Facoltà di Economia Università degli Studi di Parma Cooperation and Competition Among Firms Ch. 3 Provisional Version (1) 2013-14 1 1 Factors (strategies) facilitating cooperation between individuals and firms 2 Factors and mechanisms of type: endogenous exogenous 3 Endogenous Strategies The initial structure of payoffs is unaffected. The likelihood of cooperation depends on variables that: • qualify subjectively the participants; • define the attributes of the group; • reflect the characteristics or the content of collective action. 4 Exogenous Strategies Preferences and characteristics of the participants are taken as given. The likelihood of cooperation depends on: changes in the structure of payoffs; sanctions mechanisms and incentives entered; involvement of agents outside the group differentiation of agents in decision-making roles 5 Endogenous Strategies 6 The shadow of the future One-shot Prisoner’s dilemma Iterated prisoner’s dilemma (IPD) 7 Prisoner’s dilemma C D C 1, 1 -1, 2 D 2, -1 0,0 8 Prisoner’s dilemma Dana D C C 1, 1 -1, 2 D 2, -1 0,0 Andrea 9 Prisoner’s dilemma Dana D C C 1, 1 -1, 2 D 2, -1 0,0 Andrea D,D=0 C,C=1 10 Prisoner’s dilemma Dana D C C 1, 1 -1, 2 D 2, -1 0,0 Andrea D,D=0+0 C,C=1+1 11 Prisoner’s dilemma Dana D C C 1, 1 -1, 2 D 2, -1 0,0 Andrea D,D=0+0+0+0 C,C=1+1+1+1 12 Prisoner’s dilemma Dana D C C 1, 1 -1, 2 D 2, -1 0,0 Andrea D,D=0+0+0+0+0 C,C=1+1+1+1+1 13 Prisoner’s dilemma Dana D C C 1, 1 -1, 2 D 2, -1 0,0 Andrea D,D=0+0+0+0+0+0 C,C=1+1+1+1+1+1 14 Prisoner’s dilemma Dana D C C 1, 1 -1, 2 D 2, -1 0,0 Andrea D,D=0+0+0+0+0+0+0…. C,C=1+1+1+1+1+1+1…. 15 The shadow of the future One-shot Prisoner’s dilemma Iterated prisoner’s dilemma (IPD) Indefinite Iteration: The value of cooperation at a given stage in an IPD clearly depends on the odds of meeting one's opponent in later rounds. As p (likelihood to meet one’s opponent in the following rounds) approaches 0, the IPD becomes a one-shot PD, and the value of defection increases. As p approaches 1 the IPD becomes an infinite IPD, and the value of defection decreases 16 1.1 Self-enforcing agreements Incomplete exchange scheme involving two or more imperfectly informed agents. The parties endorse mutual commitments to the continuation of the exchange even if they do not adopt legally binding contracts. The advantage of exchange is evaluated with regard to the difference between the accumulated payoffs of joint cooperation and the payoffs of defection. (example: Buyer-supplier relationships) 19 Self-enforcing agreements can not be applied to transactions involving relationships that develop in a short term horizon. But they are an appropriate solution when the time horizon of the report is expected long-term (indefinite iterated game). The sanction linked to failure to cooperate is not imposed by a third party but consists of the loss of profits of the entire exchange relationship. Sd=Defection payoff Ss=Cooperation payoff P=Accumulated payoff 20 Even if T>R T Rs 1 s 1 P Rs T R 1 s 21 Self-enforcing Agreements and Interfirm Cooperation infinite time horizon of the exchange* existence of a minimum length of the exchange certainty of punishment reciprocity of the benefits of ongoing exchange (*) “Chain store paradox" (Selten,1978) 22 1.2 Strategies of reciprocity 23 In the iterated prisoner's dilemma players constantly face the trade-off between maintaining the credibility of the threat (to punish anytime) and sustaining the costs of retaliation Which strategies will maximize the aggregate benefit from cooperation? 24 Tit for Tat (Axelrod/Rapoport 1984) Tournament (14+62 entries) Unconditional defection (ALL D), Tester , etc. Tit for Tat is a strategy based on reciprocity. Strategy: 1) in the first game the agent who selected Tit for Tat chooses to cooperate 2) in subsequent rounds he mimics the other player's choice: he responds to cooperation with cooperation and defection with defection. 25 Bible Judges: verse 15:11, (Samson and Philistines) “As they did unto me, so have I done unto them”. Tit for tat https://www.youtube.com/watch?v=QYg8khfc9Fs Main features of Tit for Tat Tit for Tat is a strategy that is: nice (it is never the first to defect) retaliatory (to avoid the risk of exploitation) forward-looking (not cutting off the interaction) forgiving (it is willing to cooperate even with those who have defected against it ) 28 Repeated prisoner’s dilemma Simulator http://www.gametheory.net/Mike/applets/PDilemma/ http://ccl.northwestern.edu/netlogo/models/PDN-PersonIterated (Tit for Tat+Defectors) 1.3 “Benefit of the doubt” 30 “Benefit of the doubt” In Tit for Tat each actor is able to monitor the action of the partner (perfect information) Frequently, in the real world, players are not able to assess accurately whether the choice of the other party stems from an intentional decision or it is the result of chance, force majeure or variables beyond the control of the partner. Bendor, Kramer and Stuot (1991) abandon the assumption that the players have perfect knowledge of the choices made by the