Signifying Williamson's Contribution to the Transaction Cost Approach: An Agent‐Based Simulation of Coasean Transaction Costs and Specialization

This article simulates Ronald Coase's transaction cost approach to firm organizing using agent‐based modelling, and contextualizes and contrasts it with a division‐of‐labour/specialization view of the firm that Coase challenged and sought to replace. The simulation tests the firm formation process based on the different implications of transaction costs and specialization as drivers of integration, focusing especially on Coase's rejection of specialization as an explanation for integration in the firm. The results show little support for, and suggest an important shortcoming to, Coase's transaction cost theory. My findings thereby indicate a potential relationship between the specialization theory and Williamson's Transaction Cost Economics, especially the latter's emphasis on co‐specialization through relationship‐specific investments, which helps shed light on TCE's significant influence in the theory of the firm literature.     

A Capabilities Perspective on the Evolution of Firm Boundaries: A Comparative Case Example from the Portuguese Moulds Industry*

ABSTRACT The issue of vertical firm boundaries continues to attract interest both for economics and management research. The transaction cost economics approach, emphasizing transaction‐specific assets and opportunism in order to explain discrete ‘make‐or‐buy’ decisions, dominates the literature. Nevertheless, alternative perspectives, developed under the guise of the capabilities, competence or knowledge‐based theories of the firm, have gained attention recently. They focus on the evolutionary dynamics of boundaries in the context of the division of labour among firms in an industry and on what is to be divided and co‐ordinated – i.e. productive knowledge. The conceptual links between this line of research, which some refer to as neo‐Marshallian, and the Industrial Networks approach are explored in this paper. The paper emphasizes both a vision of firms as sets of direct and indirect capabilities, developed and combined in different ways over time, and the connectedness between inter‐firm relationships. The discussion is illustrated with the cases of two firms, which are contrasted in terms of the dynamic evolution of their boundaries. The analysis made supports the argument that firms’ vertical boundaries reflect their relationships with specific counterparts and the way they address through time the division and integration of knowledge through the configuration of direct and indirect, counterpart specific, capabilities.     

The theory of the marketing firm

The theory of the marketing firm locates the rationale of the modern business enterprise that lies in its responding profitably to the imperatives of marketing orientation. Economic theories of the firm generally fail to recognize these imperatives, enhanced consumer choice and sophistication, which entail marketing orientation as the rationale of the firm. The paper propose a competence theory of the firm as a metacontingency and examines the bilateral contingencies by which firms link to their consumerates, which indicate their capacities for customer orientation. The marketing firm emerges as a means of encapsulating entrepreneurship, economizing on transaction costs, and enabling the management of marketing specialization.     

Why a Multinational Firm Chooses Expatriates: Integrating Resource‐Based,Agency and Transaction Costs Perspectives*

abstract This paper develops an integrative organizational economics framework explaining and predicting multinational firms' managerial resource deployments based on resource‐based, agency, and transaction costs theories. Our empirical findings suggest that the governance decision for managerial services of multinational firms is influenced not only by the comparative capabilities of managers, but also by the economic costs to the firm of influencing the behaviours of managers through managerial contracting.     

Open standards,vertical disintegration and entrepreneurial opportunities: How vertically-specialized firms entered the U.S. semiconductor industry

This paper shows how the emergence of open standards has created large numbers of entrepreneurial opportunities in the semiconductor industry by enabling vertical specialization. Integrating data on firms and technology evolution, we find a gradual increase in the percentage of firms represented by newly-founded “de novo” entrepreneurial startups, instead of “de alio” ones, as open standards emerged in semiconductor products and processes over the life of the industry. This standardization reduced transaction costs and fostered specialization, thus facilitating the entry of vertically-specialized new ventures. Vise versa, the rise of such new ventures further pushed the adoption of open standards, and the vertical disintegration of the industry. Our theory on how standardization creates opportunities for new ventures and our analysis of the semiconductor industry contribute to the technology entrepreneurship literature, as well as the industry architecture literature that has primarily focused on the impact of standardization on the disintegration of vertically-integrated incumbents.     

A Transaction Cost Perspective of Alliance Portfolio Diversity

Alliance portfolio diversity (APD) helps firms access diverse capabilities and knowledge. APD can also increase transaction costs, but it is unknown whether and how transaction cost theory’s (TCT’s) insights about hierarchical integration operate at the portfolio level. We adapt TCT to the portfolio level to suggest that the transaction costs from APD encourage integration into alliance partners’ industries, and we introduce the concept of shared-specific investments to pinpoint one source of transaction costs within portfolios and predict which industries will be integrated. Using data from 1996–2013 on S&P 500 firms, we find evidence in support of our theorising. Juxtaposing results with other theoretical perspectives suggests that TCT offers complementary insights about which activities to perform in the firm versus the alliance portfolio.     

