Transaction Cost Economics Theory Research Articles

Strategic Alliances and Firm Innovation in Global Markets in Turkey

Purpose: The aim of the study was to investigate the strategic alliances and firm innovation in global markets in Turkey. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: Strategic alliances significantly enhance firm innovation in global markets, particularly in Turkey. These partnerships enable firms to access resources and knowledge, driving innovation through joint R&D and technological advancements. In Turkey, alliances with multinational corporations and global partners accelerate technology adoption and best practices, boosting local firms' innovation capabilities and expanding market reach. Despite challenges like cultural differences and regulatory issues, effective alliance management can greatly benefit firms by improving competitiveness and innovation outcomes globally. Unique Contribution to Theory, Practice and Policy: Resource-based view (RBV) theory, transaction cost economics (TCE) theory & social network theory may be used to anchor future studies on strategic alliances and firm innovation in global markets in Turkey. Enhance organizational capabilities in alliance management through training programs and knowledge-sharing platforms that emphasize best practices in partner selection, negotiation, and collaborative innovation. Develop supportive regulatory frameworks that encourage cross-border alliances and facilitate intellectual property protection, thereby reducing legal uncertainties and enhancing trust among international partners.

The nexus of artificial intelligence, frugal innovation and business model innovation to nurture internationalization: A survey of SME's readiness

This study uses transaction cost economics theory to explain the interplay of artificial intelligence readiness, frugal innovation, and business model innovation to achieve SMEs’ internationalization objectives. A survey is conducted among SMEs using cluster sampling to determine their readiness for artificial intelligence adoption. The results are analyzed using Smart PLS 4.1 software. The study explored the mediating role of business model innovation and artificial intelligence’s moderating role in promoting business model innovation and SMEs’ internationalization, respectively. Finally, the authors performed a necessary conditions analysis to identify the necessary conditions for SME internationalisation. The study has contextual implications for stakeholders and policymakers of an oil-rich nation.

Enhancing Performance of Public-Private Partnership Projects: Data Management and Capacity Building of Standard Gauge Railway

This study assessed the impact of data management and capacity building on the performance of the Standard Gauge Railway (SGR) project in Kenya, specifically within the context of monitoring and evaluation (M&E) practices in public-private partnership (PPP) frameworks. Anchored in the tenets of the Principal-Agent Theory, Institutional Theory, and Transaction Cost Economics Theory, this research employs a survey-based approach, drawing insights from 55 SGR project employees. In exploring the influence of data management, the findings illuminate its significant correlation with the orchestration and advancement of the SGR project. Additionally, the study underscores the positive repercussions of capacity-building initiatives on enhancing the project’s performance metrics. Notably, participants exhibited a consensus regarding the efficacy of these programs in augmenting the skills and knowledge base of the project team and stakeholders. The study accentuates the imperative for a comprehensive review aimed at fortifying the accuracy and security of project data. It recommends a strategic emphasis on initiatives enhancing data reliability and security within the SGR project’s framework. These insights contribute crucial perspectives on the pivotal roles of data management and capacity building, specifically underscoring their influence on the SGR project in Kenya.

Influence of Political Risk on International Business Operations in Germany

Purpose: The aim of the study was to investigate the influence of political risk on international business operations in Germany. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: The study revealed that political uncertainties, such as shifts in government policies, geopolitical tensions, and regulatory changes, can significantly impact the business environment, investment decisions, and market opportunities in Germany. While Germany is known for its stable political system and business-friendly environment, recent developments, such as Brexit, global trade tensions, and the rise of nationalist movements, have introduced new layers of complexity and uncertainty for international businesses operating in the country. These political risks can manifest in various forms, including disruptions to supply chains, fluctuations in currency markets, and heightened regulatory scrutiny, necessitating proactive risk management strategies and adaptive business practices. Unique Contribution to Theory, Practice and Policy: Institutional Theory, Resource Dependence Theory (RDT) & Transaction Cost Economics (TCE) theory may be used to anchor future studies on influence of political risk on international business operations. Implement regular political risk assessments using this comprehensive framework to identify potential threats and opportunities in different regions. Businesses should use advanced analytics and scenario planning to forecast potential political changes and their impacts. Businesses should diversify their investments across multiple countries and regions with varying political risk profiles. Policymakers should establish standardized guidelines for political risk assessment to ensure consistent and accurate evaluation across industries and regions. This will help firms better prepare for and mitigate political risks.

