Transactional Governance Structures : New Cross-Country Data and an Application tothe Effect of Uncertainty

To what extent are personal trust, mutual interests, and third parties important in enforcingagreements to trade How do firms combine these to form transactional governance structures This paper answers thesequestions in a whole-economy, cross-country setting that considers a full spectrum of transactional-governancestrategies. The data collection requires a new survey question answerable in any context. The question is appliedin six South American countries using representative samples, with the resultant survey weights facilitating awhole-economy analysis. Without imposing an a priori model, latent class analysis estimates meaningful governancestructures. Bilateralism is always used. Law is never used alone. Bilateralism and formal institutions are rarelysubstitutes. Within country, inter-regional variation in governance is greater than inter-country variation. Theusefulness of the data is shown by testing one element of Williamson's discriminating-alignment agenda: greateruncertainty in the transactional environment increases the involvement of third parties.