Transaction Cost Economics

... As the global trend towards the restructuring of the telecommunications industry took hold in the ... The crude but oft-cited yardstick of international effi-ciency within telecommunications firms based on ... the 8 districts, with contracts negotiated by a new central outsourcing function. ...

Ensaio publicado originalmente em 1992 na Revista Conjuntura Econômica da FGV  explora alguns insights do artigo The Natureza da Firm de Ronald  Coase na fundamentação econômicas das "novas" velhas  formas  de organização da produção em clusters e redes e,  que veio, depois a ser formalizado por Williamson. 

Este ensaio, até que se prove o contrário é o primeiro escrito no Brasil sobre a temática no Brasil.

In this paper, we empirically investigate the determinants of the governance form of strategic alliances. We use a database with 1,344 worldwide alliances in several industrial sectors. In contrast with previous empirical studies, we find that alliances undertaking R&D activities are more likely to use loose forms of organization (contractual agreements) than more hierarchical ones (joint ventures), and this result is even stronger when the alliance takes place in technologically sophisticated sectors. Moreover, we show that alliances between rival firms tend also to be organized with forms closer to arm’s length transactions. When the scope of an alliance is multidimensional or the alliance is an international one, however, firms prefer more hierarchical organizations such as joint ventures.

Drawing from the resource-based view and transaction costs economics, we develop a theoretical framework to explain why small and large firms face different levels of resource access needs and resource access capabilities, which mediate the relationship between firm size and hybrid governance. Employing a sample of 317 venture capital firms, drawn across six European countries, we empirically assess our framework in the context of venture capital syndication. We estimate a path model using structural equation modeling and find, consistent with our theoretical framework, mediating effects of different types of resource access needs and resource access capabilities between VC firm size and syndication frequency. These findings advance the small business literature by highlighting the trade-offs that size imposes on firms that seek to manage their access to external resources through hybrid governance strategies.

This paper applies the transaction cost framework to the organisation of product sourcing and development (PS&D) activities within the popular music industry. Two firm types characterise the industry and this particular set of activities; large multinational firms (`majors') and smaller regionally bound companies (`independents'). We find that the Transaction CostEconomies framework of Oliver Williamson (1985, 1999) provides only a partial explanation for the observed hybrid organisational structures established by the two firm types. A more sensitive model can be achieved by including a number of moderating variables drawn from the socially constructed and situationally dependent idiosyncrasies of the assets involved in the PS&D activities under consideration.

The UK Government challenged construction to achieve 50% faster delivery and a 33% reduction of clients' capital costs by 2025 – prevailing business models won't meet these targets. Eliminating waste from construction design and delivery as advocated by lean ideals is therefore a necessary step towards these goals. However, waste understood simply as the improvement of current processes rather than fundamental system redesign will not be enough. Obtaining a better understanding and conceptualisation of waste in construction is therefore becoming more crucial. One aspect of this is to challenge the apparent coherence of prevailing procurement practices generated by the institutional, organisational, and commercial environments that surround the design and delivery of construction projects. This paper contributes to this by examining Tier 1 contractors and presents examples of practices that open debate on how to challenge prevailing procurement models for construction. Through literature review and interviews, the study discusses the factors influencing the 'Principal-Agent' relationship demonstrating how procurement arrangements often mirror institutional forces. These forces do not necessarily guarantee better value services, they are more likely to serve the interests of large industry players with the bargaining power to create new rules (North, 1994). A radically different delivery model, where the client intends to eliminate the management fees and confrontational behaviours of their Tier 1 contractors is described.

An economic signalling model contributing to the explanation of religious schism is presented. Religious groups are interpreted as a device for exchanging information about and via others. Two effects result. First, the larger the network, the worse the signal quality one receives of the type of other members. Second, the larger a network, the more potentially valuable information is available.

