The Transaction Cost Economics Theory of the Family Firm: Family-Based Human Asset Specificity and the Bifurcation Bias

2012 ◽  
Vol 36 (6) ◽  
pp. 1183-1205 ◽  
Author(s):  
Alain Verbeke ◽  
Liena Kano
Keyword(s):  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Family Firm ◽  
Asset Specificity ◽  
The Family ◽  
Family Based

scholarly journals Corporate Diplomacy and Family Firm Longevity

2019 ◽  
Vol 44 (1) ◽  
pp. 109-133 ◽  
Author(s):  
Luciano Ciravegna ◽  
Liena Kano ◽  
Francesco Rattalino ◽  
Alain Verbeke
Keyword(s):  
Social Capital ◽  
Transaction Cost ◽  
Family Firms ◽  
Transaction Cost Economics ◽  
Family Firm ◽  
Governance Mechanism ◽  
Network Ties ◽  
Bonding Social Capital ◽  
Bridging Social Capital ◽  
The Family

We discuss family firm longevity building upon a new conceptual lens, informed by transaction cost economics (TCE), but augmented with corporate diplomacy thinking. Family firms, because of their superior foundation of bonding social capital (interpreted here as a firm-specific, transaction cost-reducing governance mechanism), have an intrinsic advantage vis-à-vis nonfamily firms with regards to utilizing network ties supportive of longevity. Most family firms, however, fail to leverage effectively this governance tool to achieve longevity, due to bifurcation bias (BB), that is, the unchecked prioritization of assets and relationships that hold affective value for the family. We propose that corporate diplomacy, through its three process steps, familiarization, acceptance, and engagement, can help the family firm augment its baseline reservoir of social capital, and allows improved economizing on contracting challenges that endanger its survival. Externally, corporate diplomacy helps economizing on expressions of BB in relationships with outside stakeholders, thus augmenting bridging social capital. Internally, it can address biased treatment of family versus nonfamily human assets, thereby augmenting bonding social capital. Intergenerationally, corporate diplomacy supports access to, and improved reliance upon the firm’s social capital by next generation family members. The family firms that focus on corporate diplomacy processes and the resulting social capital creation greatly improve their chances of longevity.

scholarly journals The Argumentational Texture of Transaction Cost Economics

1995 ◽  
Vol 16 (4) ◽  
pp. 605-623 ◽  
Author(s):  
Niels Noorderhaven
Keyword(s):  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Asset Specificity ◽  
Economic Organization ◽  
Economic Institutions

The deconstruction method was used to analyze a seminal text in transaction cost economics, viz., Oliver Williamson's Economic Institutions of Capitalism. This deconstructive reading revealed that the assumption of opportunism that gives rise to the problem of economic organization as formulated by William son also tends to undermine the proposed solution to this problem. The plausi bility of unified governance as a solution to the problem of opportunism in transaction relations with asset specificity is shown to hinge on the temporary deferment of the assumption of opportunism. Thus, transaction cost economics finds itself in an impasse of thought: actors have to be assumed to be both opportunistic and not-opportunistic if the logic of the theory is to be main tained.

scholarly journals Sourcing van Internal Auditing-activiteiten

2005 ◽  
Vol 79 (5) ◽  
pp. 221-228
Author(s):  
H. J. Van Elten
Keyword(s):  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Environmental Uncertainty ◽  
Management Control ◽  
Asset Specificity ◽  
Internal Auditing ◽  
Control Instrument ◽  
Onderzoek Naar

Internal Auditing – traditioneel een intern management control-instrument – wordt in toenemende mate uitbesteed aan externe dienstverleners. In dit artikel wordt verslag gedaan van een onderzoek naar de invloed van Transaction Cost Economics-variabelen op de mate van uitbesteding van Internal Auditing. Ten behoeve hiervan is een schriftelijke enquête verspreid, waaraan is deelgenomen door 66 grote Nederlandse bedrijven. Meervoudige regressieanalyse laat een significant verband zien tussen outsourcing van Internal Auditing-activiteiten, asset specificity en frequency. Deze TCE-variabelen verklaren 57% van de variantie in de mate van uitbesteding van Internal Auditing. Andere TCE-variabelen (behavioral en environmental uncertainty) vertonen geen significante invloed.

