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A Note on Countertrade: Contractual Uncertainty and Transaction Governance in Emerging Economies

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Abstract

This paper develops a conceptual framework for analyzing organizational responses to contractual uncertainty in the context of emerging economies. Elaborating on Hennart's (1989) transaction cost rationale for countertrade, we develop a typology of exchange and transaction governance pertinent to the study of emerging economies: Contract, trust and hostage. Notwithstanding the traditional explanation based on foreign exchange shortage, we argue that the persistence of international countertrade illustrates organizational remedies to institutional deficiency in transaction governance.

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*Chong Ju Choi is Professorial Fellow and Director of the MBA program at Cambridge University, Judge Institute of Management, U.K. His research interests arc in the area of “emergence,” comparing emerging economies and emerging knowledge based industries. His recent publications are in the Journal of Economic Behavior and Organization, Journal of Industrial Economics, Economics Letters, Organization Studies. Human Relations, Management International Review.

**Soo Hee Lee is News International Lecturer in management at Birkbeck College, University of London, U.K. His recent pub1ications are in Management International Review and European Journal of Political Economy.

***Jai Boem Kim is ESRC research fellow in management at the City University Business School, London, U.K. His research interests are in international marketing and international business.

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Choi, C., Lee, S. & Kim, J. A Note on Countertrade: Contractual Uncertainty and Transaction Governance in Emerging Economies. J Int Bus Stud 30, 189–201 (1999). https://doi.org/10.1057/palgrave.jibs.8490066

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  • DOI: https://doi.org/10.1057/palgrave.jibs.8490066

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