Effect of Procurement Planning on Organizational Performance Within the Public Sector: A Case of Ruhengeri Referral Hospital in Musanze District, Rwanda

Public entities in Rwanda spend a significant amount of money on procurement. This is the process of acquiring goods, works, or services from a vendor. The general objective of this study was to assess the effect of procurement planning on organizational performance within the public sector. Specifically, the study assessed the effect of needs assessments in procurement planning on performance of Ruhengeri referral hospital, analyze the effect of quality specification in procurement planning on performance of Ruhengeri referral hospital, examine the effect of cost estimation in procurement planning on performance of Ruhengeri referral hospital and assess the effect of terms of payment in procurement planning on performance of Ruhengeri referral hospital. Research was guided by Resource Based viewpoint theory and Transaction Cost Economics theory. Descriptive research design was adopted in this research. This study has taken 106 populations who have direct works related to procurement planning functions from Ruhengeri referral hospital and reporting health centers (42 working at Ruhengeri referral hospital main location and 64 from 12 health centers under management of Ruhengeri referral hospital). The researcher has determined that due to the small population size, a census inquiry method employed instead of sampling. This study used both primary and secondary data, and each has its specific instruments for collection including questionnaire, documentary and interview. Here the researcher tends to interpret frequency, percentages, mean, and standard deviation, as results of Statistical Package for Social Scientists (SPSS) version 20 while content analysis used to analyze qualitative data. The Model Summary provides valuable observations into the effect of independent variables Terms of payment in procurement planning, Needs identification in procurement planning, Quality specification in procurement planning, Cost estimation in procurement planning on the dependent variable, organization performance. The findings revealed the coefficient of determination (R Square), which is 0.652, demonstrates that 65.2% of the variance in organizational performance of Ruhengeri Referral Hospital explained Terms of payment in procurement planning, Needs identification in procurement planning, Quality specification in procurement planning, Cost estimation in procurement planning. The results indicate the coefficient of needs identification in procurement planning (β: 0.399, p: 0.000), it shows the significant effect of needs assessments in procurement planning on organizational performance of Ruhengeri referral hospital. The results indicate the coefficient of quality specification in procurement planning (β: 0.387, p: 0.001), it shows the significant effect of quality specification in procurement planning on organizational performance of Ruhengeri referral hospital. The results indicate the coefficient of cost estimation in procurement planning (β: 0.152, p: 0.022), it shows the significant effect of cost estimation in procurement planning on organizational performance of Ruhengeri referral hospital. The results indicate the coefficient of terms of payment in procurement planning (β: 0.237, p: 0.021), it shows the significant effect of terms of payment in procurement planning on organizational performance of Ruhengeri referral hospital. It is recommended that Ruhengeri Referral Hospital continues to strengthen its needs assessment process by involving a wider range of stakeholders.

Examination of upstream supply chain and logistics issues in the US logging industry

AbstractUsing a mixed methods approach, this study investigates upstream supply chain and logistics issues in the logging industry through the findings of (1) a systematic literature review and (2) an inductive and interpretive case study of Mississippi, a top timber‐producing state in the United States. First, we analyze 45 peer‐reviewed studies examining logistical challenges in the logging industry via a systematic literature review to identify existing cumulative knowledge. Then, we conduct 11 qualitative semistructured interviews with logging business owners/managers to understand better complex and interdependent logistics issues that negatively impact productivity and profitability in the upstream timber supply chain. Performing a comparative analysis of the systematic literature review results and interview findings, we propose a general conceptual framework that classifies 25 logistical challenges in three main areas. They are (1) supply chain issues, (2) company‐, and (3) industry‐specific issues. Finally, using an abductive reasoning approach, we generalize our findings by linking our conceptual framework to resource dependence theory, transaction cost economics theory, and carrier selection literature to develop propositions to guide future quantitative research efforts.