A transaction cost economics model for estimating performance effectiveness of relational and contractual governance

2016 ◽  
Vol 36 (11) ◽  
pp. 1551-1575 ◽  
Author(s):  
John G. Wacker ◽  
Chenlung Yang ◽  
Chwen Sheu
Keyword(s):  
Problem Solving ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Relative Effectiveness ◽  
Asset Specificity ◽  
Governance Mechanisms ◽  
Relational Governance ◽  
Content Type ◽  
Contractual Governance ◽  
Supplier Contracts

Purpose As outsourcing continues to grow, supplier management becomes critical to the success of manufacturing firms. Transaction cost economics (TCE) suggests that firms should choose supplier governance mechanisms to ensure fulfillment of contractual obligations and safeguard against opportunism for their outsourcing activities. Accordingly, the purpose of this paper is to examine how buying organizations govern supplier contracts to improve manufacturing competitiveness and financial performance. The relative effectiveness of two primary governance mechanisms, contractual governance (CG), and relational governance, are examined. Design/methodology/approach Expanding upon previous studies, this study delineates three relational governance mechanisms (negotiation efficiency (NE), problem solving relations, and information sharing (IS)) that are conceptually, statistically and pragmatically different. Based on the TCE literature, a conceptual model is developed to decipher the relationships between pre-contract conditions (supplier asset specificity and environmental uncertainty (EU)), governance mechanisms, performance ambiguity (PA), and performance. Using the data collected from 987 firms, the statistical results present several important findings that would advance current theory and practice in outsourcing. Findings The authors find empirical support for the effects of contractual and relational governance in improving manufacturing and financial performance. The governance of supplier contracts clearly facilitates manufacturers’ ability to leverage their resources to improve performance. The relative effectiveness of these two governance mechanisms is related to the levels of EU and supplier asset specificity. Relational governance displays greater influence on performance than CG does. However, CG appears to be complementary to relational governance. Research limitations/implications The interplays between supplier asset specificity and EU should be examined in the future. The relationships among NE, IS, and problem solving should also be examined to facilitate the development of relational governance. Practical implications Managers should be aware of the situational performance of governance mechanisms. Moreover, it is important to realize how differently each of the three relational governance mechanisms and CG contribute to performance. Originality/value This study extends the academic discussion of supplier governance by investigating the alignment of governance mechanisms (relational governance and CG) with pre-contract conditions to reduce PA and, thereby, enhance manufacturing performance. Under the theoretical framework of TCE, the direct and indirect effects of pre-contract conditions and governance variables are fully examined and discussed. Moreover, relational governance involves multiple mechanisms that are conceptually and pragmatically different, and future studies should not treat it as one single construct.

scholarly journals INTELLECTUAL CAPITAL: influence on asset specificities

2020 ◽  
Vol 36 (108) ◽  
Author(s):  
Victor Galindo de Mello ◽  
Deisy Cristina Corrêa Igarashi ◽  
Vinicius Galindo de Mello
Keyword(s):  
Linear Regression ◽  
Multiple Linear Regression ◽  
Transaction Cost ◽  
Intellectual Capital ◽  
Structural Component ◽  
Quantitative Method ◽  
Transaction Cost Economics ◽  
Asset Specificity ◽  
Business Context ◽  
Three Components

