Alternate dispute resolution
1. Dispute
− Disputes are unavoidable
• Mild disagreements to outright conflict
− Power perspective is common
• More powerful party gets it way
• GM → squeezing suppliers
• Ended up loosing its position
• Power based contracts can generate 40% higher costs
2. Some typical assumptions and responses
− Exchange partner will be opportunistic
• Unreasonable assumption?
• Does it match reality?
• A Hobbesian world of war against all
− Response: EXIT
• Alternate suppliers -> go to the market
• Problems: when markets are thin, and dependency is high
− Governance literature
• Some agents are opportunistic some of the time
• Bounded rationality/ measurement problems
• Continuity of relationships is important
− Response: VOICE
1. Dispute
− Disputes are unavoidable
• Mild disagreements to outright conflict
− Power perspective is common
• More powerful party gets it way
• GM → squeezing suppliers
• Ended up loosing its position
• Power based contracts can generate 40% higher costs
2. Some typical assumptions and responses
− Exchange partner will be opportunistic
• Unreasonable assumption?
• Does it match reality?
• A Hobbesian world of war against all
− Response: EXIT
• Alternate suppliers -> go to the market
• Problems: when markets are thin, and dependency is high
− Governance literature
• Some agents are opportunistic some of the time
• Bounded rationality/ measurement problems
• Continuity of relationships is important
− Response: VOICE
