Stakeholder scholars have long explored how stakeholder relationships differ from economic transactions. We contribute to this ongoing inquiry by developing a conceptual framework of relationality in stakeholder theory that encompasses a stakeholder-theoretic extension of Williamson's contracting schema and a new typology of stakeholder relationships. Premised on understanding relationality as the need for informal human relationships beyond formal governance, our framework locates the key difference between transaction cost economics and stakeholder theory in their treatment of informal relationships. While (...) transaction cost economics perceives informal relationships to be shaped by formal governance structures and enforced by contractual safeguards, stakeholder theory is open to the possibility that some informal relationships between stakeholders may be genuinely moral and thus irreducible to formal governance and contractual safeguards. These stakeholder relationships may lead to unique economic effects described by instrumental stakeholder theory. The difference that we identified between the two literatures shows how stakeholder theory's embrace of relationality surpasses that of transaction cost economics. (shrink)

This article provides an ISCT analysis of commercial bribery focused on transaction cost economics. In the language of Antitrust, commercial bribery is a form of vertical arrangement subject to the same efficiency analysis that has found other vertical arrangements potentially beneficial to consumers. My analysis shows that actions condemned as commerical bribery in the Honda case may well have benefited Honda's dealer network once promotional free riding and other forms of rent seeking by dealers are considered. I (...) propose that the term "commercial bribery" should be avoided until after an ISCT analysis shows that the community is likely to have been harmed. The term "third-party payments" is a more ethically neutral term with which to begin the analysis. (shrink)

This article provides an ISCT analysis of commercial bribery focused on transaction cost economics. In the language of Antitrust, commercial bribery is a form of vertical arrangement subject to the same efficiency analysis that has found other vertical arrangements potentially beneficial to consumers. My analysis shows that actions condemned as commerical bribery in the Honda case (1996) may well have benefited Honda's dealer network once promotional free riding and other forms of rent seeking by dealers are considered. (...) I propose that the term "commercial bribery" should be avoided until after an ISCT analysis shows that the community is likely to have been harmed. The term "third-party payments" is a more ethically neutral term with which to begin the analysis. (shrink)

In recent years, copyright governance for short videos has become a hot issue of common concern in the academic community and the industry. Therefore, this study intends to explore the economic aspect of copyright governance in relation to the proliferation of infringing short videos. The short video industry of China has been taken as a case to demonstrate the copyright governance issue. Transaction cost theory has been applied to analyze the economic aspect of copyright governance in terms of (...) four dimensions: bounded rationality, opportunism, environmental uncertainty, and asset specificity. From the perspective of transaction cost economics, the problem of short video infringement is observed to be essentially a market failure due to high transaction costs. In the short video market, substantial transaction costs are incurred in the legal transaction of copyright with these costs considered to be too high. This is especially the case when transaction costs exceed the net proceeds initially expected by short video users from the authorization, making it impossible to carry out the transaction and leading to infringement. To effectively control the copyright infringement of short videos, it is necessary to build a cross-platform information-sharing mechanism to reduce search costs, establish a unified copyright management platform to reduce coordination costs, and give full attention to the role of technical support to reduce regulatory costs. (shrink)

As the transaction cost theory of the firm was taking shape in the 1970s, another important movement in economics was emerging: a revival of the ‘Austrian’ tradition in economic theory associated with such economists as Ludwig von Mises and F. A. Hayek . As Oliver Williamson has pointed out, Austrian economics is among the diverse sources for transaction cost economics. In particular, Williamson frequently cites Hayek , particularly Hayek’s emphasis on adaptation as a (...) key problem of economic organisation . Following Williamson’s lead, a reference to Hayek’s ‘The Use of Knowledge in Society’ has become almost mandatory in discussions of economic organisation . However, there are many other potential links between Austrian and transaction cost economics that have not been explored closely and exploited.This article argues that characteristically Austrian ideas about property, entrepreneurship, economic calculation, tacit knowledge, and the temporal structure of capital have important implications for theories of economic organisation, transaction cost economics in particular. Austrian economists have not, however, devoted substantial attention to the theory of the firm, preferring to focus on business-cycle theory, welfare economics, political economy, comparative economic systems, and other areas. Until recently the theory of the firm was an almost completely neglected area in Austrian economics, but over the last decade, a small Austrian literature on the firm has emerged. While these works cover a wide variety of theoretical and applied topics, their authors share the view that Austrian insights have something to offer students of firm organisation. (shrink)

