Original scientific paper
Diagonal cumulation of origin as the EU’s institutional incentive mechanism for promoting international trade and business
Milan Jurše
orcid.org/0000-0001-8819-3078
; Faculty of Economics and Business, University of Maribor, Maribor, Slovenia
Klavdij Logožar
; Faculty of Economics and Business, University of Maribor, Maribor, Slovenia
Romana Korez Vide
orcid.org/0000-0003-3345-5215
; Faculty of Economics and Business, University of Maribor, Maribor, Slovenia
Abstract
In this paper we explore the effects of a diagonal cumulation of origin as the EU’s Common Commercial Policy (CCP) incentive mechanism that affects the intraregional trade and transaction cost structure of firms engaged in cross-border business operation. The research explores how firms should frame their crossborder physical flows of goods and the configuration of their value-adding processes for taking advantage of diagonal cumulation of origin. The empirical analysis is based on an in-depth case study of effects of the ‘SAP+ diagonal cumulation of origin’ on changes in the transaction cost structure of a selected Slovenian firm operating within the household-appliance sector in one of the Western Balkan Countries. Based on eligibility of local subsidiary for using origin of goods in its import/export transactions the cost calculations were made for its products and then three different business scenarios were developed for showing the effects of the mechanism on transaction cost changes of a firm. The paper concludes that, at the conceptual level, the mechanism of diagonal cumulation oforigin may serve as an effective institutional cross-border trade-promoting tool.
Keywords
international business; institutional incentive mechanism; diagonal cumulation of origin; European Union; transaction costs; Western Balkan Countries
Hrčak ID:
62357
URI
Publication date:
20.12.2010.
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