Transaction Cost Theory Perspective Research Articles

Private ownership and management control decisions in infrastructure from the perspective of Transaction Cost Theory: Evidence from emerging economies

AbstractFrom the perspective of Transaction Cost Theory, this paper proposes a conceptual model to assess ownership and management control decisions of private partners in public‐private partnerships for infrastructure with regard generic risk factors, namely asset specificity, demand risk, environmental risk, social risk, macroeconomic risk, and governance or behavioral risk. Using an ordinal logistic model, hypotheses are tested on data covering 2152 projects in 12 emerging countries for the period 2010–2019. Overall results indicate that the extent of private ownership and management control is negatively related to risks, the marginal effects of which are moderated by high‐quality public institutions.

Mecanismos de proteção de direitos de propriedade no sistema agroindustrial do leite: Um estudo no Paraná, Brasil, e na antiga Midi-Pyrénées, França

Abstract Purpose: This study aims to understand the mechanisms of property rights guarantee in the dairy agro-industrial system (DAGS) in Paraná, Brazil, and in the old Midi-Pyrénées region, France. Originality/value: From a complementary perspective of Transaction Cost Theory and Measurement Cost Theory, the proposal in the study is that the use of mechanisms to guarantee property rights through safeguards, parameters, measurement, agreements, or litigation contributes to the transaction of differentiated products and also to the protection of these rights, favoring systems improvement. Design/method/approach: A descriptive qualitative study was done, encompassing 25 semi-structured interviews with producers, processors, and key agents of the DAGS in the state of Paraná in Brazil and in the old Midi-Pyrénées region of France, in 2016 and 2017. Qualitative content analysis was performed with NVivo Pro software. Findings: It was identified that in France and in the central-eastern and western regions of Paraná, the use of complementary protection property rights mechanisms (safeguards, parameters, measurement, agreements, or litigation) allows higher quality milk transactions and reinvestments in production by agents, contributing to system improvement. In the northern region of Paraná, the limited use of property rights mechanisms (verbal agreement, measurement, unreliable information sharing, and the absence of ex post protection) allows minimal quality milk trans actions and restricts reinvestments in production, limiting systems improvement.

A transaction cost perspective on blockchain governance in global value chains

AbstractThis study advances theoretical insights into blockchain adoption in the context of global value chains from a transaction cost theory perspective. The research has adopted an exploratory qualitative approach using the Netnography method to scrutinize the case of TradeLens—a thriving blockchain‐enabled ecosystem that Maersk and IBM jointly developed. This study applies textual and audiovisual data from company websites and social media. Our findings indicate blockchain technology's salient and strategic relevance in streamlining business processes, improving efficiency, enhancing visibility, transparency, and traceability for value creation in the global value chains. This investigation supports the notion that blockchain, as a disruptor, will transform global trade with the digital tools to share real‐time information and collaborate security to reduce search and information cost, policing and enforcement cost in global economic transactions and administrative friction in trade. In contrast, the bargaining cost will increase if the information for the transaction is hard to verify where human actor intervention will be required, implying relatively higher designing costs in codifying the agreements in smart contracts.

Role of Reputation in Sustainable Performance of Online Crowdsourcing Vendors: An Explanation From Transaction Cost Theory

This study reveals a new finding on the impact of reputation growth on crowdsourcing vendors’ sustainable performance in different modes of markets using fixed-effect panel data regression models. To this end, we extract data from a large Chinese crowdsourcing platform named zbj.com for the period of 2012–2014, which was a key stage for the establishment of market diversification. Based on different transaction modes, the study divides the markets on the crowdsourcing platform into task-based market (TBM) and employment market (EPM). By applying the multiple framework, the empirical results exhibit a negative and significant effect of vendors’ reputation on participation rate (PR) in TBM and EPM. At the same time, reputation also has a consistent effect on vendors’ revenue share (RS) of each market. Moreover, this study shows that the significant reputation impact on PR and RS of EPM will be, respectively, weakened and strengthened in fixed-price mode and customized mode when vendors participate more in large-scale projects. The findings suggest that the growth of reputation will promote market transfer of vendors, that is, showing different sustainability in different markets, which will lead to uneven development of the crowdsourcing markets. By adopting the perspective of transaction cost theory (TCT), this study elaborates and analyses these phenomena and derives corresponding policy implications.

