Transaction Cost Perspective Research Articles

Is blockchain cost-effective in construction project management? A systematic review from the perspective of transaction cost

PurposeBlockchain technology (BCT) is considered a promising tool to improve the productivity of construction project management. Existing research has studied its potential costs and benefits for the construction industry. However, the potential costs and benefits of BCT failed to be compared as actual costs and benefits of specific applications for stakeholders. To fill this gap, this study seeks to analyze the cost-effectiveness of BCT-based applications in construction project management.Design/methodology/approachThis study is conducted with a customized systematic literature review based on transaction cost theory to enable qualitative comparison. With a deliberately designed structure confining extraneous variables, the costs and benefits of BCT-based applications are identified and compared. The inherent dependent relations of processes and the evolution relations of functions are identified. The cost-effectiveness of blockchain adoption is then analyzed.FindingsSeven functions and six challenges are identified within five processes. The result suggests all identified functions are cost-effective except for manual instruction (coding smart contracts manually). The smart contracts require explicit definition and logic to be effective. However, the construction projects essentially require the institution to be flexible due to unpredictability. The adoption of smart contracts and corresponding additional requirements can increase the transaction cost of bounded rationality.Research limitations/implicationsAs manual instruction is fundamental to realize other functions, and its advanced substitute relies on its broad adoption, its cost-effectiveness must be improved for applications to be acceptable to stakeholders. The establishment of a universal smart contract model and a universal, legitimate and efficient database structure are recommended to minimize the cost and maximize the effect of applications.Originality/valueThis study contributes to the knowledge by providing a comprehensive analysis of BCT adoption’s cost-effectiveness in construction project management. The adopted review structure can be extended to analyze the qualitative benefits and challenges of management automation in the early stages.

How does adopting sustainable supply chain quality management improve corporate financial performance? A transaction cost perspective

This article examines the impact of adopting SSCQM on the financial performance of companies, based on transaction theory. The main objective of this study is to assess how reducing transactional costs through SSCQM, or within its framework, can improve the financial performance of Moroccan companies. The methodology is based on quantitative analysis, using an econometric model (GLM-Gamma) to test the association between SSCQM adoption and financial performance. The results of the study show that various SSCQM-related practices positively affect companies’ financial performance. Managing sourcing costs significantly improves profit margins. Contracts focusing on quality and sustainability, and minimizing the risk of non-compliance, also boost financial performance. However, the ability to adapt and respond to regulatory changes shows no significant impact. Optimizing production processes and investing in green technologies are proving to be profitable strategies, with significant improvements in financial performance. Customer engagement and transparency and traceability of operations also have a positive impact. These results suggest that SSCQM practices, such as the adoption of green technologies and transparency policies, are beneficial for companies’ financial performance. The originality of the study lies in its approach, which links transaction theory to sustainable supply chain management, an angle little explored in existing literature. The study confirms that SSCQM is an effective strategy for improving corporate financial health by minimizing transactional costs. It recommends integrating SSCQM into companies’ management strategies to boost their competitiveness, financial performance and sustainability.

Bridging the Digital Divide in Online Retailing: The Effect of a Strategic Focus on E-Commerce Fulfillment Offerings

The digital divide is an area of significant concern as society increases its reliance on the internet for everyday tasks. Retail operations are no exception to this trend where the use of the online sales channel has become ubiquitous. As retailers seek to provide a high-quality customer experience across socioeconomic groups to maximize sales potential, they must find ways to bridge the digital divide and ensure consumer access to their products. Embracing resources and appropriation theory and the consumer transaction cost perspective, we hypothesize on the efficacy of strategically focusing on omnichannel fulfillment offerings and online fulfillment offerings as operational tools retailers can employ to expand access to their products and improve sales to the diverse populations affected by the digital divide. We contribute to the digital divide research in operations management by showing that a strategic focus on e-commerce fulfillment capabilities is associated with a reduction in the negative impact of the digital divide. We further disaggregate the digital divide into its two component parts, infrastructure deficiencies and socioeconomic factors, to delve into the nuances of the hypothesized relationships. The findings indicate that e-commerce fulfillment strategies are broadly effective at ameliorating the negative effects of infrastructural elements of the digital divide while overcoming the socioeconomic-related component of the digital divide is more nuanced. To further understand the complexities of the socioeconomic element of the digital divide, we disaggregate the measure and explore the impact of an emphasis on omnichannel and online fulfillment offerings to help alleviate the impact of the digital divide for the following vulnerable consumer populations: those who are in poverty, those who are over 25 and have less than a high school education, those 65 and older, and individuals with a disability. Our results show that while these vulnerable populations can be aided by carefully selecting which omni or online fulfillment offerings are available to consumers, not all fulfillment offerings are effective.