counterparts and introduce “noisy settings” 31 Implications Highly reactive strategies tend to provide very low cooperative outcomes; Tit for Tat in an uncertain environment is dominated by other strategies; (Asymmetry of the effects of the error term) 32 Strategies of ‘generosity’ In uncertain environments, the dominant strategies are characterized by "generosity" (see NICE). NICE, for istance, does not reciprocate with mutual defection, but continues to cooperate by allowing the recovery of cooperative counterpart. Only below a defined level of ex ante cooperation, NICE begin to progressively reduce their cooperative attitude. In uncertain contexts ‘benefit of doubt’ in the long run generates more favorable results than immediate reactivity 33 % C.C 100 90 n. rounds % C.C 100 5 5 90 n. rounds % C.C 100 5 5 5 90 n. rounds % C.C 100 5 5 5 90 n. rounds % C.C 100 5 5 5 90 n. rounds % C.C 100 5 5 5 90 n. rounds % C.C 100 5 5 5 90 n. rounds Mathew 5:38-44 38 "Here's another old saying that deserves a second look: 'Eye for eye, tooth for tooth.' 39 Is that going to get us anywhere? Here's what I propose: 'Don't hit back at all.' If someone strikes you, stand there and take it. 40 If someone drags you into court and sues for the shirt off your back, giftwrap your best coat and make a present of it. 41 And if someone takes unfair advantage of you, use the occasion to practice the servant life. 42 No more tit-for-tat stuff. Live generously. 43 "You're familiar with the old written law, 'Love your friend,' and its unwritten companion, 'Hate your enemy.' 44 I'm challenging that. I'm telling you to love your enemies. Limits Exploitation risks Incomplete Cooperation 42 2 Heterogeneity 43 2 Heterogeneity Relevant dimensions: Differences in resource endowment; Heterogeneity in preferences 44 Heterogeneity Heterogeneity promotes collective action (Olson); Heterogeneity inhibits collective action (Ostrom); The concept of critical mass (Maxwell) 45 Heterogeneity Olson Cooper Heterog Heterogeneity Olson Cooper Ostrom Heterog Heterogeneity Cooper Maxwell Heterog Heterogeneity Olson Cooper Maxwell Ostrom Heterog Heterogeneity Intermediate levels of heterogeneity promote cooperation; Very high and very low levels of heterogeneity discourage cooperation; Heterogeneity in endowments and homogeneity in preferences facilitate cooperation. 50 3 Fairness 51 Ultimatum game Division of a fixed sum of money S between a Proposer and a Responder. Proposer offers x. If Responder rejects x both earn zero. If x is accepted the Proposer earns S – x and the Responder earns x. 52 Ultimatum game Agent A and B cannot communicate Agent A: Receives € 100 and Decides how many € to give to Agent B: (write the ammount of € and pass the card to Agent B) € ... ... ... ... ..=X Agent B Agent B can: a) accept and in this case Agent B receives X and Agent A receives €100-X b) refuse and in this case both get € = 0 Accepts □ Refuses □ 53 Predictions with rational and self-regarding players Offer x=ε; where ε is the smallest money unit. Any x>0 is accepted. 54 Experimental regularities Most offers are between 0.3S and 0.5S. x <0.2S is rejected half the time. Competition among Proposers has a strong xincreasing effect. Competition among Responders strongly decreases x. 55 56 Interpretation Role of fairness (and economic altruism) Fairness as a behavioral guide Inequality aversion 57 Dictator game Like the ultimatum game but the Responder cannot reject what the “Proposer” dictates (S-x, x). 58 Predictions with rational and self-regarding players No sharing, i.e., x = 0 59 Experimental regularities On average “Proposers” allocate x=0.2S. Strong differences across experiments and across individuals 60 61 Third party punishment game Agent A and Agent B play a dictator game. Player A receives an endowment of 100 tokens of which he can transfer any amount to Player B. Player B has no endowment and no choice to make. Player C has an endowment of 50 tokens and observes the transfer of Player A. After this player C can assign punishment points to Player A. For each punishment point assigned to Player A Player C has costs of 1 token and Player A has costs of 3 tokens. 62 Predictions with rational and self-regarding players Since punishment is costly a self-interested player C will never punish. 63 Experimental regularities In the above experiments Players A were never punished if they transferred 50 or more tokens to Player B. Roughly 60 percent of Players C punished A. The less A transferred, the stronger was the punishment 64 4 Trust 65 Trust (1) Trust can be defined as : 1)Reliability/Ability/Competence and/or 2) Fairness/Loyalty/Good Faith/Goodwill 66 Trust (2) Trust can be defined as the expectation that other agents will adopt cooperative behavior even when they are not subject to control or direct monitoring. 67 Implications If trust is perfect, there is no room for opportunism, and then there will be no social dilemmas. 