Abstract
This paper extends the traditional transaction cost economics (TCE) perspective by taking account of status differences of transaction participants. Based on the status-based model of market competition proposed by Podolny (1993), I examine how transaction cost advantages or disadvantages originating from status differences affect market participants’ economic incentives and strategic objectives regarding their vertical and horizontal scope decision. I also examine long-term consequences of firms’ decisions and the implications of these consequences for high and low status firms. Considering status differences makes it clear that a considerable conceptual overlap exists between TCE and the resource-based view (RBV).
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