scholarly journals Supply Management: A Transaction Cost Economics Framework

2012 ◽  
Vol 7 (2) ◽  
pp. 139-147 ◽  
Author(s):  
Reza Mohammady Garfamy
Keyword(s):  
Economic Theory ◽  
Supply Chain ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Governance Structure ◽  
Analytical Framework ◽  
Supply Management ◽  
Vertical Coordination ◽  
Contractual Relations ◽  
Limited Scope

Abstract Transaction Cost Economics (TCE) is an economic theory that provides an analytical framework for investigating the governance structure of contractual relations within a supply chain. The purpose of this paper is to examine existing research in an effort to understand the potential effects of transaction costs on the vertical coordination of a supply chain. The paper arrives at many insights into how supply chains are organized under different governance structures. These insights can certainly be shared via the development and introduction of related propositions. The conceptual typology of contractual relations developed herein can help researchers better understand the scope of both the problems and the opportunities associated with supply management. It will be of value, therefore, not only to researchers who desire to expand their research into this area, but also to those who have already investigated this topic in isolation or with limited scope.

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.

Strategic Management of International Subcontracting

2010 ◽  
pp. 1924-1934
Author(s):  
Yue Wang
Keyword(s):  
Supply Chain ◽  
Strategic Management ◽  
Transaction Cost ◽  
Empirical Research ◽  
International Business ◽  
Multinational Enterprises ◽  
Cost Model ◽  
Governance Structure ◽  
Complex Nature ◽  
Relational Contract

Research on international subcontracting has been policy-oriented and industry-focused. There is a lack of understanding of the phenomenon from strategic management and international business perspectives. This article conceptualizes international subcontracting as a type of relational contract formed by buyers and suppliers from different countries, aiming to facilitate the sourcing of products or components with buyer-specific requirements. It builds a transaction cost model for studying the strategic choice of international subcontracting as an intermediate governance structure, sitting between arm’s length outsourcing arrangement and vertically integrated multinational enterprises (MNEs). A set of propositions are developed to aid future empirical research and to provide managers with some guidelines for organizing supply chain across borders. The model also allows managers to examine the complex nature of a range of subcontracting relationships and identify the specific mechanisms that can be used to preserve and manage the dyadic principal-subcontractor exchanges.

Managing transaction risks in interdependent supply chains: an extended transaction cost economics perspective

2012 ◽  
Vol 12 (3) ◽  
pp. 243-260 ◽  
Author(s):  
Mark Wever ◽  
Nel Wognum ◽  
Jacques Trienekens ◽  
Onno Omta
Keyword(s):  
Risk Management ◽  
Supply Chain ◽  
Supply Chains ◽  
Transaction Cost ◽  
Risk Sharing ◽  
Transaction Cost Economics ◽  
Management Strategies ◽  
Risk Minimization ◽  
Risk Management Strategies ◽  
Supply Chain Orientation

The present study examines the management of transaction risks in supply chains. Risk management studies often ignore the wider supply chain context in which individual transactions take place. However, risk management strategies which are suitable to use when only a single transaction is considered may be inappropriate when other transactions in the supply chain are taken into account. This study addresses this issue by examining: (1) how risks arise as a result of interdependencies between the various transactions making up the supply chain; and (2) what types of contractual-based strategies actors can use to manage their risk exposure. To realize these aims, the study applies an extended Transaction Cost Economics (TCE) framework with a supply chain orientation. The framework illustrates how different types of interdependencies - pooled, sequential and reciprocal - expose companies to different sources of risk. Three strategies companies can use when facing barriers to risk minimization in sequentially interdependent supply chains are analyzed: risk transferring, risk altering and risk sharing. Examples from the agri-food sector are discussed to demonstrate the functioning of these strategies.

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.