68 Trust as a precondition for cooperation (General) Trust can be seen, not as a factor of cooperation, but as a precondition allowing cooperation projects to be identified and carried out. It is relevant in terms of: a) no ex-ante aversion towards cooperation b) injection of extra economic value to cooperation as such, with the consequence of canceling the benefits of defection 69 Trust as an outcome of cooperation Individual, not general, trust is the output of positive experiences of cooperation and allows for the extension towards further initiatives Trust game In a trust game an Investor receives an amount of money S from the Experimenter, and then can send between zero and S to the Trustee. The Experimenter then triples the amount sent, which we term y, so that the Trustee has 3y. The Trustee is then free to return something (z) between zero and 3y to the Investor. The payoff of the Investor is S – y + z and the payoff of the Trustee is 3y – z. 71 Predictions with rational and self-regarding players Trustee repays nothing: z = 0. Investor invests nothing: y = 0. 72 Experimental regularities On average y = 0.5S and trustees repay slightly less than 0.5S. Z is increasing in y. Roughly one third of the trustees reciprocated by sending back more than was originally sent. 73 5 Social capital 74 Social Capital Def. 1: Social capital is the set of personal relationships (formal or not) that an individual has (Burt); Def. 2: Social capital is the endowment of social relations and rules of conduct present in a given community (Putnam) 75 Social capital (def.2) Social capital is the output of experiences of civic engagement, participation in associative organizations (cultural, recreational, sports, etc..) and the adherence to the norms that regulate the community life. 76 Social capital Def. 2 (Extended interpretation) Social Capital facilitates collective action and cooperative practices through: the strengthening of social cohesion (reduction of conflicts, decreasing uncertainty, etc); the increase of information exchange; the strengthening of group identity. 77 Social capital Def. 2 (Restrictive interpretation) Social capital facilitates collective action and practical cooperative through the following mechanism: The networks of civic engagement provide relational goods (contacts, information, reputation). These assets can be preserved only if individuals maintain positive relations inside the community they belong to. The fear that in the case of defection the sanction could be ostracism (exclusion from the system of internal relationships), reduces the individual and collective incentives towards opportunism and facilitates cooperation 78 Social capital and institutional action Hp. 1 Capital (Civicness) → Selection of the political representation → Control of the work of public administrators → Institutional efficiency → Increased endowment of public goods → Social and economic growth → Extension of the social capital 79 Social capital and institutional action Hp. 2 Proactive Institutions → Institutional activism → Increase the endowment of public goods; → Economic and social growth → Growth of civicness → Increase in Social Capital → Selection of the political representation → Control of the work of public administrators 80 Social capital and institutional action Implications: Circularity of processes; Role of history (Hp 1: Social capital is inherited from the past); Institutional action (the formation of social capital is affected by institutional initiative) 81 6 Group Identity 82 Individual and group identity Identity - self-image - can be seen as a component of individual utility and is an explanation for agents’ behaviour in an economic context (Akerlof and Kranton 2000). 83 Individual and group identity Individual identity develops in social contexts; Group identity reinforces the sense of self and every action that approximates the individual to the ideal characteristics of the group increases its personnel utility; These actions can be highly costly and may apparently conflict with individual rationality. 84 List of rites of passage (partial) NA (native Indians), SA, Africa: women at menses secluded and taught by elder the art of womanhood. Boys undergo trials to affirm their passage. (first hunt, wilderness alone, warfare (Borneo Tribes). Candomble initiate in Brazil (see below). Dangers in this passage can provide great growth potential Lesse tribe, Zaire: girls reach menarche, secluded with other girls. The Zulus of South Africa, and the Cuna of S. America: girls are secluded during the onset of puberty (safe place). The Ndembu of Zambia: girls secluded 3 months: communicate with outside only with melodic messages played on a harp-like instrument. In Kampuchea : seclusion several years. In all cases, women emerge as women and potential brides. Turkey: sunnet = circumcision (7-8) so boy remembers when he became a "man". Paraded on donkey before sunnet, white robe with red ribbon. After, boys take off red ribbon and sit in a lavishly decorated bed to receive gifts and compliments for bravery. Clitoridectomy (female circumcision): Egypt (even mummies) and other Muslim countries. In Egypt, 75% of the females are circumcised. 