A Transaction Cost Approach to the Autonomization of Government Organizations: A Political Transaction Cost Framework Confronted with Six Cases of Autonomization in the Netherlands

Abstract

The aim of this paper is to explore the relevance of some important aspects of transaction cost economics (TCE) to a better understanding and explanation of the autonomization of government organizations. As TCE, with its focus on economic efficiency, was basically developed for the profit sector, its main concepts have to be adapted for the public sector. This paper presents a 'political transaction cost' framework which emphasizes 'political rationality' and 'political efficiency'. TCE's main concepts—the transaction characteristics specificity, frequency/scale and uncertainty and its assumptions about human behaviour, i.e. bounded rationality and opportunism,—are discussed for politically governed organizations and they are related to autonomization. The results of exploratory case research into six government organizations in the Netherlands suggest that such factors as bounded rationality, opportunism, political efficiency, and social institutions may have played an important part in the autonomization of the organizations involved. It seems that strictly economic aspects were less relevant whenever a decision to autonomize was taken and a specific form of autonomization was chosen.