This qualitative study looks at the complex relationship of transaction costs, norms, and social networks through a comparison of industrial buyer-seller relationships in the United States and Mexico. Despite arguments by transactioncost theorists that the nature of cooperation in business is largely a function of the nature of investments in transaction assets, this article illustrates several cases where the economic logic is attenuated and a mutual orientation develops as the social structure promotes greater trust either because of shared (...) norms or network ties. It also suggests that asset specificity may at times be a product of the social structure in which the transaction is embedded. The article develops theoretical propositions and suggests directions for future research. (shrink)

This qualitative study looks at the complex relationship of transaction costs, norms, and social networks through a comparison of industrial buyer-seller relationships in the United States and Mexico. Despite arguments by transactioncost theorists that the nature of cooperation in business is largely a function of the nature of investments in transaction assets, this article illustrates several cases where the economic logic is attenuated and a mutual orientation develops as the social structure promotes greater trust either because of shared (...) norms or network ties. It also suggests that asset specificity may at times be a product of the social structure in which the transaction is embedded. The article develops theoretical propositions and suggests directions for future research. (shrink)

This paper views corruption as a form of contracting amenable to analysis from the viewpoint of transaction-cost economics. Concepts such as transaction, bounded rationality, opportunism, and asset specificity are shown to apply to cases of corruption. Both market and parochial corruption are hypothesized to vary in accordance with changes in the specificity of assets invested to support the corruption transaction. Evidence from a number of different studies tends to support the hypothesized relation. The implications of (...) the transaction-cost perspective are developed for policy makers and directions for future research are suggested. (shrink)

New network technologies are framed as eliminating ‘transaction costs’, a notion first developed in economic theory that now drives the design of market systems. However, the actual promise of the elimination of transaction costs seems unfeasible, because of a cyclical pattern in which network technologies that make that promise create processes of institutionalization that create new forms transaction costs. Nonetheless, the promises legitimize the exemption of innovations of network technologies from critical scrutiny.

This paper explores the conditions favouring or inhibiting the implementation of strategic corporate social responsibility policies in the context of global value chains. Using transaction cost theory, we specify the economic and behavioural issues raised by strategic CSR policies. We show that the existence of market rewards for such policies does not constitute a solution per se, but tends to increase the difficulties that value chain members face. Bringing TCT into the analysis of the diffusion of strategic CSR (...) policies in GVCs helps us to make different contributions. We first theoretically identify some limiting conditions of strategic CSR policies in GVCs. We also contribute to developing a more robust theoretical perspective for CSR in GVC research, which remains underdeveloped and mostly driven by empirical case studies. Finally, we shed light on new research questions and topics that could guide major theoretical and empirical investigations in the capacity of GVCs members to bypass the numerous difficulties involved in the implementation of strategic CSR policies. (shrink)

This book examines transaction cost economics, the influential theoretical perspective on organizations and industry that was the subject of Oliver Williamson's seminal book,Markets and Hierarchies. Written by leading economists, sociologists, and political scientists, the essays collected here reflect the fruitful intellectual exchange that is occurring across the major social science disciplines. They examine transaction cost economics' general conceptual orientation, its specific theoretical propositions, its applications to policy, and its use in systematic empirical research. The (...) chapters include classic texts, broad review essays, reflective commentaries, and several new contributions to a wide range of topics, including organizations, regulations and law, institutions, strategic management, game theory, entrepreneurship, innovation, finance, and technical information. The book begins with an overview of theory and research on transaction cost economics, highlighting the specific accomplishments of scholars working within the perspective and emphasizing the enormous influence that transaction cost reasoning exerts on the social sciences. The following section covers conceptual uses for the transaction cost framework and major theoretical or methodological elements within it, such as bounded rationality. While advancing some interesting theoretical propositions, these chapters are in fact more ambitious: each examines a specific field, area, or research program and attempts to fashion a new way of thinking about research questions. In the section on industrial applications, contributors study the application of transaction cost theory to a range of problems in utilities, telecommunications, laser printing, and early international trade. The book closes with four microanalytical chapters that delve into the structures and behaviors of specific aspects of firms and organizations: boards of directors, equity structures, employment models, human resource policies and practices, technology strategies, and innovation events. Firms, Markets, and Hierarchies collects excellent social science work on transaction cost economics, taking stock of its status, charting its future development, and fostering its renewal and evolution. (shrink)