1) end the girl's phase of androgyny, 2) curb woman's sexual desires as adult (reduces infidelity). If woman is not circumcised, considered unfit for marriage. Not mandated by Islam, but by culture. Implications The higher the group identification, the greater the propensity of individual agents to underestimate or to accept the risk of defection of some members and develop an optimistic forecast on the overall conduct of the group. 86 7 Reputation 87 Reputation Reputation can be defined as an individual sunk investment made to signal the personal ability to fulfill the assigned tasks and the level and quality of his/her own commitment. 88 Reputation and cooperation Reputation can be identified as a barrier against defection: actors with good reputations tend not to choose defection for fear of cancelling the value of their investment in reputation. 89 Written Exam Three questions (an hour and a half) General topics/Slides/Classroom presentation Threshold effect Argumentative approach Written Exam Impact of a sanctioning mechanism on the interaction between economic agents Typologies of social dilemmas: social traps and public goods Technological externalities and cooperation between firms Group size and cooperation between agents Ultimatum game: what it is and what it tells us Self-enforcing agreements: main features Heterogeneity and collective action The tragedy of commons and the implications for the cooperation between agents Exogenous variables and mechanisms 92 Exogenous Strategies Preferences and characteristics of the participants are taken as given. The likelihood of cooperation depends on: changes in the structure of payoffs; sanctions mechanisms and incentives entered; involvement of agents outside the group differentiation of agents in decision-making roles 93 2.1 Sanctioning systems 94 Introduction: public goods game Each Firm (player) receives from the Experimenter n tokens at each round. There are 4 firms and 20 rounds of the game. Firms can invest in a common research project (s) or retain the sum of money (1-s). The Experimenter doubles the value of the total investment and divides by 4. Each Firm maximizes the individual cumulative income. Changes in the payoff structure Changes in the structure of the dilemma can alter the incentives of individuals and make the adoption of cooperative behavior more likely. Free riding may be reduced or canceled if punished through certain sanctions and ex ante known by agents. 96 Impact of sanctioning Fehr and Gächter (2000) introduced a punishment opportunity into the public goods game. In their game there are two stages. Stage one is a public goods game. In stage two, after every player in the group has been informed about the contributions of each group member, each player can assign up to ten punishment points to each of the other players. The assignment of one punishment point reduces the first-stage income of the punished subject by ten per cent and also reduces the income of the punisher. 97 Impact of sanctioning Predictions with rational and self-regarding players Since punishment is costly for the punisher, the selfinterest hypothesis predicts zero punishment. Since rational players will anticipate this, the selfinterest hypothesis predicts no difference in the contribution behavior between the standard public goods game and the game with a punishment opportunity. In both conditions zero contributions are predicted. 98 Impact of sanctioning Experimental regularities The experimental evidence completely rejects this prediction. In contrast to the standard public goods game, where cooperation declines over time and is close to zero in the final period, the punishment opportunity causes a sharp jump in cooperation and a steady increase until almost all subjects contribute their whole endowment. The sharp increase occurs because free-riders often get punished, and the less they give, the more likely punishment is. Cooperators feel that free-riders take unfair advantage and are thus willing to punish them. 99 Impact of sanctioning 100 Impact of sanctioning Mascalet et al. 2003 101 102 Impact of sanctioning “The actual rate of punishment is very low in the last few periods: the mere threat of punishment, and the memory of its sting from past punishments, is enough to induce potential free-riders to cooperate” (Camerer and Fehr). 