in this thesis. In total, it is concluded that transaction costs and production costs can both be key determinants of the governance of air conditioning maintenance in the chain that supplies this activity to Australian retail centres. Moreover, and in this chain, upstream exchange relationships are not determined by downstream external exchange relationships. The implications of the results for practice - in more mainstream construction, and concerning the make-or-buy decision, particularly concern trades in close physical and intellectual proximity to the main contractor’s key activity of planning and coordinating site activity. Here, the results indicate that main contractors would benefit from focusing on the possibility of hold-up and not production cost improvements. With respect to external relationships, the results show that even when clients have an ongoing requirement for an activity, a discrete exchange can be both economical and effective. This suggests that calls by some government sponsored reports for all clients buying services from main contractors to seek a relational exchange are not justified. In terms of the firm's internal relationships and upstream external relationships, the evidence from this thesis is that these relationships should not necessarily be determined by the firm’s downstream external relationships. Here, for example, main contractors might not allow their exchanges with their staff and subcontractors to be determined by exchanges with their clients. More specifically, this thesis suggests that main contractors can prosper from developing relational exchanges with their staff, core subcontractors and suppliers despite engaging in discrete and arms-length exchanges with their clients. This finding may encourage main contractors to help move mainstream construction away from any "command and control" image.

Since the late 1970s, the world has experienced a wave of microeconomic reform that has resulted in the privatisation of many previously State-owned assets, as well as other reforms directed at improving the efficiency of government business enterprises. This dissertation focuses on one important instrument of reform: outsourcing of public-sector service provision. Despite the prevalence of outsourcing, there has been relatively little empirical work analysing the effects of outsourcing at the contract level. This dissertation addresses three important empirical issues related to outsourcing. First, analysis of the magnitude and sources of cost savings associated with outsourcing was undertaken using a present value costing framework. Unlike other studies, this study includes transaction costs and considers how costs change over the life of the contract. The results indicate that savings of 37 per cent were achieved in the first year of contract operation ?savings that were achieved through a combination of reductions in pay and conditions, labour-saving technological change and reductions in inefficiency. Secondly, the dissertation considered why the level of savings achieved fell to 24 per cent following contract variations at the end of year 1. Some evidence indicated that this may have been due to opportunistic behaviour or hold-up: that the contract service provider may have taken advantage of contractual incompleteness and increased its price during the course of contract renegotiations. Although hold-up is an important theme in the literature on contracts, little empirical work has been undertaken in verifying its existence. Thirdly, the impact of contract design on the efficiency of outsourcing arrangements was analysed. It is well known that contract theory predicts a trade-off between incentives and risk. Using the standard principal-agent framework, a simple model is developed to analyse the effects of demand uncertainty on the risk-incentive trade-off. This model is then tested using data from maintenance services contracts at two corporatised water retailers in Melbourne: an environment that is characterised by high levels of both cost and demand uncertainty. Using a general linear regression model, the results obtained indicate that the moral hazard effect dominated the risk premium effect.

Since the late 1970s, the world has experienced a wave of microeconomic reform that has resulted in the privatisation of many previously State-owned assets, as well as other reforms directed at improving the efficiency of government business enterprises. This dissertation focuses on one important instrument of reform: outsourcing of public-sector service provision. Despite the prevalence of outsourcing, there has been relatively little empirical work analysing the effects of outsourcing at the contract level. This dissertation addresses three important empirical issues related to outsourcing. First, analysis of the magnitude and sources of cost savings associated with outsourcing was undertaken using a present value costing framework. Unlike other studies, this study includes transaction costs and considers how costs change over the life of the contract. The results indicate that savings of 37 per cent were achieved in the first year of contract operation ?savings that were achieved through a combination of reductions in pay and conditions, labour-saving technological change and reductions in inefficiency. Secondly, the dissertation considered why the level of savings achieved fell to 24 per cent following contract variations at the end of year 1. Some evidence indicated that this may have been due to opportunistic behaviour or hold-up: that the contract service provider may have taken advantage of contractual incompleteness and increased its price during the course of contract renegotiations. Although hold-up is an important theme in the literature on contracts, little empirical work has been undertaken in verifying its existence. Thirdly, the impact of contract design on the efficiency of outsourcing arrangements was analysed. It is well known that contract theory predicts a trade-off between incentives and risk. Using the standard principal-agent framework, a simple model is developed to analyse the effects of demand uncertainty on the risk-incentive trade-off. This model is then tested using data from maintenance services contracts at two corporatised water retailers in Melbourne: an environment that is characterised by high levels of both cost and demand uncertainty. Using a general linear regression model, the results obtained indicate that the moral hazard effect dominated the risk premium effect.

Doctor of Philosophy / The motivation for the research presented in this thesis stems from the recent availability of high frequency limit order book data, relative scarcity of studies employing such data, economic significance of transaction costs management, and a perceived potential of data mining for uncovering patterns and relationships not identified by the traditional top-down modelling approach. We analyse and build computational models for order submissions on the Australian Stock Exchange, an order-driven market with a public electronic limit order book. The focus of the thesis is on the trade implementation problem faced by a trader who wants to transact a buy or sell order of a certain size. We use two approaches to build our models, top-down and bottom-up. The traditional, top-down approach is applied to develop an optimal order submission plan for an order which is too large to be traded immediately without a prohibitive price impact. We present an optimisation framework and some solutions for non-stationary and non-linear price impact and price impact risk. We find that our proposed transaction costs model produces fairly good forecasts of the variance of the execution shortfall. The second, bottom-up, or data mining, approach is employed for trade sign inference, where trade sign is defined as the side which initiates both a trade and the market order that triggered the trade. We are interested in an endogenous component of the order flow, as evidenced by the predictable relationship between trade sign and the variables used to infer it. We want to discover the rules which govern the trade sign, and establish a connection between them and two empirically observed regularities in market order submissions, competition for order execution and transaction cost minimisation. To achieve the above aims we first use exploratory analysis of trade and limit order book data. In particular, we conduct unsupervised clustering with the self-organising map technique. The visualisation of the transformed data reveals that buyer-initiated and seller-initiated trades form two distinct clusters. We then propose a local non-parametric trade sign inference model based on the k-nearest-neighbour classifier. The best k-nearest-neighbour classifier constructed by us requires only three predictor variables and achieves an average out-of-sample accuracy of 71.40% (SD=4.01%)1, across all of the tested stocks. The best set of predictor variables found for the non-parametric model is subsequently used to develop a piecewise linear trade sign model. That model proves superior to the k-nearest-neighbour classifier, and achieves an average out-of-sample classification accuracy of 74.38% (SD=4.25%). The result is statistically significant, after adjusting for multiple comparisons. The overall classification performance of the piecewise linear model indicates a strong dependence between trade sign and the three predictor variables, and provides evidence for the endogenous component in the order flow. Moreover, the rules for trade sign classification derived from the structure of the piecewise linear model reflect the two regularities observed in market order submissions, competition for order execution and transaction cost minimisation, and offer new insights into the relationship between them. The obtained results confirm the applicability and relevance of data mining for the analysis and modelling of stock market order submissions.

Thesis (Ph. D.)--University of Missouri-Columbia, 1997. / Typescript. Vita. Includes bibliographical references (leaves 209-220). Also available on the Internet.

Thesis (Ph. D.)--University of Missouri-Columbia, 1997. / Typescript. Vita. Includes bibliographical references (leaves 209-220). Also available on the Internet.