Problems and Countermeasures of Industrial Land Transformation from the Perspective of Transaction Costs

Problems and Countermeasures of Industrial Land Transformation from the Perspective of Transaction Costs

Applying a transaction cost perspective to decode viking Scandinavia's earliest recorded value relation: insights from the forsa ring’s runic inscription

ABSTRACT This article reevaluates the inscription of the Viking-era Forsa Ring, which contains Scandinavia’s oldest extant legal codex. The inscription’s fine reads ‘uksa … auk aura tua’, previously translated as ‘ox … and two öre [silver]’ and interpreted as a payment of both ox and silver, suggesting cumbersome transactions. This study applies a transaction cost perspective and draws on economic, legal and etymological contexts to propose that the fine could be paid with either an ox or two öre silver, not mandatorily both. This reinterpretation positions the Forsa Ring as Scandinavia's earliest documented instance of a value relation. The value of an ox at two öre of silver corresponds to the valuation of an ox at 30 pence in Anglo-Saxon Laws during the same period.

The Impact of the Governance Fragmentation of Forestry Communities on the Economic Performance of State-Owned Forest Enterprises in Northeast China: An Empirical Analysis Based on the Transaction Cost Perspective

The Impact of the Governance Fragmentation of Forestry Communities on the Economic Performance of State-Owned Forest Enterprises in Northeast China: An Empirical Analysis Based on the Transaction Cost Perspective

The delegation of discretionary power in international agreements: New comparative evidence from the association of Southeast Asian Nations

Abstract According to the transaction-costs perspective on delegation, decision-makers grant more discretion to implementers in relation to policies that are more complex and therefore require more specialist expertise to implement. Furthermore, decision-makers grant less delegation to implementers when those implementers have divergent preferences and are therefore more costly to monitor. The transaction-costs perspective has implications for the design of international agreements, such as those adopted by the European Union (EU) and the Association of Southeast Asian Nations (ASEAN). While delegation in the EU has been the subject of systematic research, delegation in ASEAN has not. We argue that ASEAN offers a particularly hard test of the transaction-costs perspective, especially in relation to its propositions concerning implementers’ policy preferences. Notwithstanding the unique characteristics of ASEAN, the evidence provides strong support for the transaction-costs perspective both in terms of specialist expertise and implementers’ preferences. The new dataset we examine includes information on more than 8,500 major provisions within the 235 legal instruments adopted by ASEAN since 1967.

The impact of blockchain on Brazilian public procurement processes from the perspective of transaction costs: scenarios as perceived by experts

Purpose This paper aims to explore the impacts of a blockchain network implementation to support purchasing processes of a Brazilian public organization. Design/methodology/approach The Grumbach method was used to build the scenarios. Five experts with knowledge in blockchain and experience in public procurement were consulted on 20 possible preliminary events, defining their probability of occurrence and relevance. The data obtained were processed in Puma software, which returned a selection of ten definitive events, based on probability, relevance and standard deviation indicators, generating a map of prospective scenarios. Findings Three following scenarios are shown, the ideal scenario, the one with greater implantation benefits and fewer complications; the trend scenario, more likely to occur under current conditions; and the most likely scenario of occurrence, according to experts. The results indicated which simulated events are drivers (motives), and which are influenced (dependent). They were categorized as opportunities or threats to the deployment of the technology. Research limitations/implications Although public procurement processes are standardized by Brazilian legislation, new events may arise from the replication of the model in different organizations. The research revealed the need for practical testing in a simulated public procurement environment. Originality/value The article explores the interaction between disruptive network technology and processes linked to public sector efficiency. Studies on electronic government point to the future of public management.

How does digital transformation promote supply chain diversification? From the perspective of supply chain transaction costs

Companies must implement digital transformation to achieve supply chain diversification with the current volatile economic conditions, which is crucial for their survival and as a fundamental measure to ensure industrial supply chain resilience and security. Based on A-listed companies, this paper systematically examines the impact of digital transformation on supply chain diversification, exploring the underlying mechanism of this effect from the transaction cost perspective. This paper reveals that digital transformation can significantly promote upstream suppliers, downstream customers, and the whole supply chain diversification. This impact operates mainly through the reduction effects of supply and demand coordination and inventory transportation costs.