How to Rebuild the Quality of Public Services at the Local Government Level During the Covid-19 Pandemic from the Transaction Cost Theory Perspective

Purpose: The objective of paper is to consider transaction cost theory to analyse and improve local government operations during the SARS-COV-2 pandemic. Design/Methodology/Approach: The article was prepared according to a neo-institutional approach, combining systemic, institutional and comparative methods. Findings: Public forms of performing public tasks (budgetary establishments and budgetary units) at the local government level during the Covid-19 pandemic enable the restoration of the quality of public services and counteract speculation in the market of public goods and services. Practical Implications: The paper presents a universal mechanism for selecting organisational forms of performing public tasks based on transaction cost theory that can be used by local authorities, civil servants and public sector experts alike during the Covid-19 pandemic. Originality/Value: The comparison of public task forms with private ones highlighted the important role played by local government in rebuilding the market of public goods and services during the Covid-19 pandemic.

Digitalization of International Tax Dispute Resolution: Reflection in Light of the Covid-19 Pandemic

The mutual agreement procedure (MAP) has long been criticized. From the perspective of transaction cost theory, the deficiencies of the mechanism primarily reflect three types of transaction costs: agency cost, bargaining cost, and administrative cost, all of which can be economized via the digitalization of international tax dispute resolution (ITDR) processes. The impetus for the development of digital ITDR becomes more prominent considering the current Covid-19 pandemic. Furthermore, compared with dispute resolution mechanisms in many other domains, the ITDR process particularly lends itself to digital facilitation. However, data from peer review reports under Action 14 of the Base Erosion and Profit Shifting (BEPS) Project shows that the international practice of the digital ITDR still remains at a rudimentary stage. This underdevelopment can largely be attributed to a decentralized approach to the ITDR development at the international level. In this regard, it is proposed that the OECD can play a greater role in leading and coordinating the development of digital ITDR at the global level. In particular, a global digital platform is envisaged to facilitate the digital ITDR processes among competent authorities. Digitalization, international tax dispute resolution, online dispute resolution, Covid-19, new technologies, digital justice, mutual agreement procedure.

Blockchain and supply chain relations: A transaction cost theory perspective

Blockchain is projected to be the latest revolutionary technology and is gaining increasing attention from academics and practitioners. Blockchain is essentially a distributed and immutable database that enables more efficient and transparent transactions. The consensus-based record validation can eliminate the need for a trusted intermediary. We utilize the transaction cost theory to create a better understanding of how blockchain might influence supply chain relations, specifically in terms of transaction costs and governance decisions. Conceptually developing a set of six propositions, we argue that blockchain limits opportunistic behavior, the impact of environmental and behavioral uncertainty. Blockchain reduces transaction costs, as it allows for transparent and valid transactions. We explore several areas for future research on how blockchain might shape supply chain management in the future.

The bullwhip effect in Brazilian supply chain of organic products: an analysis from the perspective of transaction cost theory

This paper deals with the to the supply chain strategic management of organic products. The objective of this study is to propose a model that integrates the concepts of supply chain management (SCM), transaction costs theory (TTC) and bullwhip effect in supply chain of organic products generating propositions that will direct future empirical research. Therefore, this paper proposes that the SCM and TTC can contribute in reducing the distortion of perception of demand along the supply chain of organic products. A conceptual model relating the three variables studied was elaborated and three theoretical future empirical investigations to propositions in order to solve the problem of the bullwhip effect, namely the distortion of perception of demand along the supply chain of organic products.

DBFOM Contracting and Public Stewardship in the Norfolk-Portsmouth Elizabeth River Tunnels Public-Private Partnership

In 2011, the Virginia Department of Transportation issued a request for proposals to upgrade the Norfolk-Portsmouth Elizabeth River Midtown and Downtown Tunnels. The project involved government contracting with a local subsidiary of two foreign entities that would handle all project phases according to a Design-Build-Finance-Operate-Maintain (DBFOM) contract. The case of the Elizabeth River Tunnels (ERT) project is examined through the perspective of transaction cost theory and evaluates the DBFOM contracting method according to its impact on public stewardship. The research findings improve understanding of public-private partnerships (PPPs) by examining the connection between transaction costs and public stewardship.

ОПОДАТКУВАННЯ БІЗНЕСУ: ПОГЛЯД КРІЗЬ ПРИЗМУ ТЕОРІЇ ТРАНСАКЦІЙНИХ ВИТРАТ

ОПОДАТКУВАННЯ БІЗНЕСУ: ПОГЛЯД КРІЗЬ ПРИЗМУ ТЕОРІЇ ТРАНСАКЦІЙНИХ ВИТРАТ

Internationalisation of publicly traded family firms: a transaction cost theory perspective and longitudinal analysis

There has been a prominent stream of research investigating internationalisation of organisations. While the importance of transaction costs in the governance decisions of firms has been well established in the literature, transaction cost theory (TCT) in family firms remains underutilised. We examine the impact of family governance (i.e. family ownership and involvement in management and the board of directors) on internationalisation within the domain of TCT using 386 S&P 500 firms. Our findings indicate an inverted U-shaped relationship between family ownership and internationalisation and a U-shaped relationship between family's involvement in management and the board and internationalisation. This illustrates the interesting differential impact of the components of family involvement on internationalisation. We conclude by discussing future research and implications for practice.