A linear probability model (LPM) analysis of seller decisions selling cassava on-farm (farm-gate) or off-farm
(market) was derived and estimated consistent with a sample 216 farm households. Variables of proportional
transaction costs have different effects on off-farm and on-farm market participation decisions. The seller type
decision revealed that coefficients for have a personal means of transport, road conditions to the nearest town and
marketing experience were positive and significantly related to increase in off-farm cassava sellers at 5% level of
probability. The coefficient for distance from the house to the farm was negatively and significantly related to
increase in farmers selling off-farm at 1% level of probability. The coefficients for crop transportation costs,
distance to the nearest town, distance from the house to the farm and yield were negative and significant at 5% level
of probability. These decisions to participate as an off-farm or on-farm seller were as a result of proportional
transaction costs associated with participating in the market. It was found that unexpected transaction costs inhibit
farm households from selling off-farm. The results therefore calls for policies aimed at infrastructural development
especially on roads and establishment of bulking centers to mitigate transportation costs.

An economic signalling model contributing to the explanation of religious schism is presented. Religious groups are interpreted as a device for exchanging information about and via others. Two effects result. First, the larger the network, the worse the signal quality one receives of the type of other members. Second, the larger a network, the more potentially valuable information is available.

Abstract Over the last decade, Brazil has pioneered an innovative model of branchless banking, known as correspondent banking, involving distribution partnership between banks, several kinds of retailers and a variety of other participants, which have allowed an unprecedented growth in bank outreach and became a reference worldwide. However, despite the extensive number of studies recently developed focusing on Brazilian branchless banking, there exists a clear research gap in the literature. It is still necessary ...

The production of desserts and fruit jellies is a traditional agribusiness activity in the south of Brazil, especially in Pelotas, Rio Grande do Sul. However, the Brazilian commercial opening that was processed in the beginning of the 1990’ years, it influenced negatively this segment, mainly in relation to the peach. This resulted in a new roll of conditions that culminated

This paper reports on and interprets the results of a survey of visitors to the Jourama Falls Section of the Paluma Range National Park located in Northern Queensland. It reports, amongst other things, on how much knowledge visitors to the site had about it before their visit, the procedures they adopted in deciding to visit it and how generally they go about deciding to visit tourist sites when on holidays. The results are consistent with those predicted by theories of bounded rationality and behavioural economics. Information is also provided on the value visitors placed on attractions at the Jourama Falls sites, their attitudes to the private supply of tourist/visitor services and facilities in national parks, the importance of wildlife as an attraction to visitors at this site and their knowledge of it. In addition, the attitudes of visitors to facilities, camping procedures, environmental issues and activities at this site are assessed as well as the acceptability to respondents of an entrance fee. A halo, proximity or local existence effect was observed in relation to wildlife present at Jourama Falls but not visible.

Modern understanding of the corporation as an integrated system driven by a common goal of profit maximization has brought both economic theory and management practices to a deadlock. Incorrect understanding of the modern corporation’s core, as well as inability to adequately assess them, became one of the causes of the global economic crisis.  One of the promising “reanimation” options of the modern firm theory is the institutional approach. However, this approach is in dire need of measurable operational criteria and indicators that would tie business practices together with their basic theoretical categories: institute, contract, and transaction costs.

The scope of this paper is to offer and demonstrate the possibilities of testing methodology for assessing the corporation as an institutional unit of an economic system. To do so, we propose a new approach in the assessment of institutional compliance of the corporations with the expectations of their major subjects.  It is based on estimating the distribution of the gross added value between the subjects.  Moreover, the technique of assessing the level of transaction costs in corporations, based on data accounting, is proposed.  The methods were tested on examples of real Russian metallurgical industry corporations as reported between 2003 and 2012.  The presence of a statistically significant negative connection between the share of value added revenue and level of transaction costs, as well as between the share of value added at the owners disposal and the transaction costs level, was established.  The presence of a statistically significant positive connection between the level of transaction costs and share of value added, at the disposal of workers, was established.