103 Monetary and nonmonetary sanctions Mascalet et al. 2003 Monetary sanctions = opportunity of decreasing monetary payoff of other’s player Nonmonetary sanctions (opportunity to communicate a level of disapproval of each other player's contribution) 104 Monetary and nonmonetary sanctions Mascalet et al. 2003 “Monetary and nonmonetary sanctions (opportunity to communicate a level of disapproval of each other player's contribution) initially increase contributions by a similar amount. Over time, however, monetary sanctions lead to higher contributions than nonmonetary sanctions. After the opportunity to impose sanctions is lifted, contributions fall to similar levels…” Trust and sanctioning mechanism Mulder,Van Dijk, De Cremer, Wilke (2006) “Sanctioning systems in social dilemmas are often meant to increase trust in others and to increase cooperation. Sanctioning systems may also give people the idea that others act in their own self-interest and undermine the belief that others are internally motivated to cooperate. When there is a sanction on defection, trust in others being internally motivated to cooperate is undermined: participants, who had experienced the presence of a sanctioning system, trusted fellow group members less than participants who had not. In a similar vein, the sanction undermined cooperation when trust was intitially high.” Trust and sanctioning mechanism: monitoring systems Coletti et al. 2004: For improving cooperation firms can enhance the control systems used to govern collaborative agreements. Through increased monitoring, sanctioning, and rewarding, firms can reduce the incentives for opportunistic behavior. Periodic monitoring increases the probability that opportunistic behavior will be detected, and sanctioning (rewarding) systems impose penalties (bonuses) on collaborators who engage in such behavior. 107 Trust and sanctioning mechanism: monitoring systems Prior research suggests that control systems can have unintended negative consequences with regard to trust and cooperation. Specifically, a number of researchers argue that control systems signal mistrust and therefore reduce cooperation. Monitoring costs may be lower than previously believed: control systems may actually engender trust, reinforcing the positive effects of control. Participants cooperate more when there is a control system in place than when there is none. Constraints Change of the structure of payoffs or introduction of sanction rules require collective action. Obstacles affecting cooperation in the original dilemma act with the same intensity when decisions are made to alter the structure of the game 109 Entering a sanction system first order dilemmas (concerning the original problem of collective action); second-order dilemmas (regarding the provision of mechanisms for sanctioning opportunism; the sanction mechanism is a public good). 110 Differences in the nature of dilemmas Elementary cooperation; Instrumental cooperation (Yamagishi 1986) 111 The role of instrumental cooperation Second order cooperation can be seen as a costly preplay game. Only the contributors are allowed to join the game and if the contributions are positive the mechanism is provided. The original dilemma will be solved since: 1) No-one will have incentives for defection 2) All the contributors are safe by exploitation 112 Large and small groups In small groups, social ties, identity and other factors may act as deterrents against opportunism and elementary cooperation motivation may be sufficient; In larger groups, cooperation can only emerge if agents are motivated by factors other than those of elementary cooperation. Cooperation in large groups depends on the safeguards against opportunism 113 Large and small groups In large groups cooperation depends on the cost of monitoring and sanctioning as well as on the expected level of payoff; In addition cooperation is not a function of a time horizon in which collective action is developed; The efficiency of investment in the sanctiong structure tends to vary according to group size 114 2.2 The centralization of decision-making 115 Centralization of decision-making Centralization of decision-making = Allocation of decision-making, sactioning, redistributive tasks to an authority internal to the group 116 Pros Reduction of coordination and regulation costs; Increased fairness in the distribution of the output Increase of the efficiency of sanctions; Output closer to the optimum level of cooperation. 117 Non-hierarchical Team Non-hierarchical Team N(N-1)/2=15 Hierarchical Team (N-1)=5 Pros Reduction of coordination and regulation costs; Increased fairness in the distribution of the output Increase of the efficiency of sanctions; Output closer to the optimum level of cooperation. 121 Cons Reducing the volume of information exchanged in the group; Stratification of social roles (power concentration). 122 Empirical evidence The groups deviating most from the optimal use of resources are those that are most ready to adopt solutions to centralize decision-making processes (Rutte and Wilke 1984) Individuals elected for the role of leader are those most able to complete his/her tasks, who show behavior similar to the voters’, who have approximated optimal use of the common resources and have prevented its depletion. 