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44Research article UDC 339
doi: 10.47576/2782-4586_2022_1_38
CAUSAL RELATIONS OF THE ORIGIN OF CONFLICTS IN B2C MARKETS AND METHODS FOR THEIR JUDGING
Domovaya Zinaida V.
Saratov State Agrarian University named after N.I. Vavilov, Saratov, Russia
Abstract. The purpose of the chapter is to analyze the causal relations of emergence of conflicts in B2C markets, to consider the existing methods of solving them, and to develop the perspective (more effective) methods in view of the possibilities of the digital economy. The author use the methods of the systemic, problem, and logical analysis, as well as modeling of socio-economic processes and systems and formalization. It is determined that conflicts in B2C markets could be caused by a lot of different reasons - from consumers and companies. Emergence of conflicts is a usual phenomenon, which allows improving the economic practice. However, a serious problem is inaccessibility of two of the most popular methods of conflict resolution - observation of contract terms (due to incompletion of agreements) and applying with law enforcement (due to insufficient legal force of the agreements). That's why the most popular method of conflict resolution is climb-down of one of the parties or conclusions of a new agreement. This shows worthlessness of the institute of contractual law, causes uncertainty and high-risk component of B2C markets, and reduces effectiveness of economic activities. For solving this problem, the authors suggest using the possibilities of the digital economy. An innovative digital technology - blockchain - allows forming the updated electronic data bases with a high level of security' and full legal force, under the control of the state. Digital contract that is concluded with the help of blockchain technologies is a preventive practice that precedes the alternative methods of conflict resolution in B2C markets. Its advantages, as compared to traditional (paper) contract, are large opportunities for independent conflict resolution by the parties (due to completeness and transparence of the contract) and applying for state's support (due to full legal force of the contract and state guarantees of the parties' rights). A conceptual model of conflict resolution in B2C markets in the conditions of the digital economy on the basis of blockchain technologies is developed and recommended for practical usage.
Keywords: B2C markets ("business-to-consumers"); conflicts; conflict resolution; retail; blockchain technologies; digital economy.
For citation: Domovaya Z. V. Causal relations of the origin of conflicts in B2C markets and methods for their judging. Journal of Monetary Economics and Management, 2022, no. 1, pp. 38-43. doi: 10.47576/2782-4586_2022_1_38.
ПРИЧИННО-СЛЕДСТВЕННЫЕ СВЯЗИ ВОЗНИКНОВЕНИЯ КОНФЛИКТОВ НА РЫНКАХ B2C И МЕТОДЫ ИХ ОЦЕНКИ
Домовач Зинаида Викторовна
Саратовский государственный аграрный университет им. Н. И. Вавилова, Саратов, Россия
Аннотация. В статье анализируются причинно-следственные связи возникновения конфликтов в бизнесе с рынками потребления, методы их решения с учетом возможностей цифровой экономики. Автор использует методы системного, проблемного и логического анализа, а также моделирования социально-экономических процессов и систем и формализации. Определено, что конфликты между бизнесом и потребителями на рынках могут быть вызваны множеством разных причин - со стороны потребителей и компаний. Возникновение конфликтов - обычное явление, позволяющее совершенствовать экономическую практику. Однако серьезной проблемой является недоступность двух наиболее популярных способов разрешения конфликтов — соблюдения условий контракта (из-за незавершенности договоров) и обращения в правоохранительные органы (из-за недостаточной юридической силы договоров). Поэтому самым популярным методом разрешения конфликта является схождение одной из сторон или заключение нового соглашения. Это свидетельствует о нецелесообразности института договорного права, порождает неопределенность и высокорисковую составляющую бизнеса на потребительских рынках, снижает эффективность хозяйственной деятельности. Для решения данной проблемы авторы предлагают использовать возможности цифровой экономики. Инновационная цифровая технология - блокчейн - позволяет формировать под контролем государства обновляемые электронные базы данных с высоким уровнем безопасности и полной юридической силой. Цифровой контракт, заключаемый с помощью технологий блокчейна, является превентивной практикой, предшествующей альтернативным методам разрешения конфликтов в бизнесе на потребительских рынках. Его преимуществами по сравнению с традиционным (бумажным) договором являются большие возможности для самостоятельного разрешения конфликтных ситуаций сторонами (за счет полноты и прозрачности договора) и обращения за государственной поддержкой (за счет полной юридической силы договора и государственных гарантий права сторон). Разработана и рекомендована к практическому использованию концептуальная модель разрешения конфликтов между бизнесом и потребительскими рынками в условиях цифровой экономики на основе технологий блокчейна.
Ключевые слова: рынки В2С («бизнес - потребителям»); конфликты; разрешение конфликтов; ритейл; блокчейн-технологии; цифровая экономика.
A conceptual platform of growth and development of modem economic systems is the economy of well-being. This envisages establishment of increase of population's living standards as a strategic priority of economic activities and state management of economy. The level of public well-being, measured through the prism of such indicator as GDP per capita, is set in the basis of global rankings of countries and is used as the main indicator of effectiveness of state regulation of economy during internal evaluations.
