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Market imperfections and the effectiveness of subcontracting and informal institutions in export market transactions in Ghana

Boampong, Owusu (2010)
Ph.D. thesis, University of Birmingham.

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Abstract

The study set out to explore how small exporting firms coordinate production functions and the extent to which the chosen path of institutional arrangements enable them to reduce market imperfections, access resources, meet export market requirements and succeed in the export market. The literature posits that in the absence of effective state institutions, informal and private institutional arrangements tend to govern market transactions. However, little is known about the effectiveness of these arrangements in supporting distant and expanding trade transactions, especially, in Africa. Using the Ghanaian craft export sector as a case, the study showed that the small-scale exporters rely predominantly on informal institutions and subcontracting ties in their export transactions. Yet these informal and subcontractual relations remain inadequate coordination mechanisms for engendering greater export success. Under conditions of market imperfections and endemic opportunism, the informal trade arrangements and loose arm’s length subcontracting relations only enable the small firms to achieve imperfect results even in modestly complex and expanding trade transactions. Notwithstanding, informal subcontractual ties potentially offer the platform for the small enterprises to succeed in the export market given improvements in the socio-cultural and the microeconomic environments. The emergence of “in-house contracting” in the industry is linked to the move by some of the exporters to reduce transaction costs and meet quality standards. By this arrangement, the entrepreneur has some level of control (albeit less rigid) necessary to reduce transaction costs, meet quality requirements, and flexibly adjust to fluctuations in export market demands. The in-house exporter maintains multiple informal and trust building relationships with segmented buyers and subcontractors to keep the production system operational.

Type of Work:Ph.D. thesis.
Supervisor(s):Jackson, Paul B.
School/Faculty:Colleges (2008 onwards) > College of Social Sciences
Department:School of Government and Society, International Development Department
Subjects:HC Economic History and Conditions
HF Commerce
H Social Sciences (General)
Institution:University of Birmingham
ID Code:1105
This unpublished thesis/dissertation is copyright of the author and/or third parties. The intellectual property rights of the author or third parties in respect of this work are as defined by The Copyright Designs and Patents Act 1988 or as modified by any successor legislation. Any use made of information contained in this thesis/dissertation must be in accordance with that legislation and must be properly acknowledged. Further distribution or reproduction in any format is prohibited without the permission of the copyright holder.
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