This paper outlines different types of knowledge and how they are applied to different problem types. It makes the case that co-created knowledge, generated by innovative and collaborative partnerships of scholars within a transdisciplinary framework is best suited to address the most complex and therefore most important problems in food systems scholarship. It applies Transaction Costs theory to highlight some of the options we scholars face and applies these concepts to the issue of Payments for Ecosystems Services., with an (...) analogy and questions to ponder. (shrink)

Purpose of the study is to determine factors influencing transaction costs on the sharing economy. The article examines the evolution of the fundamental concept of economic theory – transaction costs, under the influence of the expansion of sharing economy. The sharing economy appears to be the result of the further development of the consumption economy, since within the framework of this economic system, the quality of the services provided is improving. The scientific novelty lies in the clarification of (...) the mechanism of mutual development of both the sharing economy and transaction costs. As a result, the importance of the factor of massive use of the Internet and mobile devices by a huge number of people, as influencing the service provision market, was revealed. At the same time, there is no need to overcome various barriers, and entrepreneurs have the opportunity to sell not so much reductions in production costs, but rather a reduction in transaction costs. (shrink)

Many economic theorists hold that social institutions can lead otherwise irrational agents to approximate the predictions of traditional rational choice theory. But there is little consensus on how institutions do so. I defend an economic internalist account of the institution-actor relationship by explaining economic rationality as a feature of individuals whose decision-making is aided by institutional structures. This approach, known as the subjective transaction costs theory, represents apparently irrational behavior as a rational response to high subjective transaction costs (...) of thinking and deciding. The theory has two attractive features. First, it reconciles rational choice theory with the increasing body of evidence cataloguing putative errors in economic decision-making. Second, it vindicates the explanatory power of individual choice against externalist challenges; the subjective transaction costs theory keeps economic rationality in the head. (shrink)

This article examines Sagoff's criticisms of 'Four Dogmas of Environmental Economies' and argues that none of them are fatal. Many of the criticisms appear to rest on general misunderstandings about welfare economics. One misunderstanding is that transaction costs are theoretically indistinguishable from regular production costs. The theoretical distinction is that transaction costs vary under alternative policies and institutions whereas production costs are fixed by tastes, technology and endowments. Another misunderstanding is that market failure concerns only Pareto efficiency. (...) Market failure also concerns social efficiency with respect to the 'social welfare function', a device for making explicit ethical judgments about the interpersonal distribution of welfare. A third misunderstanding is that the 'rationality assumption' drives economic theory. In fact, the explanatory power of economic models comes mainly from explicit assumptions about the constraints facing economic agents. A fourth misunderstanding is that welfare economics is used as a mechanism for making legal and political decisions. Rather, welfare economics is used as a method for informing legal and political decisions by evaluating their outcomes on the basis of individual welfare. Used properly, it can improve the democratic process by bringing hidden costs and difficult issues to the attention of both policy-makers and the wider public. (shrink)

This paper discusses recent attempts by economists to analyze institutional structure using individualist methodology. It is argued that developments in game theory, as well as advances in the analysis of transactions costs, have proved surprisingly fertile in yielding insights into the nature and structure of institutions. The example of the university is used to illustrate the ways in which the economic approach to institutions can be applied. In particular, the nature of academic contracts and the non?profit status of universities are (...) related to the literature on contractual hazards. Although methodologically very different from sociological or historical analysis of institutions, it is argued that the new institutional economics may provide a bridge permitting greater contact between hitherto almost entirely separate disciplines. (shrink)

The paper provides an economic interpretation of legal culture. Drawing on analogies from other products and services markets, I argue that combinations of legal language, procedures and conceptual structures constitute a network which, mainly through cost considerations, come to occupy a dominant position in particular jurisdictions. The facts that a particular legal culture will be adopted by political rulers and that practising lawyers can both control entry to the profession and ‘capture’ law‐making processes suggest that legal culture networks may (...) be protected against competition. To the extent that they have monopolistic power, lawyers can exploit the key features of legal culture to extract rents: the law used can be more formalistic, more complex and more technical than is optimal. Whether the monopolistic power of a particular legal culture is sustainable depends on the relative strength of potential competitive forces. These can take the form of alternative cultures becoming available for particular branches of the law, thus partially dismantling the network, or through transfrontier transactions opening up the network to competition from foreign systems. (shrink)

