An empirical examination of transaction‐ and firm‐level influences on the vertical boundaries of the firm

A large literature has successfully employed transaction cost economic theory to describe how exchange conditions affect the optimal form of organization. However, this approach has historically not accounted for the influence of firm‐specific attributes on the governance decision. This paper develops a model based on insights from transaction cost economics, the resource‐based view, and real options theory to examine how transaction‐level characteristics, firm‐specific capabilities, and product‐market scope influence the governance of production. Empirical evidence derived from analysis of 469 make‐or‐buy decisions involving 117 semiconductor firms indicates that decisions regarding the governance of production activities are strongly influenced by both transaction‐ and firm‐level effects. Copyright © 2003 John Wiley & Sons, Ltd.     

Testing alternative theories of the firm: transaction cost,knowledge-based,and measurement explanations for make-or-buy decisions in information services

Firms boundary choices have undergone careful examination in recent years, particularly in information services. While transaction cost economics provides a widely tested explanation for boundary choice, more recent theoretical work advances competing knowledge-based and measurement cost explanations. Similar to transaction cost economics, these theories examine the impact of exchange attributes on the performance of markets and hierarchies as institutions of governance. These theories, however, offer alternative attributes to those suggested by transaction cost economics or offer alternative mechanisms through which similar attributes influence make–buy choices. Traditional empirical specifications of make–buy models are unable to comparatively test among these alternative theories. By developing and testing a model of comparative institutional performance rather than institutional choice, we examine the degree of support for these competing explanations of boundary choice. Hypotheses are tested using data on the governance of nine information services at 152 companies. Our results suggest that a theory of the firm and a theory of boundary choice is likely to be complex, requiring integration of transaction cost, knowledge-based, and measurement reasoning. © 1998 John Wiley & Sons, Ltd.     

从制度经济学视角解析中小企业融资难问题

中小企业是推动国民经济发展,构造市场经济主体,促进社会稳定的基础力量。特别是当前,在确保国民经济适度增长、缓解就业压力、实现科教兴国、优化经济结构等方面,均发挥着越来越重要的作用。但也应看到,融资问题已成为制约中小企业发展的最大障碍和瓶颈。基于制度经济学的研究视角,通过交易费用理论、产权理论及强制性制度变迁理论对中小企业融资难问题进行剖析。     

EXPLAINING FIRM CAPITAL STRUCTURE: THE ROLE OF AGENCY THEORY VS. TRANSACTION COST ECONOMICS

The study of capital structure has increasingly gained importance in strategic management research. Paradigms derived from organizational economics have also gained popularity in explaining firm actions. Agency theory and transaction cost economics represent two such paradigms that rely on the notion of market imperfections. Notwithstanding the similarities between them, these two offer different explanations of the role of debt and equity in a firm. The governance abilities of the financing structures and the nature of assets of the firm provide two key sources of differences. Viewing capital structure from transaction cost economics gives rise to predictions that are contradictory to those presented by agency theory. It is argued that the extant evidence mainly supports the transaction cost viewpoint. Two organizational phenomena—leveraged buyouts and product diversification—are used to highlight the comparison.     

What kind of assumptions need to be realistic and how to test them: A response to Tsang (2006)

Tsang (2006) contends that certain core assumptions of a theory, which are typically about people's behaviors or thoughts, need be realistic, because they determine the viability of the mechanism that generates a hypothesized relationship. While Tsang's (2006) article rightly emphasizes the importance of realistic assumptions, it neglects the issue that certain kinds of assumptions are necessarily unrealistic for the roles that they play in theory development and testing. Therefore, researchers should not be criticized for making unrealistic assumptions of the latter kinds. Furthermore, by deliberating on the assumptions underpinning a theory, researchers can construct theories with better explanatory power and further develop existing theories. Tsang (2006) also suggests two approaches for testing assumptions, namely, a structural model and direct inquiry approaches. Although these approaches have certain merits, they also have limitations that may render the evidence gathered unreliable under certain situations. Two alternative approaches, namely, the experimental‐causal‐chain and the moderator‐of‐process designs, address these limitations. The researcher could consider adopting these designs as well in order to improve the rigor of assumption testing. Copyright © 2010 John Wiley & Sons, Ltd.     