Internationalisation of publicly traded family firms: a transaction cost theory perspective and longitudinal analysis

There has been a prominent stream of research investigating internationalisation of organisations. While the importance of transaction costs in the governance decisions of firms has been well established in the literature, transaction cost theory (TCT) in family firms remains underutilised. We examine the impact of family governance (i.e. family ownership and involvement in management and the board of directors) on internationalisation within the domain of TCT using 386 S&P 500 firms. Our findings indicate an inverted U-shaped relationship between family ownership and internationalisation and a U-shaped relationship between family’s involvement in management and the board and internationalisation. This illustrates the interesting differential impact of the components of family involvement on internationalisation. We conclude by discussing future research and implications for practice.

복수 공급업체와의 관계구조가 정보기술 아웃소싱 성과에 미치는 영향 : 거래비용 이론 관점

현대 기업에서의 정보기술 아웃소싱(Information Technology Outsourcing: ITO)은 비즈니스 프로세스 및 정보기술의 고도화와 함께 수행영역과 적용기술 등의 다양한 측면에서 진화를 거듭하고 있다. 특히, ITO 프로젝트의 수행과정에서 고객과 공급업체들 간의 관계구조는 과거 단일 공급업체가 주도 하는 단순한 형태를 벗어나 기술적 전문성과 관리기법을 겸비한 복수의 공급업체가 참여하는 형태 (Multi-vendor Outsourcing: MVO)의 비중이 높아지고 있다. 본 연구에서는 고객과 공급업체간 관계구조 가 ITO 수행 시 수반되는 거래비용의 구조와 크기를 변화시킴으로써, 결과적으로 ITO 성과에 영향을 미치게 된다는 전제를 바탕으로, 다음과 같은 질문에 답하고자 한다. 고객과 복수의 공급업체들 간에 맺어지는 관계구조의 형태가 특정 유형의 ITO 성과에 영향을 미치는가? 본 연구는 거래비용 이론(Transaction Cost Theory)을 기반으로, 고객과 공급업체들 간에 맺어지는 관계구조의 유형을 두 가지로 나누어 제시하였다. 아울러, ITO 수행과정에서의 거래비용을 살펴봄으로써 각각의 관계유형에 상대적 으로 부합하는 ITO 성과유형을 제시하는 내용을 가설화하였다. 제시된 가설에 관한 검증은 ITO를 수행하는 국내 246개 기업으로부터 수집된 자료를 바탕으로 진행되었다. 분석결과를 통해, 특정 관계 구조 유형은 그에 부합하는 형태의 ITO 성과에 더 많은 영향을 미치고 있는 것을 확인 하였다. 본 연구는 ITO 프로젝트의 수행 과정에서 IT 실무자들이 아웃소싱 공급업체들과의 관계구조를 설정하고 운용하는 데 있어 주요한 참조자료로 활용될 수 있을 것이다.

Australia's Cooperative Research Centre Program: A transaction cost theory perspective

Cooperative Research Centres (CRCs) in Australia are underpinned by funding from the Australian Government. Among their many goals, they are intended to lead to long-term sustainable relationships between industry and academic institutions without the need for further public funding. Yet concerns have been raised in various reports and reviews about the ability of CRCs to achieve sustainable collaboration beyond their initial seven-year life, despite the general observation that CRCs have proved beneficial to the broader Australian community and the economy in general. This study adduces Transaction Cost Theory to determine the impediments to long-term sustainable collaboration between industry and academia. It does so by examining relationships between CRC members at a member organisational level, rather than at an individual researcher or program level, as previous studies have done. The article concludes by introducing testable governance attributes that have the potential to minimise transaction costs between participants in industry-academic collaboration and therefore foster long-term research collaborations.

An Exploration of the Relationships among Specific Human Capital, Information Structure and Innovation Pattern

The paper discussed the relationships among specific human capital, information structure and innovation pattern. The organizational pattern of technological innovation is called innovation pattern in short, which includes two typical patterns: internal and external innovation from the perspective of transaction-cost theory. Information structure includes horizontal and vertical information structure, and the degree of human capital specificity is different in different enterprises. Based on a detailed analysis to the connotations of specific human capital, information structure and innovation pattern, the paper analyzed the relationships of them from theoretical perspective, and considers that enterprise’s horizontal information structure corresponds with special human capital and internal innovation pattern separately; while vertical information structure corresponds with versatile human capital and external innovation pattern separately.