THE IMPACT OF THE GIG ECONOMY ON TRADITIONAL EMPLOYMENT AND THE NECESSITY FOR REVISED BUSINESS, HR, AND LEGAL STRATEGIES

The entrance of the gig economy into the employment field requires many innovative business strategies from both players as well as from the government. This study appraises the management of the freelance workforce from the theory of resource-based view (RBV) and transaction cost economics (TCE), which are helpful theoretical tools. RBV considers freelancer calls, and TCE does benefit and cost analysis when hiring freelancers or home staff. Given the qualitative nature of the research, a combination of interviews and focus groups with the stakeholders operating in the gig economy platform, as well as an analysis of documents of a strategic and legal nature, will be taken to investigate the inner articulations of gig employment. The preliminary results show that having organizational flexibility, personalizing personnel management, and the strategic inclusion of gig workers are the main factors that can ensure business success in a rapidly changing market environment. Nevertheless, without the gender pay gap and legal safeguarding, it becomes evident that there is a further need to work on these. The focus of the study is to bring up topics to be implemented in gig employment, such as the creation of HR policies and legal standards which would promote the sustainability of gig work and, at the same time, protect worker rights, which can contribute to a balanced and fair gig economy

The e-commerce platform conundrum: How manufacturers' leanings affect their internationalization

Internationalization is seen as a commercial opportunity and, in some circumstances, necessary for many firms' resilience in today's volatile and unpredictable global marketplace. Most exporting organizations must cope with various emergent e-commerce digital platforms, given the rising importance of digital and technological transformation of modern international trade and its related strategic challenges. The spread of third-party multi-sided platforms (TPMPs) and established actors such as Amazon, eBay, and Alibaba, has led research to overlook evaluations involving other types of multi-sided e-commerce platforms, such as content management systems (CMSs). Nevertheless, these other platforms are evolving by leaps and bounds and changing the rules of the game for e-commerce website development. This study draws on the transaction cost economics perspective and theory of boundary choices to shed light on the differences in manufacturing firms' internationalization performances from the reliance among CMSs and TPMPs. The study retrieves data from a survey of 263 manufacturing firms' managers and executives relying on structured equation modeling. The findings outline that adopting CMSs partially mediates the relationship between e-commerce strategic commitment and internationalization performances. In contrast, TPMPs negatively moderate the relationship between e-commerce commitment and CMS and between e-commerce commitment and internationalization despite directly partially enhancing internationalization performances. Finally, the study reveals an inverted U-shaped relationship between e-commerce commitment and TPMP reliance.

Transaction cost economics in the digital economy: A research agenda

Transaction cost economics theory explains when it is more efficient for a transaction between two parties to occur across the market or within an organization. How does transaction cost economics apply in the digital economy, which relies on digital transactions? In this article, we consider how digital transactions help us probe the boundary conditions of transaction cost economics and how, despite all the changes wrought by digital transactions, transaction cost economics can still provide a useful lens to help scholars and practitioners understand and measure the organization of economic activity and make strategic decisions. We highlight several characteristics of digital transactions and discuss how these characteristics offer opportunities for future research in the fields of strategy, organizations, and economics, and lay out a research agenda for this increasingly important area.

