Transaction cost economics in global sourcing: Assessing regional differences and implications for performance

This paper addresses two gaps in current research on transaction cost economics (TCE): first, the fundamental claim suggesting that firms that align their governance structure to transactions according to TCE perform better than those that do not, and second, the application of TCE to global sourcing transactions. A research model is presented and evaluated using a set of 150 relationships between Swiss buyers and foreign suppliers. The findings suggest that there are significant differences in how transactions and governance structures are aligned with varying performance and with suppliers from Western Europe as compared to suppliers from other regions.