Logic Of Transaction Cost Economics Research Articles

Characterization of Business Models by the Logic of Transaction Cost Economics

Objetivo (obrigatório): O presente estudo tem por objetivo caracterizar os modelos de negócios sob a lógica das estruturas de governança discutidas na Economia dos Custos de Transação (ECT). Método (obrigatório): A partir da revisão na literatura, foram identificados os principais elementos que compõem um modelo de negócios, que foram então combinados em um modelo gráfico com as principais características da Economia dos Custos de Transação (ECT) adotadas. Originalidade/Relevância (obrigatório): Com base na fundamentação teórica sobre o assunto, foi identificada a forma com que os elementos de um modelo de negócios interagem entre si, sob a lógica da ECT. Resultados (obrigatório): Os resultados apresentam as relações entre os componentes de um modelo de negócio e as principais características conceituais da ECT. Um modelo de negócio é suportado por elementos como as especificidades dos ativos, frequências e incertezas, estratégias de diferenciação, entre outros, definidos a partir da segmentação de clientes. Contribuições teóricas/metodológicas (obrigatório): As principais contribuições estão relacionadas à complementaridade da literatura sobre modelos e negócios, em seus diferentes elementos, à luz da ECT de modo a caracterizar a competitividade de diferentes organizações, a partir de diferentes estratégias adotadas. Contribuições sociais / para a gestão (opcional): Diferentes organizações, que já se pautam na redução dos custos transacionais, podem se utilizar dos elementos que caracterizam um modelo de negócio para se tornarem mais competitivas. Palavras-chave: Competitividade Organizacional; Estratégia; Estrutura de Governança.

The market for the “old” and the “new” institutional economics

ABSTRACT This paper conceives of the market as an institution, and contrasts two theoretical approaches: Institutionalism, with an evolutionary and analytical bias, whose theoretical basis comes from “Old/Original” Institutionalism, and New Institutional Economics, with an analytical, contractual approach, linked to mainstream economics. Both approaches have given relevant contributions, as they consider the importance of institutions for economic performance. The limits of New Institutional Economics are particularly relevant, whose analysis of the operation of markets is centered on the logic of transaction cost economics as a determinant of economic performance. Evolutionary Institutionalism, in turn, sees the market within a broader scope, in which cost economies only partially explains economic performance, but it is not necessarily seen as a determining factor.

Intermediary Litigation as a Nonmarket Strategy

Firms face a number of threats to their businesses from online communication practices. Simply put, most firms possess intangible assets, such as information goods and goodwill, whose value is vulnerable to harm associated with the transmission and publication of online content. Consequently, firms have sought to protect their assets from such harms, which I collectively refer to as information hazards, by suing Internet intermediaries. Internet intermediaries are online services that provide a means for information to transmitted between third parties. Making the argument that the difficulty of specifying and enforcing property rights for intangible assets leads to market failure, I draw on the logic of transaction cost economics to suggest that intermediary liability should be addressed as a the outcome of a choice amongst four modes of governance for nonmarket strategies to enforce property rights. I create a two stage framework in which firms first choose regulation or litigation as a governance mode ...

Why FDI Transaction Prices Vary

Adapting the logic of transaction cost economics (TCE), we argue that the source of transaction safeguards (i.e., foreign investor or host government) interacts with country-level uncertainty to determine the price investors pay for foreign direct investments (FDI) in strategic sectors. We find that the marginal effect of protective transaction safeguards on FDI price varies in surprising ways across the level of uncertainty. When the government installs beneficial safeguards, the marginal effect on FDI price is positive, and this positive effect decreases as country-level uncertainty increases. When investors install their own safeguards and thus bear the costs of protection, the marginal effect on the acquisition price of the FDI transaction is negative, and this negative effect decreases with increases in country-level uncertainty. Using novel data on 332 FDI transactions in the telecommunications services sector of 77 emerging markets, we employ multilevel analysis to manage the clustered and interactive nature of the data.

Trust, power and transaction costs in B2B exchanges — A socio-economic approach

The advent of the Internet has enabled organisations to reconfigure their inter-organisational relationships. This study presents three frameworks to analyse the outcome that the use of Internet based electronic markets has on the nature of inter-organisational relationships: transaction cost economics, social exchange theory and an integrated framework that combines the first two. The integrated framework proposes that the nature of inter-organisational relationships depends on the interaction between the logic of transaction cost economics and the need for trust and interdependencies between exchange parties. A single case study is used to illustrate the way the three frameworks can be applied to analyse the use of electronic markets in inter-organisational exchanges. The study finds that the integrated framework provides a more complete understanding of inter-organisational relationships, and suggests a modular approach to the implementation of electronic marketplaces.

Professional versus Political Contexts: Institutional Mitigation and the Transaction Cost Heuristic in Information Systems Outsourcing

IS research has considered the outsourcing decision from the perspective of transaction cost economics (TCE) and institutional theory. In this research, we consider how the appropriation of the logic of transaction cost economics is contingent on decision makers' institutional context. The institutional contexts contrasted are professional versus political contexts. In a survey of 214 city governments in the United States, we substantiate the existence of these two institutional contexts, a distinction that has been noted to extend into the private sector as well. Subsequent analyses of the moderating effects of institutional context on the application of the TCE heuristic to the outsourcing decision revealed the following: The institutional context moderated the impacts of conditions-of opportunism and bounded rationality-and of transaction frequency on outsourcing decisions. In professional contexts, opportunism reduced outsourcing and frequency increased outsourcing; in political contexts, bounded rationality fostered outsourcing and frequency dissuaded outsourcing. However, no institutional moderation was noted for the situational conditions of asset specificity and uncertainty. Instead, situational conditions were found to increase the incidence of outsourcing across both contexts. Findings about the contingent effects of human frailty conditions augment our understanding of the outsourcing phenomenon by emphasizing that decision makers' attentiveness to the logic of transaction costs during outsourcing is shaped by their institutional context. Findings with regard to situational conditions suggest a need for future research to consider the role of another contextual factor-resource munificence-in mitigating the effects of situational conditions on responses to transaction costs.