WORKING CAPITAL MANAGEMENT PRACTICES AND FINANCIAL PERFORMANCE OF DAIRY PROCESSING FIRMS IN KENYA

The significance of the dairy sector in Kenya’s economy cannot be over emphasized. This is because the sector contributes 4% of the national gross domestic product and 19% of the agricultural gross domestic product for an economy that heavily relies on agriculture. Working capital plays a critical role in the success of commercial entities. This study sought to determine the effect of working capital management practices on the financial performance of dairy processing firms in Kenya. The general objective of the study was to determine the effect of working capital management practices on financial performance of dairy firms in Kenya. The specific objectives of the study were to establish the effect of inventory management practices, debtor’s management practices, creditors’ management practices and cash management practices on financial performance of dairy firms in Kenya. The theories that guided the study are; Keynesian liquidity preference theory, Cash Conversion Cycle theory, Stewardship theory, Risk return trade-off theory and Transaction Cost Economics Theory. The study population comprised the 221 dairy processing firms classified as major and mini processors by the Kenya Dairy Board. Stratified random sampling technique was used to select a sample size of 69 firms for the study. Self-administered structured questionnaire was used for data collection. A pilot study was conducted to test for the validity and reliability of data measuring instruments. Descriptive statistics namely mean, variance and standard deviation, and inferential statistics namely, correlation, simple and multiple regression was used for data analysis. The results of the analysis were presented using tables. The diagnostic tests to be performed in the study included Normality, Linearity and Multi - collinearity. A statistical package for social sciences software was used to aid the data analysis. Results indicated that inventory management was a key predictor of financial performance. Results indicated that debtor’s management practices were a key predictor of financial performance. Correlation outcomes of the results showed that credit management, and cash management had a positive and statistically significant relationship with the financial performance of dairy firms in Kenya. The regression results showed that cash management and creditors management have a direct positive effect on the financial performance of dairy firms in Kenya. The study recommended that Dairy Firms directors should develop a policy on credit collection detailing the policies and practices to be followed by the Dairy Firms. To enhance their accounts receivables and remove bad debts while boosting sales and inventory turnover, farm owners should rigorously follow up on debts, assess consumers before providing debts, give incentives for early debt payments, and build a solid debt management strategy. Dairy Firms may generally keep the standard payment interval longer than the average collection period to limit receivables payments for short-term needs, lowering finance expenses.

Transaction Costs for Delivering HIV&AIDS Prevention Services in Uganda

The dwindling international funding for HIV&AIDS, limited domestic resources and the growing need for HIV&AIDS services in low-income countries make the cost-minimization of HIV&AIDS services essential to address the shortage of funds. Previous HIV/AIDS studies have addressed the budget constraints using quantitative methods in economic evaluation. Transaction cost analysis in HIV&AIDS service implementation—guided by the Transaction cost economics (TCE) theory sources of costs— asset specificity, service measurability, and opportunism—have not been sufficiently analyzed in the literature, nor have qualitative approaches been applied. Guided by TCE theory, this study (1) characterized transaction complexity levels needed in HIV&AIDS prevention services to safeguard asset specificity and services measurability and avoid opportunism in Uganda, (2) compared the relative transaction costs across three modes of HIV&AIDS prevention services, and (3) assessed whether the HIV&AIDS prevention services mode with the least transactions costs matched the proposition of the transaction (TCE) theory to guide HIV&AIDS transactions design. Data was collected from October to December 2020 from three dominant HIV&AIDS prevention services modes in Rakai, Lira and Mukono in Uganda. These modes were: (1) “ Public sector provision” mode, (2) Community-led HIV&AIDS Initiative—CHAI mode, and (3) Determined, Resilient, Empowered, AIDS-free, Mentored and Safe—DREAMS mode. These modes corresponded to respective TCE theory provision mode constructs: “ Internal integration,”“ Partnership,” and “ Contracting out.” In each HIV& AIDS prevention services mode, the study conducted key informant interviews, a review of documents, and a focus group discussion. Transaction cost data were analyzed across the three modes based on TCE theory’s sources of transaction costs ( aspect specify, service measurability and opportunism). Safeguarding asset specificity and services measurability in Uganda required transactions characterized by mixed-level complexity whilst avoiding opportunism required transactions characterized by high-level complexity. Based on these transaction characteristics requirements, the “ partnership” (CHAI) was HIV&AIDS prevention service mode most matching the TCE theory for cost minimization in Uganda. The evidence further suggested that CHAI had the least complex transactions to safeguard asset specificity, deal with HIV&AIDS service measurability, avoid opportunism, and hence the lowest transaction cost levels. The “ partnership” (CHAI) was the least costly in dealing with asset specificity, service measurability and opportunism in Uganda and was the most aligned with the proposition of the TCE theory. The findings imply that the TCE theory can be used to guide HIV&AIDS prevention services provision in Uganda.