123 Empirical evidence Individuals chosen for the role of leader behave very similarly to the expectations of those who have voted them. They improve the previous performance and tend to limit the exploitation of individual and collective resources and to distribute aggregate benefits in an equitable way among group members 124 Leadership styles Van Vugt, Jepson,Hart, De Cremer 2004: “Researchers have focused almost exclusively on autocratic style (Messick & Brewer, 1983). This has led some analysts to conclude that the only viable solution to social dilemma conflicts is the adoption of a coercive, non-democratic regime. Hobbes asserted that only a strong central authority or leader figure can save society from the ruthless competition of selfish individuals. This is echoed in the work of many contemporary writers who claim that social dilemma stragedies can only be prevented if groups are willing to implement dictatorial solutions (Arrow, 1951; Hardin, 1968; Messick & Brewer, 1983)”. Leadership styles “After group members repeatedly failed to provide the public good through voluntary contributions, they had an opportunity to choose a leader to improve their group’s performance. Among a range of leaders with different styles, an autocratic leader was preferred the least, whereas a democratic, consultative leader was preferred the most.” Leadership styles “Autocratic leadership effectively resolves social dilemmas by forcing members to invest in their group. Although this is true in situations where escape from a group is impossible, in many situations group members not only have a choice between investing or not investing in a group, but also between staying in the group or leaving, thereby affecting the group’s welfare and stability (cf. Ziller, 1965). Stay/exit decisions may have important consequences for a group’s ability to provide public goods, particularly step-level goods, because they require a minimum number of members to contribute. Hence, effective leaders must not only be able to solve the free-rider problem in their groups, but also to keep a sufficient number of members committed to those groups, thereby preventing them from taking their resources elsewhere.” Leadership styles Autocratic leader: effective in long run only if group members are not allow to exit Democratic leader: (control over decision process) effective in step-level public good provision (the group size is crucial); Laissez-faire leader: (leader provides only information) always ineffective Centralization of decision making: goals and forms “A cluster of firms with different competencies cooperating for the realization of a large plant may, and often do, concede to one firm the right to determine the behaviours of the other firms within a given ‘zone of acceptance”, to coordinate their actions, to speak on everybody’s behalf and to exert technical leadership (Grandori and Soda 1995) Centralization of decision making: goals and forms (Gulati and Singh 1998) “The command structure, authority systems, and standard operating procedures all make it easier to coordinate tasks between partners by clarifying decision-making procedures and anticipating issues before they arise. …Hierarchical elements in alliances can effectively address the anticipated coordination costs resulting from interdependence for several reasons.” Centralization of decision making: goals and forms Joint ventures: A separate administrativeh hierarchy of managers oversees day-to-day functioning and addresses contingencies as they arise. This provides an independent command structure and authority system with clearly defined rules and responsibilities for each partner Minority alliances: Hierarchical supervision is typically created by the investing partner joining the board of directors of the partner that received the investment Contractual alliances: Few if any command structures, authority systems, incentive systems, standard operating systems, dispute resolution procedures, or non-market pricing systems are necessarily part of such arrangements. Centralization of coordination The centralization of coordination means entrusting a limited and specialized subset of agents to define incentives for the synchronisation of courses of action and selection of the coordination equilibrium . 132 Centralization and coordination of cost reduction Centralization allows exploitation of economies of scale in gathering relevant information; The reduced number and greater uniformity of decision makers lowers the cost of information transfer and reduces individual informational symmetries. Because they are selected on the basis of their competences, the components of the decision board work without requiring significant additional knowledge investment. 133 2.3 Institutions and Goverments Institutions=rules of games (law; judiciary system; antitrust authority, ecc.) Institutions= Parliaments, Governmental bodies (Ministries; Local goverment, …); Semipublic entities; Branch of public entities; Economic associations, …. Max Weber Institutions and Goverments Coordination of macroeconomic policies (reduction of uncertainty; transaction costs; etc); Industrial policies (providing a route in sectoral change); Increase of social capital; Support to overcome collective market failure (R&D interfirm projects, antitrust, …); Support to collective initiatives ( GI in agriculture and food industry; Unido, etc) Garantees of independent and non opportunistic behavior inside collective action (Consortia). 