The logic of transaction cost economics in health care organization theory.

Health care is, at its core, comprised of complex sequences of transactions among patients, providers, and other stakeholders; these transactions occur in markets as well as within systems and organizations. Health care transactions serve one of two functions: the production of care (i.e., the laying on of hands) or the coordination of that care (i.e., scheduling, logistics). Because coordinating transactions is integral to care delivery, it is imperative that they are executed smoothly and efficiently. Transaction cost economics (TCE) is a conceptual framework for analyzing health care transactions and quantifying their impact on health care structures (organizational forms), processes, and outcomes.

Political Markets, Bond Markets, and the Effects of Uncertainty: A Cross-National Analysis

One of the critical challenges of contemporary democracy is securing a balance between the markets of representation and the markets of exchange and capital within democracies. This article explores the effect that political markets have upon capital markets' performance as measured by the market risks within the long-term government bond markets in nineteen democracies of the Organization for Economic Cooperation and Development (OECD) between 1955 and 1992. Our theory linking political markets and capital markets will be developed around the logic of transaction cost economics. We will argue that critical aspects of transaction costs within political markets generate corresponding transaction costs and risks within capital markets thereby reducing market efficiency. Specifically, we demonstrate that, based on cross-national evidence drawn from three panels over the time period 1955–1992, stochastic political markets generate transaction costs within long-term government bond markets, the consequences of which are reflected in rising market risk within these capital markets. Our pooled cross-sectional sample confirms that stochasticity in institutional structure presents trade-offs for democracy. Stochasticity may reflect more responsive and generally sensitive representative institutions, but often at the price of risk-laden capital markets. We consider the implications of these findings at the conclusion of the article.

The role of asset specificity in the vertical integration decision

According to the logic of transaction cost economics, several factors determine the most efficient form of economic organization. These factors include uncertainty and frequency of transactions involving the transfer of goods or services, although the most important factor is asset specificity. These characteristics of transactions engender high transaction costs, but they also parallel the conditions under which the sunk cost effect is most likely to be observed. The potential influence of sunk cost considerations in the choice of corporate governance structure is illustrated with respect to vertical integration, and was tested in a laboratory study in which subjects were asked to play the role of a firm's chief strategist. The results support the view that asset specificity drives vertical integration, but for reasons that may have little to do with transaction cost economizing.

STRATEGIC ALLIANCE STRUCTURING: A GAME THEORETIC AND TRANSACTION COST EXAMINATION OF INTERFIRM COOPERATION.

Maintaining robust cooperation in interfirm strategic alliances poses special problems. Such relationships have received growing attention in recent research grounded in game theory, which has suggested that some alliance structures are inherently more likely than others to be associated with high opportunity to cheat, high behavioral uncertainty, and poor stability, longevity, and performance. The present study merged these theoretical insights with the logic of transaction cost economics in a general model of alliance structuring and tested it with data from 111 interfirm alliances. Findings generally supported the model and hypotheses, suggesting the need for a greater focus on game theoretic structural dimensions and institutional responses to perceived opportunism in the study of voluntary interfirm cooperation.

Strategic Alliance Structuring: A Game Theoretic and Transaction Cost Examination of Interfirm Cooperation

Maintaining robust cooperation in interfirm strategic alliances poses special problems. Such relationships have received growing attention in recent research grounded in game theory, which has suggested that some alliance structures are inherently more likely than others to be associated with high opportunity to cheat, high behavioral uncertainty, and poor stability, longevity, and performance. The present study merged these theoretical insights with the logic of transaction cost economics in a general model of alliance structuring and tested it with data from 111 interfirm alliances. Findings generally supported the model and hypotheses, suggesting the need for a greater focus on game theoretic structural dimensions and institutional responses to perceived opportunism in the study of voluntary interfirm cooperation.

Transaction-Cost Economics and Cross-National Patterns of Industrial Conflict: A Comparative Institutional Analysis

At the core of a capitalist system is an implied coalition between labor and capital built upon a system of exchange and compromise. Without capital, the material condition upon which labor's interests are realized would be impossible. Likewise, without labor's consent to exchange wages for future investment, capital could not procure the profits and savings necessary for its reproduction and transformation. Organizing stable and cost-efficient class coalitions has long been recognized as not merely an economic priority but a political challenge. Yet, some democracies have met this challenge more successfully than others. For the student of comparative political economy, an enduring question remains: Why? The present study is an attempt to provide an answer that complements and integrates the more common macroand microanalytic studies of industrial conflict. It is argued here that a useful approach is to explicate some of the major microeconomic dynamics that condition exchanges between labor and capital and to demonstrate how institutional devices designed to accommodate political representation and conflict resolution facilitate or impede the process of class compromise. By employing the logic of transaction-cost economics, the analysis highlights the comparative institutional elements fundamental to economizing on the costs of exchange-shaping consensus within a political economy's industrial relations system. The resulting transaction-cost efficiency model of industrial conflict specifies the ex ante cost factors (price margin of transaction and the institutional control of bounded rationality) and the ex post cost factors (legislative polarized pluralism, executive hegemony, and the frequency of general elections) central to the process of building and sustaining class coalitions. The model is tested on data drawn from 19 democracies covering the years 1965-83. Use of simulation models reveals the relative trade-offs associated with different patterns of ex ante and ex post cost structures.