Social environment in which the modem economy of well-being develops is a consumer society. The market model of economy envisages competition between sellers for the possibility of selling in the interest of commercial profit (increase of sales and profits) and between buyers for access to goods, works, and services in the
interest of satisfying the needs. The specifics of consumer society consist in the fact that the set of needs is not fixed and is predetermined not only by the objective reasons (consumers' own motives) but also by the subjective reasons (current tendencies and marketing activity of companies).
Thus, there is a fixed set of natural and an infinite number of constantly emerging new artificial needs that are oriented at obtaining the social status (belonging to a certain social group or uniqueness). These reasons show that the key function of entrepreneurial activities in economy is satisfaction of internal public needs. In their turn, companies are oriented at final consumers not only due to their social mission but also due to commercial interests, as, finishing the added value chain, retail sellers dictate the conditions of demand at all previous stages of these chains -
thus, they largely determine the tendencies of development of other B2B, business-to-business, B2G, business-to-govemment markets.
Thus, B2C markets (business-to-consumers) have a central role in the sectorial structure of economy, which is determined according to the type of subjects that interact during implementation of economic activities. Conflicts that arise in these markets have clear negative influence on socio-economic systems, destabilizing them (violating the balance of aggregate demand and offer) and reducing their sustainability and global competitiveness.
That's why an important problem of the modem economic theory and practice is development of the methodology of highly effective conflict resolution in these markets. The working hypothesis of the research is that in the conditions of the digital economy there appear new possibilities for optimizing the process of conflict resolution in B2C markets. The purpose of the chapter is to analyze the causal relations of emergence of conflicts in B2C markets, to consider the existing methods of solving them, and to develop the perspective (more effective) new methods in view of possibilities of the digital economy.
The performed content analysis of the economic literature on the selected topic showed that the essence of B2C markets, consisting in interaction of retail entrepreneurial structures and individual consumers during implementation of economic activities, is studied in detail and described in Kahraman et al. (2018), Lee and Chan (2018), Lin et al. (2018), and Zhou et al. (2018).
The above authors note the main peculiarity of the B2C markets - high share of subjectivism during consumer's making the decisions on economic operations. However, the existing publications do not consider the issues of emergence and conflict resolution in B2C markets, due to which they remain poorly studied and require further elaboration.
For this, the authors use the methods of systemic, problem, and logical analysis, as well as modeling of socio-economic processes and systems and formalization. The theoretical base includes the materials of works of the modem scholars on the issues of modernization of economic activities on the basis of digital technologies in the conditions of formation of the digital economy: Bogoviz (2019), Bogoviz et al.
(2019), Inshakova et al. (2017), Popkova (2017, 2019), Popkova and Sergi (2019), Popkova et al. (2019), and Sukhodolov et al. (2018).
As a result of studying the practice of interaction between entrepreneurial structures and consumers by the example of the modem Russian economy, the causal relations of emergence of conflicts in B2C markets are determined (Table 1).
As is seen from Table 1, conflicts in B2C markets may arise due to companies or consumers. The reasons of emergence of conflicts in B2C markets from companies include the following:
- Difference between the factual quality (technical characteristics) and the volume of products and the contract terms, due to which the initial need is not fully satisfied.
- Violation of delivery terms, due to which the initial need is not satisfied in time.
- Negative externalities during delivery and usage of products, due to which the consumers have additional (unexpected) expenditures and needs.
- Refusal, long or low-quality maintenance service of products, due to which the initial need is satisfied not in full and/or not in time and/or additional expenditures and needs emerged.
- Refusal to accept products in case of unlawful exchange and return, due to which consumers cannot exchange products or return the money.
Consequences of conflicts due to these reasons for companies include contractual opportunism of consumers, which consists in violation of contract terms for delivery of products (refusal to purchase or pay for products) and reduction of business reputation, as consumers exchange information and experience of purchase of products. Reasons of emergence of conflicts in B2C markets from consumers include as follows:
- Refusal from purchasing and paying for products due to difference between its factual quality and expectations of consumers (this reason is often caused by insufficient information support of the contract from the company with impossibility for the consumers to study it independently because of the lack of specialized (professional) competences);
- Untimely or incomplete payment for products - both these reasons lead to contractual opportunism of entrepreneurs (damage to
products, refusal to provide it, and violation of delivery terms), reduction of consumer reputation (inclusion into lists of mana fide purchasers - e.g., "blacklists" of violators of contracts on crediting in the bank sphere);
- Unlawful requirement of exchange, maintenance service, or return of products, which causes negative emotions due to refusal to execute the requirement by the company or irrational spending of time resources.