Blockchain technology for pay-for-outcome sustainable agriculture financing: implications for governance and transaction costs

Pay-for-outcome financing mechanisms have been used to address agricultural runoffs to overcome the inefficiencies associated with push-based solutions, which are dependent on subsidies or philanthropic funding. As a market-based approach, pay-for-outcome platforms seek to incentivize sustainable practices, compensated by beneficiaries of the positive outcomes. Execution of pay-for-outcome financing mechanisms in an agriculture context is a complex transaction, involving investors, farmers, third party verifiers of outcomes, government and corporate beneficiaries, and thus requires a costly governance structure. Effective governance mechanisms are needed to meet the transaction costs identified in performance measurements. This study investigates the efficacy of blockchain technology to address transaction costs in pay-for-outcome financing for sustainable agriculture. Through a proof-of-concept, this study quantifies and explores the potential cost-saving benefits of utilizing blockchain. The proof-of-concept is an application of blockchain within a pay-for-outcome incentive model, namely the Soil and Water Outcomes Fund, for sustainable agriculture. Utilizing the Ethereum blockchain, transactions are facilitated through crypto wallets and a hybrid smart contract, while precipitation is used as a proxy for agricultural runoff measurements. Drawing from Transaction Cost Economics theory, a discussion is presented on how blockchains can reduce transaction costs, enhancing the governance and efficiency of pay-for-outcome mechanisms. Furthermore, the article presents blockchain transaction fees in the context of the scale of operations, considering the total number of participants in the Soil and Water Outcomes Fund. Our findings indicate that blockchain technology has the capacity to simplify intricate transactions, boost measurement accuracy, cut administrative expenses, and foster trust and transparency among stakeholders, thereby reducing the overall transaction costs associated with pay-for-outcome incentives. While blockchain has its limitations and is not a universally applicable solution for every type of transaction cost, we believe that blockchains are well-suited to facilitate pay-for-outcome financing such as the Soil and Water Outcomes Fund.

Blockchain i upravljanje ljudskim resursima

Previous research has shown that implementing blockchain technology in businesses can lead to more secure and efficient processes in various organizational areas, including human resource management. This review paper examines the use of blockchain in human resources departments from the perspective of transaction cost economics theory, which identifies several fundamental variables that increase transaction costs for firms. These variables include bounded rationality, the pervasive possibility of opportunistic behavior, and uncertainty. The paper explores how blockchain implementation, including blockchain-enabled smart contracts, can mitigate these challenges. The paper also identifies some limitations to using blockchain and smart contracts that may increase transaction costs and thus reduce transaction cost savings.

A comprehensive theoretical framework for sustainable network contracts: Contracting dimensions and Contract classification

Disruptions in the supply chains/networks result in both performance failures and a poor return on investment (ROI) of network assets. We propose that addressing this situation requires the governance of exchange relationships through contracts guided by sustainability principles. Specifically, we refer to these contracts in the supply and distribution context as “sustainable network contracts”, and the overall framework as the “sustainable contracting framework (SCF)/theory”. Despite the critical role of sustainable network contracts for all key stakeholders in the network, we identify a gap in the existing literature regarding the theory of sustainable network contracts. We bridge this gap by extending the extant dimensions of contracts, as described in Transaction Cost Economics and Relational Exchange Theory, to include sustainability dimensions - constituting the ‘what’ of theory building. To inform sustainable contracts, we propose and employ three factors: costs, benefits, and risks (CBR). We present the ‘how’ of the theory building, outlined in a five-step approach along with an analytical tool, to demonstrate the practical application of our framework. Additionally, we provide a rationale for adopting sustainable network contracts (the ‘why’ of the theory building). Our research methodology involves collecting interview-based data from senior executives (CXOs) (secondary and primary), collecting primary and secondary cost data (objective), integrating behavioral elements (subjective), and employing constrained optimization techniques to determine quantity allocation under various contract policies. Further, we map the proposed eight distinct contract types onto the CBR-space, thereby highlight the relevance of the contract types to real-world practices. This mapping considers network externalities, risks, and allows for a coordinated sustainable approach to contracting from the buyer's (retailer's) perspective. For managers, our framework would serve as an important tool that would inform the contract evaluation process, facilitate local versus global decision-making, safeguard network investments, and help align the interests of buyers and suppliers in each contracting cycle.