Impacts of non-GMO standards on poultry supply chain governance: transaction cost approach vs resource-based view

2016 ◽  
Vol 21 (6) ◽  
pp. 743-758 ◽  
Author(s):  
Houda Ghozzi ◽  
Claudio Soregaroli ◽  
Stefano Boccaletti ◽  
Loïc Sauvée
Keyword(s):  
Supply Chain ◽  
Transaction Cost ◽  
Genetically Modified Organisms ◽  
Animal Feed ◽  
Governance Structure ◽  
Empirical Literature ◽  
Governance Structures ◽  
Resource Based View ◽  
Content Type ◽  
Cost Approach

Purpose Following a negative attitude of consumers toward genetically modified organisms (GMOs) and the spaces left by the labeling legislation on GMOs of different countries, some retailers and processors introduced their own non-GMO standards, with the intention of avoiding the presence of GMOs in their products. This paper aims to understand how the implementation of these new retailer-driven standards affects governance structures along the supply chain and the determinants of such change focusing on transaction cost approach (TCA) vs resource-based view (RBV). Design/methodology/approach The non-GMO introduction is investigated as a case study in the poultry industry of France and Italy. The case relies on data primarily collected from interviews with the main actors at five stages of the supply chain from the retailer up to animal feed and crop production. Findings Findings indicate that the introduction of non-GMO products had different impacts on the transactions along the supply chain, generally leading to more integrated relationships. Theoretical relevance depends on the observed transaction and the type of governance structure considered. Interestingly, only RBV explains the shift toward hierarchical governance when this is observed. Originality/value This paper contributes to the empirical literature highlighting the upstream effects caused by the adoption of new standards. On the theoretical side, building on Conner and Prahalad’s (1996) seminal work and leveraging on the concepts of opportunism, “potential” superior knowledge and strategic importance of an activity, this research suggests a comparative framework for identifying governance structures and their determinants under TCA and RBV.

scholarly journals The Comparative Effects of Transaction Cost Economics and Resource Based View: A Technological Alliance Motivational Perspective

2016 ◽  
Vol 6 (5) ◽  
pp. 64 ◽  
Author(s):  
Hwan Jin Kim
Keyword(s):  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Governance Structure ◽  
High Tech ◽  
Resource Based View ◽  
Alliance Partner ◽  
Positive Effects ◽  
Alliance Partners ◽  
The Impact ◽  
Alliance Governance

<p>This paper examines the impact of two main alliance motivation theories, transaction cost economics (TCE) and resource based view (RBV), on alliance processes among Korean manufacturing high-tech ventures. Results show that TCE and RBV are complimentarily explaining the formation of inter-firm alliances. TCE variables are more related with alliance partner characteristics while RBV is more linked with partner capabilities. Both show positive effects on performance. No significant effect is found on determining an alliance governance structure. While selecting appropriate technological alliance partners show positive effects on performance, no significant effect is found between alliance governance structure and performance. Factors of both theories impacting each alliance stage and analytical explanations of such impacts are discussed.</p>

scholarly journals Choosing Between Safeguards: Scope and Governance Decisions in R&D Alliances

2018 ◽  
Vol 46 (3) ◽  
pp. 359-384 ◽  
Author(s):  
Constantinos S. Lioukas ◽  
Jeffrey J. Reuer
Keyword(s):  
Knowledge Sharing ◽  
Transaction Cost ◽  
Empirical Analysis ◽  
Transaction Cost Economics ◽  
Governance Structure ◽  
Theoretical Issue ◽  
Control Mechanisms ◽  
Functional Activities ◽  
Multiple Partners ◽  
Ex Post

Research on transaction cost economics has emphasized the choice of an appropriate governance structure as an important mechanism in alleviating exchange hazards in interfirm transactions, yet firms may also manipulate the characteristics of a transaction to make it less hazardous in the first place by carefully selecting the activities or assets involved in the transaction. In this paper, we explore this theoretical issue in transaction cost economics by examining how firms design R&D alliances to mitigate appropriation hazards in these interfirm transactions. In particular, we investigate when firms will prefer to limit the scope of functional activities involved in an R&D alliance, thus addressing appropriation hazards directly by manipulating the alliance’s characteristics, versus when they will opt for an equity-based governance structure in order to mitigate appropriation hazards ex post. We argue that firms are more likely to limit the scope of alliance activities rather than choose an equity-based governance structure when there are multiple partners in an alliance and when the partners are from different nations, because monitoring and other control mechanisms become more cumbersome and problematic in these circumstances. In contrast, firms that are direct competitors are more likely to choose an equity-based governance structure in order to mitigate exchange hazards, such as knowledge misappropriation, through carefully monitored knowledge sharing. Empirical analysis of data on R&D alliances in a variety of industries provides support for our arguments regarding alliances involving multiple partners and alliances between competitors. We discuss the implications of our study for research on transaction cost economics.

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