External corporate venturing modes as new way to develop dynamic capabilities

Today, firms encounter scarce resources and rapid technology change which render formerly successful business models obsolete. Research shows that some firms perform better than others in continuously discovering, evaluating, and exploiting opportunities in volatile environments and that this is dependent on firm’s dynamic capabilities. Besides obtaining dynamic capabilities through internal R&D activities, firms have open up their innovation process to pursue dynamic capabilities outside their organizational boundaries through external corporate venturing by accessing startup's technological capabilities necessary to innovate. External corporate venturing is a means to develop new distinctive capabilities and businesses by exploring and exploiting business opportunities outside a firm’s existing boundaries. Drawing on the dynamic capability literature, we use a multiple case study approach to examine the contribution of external corporate venturing to firms’ dynamic capabilities. Our results reveal that firms indeed use corporate venturing to identify and exploit startup’s technological knowledge and competencies to increase firm’s dynamic capabilities. But our empirical data also shows that not every firm is fully profiting from all dynamic capability phases as their corporate venturing modes are not linked with each other and cumulative effects are not realized.     

Emergenz organisationaler Fähigkeiten

The capabilities based view of the firm is a major approach in current strategic management research. It focuses on organizational capabilities as the fundamental unit of analysis and states that firms evolve through evolutionary processes. What organizational capabilities are and how they emerge and evolve are central research questions. Existing research focuses only on partial aspects of the emergence of organizational capabilities. Hence, an integrative framework to address these issues is missing. This contribution aims at developing such an integrative framework by a critical review of existing research. Different perspectives are combined to explain the emergence and evolution of organizational capabilities while focusing on a lifecycle model. This contribution starts with an explanation and a taxonomy of pivotal terms of the capabilities based view. Different ways of the emergence and the development of organizational competencies and their relationships will be systematically explained by examining theoretical backgrounds of evolutionary economics and path dependency theory. This contribution ends with a summary and discusses future research streams.     

分工、交易效率与双边市场的形成

基于分工和交易费用两难冲突,运用新兴古典经济学理论,解释了双边市场形成和演进的根本原因。双边市场是一种特殊的中间平台;它是交易效率改进到一定程度导致的专业化水平提高和分工深化的结果。双边市场的出现和发展也预示着市场经济演进到了更高的层次。     

公司创业导向、能力、战略与竞争优势的关系研究

旨在分析创业导向对于企业竞争优势的影响机制,重点进行公司创业、企业能力、竞争战略、竞争优势等相关理论的探究和模型的构建,并在理论分析的基础上提出若干命题。分析表明,创业导向通过企业能力和竞争战略内外两条互为补充的路径,实现竞争优势。不仅丰富了公司创业和战略管理理论研究,还为企业如何在动态、复杂、不确定的全球环境中生存和发展提供借鉴和指导。     

Sustainability‐oriented capabilities for eco‐innovation: Meeting the regulatory,technology, and market demands

Despite consensus in the literature that regulation, technology push, and market pull drive eco‐innovation (EI), evidence remains limited on the diverse firm capabilities needed to boost EI. Building on the natural‐resource‐based view of the firm and the EI literature, this paper posits that firms need to renew and realign their capabilities, and ultimately develop distinctive sustainability‐oriented capabilities, in order to meet the rapidly changing regulatory, technology, and market demands. Results of the analysis, based on a survey of U.K. firms, reveal that EIs are more likely to arise when firms (a) build capabilities on voluntary self‐regulation (i.e., executive driven environmental management system and corporate social responsibility) because such organizational capabilities allow them to address increasing regulatory pressures; (b) invest in environmental research and development (i.e., eco‐R&D)—instead of generic research and development—because it provides them with the relevant and specific technological capabilities to tackle technology shifts towards sustainability; and (c) develop capabilities in green market sensing as such capabilities allow them to address green consumption needs.     

The importance of client heterogeneity in predicting make-or-buy decisions

Scholars have begun to merge the transaction cost economics and capabilities perspectives to examine outsourcing decisions. Further integrating these perspectives with intermediation theory, we assert that a firm's decision to use an intermediary when entering a foreign market is largely a function of the intermediary's relative capabilities and relative transaction costs (i.e., relative advantage). We hypothesize that the intermediary's relative advantage is influenced by three significantly intertwined exchange conditions: client heterogeneity, intermediary risk, and firm learning. Using a sample of 929 new foreign market initiatives by a global consulting firm, our results support our theory.     

An Equilibrium Model Endogenizing the Emergence of a Dual Structure between the Urban and Rural Sectors

This paper presents a general equilibrium model which formalizes the trade-off between economies of specialization and transaction costs. The comparative statics, based on corner solutions, indicate that the general equilibrium will shift between several market structures as transaction efficiency is improved. Introducing a differential in transaction efficiency between the agricultural and manufacturing sectors, we derive the emergence of a city from the evolution of the division of labor, which is driven by improvements in transaction efficiency. The division of labor is necessary but not sufficient for the emergence of cities. A sufficiently high transaction efficiency will make a city emerge from a high level of division of labor between specialized manufacturers.     

