Broaden the Pathway to Inclusive Entrepreneurship: A Transaction Cost Proposition

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Jian Du ◽  
Jie Lu ◽  
Yanbing Jiang
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Social Exclusion ◽  
Transaction Cost Economics ◽  
Inclusive Growth ◽  
Stage Model ◽  
Base Of The Pyramid ◽  
Resource Base ◽  
Personal Competence

Abstract Since entrepreneurship was conceptualised as a panacea for achieving inclusive growth in the “base of the pyramid” (BoP) regions, various ways have been explored to leverage this powerful tool, such as helping potential entrepreneurs build the resource base and capabilities. However, given the severe resources constraints in the BoP regions, such a goal is difficult to achieve. Besides, due to the high demands on personal competence, only a few people can benefit from this method, which fails to solve the problem of social exclusion in the BoP regions. Therefore, we aim to find a better way to leverage entrepreneurship to tackle the problem of the BoP regions by calling for more attention to the inclusiveness of entrepreneurship. Based on data of inclusive entrepreneurs in Zhejiang, China, we construct a three-stage model for inclusive entrepreneurship. We also apply Transaction Cost Economics to look for determinants that foster inclusive entrepreneurship and validate our main assertion that decreasing transaction cost significantly helps to increase the inclusiveness of entrepreneurship, and different phases of inclusive entrepreneurship (i.e., opportunity inclusiveness, participation inclusiveness, and sharing inclusiveness) are influenced by different sets of determinants of transaction costs.

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.

scholarly journals Firms' Choice of Regulatory Instruments to Reduce Pollution: A Transaction Cost Approach

2004 ◽  
Vol 6 (3) ◽  
pp. 1-20 ◽  
Author(s):  
Magali Delmas ◽  
Alfred Marcus
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Command And Control ◽  
Governance Structure ◽  
Governance Structures ◽  
Negotiated Agreements ◽  
Regulatory Instruments ◽  
Market Opportunities ◽  
And Control

This paper compares the economic efficiency of firm-agency governance structures for pollution reduction using transaction costs economics. Two governance structures are analyzed with the transaction costs approach: command and control regulation (CCR) and negotiated agreements (NAs). We propose that the choice of governance structure depends on the strategies firms pursue given the attributes of their transactions and their market opportunities. The application of transaction cost economics analysis leads to different choices of regulatory instruments. Firms in more mature, stable industries are likely to choose command and control, while firms in new, dynamic sectors are more likely to opt for negotiated agreements. Frequency of transactions is a key factor in firm choice.

How A Social Enterprise Wanes: The Transaction Costs of Credible Commitments at Etsy.com

2021 ◽  
pp. 026010792110382
Author(s):  
Alejandro Agafonow ◽  
Marybel Perez
Keyword(s):  
Political Economy ◽  
Transaction Costs ◽  
Transaction Cost ◽  
Social Enterprise ◽  
Economic Transition ◽  
Transaction Cost Economics ◽  
Credible Commitments ◽  
Social Mission ◽  
Corporate World ◽  
Online Marketplace

This article fathoms how a social enterprise wanes by applying the construct of imperative credible commitments from transaction cost economics to the case of Etsy.com, an online marketplace created to connect artisans and craftwork enthusiasts. In the absence of imperative credible commitments, Etsy’s social mission was bound to change, leaving the company’s major stakeholders without safeguards to protect the perpetuation of the transactions that Etsy was created to serve. The construct of credible commitments has proved to be fertile in understanding issues of political and economic transition, yet its relevance to puzzle out the corporate world has been underestimated. To bridge this gap, we have recourse to the analogy between disabling the discretion of monarchs and executives to prevent them from reneging on commitments. Hence, by building on political economy academics’ attention is drawn to strategies that, despite existing in the corporate world, have rarely been perceived as important by management and economics scholars.

Entrepreneurship and Innovation at the Base of the Pyramid: A Recipe for Inclusive Growth or Social Exclusion?

2012 ◽  
Vol 49 (4) ◽  
pp. 785-812 ◽  
Author(s):  
Jeremy Hall ◽  
Stelvia Matos ◽  
Lorn Sheehan ◽  
Bruno Silvestre
Keyword(s):  
Social Exclusion ◽  
Inclusive Growth ◽  
Base Of The Pyramid

scholarly journals A tranzakciós költségek és a szabványosítás kapcsolata (Relationship between transaction costs and standardization)

2013 ◽  
pp. 37-49
Author(s):  
István Kovács
Keyword(s):  
Transaction Costs ◽  
Economic Impact ◽  
Transaction Cost ◽  
Theoretical Basis ◽  
Transaction Cost Economics ◽  
Research Question ◽  
Coordination Mechanism ◽  
Main Research ◽  
The Impact ◽  
The Relationship

