Navigating the Landscape of Transactions : Understanding Firms' Transactional Governance Structures in Six Latin American Countries

This note summarizes findings from a new paper, which lays out a methodology to determine the types of mechanisms, be they the legal system, civil organizations, or shared business interest, that firms use when entering into agreements with their suppliers and customers. Specially, the note summarizes the data exploration technique (known as Latent Class Analysis) used in the paper and shows some basic results in terms of the attributes of each class. Four basic classes are used for dealing with suppliers (pure bilateralism, bilateralism with private support, bilateralism with legal support, and strong comprehensive) and with customers (pure bilateralism, bilateralism with private support, bilateralism with weak support, and weak comprehensive). Lastly, some basic correlations between the likelihood of class membership and firm-level characteristics are shown.