From original equipment manufacturing to branding: entrepreneurship,strategic leadership,and Taiwan’s firm transformation

This paper investigates firm transformation from original equipment manufacturing (OEM) to original brand manufacturing (OBM) based on variant experiences of Taiwan’s top global brands. Taking the competitive advantage of practicing OEM for multinational corporations (MNCs), latecomer firms can generate capital and accumulate capabilities by engaging with the global production network. Rarely does every firm transform into a global enterprise. We propose that only entrepreneurs with strategic leadership competence, which serves to manage a delicate balance between stability and change in a firm, are capable to facilitate firm transformation from OEM to a global enterprise practicing OBM. We provide an analytical framework that combines the research fields of entrepreneurship, strategic management, and leadership to analyze firm growth and firm transformation of Taiwanese firms. In light of possible branding dilemma when straddling dual-track businesses, successful transforming firms can alleviate this problem either by separating their OBM units from their OEM units or by creating a symbiotic relationship with their MNC customers. How Taiwanese firms first took advantage of initiating OEM to create capital and capabilities and later transformed into OBM provide useful experiences for other latecomer firms.     

Facilitating offshoring with enterprise technologies: Reducing operational friction in the governance and production of services

The development of cheap and robust communications technologies has lowered the cost of conducting business transactions across international boarders and opened up low wage rate global labor markets to firms facing demand for cheap and efficient service delivery. A review of transaction cost theory and operations management models of service process disaggregation reveals parallels between the how firm boundaries are determined and how certain service process elements can be disaggregated from face-to-face customer contact. This theoretical background is used to identify challenges to the effective offshoring of service processes. The competitive capability literature offers suggestions as to how firms might acquire the internal capabilities required to manage offshore service processes. Propositions are developed on how the standardized transactional infrastructure of enterprise technologies (and the organizational competencies developed by successful enterprise system adopters) may help mitigate the challenges of offshore governance.     

Does corporate environmental responsibility engagement affect firm value? The mediating role of corporate innovation

This paper aims to construct a comprehensive corporate environmental responsibility (CER) engagement measurement to examine the relationship between CER engagement and firm value as well as explore the mediating effect of corporate innovation on this relationship based on a sample of 496 China's A‐share listed companies from 2008 to 2016. The results show that when firms start to adopt environmental regulations, CER would have a negative effect on firm value; however, at a specific level, CER would start to enhance firm value positively. In addition to this, corporate innovation plays a mediating role in the relationship between CER and firm value. Corporate innovation promotes firm value of firms with CER more than firms without CER. Overall, the findings of this paper are extremely relevant for the government, investors, and firm's managers and can be utilized for policy and investment decision making. Also, the findings encourage firms to enhance their sense of environmental responsibility in order to enhance their competitive advantages, enhance corporate innovation capabilities, and thus enhance firm value.     

Capability-based governance patterns over the product life-cycle: an agent-based model

In recent literature, there is disagreement over the temporal pattern of vertical governance of firms over the product life-cycle. We use a novel neo-Schumpeterian agent-based simulation model to investigate emerging patterns of vertical governance for different levels of imitability and substitutability of capabilities. We find that, in the mature phase of the product life-cycle, firms generally prefer vertical specialization. However, in the early phase, imitability and substitutability, in interplay, determine the governance form preferred. High imitability frustrates appropriation and thereby discourages integration for synergistic advantages. However, firms need not vertically specialize: under low substitutability, incompatibilities reduce the advantages of specialization. When both substitutability and imitability are low, firms can appropriate the value of their inventions and there is no combinatorial advantage of specialization, so firms predominantly integrate. If substitutability is high and imitability is low, the combinatorial advantage of specialization balances with the synergistic advantage of integration.     

Location,Proximity, and M&A Transactions

In this paper, we examine how the geographic location of firms affects acquisition decisions and value creation for acquirers in takeover transactions. We find that firms located in an urban area are more likely to receive a takeover bid and complete a takeover transaction as a target than firms located in rural areas, and takeover deals involving an urban target are associated with higher acquirer announcement returns, after controlling for the proximity between the target and the acquirer. In addition, a target's urban location significantly attenuates the negative effect of a long distance between the target and the acquirer on acquirer returns, a fact that is documented in the existing literature. Our findings reveal a previously underexplored force—firm location—that can affect takeover transactions, in addition to proximity. Our paper suggests that a firm's location plays an important role in facilitating the dissemination of soft information and enhancing information‐based synergies.     

以知识为基础的企业理论的产生及其演进过程

以知识为基础的企业理论的理论渊源在于对企业竞争优势内生的考察,并依次经历资源决定论、能力决定论的理论演进过程,它强调企业竞争优势源于企业的默会知识。这一观点不仅对解释和预期企业行为提供了核心概念,而且对指导企业提升竞争优势的实践具有管理学意义。