Transaction Cost Economics and Open Innovation: Implications for Theory and Practice

2012 ◽  
Vol 21 (3) ◽  
pp. 277-289 ◽  
Author(s):  
Björn Remneland-Wikhamn ◽  
David Knights
Keyword(s):  
Transaction Cost ◽  
Open Innovation ◽  
Transaction Cost Economics ◽  
Theory And Practice

Using transaction cost economics to explain open innovation in start-ups

2016 ◽  
Vol 54 (9) ◽  
pp. 2133-2156 ◽  
Author(s):  
Ching-Tang Hsieh ◽  
Hao-Chen Huang ◽  
Wei-Long Lee
Keyword(s):  
Transaction Cost ◽  
Open Innovation ◽  
Structural Equation ◽  
Transaction Cost Economics ◽  
Measurement Model ◽  
Asset Specificity ◽  
Equation Modeling ◽  
Content Type ◽  
Confirmatory Factor ◽  
Start Ups

Purpose The basic concept of transaction cost theory is that firms like to conduct transactions in a channel with lower transaction costs. Therefore, the purpose of this paper is to use the transaction cost perspective to identify which conditions cause companies to choose between outbound open innovation (hierarchy governance) and inbound open innovation (market governance). Design/methodology/approach Accordingly, transaction cost economics was used to relate the choice and implementation of open innovation using a sample of 250 electronics and information start-ups in China. Structural equation modeling was used to conduct confirmatory factor analysis to evaluate measurement model, while logistic regression analysis was used to test the hypotheses. Findings As expected, the dedicated asset specificity, human asset specificity, behavioral uncertainty, transaction frequency, and small number exchange were positively associated with outbound open innovation. Originality/value The contribution of this paper lies in explaining the role played by transaction cost economics in the process of open innovation for start-ups through empirical analysis.

From transaction costs to transaction value: Overcoming the frictional paradigm

2020 ◽  
pp. 51-81
Author(s):  
D. P. Frolov
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Path Dependence ◽  
Transaction Cost Economics ◽  
Cost Minimization ◽  
Low Cost ◽  
Coase Theorem ◽  
Transactional Analysis ◽  
Transaction Sector ◽  
Transaction Value

The transaction cost economics has accumulated a mass of dogmatic concepts and assertions that have acquired high stability under the influence of path dependence. These include the dogma about transaction costs as frictions, the dogma about the unproductiveness of transactions as a generator of losses, “Stigler—Coase” theorem and the logic of transaction cost minimization, and also the dogma about the priority of institutions providing low-cost transactions. The listed dogmas underlie the prevailing tradition of transactional analysis the frictional paradigm — which, in turn, is the foundation of neo-institutional theory. Therefore, the community of new institutionalists implicitly blocks attempts of a serious revision of this dogmatics. The purpose of the article is to substantiate a post-institutional (alternative to the dominant neo-institutional discourse) value-oriented perspective for the development of transactional studies based on rethinking and combining forgotten theoretical alternatives. Those are Commons’s theory of transactions, Wallis—North’s theory of transaction sector, theory of transaction benefits (T. Sandler, N. Komesar, T. Eggertsson) and Zajac—Olsen’s theory of transaction value. The article provides arguments and examples in favor of broader explanatory possibilities of value-oriented transactional analysis.

Governance of supplier-customer relations: An empirical review

2007 ◽  
Vol 158 (12) ◽  
pp. 406-416
Author(s):  
Jon Bingen Sande
Keyword(s):  
Transaction Cost ◽  
Empirical Research ◽  
Customer Relations ◽  
Transaction Cost Economics ◽  
Exchange Theory ◽  
Forest Industry ◽  
Relational Contracts ◽  
Relational Exchange ◽  
Exchange Relationships ◽  
Relational Exchange Theory

The forest industry is riddled with exchange relationships. The parties to exchanges may have diverging goals and interests, but still depend upon each other due to non-redeployable specific assets. Formal and relational contracts may be used to deal with the resulting cooperation problems. This paper proposes a framework based on transaction cost economics and relational exchange theory, and examines to what extent empirical research has found formal and relational contracts to deal with three different governance problems. To that end, I review the results from 32 studies in a range of settings. These studies generally support the view that exchanges characterized by high degrees of specific assets should be supported by formal and relational contracts.

Ronald Coase and the Difference between Markets and Firms

2018 ◽  
Author(s):  
Abraham A. Singer
Keyword(s):  
Transaction Cost ◽  
Economic Activity ◽  
Transaction Cost Economics ◽  
Theory Of The Firm ◽  
Tabular Form ◽  
Specific Investment ◽  
The Difference ◽  
Marginal Revolution ◽  
The Way

This chapter reviews the development of transaction cost economics and unpacks its theory of the firm. The chapter begins with the marginal revolution in economics and how it altered the way economists understood the corporation. It then reviews the work of Ronald Coase and Oliver Williamson, explaining how they provided a novel account of firms. Transaction cost economics emphasizes how firms use hierarchy and bureaucracy to overcome problems of opportunism and asset-specific investment to coordinate some types of economic activity more efficiently than markets can. The transaction cost account of the corporation’s productivity component is shown in tabular form in comparison with its historical forerunners reviewed in the previous chapter.

Virtual enterprise networks: the fifth element of corporate governance

2001 ◽  
Vol 20 (3) ◽  
pp. 171-188
Author(s):  
Nicholas C. Georgantzas
Keyword(s):  
Corporate Governance ◽  
System Dynamics ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Virtual Enterprise ◽  
Dynamics Simulation ◽  
Enterprise Networks ◽  
Market Uncertainty ◽  
Competitive Edge ◽  
Exchange Governance

Although still flying low under the popular business media's collective radar, virtual enterprise networks (or nets) do receive increased attention in the strategic management literature. A virtual enterprise network (VEN) is a system of autonomous firms that collaborate to achieve common business objectives. VENs give participants a competitive edge in markets demanding agility and rapid response. Seen as an emerging transactional exchange governance (TEG) form within transaction cost economics (TCE), VENs and the relations among firms that form them posit challenges for researchers and managers. VENs differ substantially from markets and hierarchies, and from recurrent and relational contracts, utterly changing what it means to be a firm in today's business. This essay explores alternative TEG forms, their characteristics and the criteria that bear on the choice of corporate governance: flexible specialization, market uncertainty, product (good or service) complexity, reliance on trust, risk, self-organization, shared knowledge, and socio-territorial cohesiveness. The essay offers propositions on the relations among economic criteria and the choice of transactional exchange governance forms by exploring the dynamics of a generic TEG structure. This is a system dynamics simulation model that partially offsets the shortcomings of transaction cost economics (TCE) and points to the potentially rich contribution of system dynamics to exploring VENs beyond the ideal-type TEG forms of markets and hierarchies that dominate the TCE literature.

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