Bridging the gap: state-of-the-art on vertical integration

Purpose This paper aims to present the vertical integration state-of-the-art and propose an expansion of the operations and supply chain management (OSCM) field by identifying gaps and bottlenecks. Design/methodology/approach This paper uses a systematic literature review based on a sample of 173 OSCM field articles, collected from Scopus and Web of Science databases. Findings There are no single factors, such as future costs, structures or skills development, in the decision to vertically integrate operations. It is necessary to combine the vision of production costs with the perspective of governance and transaction costs. In addition, it is essential to consider the competency perspective and its impact on capability building. Research limitations/implications Few studies have attempted to understand how vertical integration is used in terms of OSCM research themes and theories. Vertical integration can help companies face challenges and serve as a potential solution for achieving better prices, demand control and quality management. Practical implications The significant role of vertical integration mechanisms in supply chains is crucial for managers evaluating a firm's reconfiguration with more vertical operations. Policymakers interested in supporting the smoothness of vertical integration decisions in regulatory agencies play a key role as contingencies. Social implications In times of global challenges, vertical integration is a strategy known to be more effective for firms to obtain a competitive advantage, making them more resilient. Originality/value This paper addresses gaps in the vertical integration theme and provides insights for future research development.

Digital financial inclusion, resident consumption, and urban carbon emissions in China: A transaction cost perspective

Using data from 283 Chinese cities from 2011 to 2018, this study empirically investigates the impact of digital financial inclusion on urban carbon emissions. We conclude that digital financial inclusion significantly promotes urban carbon emissions. Moreover, as urban carbon emissions increase, the marginal effect first grows and then dwindles. A further investigation shows that digital financial inclusion significantly promotes urban carbon emissions by increasing resident consumption. Finally, we find that the impact of digital financial inclusion on urban carbon emissions is heterogeneous in terms of city size, city rank, and the commercial credit environment. In addition, digital financial inclusion has spillover effects on urban carbon emissions. It delivers positive effects on the local city while imposing significant suppressing effects on carbon emissions in neighbouring cities. The reason possibly is that digital financial inclusion in China is still in its early stage and it delivers ‘polarization effects’.

Supplier concentration and firm risk-taking: Transaction cost perspective

This study examines whether and how supplier concentration affects firm risk-taking. While the literature mostly focuses on customer concentration and firm risk-taking, it overlooks the role of suppliers. Based on a sample of Chinese listed firms from 2007 to 2020, we fill this gap by demonstrating that supplier concentration significantly increases firm risk-taking. Our findings remain robust to alternative measurement and endogeneity tests. Regarding the underlying channel, high inventory management efficiency (i.e., low transaction costs) amplifies the positive effect of supplier concentration on firm risk-taking. Additionally, this positive effect is more pronounced in industries more inclined to efficient business operations, specifically those with higher participation in Global Value Chains and with lower market monopoly power. Collectively, our results suggest that the hypothesis from the transaction cost perspective well explains the positive effect of supplier concentration on firm risk-taking.

Shifts in local governments’ corporatization intensity: evidence from German cities

Abstract Why do local governments create and reform public service companies, given their uncertain economic benefits and potential damage to accountability and service transparency? Taking an extended transaction cost perspective, we argue that corporatization—the provision of public services by publicly owned companies—is a function of fiscal hardship, the decision maker’s economic orientation and the level of operator transparency. Using a two-way fixed effects regression, we test this expectation on 680 investment reports of 34 German cities from 1998 to 2017, representing 11,062 year-corporatized entity combinations. We show that the drivers of corporatization are sensitive to the depth of local ownership analyzed. In doing so, we highlight the theoretical need and potential for conceptual differentiation between ownership levels along a corporation’s lineage. Exploiting the data’s panel structure, we also find that the intensity of corporatization has heightened since the late 1990s, largely due to increasingly complex corporate structures of indirect ownership.

Exploring China's Food Safety Problems and Solution from the Perspective of Transaction Costs: Taking the Incident of Earth Pit Pickled Cabbage as an Example

Exploring China's Food Safety Problems and Solution from the Perspective of Transaction Costs: Taking the Incident of Earth Pit Pickled Cabbage as an Example

Influence of Host Governance and Investment Environment on MNCs' Innovative Partnership Strategies: Insights From the Transaction Cost Perspective and a Behavioral Theory of the Firm

Influence of Host Governance and Investment Environment on MNCs' Innovative Partnership Strategies: Insights From the Transaction Cost Perspective and a Behavioral Theory of the Firm

Correction to “A Transaction Cost Perspective of Alliance Portfolio Diversity”

Correction to “A Transaction Cost Perspective of Alliance Portfolio Diversity”

Sharing Economy Practices in Changing Business Environment: Transaction Cost, Resource-Linking, and Hypercompetition Perspectives

Digital business is a phenomenon that is closely related to sharing economy business in pursuit of new entrepreneurial opportunities in Indonesia. This article aims to analyze the changing business environment because of the disruption from sharing economy practices, as well as analyze the competitive dynamics between the disruptors. The results show that sharing economy practices can change the business environment through differences in transaction costs within the cost structure and by capturing opportunities beyond the existing market through resource-linking strategies. The comparison study of Go-Jek, Grab, and Uber shows that the growth trajectory of sharing economy startups can be triggered by hypercompetition among them as the market leader.