Value Network Configuration and Competitiveness of Emerging Agricultural Cooperatives in the Central Free State of South Africa

Introduction: While many emerging agricultural cooperative firms in the Central Free State of South Africa remain inclined to progress into mainstream markets, conditions of market exclusion continue to dampen their predisposition to exploit competitive opportunities. Since cooperatives determined to reach their full market potential must contemplate competitive positions in their value networks, the business strategy literature on cooperative firms foregrounds the theoretical assertion that the value network configuration significantly influences competitiveness. Purpose: This conceptual study challenges the assertion that emerging agricultural cooperative firms’ value network configuration significantly influences their competitiveness. Methodology: Drawing on the transaction cost economics theory and a review of literature, the study sought to address the core constructs that constitute the claims, establishing, rather, that sustained competitive performance has a direct influence on the competitiveness of emerging agricultural cooperative firms. Findings: The findings suggest sustained competitive performance as the principal determinant of competitiveness and a function of the cooperative firms’ ability to navigate through transaction interaction dynamics and configurational influences. Originality: The study links industry structure and competition intensity to configurational influences, manifesting in various drivers and indicators determining sustained competitive performance, a novel concept underexplored in cooperative entrepreneurial literature.

The strategic role of R&D outsourcing practices and partners in the relationship between product modularization and new product development efficiency

PurposeThe study aims to explore the conditional relationships between product modularization and new product development (NPD) efficiency. It is postulated that R&D outsourcing plays an important mediating role. Furthermore, the level of competency trust is considered an essential factor in moderating the indirect effect of product modularization on NPD efficiency via R&D outsourcing practices.Design/methodology/approachDrawing on transaction cost economics theory, this study suggests a moderated mediation model that addresses how product modularization effectively promotes NPD efficiency via outsourcing practices. The hierarchical regression and PROCESS macro model were conducted to test the hypotheses based on survey data from 273 manufacturing firms in China.FindingsProduct modularization enhances NPD efficiency directly and indirectly through the external collaboration of R&D outsourcing. Furthermore, the role of product modularization in R&D outsourcing practices is more effective when the competency trust in R&D outsourcing partners is high.Originality/valueBy showing the critical role of external collaboration, this study provides valuable insights into how manufacturing firms utilize product modularization to achieve desired NPD performance more effectively.

Managers’ Perceptions and Microfoundations of Contract Design

In interfirm exchanges such as contracts, transaction cost economics theory (TCE) argues asset specificity, critical for value creation, poses hazards requiring contractual safeguards. TCE assumes actors have foresight to mitigate these hazards even though specificity is typically hard to observe, suggesting managers’ impressions may be biased. Taking a microfoundational approach, we explore how individual negotiators form perceptions of optimal asset specificity and aggregate them to a firm-level assessment that may be influenced through negotiation. We then explore how managers may actively manipulate their counterpart’s perceptions to maximize their firm’s value capture. We theorize about when this may occur and the implications for contractual governance, value creation/capture, and repeated exchanges – each of which may vary from extant predictions. By applying both an expanded bounded rationality assumption (including cognitive distortions) and net value capture motivation symmetrically, we augment contract design research allowing it to predict when and how managers’ strategic behavior may impact exchange outcomes. As a result, this analysis provides a more nuanced understanding of when contract design may intentionally deviate from efficient governance predictions.