154.47-015 Kentucky Wood Products Competitiveness Corporation -Governing board. (1) The Kentucky Wood Products Competitiveness Corporation is created and established, as a de jure municipal corporation and political subdivision of the Commonwealth of Kentucky which shall be a public body corporate and politic, performing functions and purposes essential to improving and promoting the health and general welfare of the people of the Commonwealth through promoting, enhancing, and developing the Commonwealth's secondary wood products industries by: (a) Disseminating information; (b) Providing services; (c) Developing workforce training measures and standards to support value-added functions with regard to design, processing and manufacture, and marketing of wood products; and (d) Providing financial support for the deployment of new or improved technology and world-class manufacturing systems to businesses engaged in the production and manufacture of value-added wood products. (2) The corporation shall be governed by a board of thirteen (13) members, consisting of seven (7) members representing the private sector including four (4) representatives of Kentucky's secondary wood products industry; one (1) member representing the Kentucky Forest Products Council as created and established by KRS 154.47-110; one (1) member representing the Education and Workforce Development Cabinet; and four (4) members representing the following universities with one (1) member each representing the University of Kentucky, the University of Louisville, Eastern Kentucky University, and Morehead State University. (3) The initial appointments to the board shall be made on or before October 1, 1994, in the following manner: (a) Seven (7) private sector members shall be made by the Governor from names of persons submitted on or before August 30, 1994, in the following manner: 1. Two (2) from a list of six (6) nominees from the secondary wood products industry submitted in writing by the Kentucky Wood Manufacturers Network; 2. Two (2) from a list of six (6) nominees from the secondary wood products industry submitted in writing by the Kentucky Forest Industries Association; 3. One (1) from a list of three (3) nominees submitted in writing by the Mountain Association for Community Economic Development; 4. One (1) from a list of three (3) nominees submitted in writing from grass roots community economic development organizations that have a demonstrated interest in the development of secondary wood products industries; and 5. One (1) from a list of three (3) nominees from private business submitted in writing by the Kentucky Economic Development Partnership. (b) The Kentucky Forest Products Council, the secretary of the Education and Workforce Development Cabinet, and the presidents of the University of Kentucky, the University of Louisville, Eastern Kentucky University, and Morehead State University shall each designate a representative of their respective organizations to be appointed by the Governor to the board. (c) If any organization or institution as specified in paragraph (a) of this subsection does not nominate persons for appointment as prescribed therein, the Governor may solicit names from any other source, or he may appoint from the list of names submitted by the remaining organizations. (d) The initial term of office for the seven (7) private sector members shall be staggered so that four (4) members shall serve for a term of three (3) years and three (3) members shall serve for a term of four (4) years. Subsequent appointments shall be made in the same manner as prescribed for original appointments, and shall be for four (4) year terms each. (4) Except as prescribed in subsection (3)(d) of this section and for the appointee representing the Education and Workforce Development Cabinet, all appointments shall have a term of four (4) years. The term for the person appointed from the Education and Workforce Development Cabinet shall be the same as that of the Governor. Any appointment made by the Governor to fill an unexpired term shall be only for the remaining time of the vacated appointment. Nothing contained in this section shall be construed as prohibiting the reappointment of a member of the board to succeeding terms if, the person to be reappointed has been nominated or designated in the manner as prescribed for original appointments set forth in this section. Effective: June 25, 2009 History: Amended 2009 Ky. Acts ch. 11, sec. 44, effective June 25, 2009. -- Amended 2006 Ky. Acts ch. 211, sec. 77, effective July 12, 2006. -- Created 1994 Ky. Acts ch. 224, sec. 3, effective July 15, 1994 Topics not fully covered in this course Contractual safeguards Differences in dyadic and multifirm alliances Specifities of single phases of interfirm cooperation Factors influencing the evolution of interfirm cooperation “Coordination devices” Distintive characteristics of international strategic alliance management