On the nature and structure of externalities

AbstractThis paper contributes to the literature on externalities and their classification by reconciling insights from transaction costs theory with James Buchanan’s and Elinor Ostrom’s analyses of property rights and institutional diversity. We critique the dominant Pigouvian analysis, which assumes only two forms of institutions—namely, governments and private markets—that can internalize externalities. We develop a new taxonomy of externalities that provides relevant conceptual space for a wide array of institutions that the market-versus-state dichotomy obscures. The proposed taxonomy considers two key classes of often-conflated attributes: (1) the scale of externalities, and (2) the assignability, enforceability, and tradability of property rights. This approach enriches the Coasean (transaction cost) perspective by allowing us to unbundle transaction costs in a manner that extends its applicability to nonmarket situations in which market-based transactions are either not permitted or technically infeasible. Thus, by integrating insights from two distinct Public Choice schools, we broaden the theory of externalities to not only encompass market exchanges but also to incorporate cases in which property rights are, and will remain, unclear. We conclude that institutional diversity can offer adaptable solutions to tackle medium- and large-scale externalities.

Blockchain technology in pharmaceutical supply chains: a transaction cost perspective

PurposeAdopting new technologies to improve supply chain activities and processes is essential due to increasingly complex and dynamic business environments. Particularly in the pharmaceutical industry, high-quality standards must be met, requiring transparency and visibility in the supply chain. This research aims at investigating the implementation of blockchain technology in the supply chain of an Egyptian pharmaceutical company.Design/methodology/approachThe research applies a single case-study approach building on the theoretical underpinnings of transaction cost economics. Twenty-five semistructured interviews were conducted with pharmacies and employees of the case company to identify the blockchain technologies' potential for pharmaceutical supply in Egypt. Further analyzing the frequencies of the codes, the authors elaborate on specific relationships between the observed practices.FindingsThe research revealed the potential benefits of adopting blockchain technology. Transaction costs are indeed positively impacted by reduced contracting costs, processing costs and lead times, also ensuring the safe delivery of medications. However, the findings also highlight obstacles related to running costs, awareness and company culture. Regarding supply chain governance, blockchain technology can enhance collaboration within the supply chain as well as with important stakeholders.Practical implicationsInsufficient management of pharmaceutical supply chains (PSC) may affect a company's reputation but also disrupt the patient's healing process due to temperature damage and counterfeit medicines. Blockchain governance, in this vein, can ensure a safer and more reliable supply of pharmaceutical products. For intraorganizational purposes, however, cloud solutions, barcoding and generally digital platforms are rated more frequently than blockchain solutions.Originality/valueThe present study contributes to an advanced understanding how blockchain technology supports PSC, particularly in an emerging country context like Egypt. It thereby confirms and extends previous research as well as adds to the theoretical underpinnings of digitalized supply chains.

Competition and Local Government's Choice Between Informal and Formal Collaborative Mechanisms: Measuring Dyadic Intercity Competition Through the Lens of Business Trade-Offs

Informal and formal collaborative mechanisms are distinctive self-governing strategies that local governments use to mitigate intergovernmental collaboration risks. Studies on local governance have long argued that both mechanisms tend to co-occur and appear mutually complementary. However, extant research drawing on the transaction cost perspective provides a more nuanced and different explanation that as intergovernmental competition increases, local governments lean toward the choice of a formal mechanism over an informal mechanism to effectively address higher collaboration risks. Through a network lens, this study empirically tests the latter view. Using the Orlando metropolitan area as a testbed, Multiple Regression Quadratic Assignment Procedure tests reveal that the use of both collaborative mechanisms is positively associated with the level of intergovernmental competition. However, different from the initial expectation, local governments are more likely to engage in the informal mechanism rather than the formal mechanism as the competition level increases. In doing so, this study developed a new measurement strategy for intergovernmental competition to test the dyadic network-related research hypotheses. The measurement strategy and the research findings should inform future research on intergovernmental relations and local government network management.