Sourcing practices and boundaries of the firm in the financial services industry

We investigate sourcing decisions related to the back‐office operations of 108 processes used by financial services companies. Guided by the arguments of transaction cost economics and the resource‐based and knowledge‐based view of organizations, we hypothesize that service customization and volume represent two key drivers of a service company's sourcing decisions. The inherent uncertainty of service customization gives rise to the transaction cost risks of opportunism and holdups and thus favors insourcing. Moreover, the competency gained from performing high‐volume back‐office operations aligns with the tenets of the resource‐based view, which also favors insourcing. The empirical results corroborate these theoretical expectations. Copyright © 2007 John Wiley & Sons, Ltd.     

神华集团煤炭产运销一体化运营模式分析

文章结合分工理论、运输经济学理论以及交易费用理论分别从分工演进、生产性质、交易性质等3个视角对神华集团的煤炭产运销一体化运营模式进行了分析。认为,神华集团煤炭产运销一体化运营属于一种链网组织,在我国经济发展的现阶段,神华集团的链网组织是分工演进的必然结果,并且该组织形式有效降低了生产成本和交易费用。但是,神华集团链网组织与市场之间的边界需要通过权衡内部生产成本与交易费用之和与市场交易费用之间的差异来进行界定。     

The vicarious wisdom of crowds: toward a behavioral perspective on investor reactions to acquisition announcements

Although event‐study methodology is invaluable to strategic management research, we argue that the traditional financial economic rationale on which it is based has led scholars to assume away the behavioral mechanisms underlying investor reactions. Building on behavioral theory from management, psychology, and economics, we set out to develop a behavioral perspective on investor reactions to acquisition announcements—one that relaxes the assumption of investors making objective, rational‐deductive calculations. Given the information asymmetry they face, we theorize that investors (1) infer management's perception of an acquisition's synergistic potential from the premium it pays, and (2) draw on additional public information to assess the reliability of that perception. Using a multi‐industry sample of acquisitions by North American firms, we find considerable support for our behavioral framework. Copyright © 2012 John Wiley & Sons, Ltd.     

Transaction cost implication of private branding and empirical evidence

Branding and transaction cost economics represent two research streams that rarely cross paths in the literature. In this study, I explore the transaction cost implication of private branding, a practice whereby products supplied by unaffiliated manufacturers are sold under private brands owned by retailers. The main thesis is that private branding can preempt a special case of asset specificity called brand specificity, where retailers also invest in the marketing of an outsourced product, but subsequent reputation effects (positive or negative) are specific to the manufacturer who brands the product. Retailers, thus, will not be fully motivated to optimize their investment in product marketing unless they take over the branding right. With potential barriers to private branding being controlled, data obtained from a national chain reveal that the retailer deploys its marketing resources according to the branding status of a product, implying that private branding can deflect the transaction cost of solving the brand specificity problem. The results offer new theoretical insights into branding and transaction cost analysis. This efficiency‐based approach to private branding also provides practitioners with useful guidelines for crafting a branding strategy that will facilitate cooperation between manufacturers and retailers. Copyright © 2009 John Wiley & Sons, Ltd.     

Market frictions as building blocks of an organizational economics approach to strategic management

This paper shows that market frictions are fundamental building blocks for an organizational economics approach to strategic management. Various organizational economic approaches (transaction costs, property rights, real options, and resource‐based) have distinctive focal problems and emphasize different combinations of market frictions. A wider recognition of the role of market frictions is useful for three main objectives. First, it helps identify an evolving market‐frictions paradigm in strategic management. Second, it shows how two primary questions in strategy of why firms exist and why some firms outperform others and the three primary strategic goals of cost minimization, value creation, and value capture can be better joined and evaluated. Third, different combinations of market frictions can generate new research questions and advance theory development in the strategic management field. Copyright © 2013 John Wiley & Sons, Ltd.     

