EMBEDDED IN THE PRODUCTION PLEXUS

Abstract

Theories on economic organization look at how transactions are carried out, whether they are inside or outside the boundaries of the film, and the factors that influence these decisions. Central to these theories is the issue of the independency of firms and interdependency between firms. Hypothetically, firms may exist as self-sufficient islands of production. These formal bureaucracies carry out all production processes themselves and need not depend on the services of other firms. Seen as a more stable alternative to market exchanges, such firms are formed in circumstances where exchanges between firms become increasingly difficult to fulfil because of various existing factors. Firms may also exist as small units of production, firmly embedded in a system of buying and selling components and services with other firms. These contracts may either be momentary or frequent. Where contracts are momentary, relationships between firms are transient. Where they are frequent and take place over a long period of time, relationships take on a more permanent feature and firms become locked into these exchanges. When such exchanges involve more than two firms, a network of interrelated exchanges is formed. Behind such a network would lie an intricate mechanism of processes that develops and maintains the relationships involved. This study seeks to show that structural factors, like the nature of the product, interact with human factors, like trust and cooperation, to create forms of exchanges that are predominantly of networks. This contributes to the development of the vibrant supporting industries of Singapore as a dense network of closely interlocked firms engaged in constant subcontracting activities.