Az elmúlt néhány évtizedben a szabványosítás terén igen komoly változások mentek végbe. Ugrásszerűen megnőtt a szabványok száma, és jelentősen átalakult a szabványosítás folyamata is. Ezzel párhuzamosan a téma gazdasági hatásaival foglalkozó kutatások száma is megsokszorozódott, ami elsősorban a hálózati externáliák irodalmának robbanásszerű gyarapodásának köszönhető. Jelen tanulmány – az elméletek fősodrától eltérően – a tranzakciós költségek elméletében (TKE) helyezi el a szabványosítást. A szabványok és a tranzakciós költségek kapcsolatáról már születtek korábban is tanulmányok, de ezek a szabványoknak a tranzakciós költségekre gyakorolt hatásaira fókuszáltak. A tanulmány ezzel szemben arra helyezi a hangsúlyt, hogy azonosítsa a tranzakciós költségeknek a szabványosításra gyakorolt hatásait. A kutatás célja, hogy olyan elméleti alapot adjon, amelyben a témakör átfogóan elemezhető. A fő kutatási kérdés az, hogy mitől függ az, hogy melyik mechanizmus kereteiben érdemes a szabványosítást lebonyolítani. ________ Significant changes have characterized the last few decades of standardization. The number of standards has dramatically increased and processes of standardization have also changed a lot. At the same time the amount of researches that are concerned with the economic impact of standardization has also multiplied due to the boom in the literature of network externalities. Unlike the mainstream, this paper places standardization in the theory of transaction cost economics. Although there are earlier papers that are concerned with the relationship between standards and transaction costs, these studies focus on the impact of standards on transaction costs. In contrast, this paper lays emphasis on the identification of the impact of transaction costs on standardization. This study aims to provide a theoretical basis for the comprehensive analyses. The main research question: What determines which coordination mechanism is used to evolve a standard?

scholarly journals Corporate governance and transaction cost economics: A study of the equity governance structure

2016 ◽  
Vol 12 (1) ◽  
pp. 33-44 ◽  
Author(s):  
Jimmy A. Saravia Matus ◽  
Silvia Saravia-Matus
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Transaction Costs ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Governance Structure ◽  
Firm Valuation ◽  
Managerial Discretion ◽  
Full Analysis ◽  
First Time

This paper extends the Transaction Cost Economics (TCE) theory of the equity governance structure by introducing a (hitherto absent) full analysis of the key TCE issue of bilateral dependency between the firm and its shareholders. In addition, the paper discusses the implications of the analysis for the topic of corporate governance and firm performance. We find that when bilateral dependency holds contractual hazards are mitigated as predicted by TCE, but that when it does not contractual safeguards are altered to the disadvantage of shareholders and managerial discretion costs increase as reflected by lower firm valuation. Importantly, our study documents for the first time a class of transactions where business relationships persist indefinitely even though transaction costs are not minimized.

Developing a framework for the performance evaluation of sorting and grading firms of used clothing

2019 ◽  
Vol 12 (1) ◽  
pp. 82-102 ◽  
Author(s):  
Manoj Kumar Paras ◽  
Daniel Ekwall ◽  
Rudrajeet Pal
Keyword(s):  
Firm Performance ◽  
Transaction Cost ◽  
Value Chain ◽  
Success Factors ◽  
Transaction Cost Economics ◽  
Developing Economies ◽  
Base Of The Pyramid ◽  
African Countries ◽  
Resource Based View ◽  
Content Type

PurposeThis paper aims to propose a framework for evaluating the performance of reverse value chain activities in the clothing industry operating at base of the pyramid. Specifically, the research explores firm and supply chain factors influencing clothing reverse value chain activities with a focus on developing economies.Design/methodology/approachThe study adopted an explorative technique using direct observations and semi-structured interviews to collect information from eight companies and two traders. Internal resources and value chain capabilities were examined using theoretical underpinnings of resource-based view, transaction cost economics and base of the pyramid.FindingsThe paper identified multiple benefits of offshoring reverse value chain activities to the developing countries (at the base of the pyramid). Low operation cost, skilled manpower, business knowledge and location are found to be internal success factors. While favourable government legislation and domestic recycling markets are important external factors contributing to the success. Developing economies such as India contribute to firm performance by integrating, transforming, acquiring and co-creating the resources at base of the pyramid. Further, it was found that to achieve higher assets specificity, a few companies have opened their own shops in African countries, while others have opened sourcing branches in Canada or the USA to ensure good quality of raw materials. Collaboration and coordination among different value chain partners minimise cost and increases profitability. Innovation in the process such as clothes mutilation for recycling has created new business opportunities.Research limitations/implicationsInformation was collected from only eight organisations and two traders from India. Future scholars may extend the research to generalise the findings by documenting similar phenomena.Practical implicationsThe proposed framework can serve a basis for the practitioners to evaluate firm performance, and the insights can be used to achieve sustainability by engaging producers, employees, consumers and community using base of the pyramid approach.Originality/valueThe study provides unique insights into the prevalent export and re-exports phenomena of used clothing. The resource-based view, transaction cost economics and base of the pyramid strategy underpinned together to develop a framework for understanding reverse value chain activities of clothing.