Transaction costs and capability factors in dual or indirect distribution channel selection: An empirical analysis of Japanese manufacturers

This study focuses on manufacturers' selection of dual or indirect channels. Although several previous studies based on transaction cost theory investigate transaction cost factors in choosing dual or indirect channels mainly in the United States, this study examines transaction costs and capability factors for such a choice in Japan. The relationships are tested with survey data from Japanese industrial goods manufacturers (n = 429). Compared to previous studies, this study presents three important findings. First, unlike previous studies, two transaction cost factors—asset specificity and behavioral uncertainty—do not exhibit the relationships predicted by transaction cost theory. Interestingly, asset specificity is negatively related to the use of dual channels. Second, two capability factors not assessed in prior studies—market orientation capabilities and differences in channel members' capabilities—exhibit significant positive relationships with the selection of dual channels. Third, capability factors are found to be more important than transaction cost factors in explaining dual or indirect channels in Japan. This study also discusses the influence of the Japanese channel context on the results.     

Reassessing the fundamentals and beyond: Ronald Coase,the transaction cost and resource‐based theories of the firm and the institutional structure of production

In this paper, three points are argued. The first is that Ronald Coase, best known as the forefather of transaction cost theory, foresaw many of the critical questions that proponents of the resource‐based view are concerned with today. The second is that resource‐based theory plays a potentially much more critical role in economic theory and in explaining the institutional structure of production than even many resource‐based scholars recognize. The last point is that a more complete understanding of the organization of economic activity requires a greater sensitivity to the interdependence of production and exchange relations. The arguments presented in this paper highlight important, but relatively ignored, elements in Coase's work that inform strategy research. More importantly, this paper makes the case for a triangular alignment between the triumvirate of governance structure, transaction, and resource attributes and demonstrates how the identity and strategy of a particular firm influences how its resources interact with the transaction and how the firm chooses to govern it. The general argument is then applied to the context of interfirm collaborative relations, where the key focus is broadened from just cost to also include skills/knowledge and the interdependence between cost and skills with respect to firm boundaries, both in terms of choice and nature. Such a broadening of focus enables us to additionally examine the transacting process as a productive endeavor, which underpins the co‐evolution of the competencies of partner firms. Copyright © 2002 John Wiley & Sons, Ltd.     

基于交易成本分析的建设交易制度创新研究

借鉴已有的经济学研究成果,主要以交易成本经济学理论为分析工具,从交易规则和交易方式两个角度对建设交易制度的交易成本构成和产生机制进行了分析,最终的目的是达到交易成本的节约。在此基础上,提出了建设交易制度的创新思路：即完善建设法规;促进工程保险和工程担保制度的发展;建立有效的建筑市场准入制度和质量体系认证制度;选择或设计科学、合理的交易方式;科学设计或安排交易合同等。     

Microfoundations for stakeholder theory: Managing stakeholders with heterogeneous motives

Instrumental stakeholder theory proposes a positive relationship between fairness toward stakeholders and firm performance. Yet, some firms are successful with an arms‐length approach to stakeholder management, based on bargaining power rather than fairness. We address this puzzle by relaxing the assumption that all stakeholders care about fairness. Empirical evidence from behavioral economics and social psychology suggests that firms face a population of potential stakeholders that consists not only of so‐called ‘reciprocators,’ who do care about fairness, but also of self‐regarding stakeholders, who do not. We propose that a fairness approach is more effective in attracting, retaining, and motivating reciprocal stakeholders to create value, while an arms‐length approach is more effective in motivating self‐regarding stakeholders and in attracting and retaining self‐regarding stakeholders with high bargaining power. Copyright © 2013 John Wiley & Sons, Ltd.     

Trust, power and transaction costs in B2B exchanges — A socio-economic approach

The advent of the Internet has enabled organisations to reconfigure their inter-organisational relationships. This study presents three frameworks to analyse the outcome that the use of Internet based electronic markets has on the nature of inter-organisational relationships: transaction cost economics, social exchange theory and an integrated framework that combines the first two. The integrated framework proposes that the nature of inter-organisational relationships depends on the interaction between the logic of transaction cost economics and the need for trust and interdependencies between exchange parties. A single case study is used to illustrate the way the three frameworks can be applied to analyse the use of electronic markets in inter-organisational exchanges. The study finds that the integrated framework provides a more complete understanding of inter-organisational relationships, and suggests a modular approach to the implementation of electronic marketplaces.     

