Abstract
ABSTRACT Purpose: The study explores the predictive relationships of the analytical dimensions of transactions and opportunistic behavior on the transaction costs of the Brazilian pharmaceutical retail market. Originality/value: The study contributes to the advancement of empirical research on the subject and proposes indicators modeled by structural equations to simultaneously estimate the effects of uncertainty, asset specificity and frequency of transactions, and opportunism in transaction costs. Design/methodology/approach: Transaction costs were estimated with indicators related to the costs of analysis, preparation, and adaptation of contracts; these are analytical dimensions of transactions with indicators that reflect the specificity of human assets and physical/dedicated assets, technological and market uncertainty, and the recurrence of transactions between partners. The data collected via an electronic questionnaire were processed with the technique of Modeling in Structural Equations. Results: Data processing demonstrated the significant influence of the frequency of transactions on opportunism and hence on transaction costs. It also confirmed the impact of uncertainty on ex ante transaction costs and the specificity of assets on ex post costs. The results denote the relevance of analytical dimensions in the theoretical framework of Transaction Cost Theory and the importance of frequency as a catalyst for opportunism. It can be used as a parameter in strategic actions to create reliable commitments and circumvent unforeseen contractual failures in the pharmaceutical retail market.
Highlights
Over the past few decades, the Transaction Cost Theory (TCT) has gained recognition for identifying the choice of efficient governance mechanisms to coordinate a company’s productive resources with lower transaction costs.This theoretical approach, structured by Oliver Williamson in the 1970s, is based on the assumptions of limited rationality and opportunistic behavior of agents and has as a unit of analysis, the transaction, characterized by objective attributes such as idiosyncratic investments, those in which much of the economic value is lost when reemployed out of context or to another activity, uncertainty in the business environment, and the frequency of transactions performed.Williamson (1991) proposed a model to explain the transaction costs of each governance structure according to the assets’ level of specificity
The study contributes to the advancement of empirical research on the subject and proposes indicators modeled by structural equations to simultaneously estimate the effects of uncertainty, asset specificity and frequency of transactions, and opportunism in transaction costs
Noteworthy are studied by Barzel (1997), which related transaction costs to property rights, Furubotn and Richter (2000) linked transaction costs to the costs of using the market price mechanism, management costs, and costs of political transactions in institutional changes, Grover and Malhotra (2003) developed an instrument to estimate transaction costs based on the perception of managers about the efforts associated with the development and monitoring of partner performance and conflict resolution, and Barthélemy and Quélin (2006) estimated transaction costs with indicators related to the proximity of partners to the core of the business and the costs of change and contractual adaptation
Summary
Over the past few decades, the Transaction Cost Theory (TCT) has gained recognition for identifying the choice of efficient governance mechanisms to coordinate a company’s productive resources with lower transaction costs. The general objective of this study is to simultaneously test the predictive relationships defended in TCT between the analytical dimensions of transactions (uncertainty, asset specificity, and frequency), opportunistic behavior, and transaction costs, focusing on the Brazilian pharmaceutical retail market. Specific objectives were established: 1. to estimate transaction costs; 2. to estimate the analytical dimensions of transactions using indicators that reflect the specificity of the assets, the uncertainty, and frequency of transactions; 3. to estimate the opportunistic behavior of managers of the Brazilian pharmaceutical retail market; and 4. to develop a theoretical model to test the relationships proposed in the study simultaneously
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