The intellectual capital (IC) is gaining prominence both in academic studies as in the business context. When evaluated the development of these elements, the Brazilian agribusiness stands out. Some difficulties are being addressed by studies linked to the transaction cost economics (TCE), resembling mainly with asset specificities. This study aims to understand how the influence of the components of intellectual capital in the formation of asset specificity in the downstream transactions of agribusiness companies. The quantitative method demonstrated relevant to the objective with the companies listed in the Exame M&M 2016, in which a multiple linear regression was performed. Three components of IC are present in the context of agribusiness, but only the structural component has been shown to be significant for the formation of asset specificities. Through this result, managers can identify points of specificities, which can be work in order to carry out efficient transactions.

scholarly journals Traceability and vertical co-ordination in the Italian dairy chain: A transaction cost approach

2006 ◽  
Vol 6 (1) ◽  
pp. 69-78 ◽  
Author(s):  
A. Banterle ◽  
S. Stranieri ◽  
L. Baldi
Keyword(s):  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Economic Incentives ◽  
Asset Specificity ◽  
Economic Agents ◽  
Economic Relationships ◽  
Traceability System ◽  
Key Features ◽  
Factor And Cluster Analysis ◽  
And Cluster Analysis

The purpose of this paper is to analyse how the introduction of a voluntary traceability system affects the organisation of economic relationships throughout the Italian dairy chain. Using the theoretical framework of transaction cost economics, we assess whether traceability increases the degree of vertical co-ordination and changes the level of the transaction key features, i.e. degree of asset specificity, uncertainty and frequency of transactions. A survey was conducted by questionnaire to assess changes in vertical relations, and to underline the different organisational solutions of dairy firms we carried out factor and cluster analysis. The results show increased bilateral dependency among the economic agents as a consequence of the rise in human, physical and site assets. At the same time, growth in the frequency and quantity of information exchanged is observed. Moreover, for medium-sized firms economic incentives play an important role in guaranteeing the safeguarding of transactions, whereas big firms adopt contractual supports.

Embeddedness, Interdependence, and Opportunism in Organizational Supplier-Buyer Networks

1993 ◽  
Vol 19 (4) ◽  
pp. 841-856 ◽  
Author(s):  
Keith G. Provan
Keyword(s):  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Asset Specificity ◽  
Opportunistic Behavior ◽  
Cooperative Network ◽  
General Thesis ◽  
Ways Of Thinking

Despite the value of Williamson’s (1975; 1985) transaction cost economics perspective to organization theorists for offering new ways of thinking about relations between organizations, its focus on supplier-buyer dyads operating on a continuum ranging from markets to hierarchies de-emphasizes the importance of cooperative network relations. In this paper; theory and hypotheses are developed explaining constraints on the emergence of opportunism when supplier-buyer relations are considered in a network context. The general thesis is that the opportunistic behavior of individual network suppliers relative to the dominant buyer; or hub firm, will decline at increasing levels of embeddedness in an interdependent supplier-buyer network, despite conditions of high asset specificity and small numbers bargaining.

When Does the Trust Prohibit the Technology Transfer between Two Manufacturing Firms? A Perspective of Transaction Cost Economics

2013 ◽  
Vol 572 ◽  
pp. 678-681
Author(s):  
Sen Mao Xia ◽  
Yong Long ◽  
Yu Xiong
Keyword(s):  
Technology Transfer ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Manufacturing Firms ◽  
Asset Specificity ◽  
Three Dimensions ◽  
Optimal Threshold ◽  
The Relationship ◽  
Threshold Point ◽  
Black Side

Few paper notices the black side of trust on technology transfer. This paper utilizes the “Transaction Cost Economics” (TCE) to find out that trust, in some cases, can deter technology transfer between two manufacturing firms. Specifically, trust can influence the transaction cost through three dimensions, including “asset specificity”, “transaction frequency” and “uncertainty”, and then the relationship between trust and technology transfer can be detected with the help of transaction cost as a media. Finally, this paper finds out that before an optimal threshold point, the trust can decrease the transaction cost and, simultaneously, can improve the technology transfer. But after that, trust may increase the transaction cost, then imposing restrictions on the technology transfer.

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