Small forces and large firms: Foundations of the RBV

The article presents a synthesis of several papers I have written, mostly in the economics literature, since the publication of ‘A resource‐based view of the firm’ (Wernerfelt, 1984). The starting point is a very small force: the reduction in bargaining costs when several bargains are pooled into one. I show how one can construct a theory of the firm based on this force and defend the theory by arguing that it makes predictions consistent with several stylized facts. In addition, the theory suggests that firms should decide on their strategy and scope based on excess capacity of productive resources—exactly like the RBV.     

Using private management standard certification to reduce information asymmetries in corrupt environments

This paper investigates how corruption in the institutional environment influences firms' decisions to obtain third‐party certification to private management standards as signals of desirable conduct. We argue that policy‐specific corruption erodes trust in government efforts to regulate firms' conduct, thus increasing the signaling value of private certifications and the likelihood of certification. However, widespread corruption in the general environment can extend distrust to private certification systems, which reduces the credibility and signaling value of private certifications, thus decreasing the likelihood that firms obtain certification. Our empirical results based on ISO 14001 environmental management system certification among 433 automotive plants in Mexico confirm these relationships. We discuss the implications of our findings for transaction cost economics, institutional theory, research, and practice. Copyright © 2012 John Wiley & Sons, Ltd.     

Restructuring diversified telecom operators

The paper examines restructuring cycles among diversified major telecom operators from two different perspectives, the governance deficiency perspective of agency theory and the governance efficiency perspective of transaction cost economics, the former being less consistent with the spirit of recent pro-competitive regulatory reforms than the latter. This restructuring cycle describes how incumbent operators grew larger and more diversified during the telecom boom before they were transformed into more efficient scale and scope either by economizing managers or by market forces along with actively intervening owners and bondholders during the subsequent telecom bust. A cycle whose expansion phase is characterized by highly acquisitive companies expanding into non-related activities followed by a delayed contraction phase where overdiversified companies are being restructured by market forces and intervening owners and bondholders is consistent with the reform-non-compliant governance deficiency thesis of agency theory. A cycle whose expansion phase is characterized by acquisitive companies expanding into related activities followed by a contraction phase where companies are restructured by their own managers after having realized that previously acquired assets have become more redeployable and their services more tradable is consistent with the reform-compliant governance efficiency thesis of transaction cost economics. Now, in the aftermath of the contraction phase of the business cycle, more narrowly focused incumbents are once again ready for another round of acquisitive expansion. Anecdotal evidence from five restructuring cases, along with available secondary information about the development of the industry, seems to support the reform-noncompliant governance deficiency thesis of agency theory rather than the reform-compliant governance efficiency thesis of transaction cost economics.     

The performance implications of “grow or buy” decisions in the wine industry

This paper investigates how wineries’ decisions to grow or buy their provisions of grape affect their viticultural performance. While previous literature in agrarian economics suggests a direct association between vertical integration and performance, this research largely neglects the impact of transaction cost variables on governance mode choice and firm performance. This paper first demonstrates that neither outsourcing nor vertical integration per se result in superior performance; rather, a winery’s viticultural performance is contingent upon the alignment of winery’s governance decisions with the predictions of transaction cost theory.     

Regulation and transaction costs in telecommunications: A research agenda

Antitrust and regulatory policies influence the vertical and horizontal integration of firms and the characteristics of their contractual arrangements. This paper examines the relevance of transaction cost economics for the analysis of regulatory policy in telecommunications. It explores the impact of changes in national telecommunications regulation on the level of transaction costs. After building a new theoretical framework based upon previous transaction cost contributions, the paper sets out a research agenda concerning the importance of transaction costs for antitrust and regulatory policies.