Increasing cooperation and reducing competition to reduce transaction costs

Abstract

Neoclassical economics outlines the way in which production, pricing and consumption are driven by supply and demand. However, it is more complicated than that. Professor Tatsuo Koda, who has vast experience with corporations, and is based at Bunkyo University, Japan, is interested in how individual behaviour can shed new light on organisational and corporate activities. He is exploring the intersection between cooperation and competitiveness with a view to demonstrating the importance of cooperation and positive corporate behaviour. Specifically, he is exploring the factors that affect transaction costs, which on a basic level means how much it costs to purchase something, and believes that companies could benefit from increasing cooperation and reducing competition as this is a way to reduce transaction costs, benefiting each party involved in a transaction. Koda has developed a theoretical framework that posits that building a trusting relationship is the prime measure for reducing transaction costs and, comparatively, contract-based exchanges lead to higher transaction costs. Ultimately, Koda is setting out to analyse the discordant relationships found within and between organisations from the viewpoint of cooperation in order to put forward solutions. He has already found that asset specificity heightens transaction costs for both contract-based exchanges and cooperative exchanges and, next, he will be interviewing organisations and individuals within corporations in order to identify other conditions that have the effect of increasing transaction costs. In the long term, this research could contribute to a priority shift in Japanese companies and accentuate cooperation within Japan and across borders.