scholarly journals Sludge and transaction costs

2021 ◽  
pp. 1-22
Author(s):  
Sina Shahab ◽  
Leonhard K. Lades
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Choice Architecture ◽  
Important Concept ◽  
Literature Highlight

Abstract Behavioral scientists have begun to research ‘sludge,’ excessive frictions that make it harder for people to do what they want to do. Friction is also an important concept in transaction-cost economics. Nevertheless, sludge has been discussed without explicit referral to transaction costs. Several questions arise from this observation. Is the analogy to friction used differently in both literatures? If so, what are the key differences? If not, should we develop the concept of sludge when the well-established literature on transaction costs already exists? This conceptual article shows that sludge and transaction costs are related, but distinct, concepts, and that the literature on sludge can benefit from incorporating elements from transaction-cost research. For example, we suggest defining sludge as aspects of the choice architecture that lead to the experience of costs, organize sludges using a typology inspired by the transaction-cost literature, highlight specificity, uncertainty, and frequency as important determinants of the ‘sludginess’ of choice architecture, and show that sludge audits can be conducted using methods developed in the transaction-cost literature.

scholarly journals Transaction Behavior in Nonmarket Settings: Revisiting Transaction Cost Economics Theory

2012 ◽  
Vol 27 (1) ◽  
pp. 23-40
Author(s):  
Ryu See Un
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Gradual Decrease ◽  
Green Tape ◽  
Red Tape ◽  
Over Time

This study focuses on changes in transaction costs over time in nonmarket settings. Traditional Williamsonian transaction cost economics theory shows little concern with time. However, this study reveals that time is a crucial factor in the fluctuation of transaction costs in nonmarket settings: Transaction costs increase in the initial and middle phases of a transaction. But in the long term, they may increase or decrease and are affected considerably by whether the rules, procedures, and protocols governing the transaction are effective ("green tape") or ineffective ("red tape"). In contrast, traditional transaction cost economics assumes a gradual decrease in transaction costs over time. The passage of time and the "red tape" or "green tape" governing the transaction influence stakeholders` transaction behavior in nonmarket settings.

scholarly journals Transaction Cost Economics Identification in Malaysian Housing Development: A Preliminary Review

2021 ◽  
Vol 12 (1) ◽  
Author(s):  
Farah Kamilah Zainuddin ◽  
◽  
Muzani Mustapa ◽  
Fara Diva Mustapa ◽  
◽  
...  
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Best Practice ◽  
Development Process ◽  
Transaction Cost Economics ◽  
Housing Prices ◽  
Preliminary Finding ◽  
Housing Development ◽  
Preliminary Review ◽  
Cost Components

Shelter, albeit being one of the crucial physiological needs in Maslow’s Hierarchy of Needs, is still considered as luxury needs as many people still struggle to afford a house especially in Malaysia. The issue stemmed from the mismatch between the affordability level and the housing prices. Many research delved from the demand and supply perspective to find the root cause, however, the problem still prevails. Hence, this research aimed to study the aforementioned issue from the transaction cost economics (TCE)’s perspective. TCE provides a platform to allow parties to deduce the invisible costs from transaction of activities. This can be done by determining the effectiveness of each transaction profile by enhancing the value between the two transactions, hence, lower the costs. This paper outlined a preliminary finding on TCE’s identification in typical housing development process based on RIBA Plan of Work 2013 process protocol. RIBA Plan of Work 2013 was chosen to provide a standard platform of measurement to ensure consistency in activities listed in the pre-contract and post-contract in typical housing development process. Interviews were conducted with purposive sampling with individuals working directly with housing development. The respondents were asked to verify the list of pre-determined TCEs by indicating whether those activities constitute under the TCEs components and whether activities identified as redundant or inefficient can be removed or enhanced. Analysis conducted using the frequency analysis managed to determine the most important and also the most redundant transaction cost components in a typical housing development. The findings revealed an interesting fact where the number of transaction cost components at both pre and post-contract were higher than the anticipated number attained from literature review. Higher number of identified transaction cost components indicates higher transaction cost in housing development. This further suggested that certain activities which were found redundant or inefficient can be either removed or enhanced to lower the transaction costs. The research findings provide a useful platform to further verify the TCE in housing development. The components will be quantified to ultimately develop a framework for a best practice transaction cost economics model to apprehend unaffordable housing issues. Hence, it is noteworthy that combining TCE and Lean Management theory will enhance this on-going research on identification and quantification of the transaction costs within the housing development to address matters that cause high transaction costs that subsequently increases the housing prices.

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