The focus of this study is to explore the impact of transformation from living as a community and perceiving cooperation as a responsibility to meet each other’s needs to individualized society of the modern life due to the capitalist market system on religious obligations with economic implications through emerging institution in the modern period. This study will first analyze how the proxy-embeddedness has led to a transformation in the society from the perspective of Islamic economics under four categories: (1) (...) the weakening of Muslims’ relations with their relatives and neighbours; (2) Equalization of worship for different purposes on a common denominator; (3) Lack of social awareness due to deprivation of the experience of performing worship personally; and (4) the prioritization of those capable of being productive over unproductive people in terms of being beneficiaries of zakat or other types of benefits. Worships such as zakāt and sacrifice are among the acts of worshipping that enable wealthy Muslims to help those in need financially. Although the transfer of material resources to the needy people through modern institutions ensures the fulfilment of worship, through which principles and objectives this transfer is carried out are also important. Significant transformations are observed in the way these worships are performed compared to the pre-modern period, as institutions that carry out zakāt and sacrificial meat collection and distribution activities in line with capitalist principles such as low transaction costs and efficiency. First, it is expected from a Muslim to be aware of the social environment he/she is in, be aware of the needy, and maintain social relations within this awareness. All kinds of charity and financial aid at the level of individual relations, especially zakāt and sacrifice, ensure the continuation of this awareness. If Muslims perform these worships and charity activities through institutions, the awareness of one’s environment will weaken. A second transformation is to make these worships indistinguishable from each other by equating them to the common denominator of paying money. This situation leads to the equalization of worship at the material level and causes the differences to be invisible for Muslims who perform the worship. A third transformation is that the realization of worship by institutions through the proxy system causes Muslims to be deprived of the experience of performing worship individually. While these prayers are performed through institutions in an efficient and low-cost way, the only thing expected from Muslims is to make the necessary payment through the bank. In this case, the spiritual contributions expected to be realized during the fulfilment of the worship decrease. Finally, we see that some institutions utilize capitalist principles and goals to decide who should receive financial aid. For this reason, people who can become a productive factor due to the help they receive are prioritized over others. There is a rational choice behind this decision mechanism: It is aimed to reduce the number of needy people in society by transforming zakat recipients into zakāt payers. On the other hand, Islamic sources do not consider such a priority among those who deserve to receive zakāt. Moreover, this situation will lead to the permanent postponement of people who are not included as a productive factor in the capitalist system but in need. In the second part of the study, an analysis of the agency (vekalet) system, which allows individuals to transfer some of their responsibilities to private institutions to spend time more efficiently, is conducted through the example of nursing houses. Another example of the fulfilment of zakat and sacrifice through the proxies given to institutions is that Muslims fulfil their responsibilities towards their relatives through institutions such as nursing houses. The reason for such a need arises from the fact that people, who take place as human capital in the capitalist system, are required to spend their time to improve themselves, get new education and gain more experience, instead of spending their time taking care of their relatives so that the production process can continue to grow. Although this type of service contract is formally valid in terms of Islamic law when evaluated in terms of the bond that Islamic morality envisages to be established between Muslims and their relatives and the protection of this bond, institutions such as nursing houses can lead to the commodification of family ties due to the transfer of responsibilities to relatives in return for a service fee. (shrink)

Current economic ontology development has failed to confront two important errors associated with historicism. Embracing the linearity of economic value being directly attributed to the labor applied to natural resources taken together with efficiency arguments used to justify monetary policy on both the microlevel (transaction) and macrolevel (global trade), we know these legacies of the scientific method applied to economic systems have left the G-20 paralyzed to deal with structural failings evidenced from banking to business to economic policy. An (...) exploration of the structural modalities that impair our current capacity for adaptation and alternative methods for accounting for value is the basis for this inquiry. Integral accounting is proposed as a more suitable method to transition from scarcity-based market models to abundance-based modes of sustainable engagement. (shrink)

We study the effect of transaction costs (e.g., a trading fee or a transaction tax, like the Tobin tax) on the aggregation of private information in financial markets. We analyze a financial market à la Glosten and Milgrom, in which informed and uninformed traders trade in sequence with a market maker. Traders have to pay a cost in order to trade. We show that, eventually, all informed traders decide not to trade, independently of their private information, i.e., (...) an informational cascade occurs. We replicated our financial market in the laboratory. We found that, in the experiment, informational cascades occur when the theory suggests they should. Nevertheless, the ability of the price to aggregate private information is not significantly affected. (JEL C92, D8, G14). (shrink)