Factors Influencing the Effectiveness of the Tendering Process in the Public Sector: A Case of The Iringa Municipal Council

Public procurement operates within a stringent legal framework that must align with the broader goals of the Government. While procuring entities may have internal objectives, such as cost-effectiveness and timely service delivery, they must also serve the interests of the general public, who bear the tax burden. The study aimed to assess factors influencing the effectiveness of the tendering process in Iringa Municipal Council through financial resources, physical assets, and employee competence. A quantitative approach and cross-sectional design were used, whereby Transaction Cost Economics and Resource-Based View theories were adopted. Sixty-five employees were involved in this study. Descriptive statistics was used in data analysis. The findings showed that effective financial resource management plays a crucial role in influencing the effectiveness of the tendering process. The Iringa Municipal Council demonstrated effective tendering with its abundant financial assets, sufficient working capital, and strong financial position. Physical assets, such as well-maintained facilities and high-quality assets, positively influenced the effectiveness of the tendering process in The Iringa Municipal Council. Employee competence, commitment, education level, and experience significantly affected the effectiveness of the tendering process at The Iringa Municipal Council. The study concluded that financial resources are essential for an effective tendering process. Their efficient allocation and management are critical to success. Adequate physical assets and their maintenance are crucial for a streamlined tendering process. The study recommended that the Government should establish clear policies to ensure the effectiveness of the tendering process in public sectors. The Iringa Municipal Council should provide robust support and training to employees involved in the tendering process to enhance its efficiency. Further studies should explore additional factors contributing to ineffective tendering processes, such as the provision of substandard goods and services, missed deadlines, and punctuality issues in public sectors, to gain deeper insights into their causes and potential solutions

Understanding the costs of co‐commissioning: Early experiences with co‐commissioning in Australia

AbstractPublic services, such as health and other human services, are increasingly being delivered by third‐party providers (providers) under contract to public sector organisations (PSOs). While often advantageous to PSOs, this creates a fragmented service context which is difficult for consumers to navigate. Further, providers often deliver services under multiple contracts to multiple funders, with high reporting requirements, high administrative costs, and low operational sustainability. Policymakers have encouraged co‐commissioning—where PSOs come together to jointly commission services—to increase the efficiency and effectiveness of outsourcing. This article seeks to understand the costs of co‐commissioning in Australia, and consequently the enablers and barriers to co‐commissioning. This qualitative study is based on the early experiences of co‐commissioning by one of 31 Primary Health Networks (PHNs). Using transaction cost economics (TCE) theory, the study explains how the PHN started co‐commissioning services with other PHNs, before co‐commissioning with other types of organisations. The PHN also co‐commissioned relatively simple activities first, before moving on to more complex services. The insights provided using TCE theory help explain why co‐commissioning is initially complicated (and costly), requiring time to understand both the services to be commissioned and the governance requirements of each party involved. While initial transaction costs may be high when co‐commissioning, this may reflect organisational learning and capacity development costs ‐ therefore, costs are expected to reduce over time.Points for practitioners Fragmentation in policy and funding also leads to fragmentation of human services and high costs to service providers. Co‐commissioning is where multiple funders pool funds and strategically commission services together. Co‐commissioning offers a way to reduce fragmentation and reduce costs to service providers, potentially offering better public value. Co‐commissioning can initially take time and resources to establish. Over time, as organisations learn, the cost of co‐commissioning reduces potentially offering benefits to funders, providers, and service users.

FACTORS AFFECTING OUTSOURCING DECISIONS FOR FACILITY MANAGEMENT SERVICES

This research aimed to explore factors that affect outsourcing decisions for Facility Management (FM) services in Thailand. It was based on the result of 290 respondents authorized to make decisions on outsourcing Facility Management services. Due to differences in each business field, factors that affect outsourcing decisions were also dissimilar. The goal of decisions, in general, was to choose outsourcing services instead of using in-house resources which reflected business needs in terms of management, strategy, economics, or others to help facilitate and increase the competition level. The results of decision makers' perceptions showed that important factors in different industries considerably varied. The most important factors were management and quality factors which were strongly supported by the Core Competency theory. Meanwhile, the Transaction Cost Economics theory was still significant but not regarded as a top priority for business concerns in the present uncertain period.