Information sharing with key suppliers: a transaction cost theory perspective

PurposeThe purpose of this paper is to explain variations in discretionary information shared between buyers and key suppliers. The paper also aims to examine how the extent of information shared affects buyers' performance in terms of resource usage, output, and flexibility.Design/methodology/approachThe data for the paper comprise 221 Finnish and Swedish non‐service companies obtained through a mail survey. The hypothesized relationships were tested using partial least squares modelling with reflective and formative constructs.FindingsThe results of the study suggest that (environmental and demand) uncertainty and interdependency can to some degree explain the extent of information shared between a buyer and key supplier. Furthermore, information sharing improves buyers' performance with respect to resource usage, output, and flexibility.Research limitations/implicationsA limitation to the paper relates to the data, which only included buyers. A better approach would have been to collect data from both, buyers and key suppliers.Practical implicationsCompanies face a wide range of supply chain solutions that enable and encourage collaboration across organizations. This paper suggests a more selective and balanced approach toward adopting the solutions offered as the benefits are contingent on a number of factors such as uncertainty. Also, the risks of information sharing are far too high for a one size fits all approach.Originality/valueThe paper illustrates the applicability of transaction cost theory to the contemporary era of e‐commerce. With this finding, transaction cost economics can provide a valuable lens with which to view and interpret interorganizational information sharing, a topic that has received much attention in the recent years.

Knowledge Sharing Behavior in E-Communities: from the Perspective of Transaction Cost Theory

This study aims to examine the factors affecting knowledge sharing behavior in knowledge-based electronic communities (e-communities) because quantity and quality of knowledge shared among the members play a critical role in the community’s sustainability. Past research has suggested three perspectives that may affect the quantity and quality of knowledge shared: economics, social psychology, and social ecology. In this study, we strongly believe that an economic perspective may be suitable to validate factors influencing newly registered members’ knowledge contribution at the beginning of relationship development. Accordingly, this study proposes a model to validate the factors influencing members’ knowledge sharing based on Transaction Cost Theory. By doing so, we may empirically test our hypotheses in various types of e-communities to determine the generalizability of our research models. Keywords—Electronic community, individual behavior, knowledge sharing, transaction cost theory.

Organizational modes in the residential building sector in Sweden

Traditional organizational studies emphasize department groupings and the management style of different organizations that are often based on common tasks, products, geography and processes. They also mainly emphasize the connection between construction supply chain and procurement methods but have not analysed of how external factors shape the organization structure and consequently the supply chain. Three things are analysed: the impact of competitive pressure, required competence and degree of flexibility on various modes of construction organization used for producing multi‐family residential housing in Sweden from a transaction cost theory perspective. Organization structures depend on the level of project engagement, competence demanded by the preferred organization mode as well as the economic environment, and the level of construction activities.

A transaction cost analysis of staffing decisions in international operations

This paper analyzes staffing decisions in foreign subsidiaries from the perspective of transaction cost theory. We focus on the ex post transaction costs of the employment relation. Specifically, we look at the monitoring, bonding, maladaptation, and bargaining costs of conducting activities in specific subsidiaries in a foreign country. We hypothesize that the transaction costs of using expatriates are lower than those generated by local employees, especially in the higher managerial echelons of foreign subsidiaries, but also that costs can be reduced as individuals become more experienced. We also conjecture that ex post transaction costs are influenced by cultural differences between the host and the home countries, and by characteristics of the companies and their subsidiaries. The framework is empirically corroborated by survey data on a sample of 145 Norwegian MNCs.

Transaction cost framework in operations and supply chain management research: theory and measurement

Over the past decade, transaction cost theory (TCT) has received considerable attention from researchers in various disciplines of business. Unfortunately, the rich theoretical base of TCT has seen limited application in the operations and supply chain management research. This article seeks to change that by providing a cogent synthesis of TCT, its assumptions, constructs, and propositions. It also summarizes existing empirical work in management and other disciplines that draws from the TCT perspective and examines relationships in manufacturing organizations. A measurement model of transaction costs is subsequently presented using data from 203 manufacturing firms in the OEM electronics industry. Guidelines and recommendations for researchers are then presented regarding both the uses of the theory and its measurement. It is hoped that this study will stimulate work in the important areas of inter-firm relationships that draw from this rich but underutilized theoretical lens, and thereby add another perspective to the knowledge base in related areas of the operations and supply chain management fields.