Reasons of Emergence of Conflicts in B2C Markets
Consequences of Conflicts Consequences of Conflicts for Consumers for Companies
Difference between factual quality and volume of products* and the contract terms
Violation of the terms of products supply
■j= Negative externalities during o. shipment and usage of
I products
U
E
£ Refusal, long or low-quality service (guarantee) maintenance of products
Refusal for acceptance of products in case of lawful exchange/return
Initial need is not fully satisfied
Initial need is not satisfied in time
Additional (unexpected) expenditures and needs appeared
Initial need is satisfied incompletely and/or not in time and/or additional expenditures and needs emerged
Complexity or impossibility of exchange of products or return of money
Contractual opportunism of consumers (refusal to buy or pay for products), reduction of business reputation
Reduction of business reputation
£ 5J
E s
<ri
c
o U
E
2
Refusal from purchase and payment for products due to difference between its factual quality and expectations of consumers
Untimely or incomplete payment for products
Unlawful requirement of exchange, maintenance service, or return of products
Contractual opportunism of entrepreneurs (damage to products, refusal to provide products, violation of terms of delivery), reduction of consumer reputation (inclusion into lists of mala fide purchasers)
Negative emotions
Impossibility for return of investments or losses (additional expenditures), connected to return or change of products
reduction of business reputation
♦products—goods, works, and services. Source: compiled by the authors.
Table 1 - Causal Relations of Emergence of Conflicts in B2C Markets
Thus, the reasons of emergence of conflicts in B2C markets could be caused by direct violation of the terms of agreements for supply of products and by incompletion of the concluded agreements, as well as lack of their clarity for the agreement parties. Regardless of the reasons of conflicts in B2C markets, they cause negative micro-economic consequences for both participating parties - consumers and companies - and macro-economic consequences, which are connected to the following:
- Change of consumer preferences: accumulation of negative experience and refusal from future cooperation with companies with low business reputation or whole sectorial markets in which emergence of conflicts is very probable (e.g., reduction of interest in e-commerce after a series of failed purchases and arguments with companies);
- Targeted bankruptcy and restoration of companies for the purpose of avoiding responsibility for violation of contractual law, which destabilizes the economy. The existing and accessible preventive practices of conflict regulation in B2C markets include the following:
- Concession of one party or mutual concession: in order to avoid negative consequences and solve the conflict quickly, one of the parties agrees to the terms of another party (or the parties come to a new agreement), though they contradict the contract terms;
- Observing the contract terms: the parties study the concluded contract and follow its instructions on solving the conflict situations; and
- Filing reports with law enforcement (up to the level of court): if it is impossible to solve the conflict independently, the parties seek the help of state regulators.
It should be noted that in the modem economic practice the first method (concession) is very popular and effective, as application of other methods (observing the contract terms or filing reports with law enforcement) is complicated due to imperfection of contractual law, due to which the contracts for provision of products may not list all the necessary data, and the contracts may
Figure 1
The model presented in Figure 1 shows that transition from the traditional (paper) form of contract to a new one - electronic - envisages its registration and storage in the digital data base of B2C markets with the help of blockchain technologies. Due to this, full legal power of contract is achieved, and intellectual support for preparation of the contract is offered for provision of its highest transparency and completeness. This allows for independent resolution of conflicts by the contract terms and guarantees simplicity of applying for state support.
Thus, the results of the performed research showed that conflicts in B2C markets could be caused by a lot of different reasons - from consumer and companies.
Emergence of conflicts is a usual phenomenon, which allows for improvement of the economic practice. However, a serious problem is inaccessibility of the two most popular practices of conflict resolution - observation of contract terms (due to incompleteness of the contract) and filing a report with law enforcement (due to insufficient legal power of the contract).
That's why the most popular variant of conflict regulation is concession of one party or conclusion
have insufficient legal power for protecting the interests of their parties with law enforcement.
In the conditions of the digital economy there appear technical possibilities for solving this problem, which is shown by the following conceptual model of conflict resolution in B2C markets on the basis of blockchain technologies (Figure 1).
of a new agreement. This causes uncertainty and high-risk component of B2C markets and reduces the effectiveness of economic activities. For solving this problem, it is offered to use the possibilities of the digital economy. Innovative digital technology - blockchain - allows forming an updated electronic data base with a high level of security and full legal power, which is under the control of the state.
Digital contract that is concluded with the help of blockchain technologies is a preventive practice, which precedes the alternative methods of conflict resolution in B2C markets. Its advantages, as compared to traditional (paper) contract, include larger opportunities for independent conflict resolution by the parties (due to higher completeness and transparency of the contract) and applying for state support (due to full legal power of the contract and state guarantee of its parties' rights). In the long term, the offered preventive practice will allow preventing conflicts in B2C markets and will ensure intensification of development of these markets due to reduction of uncertainty and risks and due to increase of effectiveness of economic activities of their participants.
Conceptual Model of Conflict Resolution in B2C Markets in the Conditions of the Digital Economy on the Basis Of Blockchain Technologies (Source: Compiled by the authors)
References
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Information about the author
DOMOVAYA ZINAIDA V. - Saratov State Agrarian University named after N.I. Vavilov, Saratov, Russia
Информация об авторе
ДОМОВАЧ ЗИНАИДА ВИКТОРОВНА - Саратовский государственный аграрный университет им. Н. И. Вавилова, Саратов, Россия