The theory of the firm initially developed by Ronald Coase has made explicit the political nature of firms by putting hierarchy at the heart of the economic process. Theories of workplace democracy articulate this intuition in the normative terms of the conditions under which this political power can be legitimate. This paper presents an organizational theory of workplace democracy, and contends that the democratization of firms requires that we take their organizational dimension explicitly into account. It thus construes democracy as (...) an organizational principle and juxtaposes it to market, hierarchy, and norm-compliance as rival principles for the organization of economic activities. Attempts to construe democracy as an organizational principle with unique features in the tradition of transaction-cost economics are discussed before proposing an innovative solution based on an updated version of grid/group cultural theory of politics, adjusted to accommodate the basic requirements of democratic theory. (shrink)

Conflicts of interest in corporate law can be addressed by two main alternatives: a requirement of a majority of the minority vote or the imposition of duties of loyalty and fairness. A comparison of Delaware, the UK, Canada, and Israel reveals that while the conflicts of interest problem within publicly-traded corporations receives different treatment in the different jurisdictions — either a fairness rule or a majority of the minority rule — closely-held corporations receive the same treatment of an imposition of (...) duties of loyalty and fairness. This article explains this finding, demonstrating that determining which of these rules is adopted is, in fact, a choice between liability rule protection and property rule protection. This choice depends on the total and relative transaction costs. These costs include both the negotiation costs attendant upon a property rule, as well as the adjudication costs associated with a liability rule. The sum of these costs is influenced by the efficacy of the judicial system and of extralegal mechanisms such as the market for corporate control, the capital market, and the types of investors active in the market. Because the different jurisdictions have different relative costs, due to differences in the economy and the legal systems, publicly-traded corporations are treated differently in each system. However, sometimes conflict of interest situations share the same main characteristics — as with closely-held corporations—leading to the domination of one solution, and thus the same solution is applied for closely-held corporations in the different jurisdictions. (shrink)

Regulation is often applied to business behavior to ensure that the social costs of doing business are included in the cost and pricing structures of the firm. Because the consumer benefits from the transaction that generated the social costs, asking the consumer to bear the burden imposed by the transaction is fair. However, there may be a lack of Justice m the internal and external distribution of the social costs of doing business if consumers are the only (...) party bearing that burden, or if the costs are being shifted to employees or taxpayers when a closer stakeholder is also benefiting from the transaction – the stockowner. A social justice perspective requires that those benefiting from a transaction share in the burdens of it. We propose that a Tobin-like tax on stock transactions might be a just means of achieving greater justice in the distribution of the social cost burden. (shrink)

The purpose of the study is to present the author's accounting mechanisms in relation to the transaction costs of a manufacturing enterprise in relation to the financial, managerial and strategic aspects of this process. The scientific novelty of the research lies in the fact that the paper systematizes views on the existing accounting and analytical support in relation to transaction costs, offers various options for constructing accounting, management and strategic accounting of transaction costs, depending on the assessment (...) available for reflection. As a result, the recommended accounting approaches using accounting, management and strategic accounting of transaction costs are presented on the example of an industrial company. Since transaction costs occupy a significant share in the cost structure of business units engaged in production, it is necessary to organize their reflection using modern accounting principles. The complexity of the monetary assessment of such costs causes the complexity of the management process associated with their accounting. This publication is devoted to the problems of accounting, management and strategic accounting of transaction costs at a manufacturing enterprise. The use of an integrated approach based on accounting principles makes it possible to ensure control over transaction costs for solving urgent tasks of management and owners. (shrink)

Mental accounting is a concept associated with the work of Richard Thaler. According to Thaler, people think of value in relative rather than absolute terms. They derive pleasure not just from an object’s value, but also the quality of the deal – its transaction utility (Thaler, 1985). In addition, humans often fail to fully consider opportunity costs (tradeoffs) and are susceptible to the sunk cost fallacy. Why are people willing to spend more when they pay with a credit (...) card than cash (Prelec & Simester, 2001)? Why would more individuals spend $10 on a theater ticket if they had just lost a $10 bill than if they had to replace a lost ticket worth $10 (Kahneman & Tversky, 1984)? Why are people more likely to spend a small inheritance and invest a large one (Thaler, 1985)? According to the theory of mental accounting, people treat money differently, depending on factors such as the money’s origin and intended use, rather than thinking of it in terms of the “bottom line” as in formal accounting (Thaler, 1999). An important term underlying the theory is fungibility, the fact that all money is interchangable and has no labels. In mental accounting, people treat assets as less fungible than they really are. Even seasoned investors are susceptible to this bias when they view recent gains as disposable “house money” (Thaler & Johnson, 1990) that can be used in high-risk investments. In doing so, they make decisions on each mental account separately, losing out the big picture of the portfolio. (See also partitioning and pain of paying for ideas related to mental accounting.) . (shrink)