In this article, we identify success factors for managing small and intensive purchasing groups by comparing successful and unsuccessful Dutch purchasing groups in a large-scale survey. Transaction costs economics and social exchange theory are used as theoretical frameworks for our broad empirical investigation. We found that the success factors studied that are related to interorganizational trust, the formality of the group, and uniformity of the group members are not success factors for managing purchasing groups. For our data set, the most important success factors are no enforced participation, sufficient total contribution of efforts, all members contribute knowledge, all members rarely change representatives, fair allocation of savings, and communication. We discuss the academic and practical implications of the success factors found. Educator & practitioner summary In this article, we identify success factors for managing small and intensive purchasing groups. The most impo...

This paper draws on the pioneering studies of orality by Walter J. Ong, and the work of Ronald Coase and Oliver Williamson on transaction costs, to develop both a theoretical framework and practical tools for overcoming the failure of rural financial markets through cooperative and other village-based institutions.

Um dos principais objetivos das organizações é a redução dos seus custos de transação,considerando a governança adotada. A partir de estudo de caso com uso de dados primários e análise de documentos, analisou-se a governança adotada por uma usina paulista de gestão
familiar no segmento sucroenergético, fundamentados na abordagem holística de Bogetoft e Olesen (2002, 2004). Concluiu-se que a adoção de formas híbridas de governança e de coordenação de parcerias agrícolas no caso selecionado, configura-se como uma forma
pioneira de governança no setor sucroenergético para a eficiência econômica entre os atores sociais.

Previous empirical research has supported the predictions derived from transaction cost economics that asset specificity, uncertainty, frequency and complexity entail vertical integration (David and Han 2004). The underlying assumption is that integration creates the most efficient organizational formation. Given this assumption from transaction cost theory integration caused by market failures due to asset specificity lead to efficiency. This test focus on the ability of the principal company to control opportunism and to reduce transaction costs through vertical control. Therefore, the empirical question raised here is whether dimensions of costs can be contract related. Contract related transaction costs unlike production costs are associated to the incentives defined by the contract. This problem has barely been studied in previous empirical analysis. However, the theoretical question makes it crucial to explore a homogeneous setting like a plural formed franchise system where third variables also including asset specificity can be kept relatively constant.  My intention, therefore, is not to test traditional hypotheses derived from transaction cost theory, but to explore dimensions of transaction costs and to test the prediction from the theory that costs associated to the bilateral exchange are related to the incentive system given by the contract. The test reveals how transaction costs are related to aspects of the bilateral contract. The bilateral contract is dimensionalized into structural variables like centralization and formalization and a variable describing the interactive process. The empirical setting is an oil company (Shell) and its plural formed franchise system in the Norwegian gasoline market, representing standardized technology and products, and trademark specific assets equally distributed among dealers. Both dyadic and unilateral data are used to test the hypotheses. The results point out the importance of formal rules and procedures and the scope and magnitude of interactions as efficient instruments of bilateral contracting.  Centralization, though, is related to both control costs and free-riding costs.

Measurement quality is a fundamental factor in determining the cost of transactions within organizations and markets. A huge gulf separates the meaningfulness and precision of business metrics as currently achieved from the quality that has been routinely obtained for decades in research and in limited commercial applications. The transformation of ordinal, instrument-dependent, and nonlinear test, survey, and assessment scores into interval, invariant, and linear measures stands as a major technical achievement of the last 80 years. Unfortunately, few in business or economics are aware of these advances or their implications for the efficiencies of markets for intangible assets. This essay links the state of the art in measurement theory and practice to recent work (a) integrating human, social, and natural capital into a comprehensive economic framework, (b) presenting the pursuit of perfection as the ideal of lean production, (c) on the ethics of transparent representation, and (d) describing the co-production of social orders across scientific, economic, and political domains. The essay concludes with a brief listing of the advantages of improved measurement, how they might contribute to the establishment of an Intangible Assets Metric System, and the need to harness the energy of the profit motive as the driver for the re-invention of capitalism as a system that rewards value for life.