We argue that although halal certification could potentially reduce the high transaction costs related to buying Islamic financial products, in practice these costs are just replaced by transaction costs relating to the certification itself. It takes considerable time (2–3 months) and money (USD 122.000) to obtain a halal certification. Partially, this is because the market is highly concentrated and non-contestable. About 20 individual Sharia scholars control more than half the market, with the top 3 earning an estimated USD (...) 4.5 million in fees per year. Moreover, this market seems plagued with problems, most notably a strong incentive for excessively lenient certification, lack of consensus on what is considered halal and sub-standard governance practices. We discuss solutions to these problems and conclude that a neutral non-profit government entity should assume the role of halal certifiers. (shrink)

This paper views corruption as a form of contracting amenable to analysis from the viewpoint of transaction-cost economics. Concepts such as transaction, bounded rationality, opportunism, and asset specificity are shown to apply to cases of corruption. Both market and parochial corruption are hypothesized to vary in accordance with changes in the specificity of assets invested to support the corruption transaction. Evidence from a number of different studies tends to support the hypothesized relation. The implications of (...) the transaction-cost perspective are developed for policy makers and directions for future research are suggested. (shrink)

This book brings together in one place the work of one of our most respected economic theorists, on a field in which he has played a large part in originating: the New Institutional Economics. Transaction cost economics, which studies the governance of contractual relations, is the branch of the New Institutional Economics with which Oliver Williamson is especially associated.Transaction cost economics takes issue with one of the fundamental building blocks in microeconomics: the (...) theory of the firm. Whereas orthodox economics describes the firm in technological terms, as a production function, transaction cost economics describes the firm in organizational terms, as a governance structure. Alternative feasible forms of organization--firms, markets, hybrids, bureaus--are examined comparatively. The analytical action resides in the details of transactions and the mechanisms of governance.Transaction cost economics has had a pervasive influence on current economic thought about how and why institutions function as they do, and it has become a practical framework for research in organizations by representatives of a variety of disciplines. Through a transaction cost analysis, The Mechanisms of Governance shows how and why simple contracts give way to complex contracts and internal organization as the hazards of contracting build up. That complicates the study of economic organization, but a richer and more relevant theory of organization is the result. Many testable implications and lessons for public policy accrue to this framework. Applications of both kinds are numerous and growing.Written by one of the leading economic theorists of our time, The Mechanisms of Governance is sure to be an important work for years to come. It will be of interest to scholars and students of economics, organization, management, and law. (shrink)

This article explores managers’ ethical reasoning for behaviors in price negotiations using evidence from 15 in-depth interviews conducted with sales and purchasing representatives in the chemical industry in Germany. Applying transaction cost economics, we find that negotiators in commoditized market-like exchanges either refer to deontological norms such as not to lie, or they neglect a role for ethics, arguing that distributive negotiation is per se opportunistic. In contrast, exchanges of products with higher asset specificity lead to stronger (...) informational integration which is supported with teleological justifications. Some negotiators use teleological justification to build business on trust rather than on economic safeguards as their firm norms would require. For negotiators, our results suggest considering institutional context and adjusting ethical reasoning to the negotiation situation. Firms need to recognize and find ways to address the potential conflicts of their internal norms with their frontline managers’ attempts to act in the firms’ best economic and ethical interests. (shrink)

The purpose of the study is to present the author's method of digitalization of transactions of solved business tasks to reduce transaction costs of a manufacturing enterprise. The scientific novelty of the research lies in the fact that the elements of digitalization are proposed in the work to reduce the transaction costs of searching for information, negotiating, measuring, and concluding a contract. The introduction of digital technologies into specific business tasks contributes to the optimization of transaction costs (...) in the modern institutional environment. As a result, the information relationship of the structural divisions of the production company was established during the performance of their functions at all stages of the production cycle from procurement to sales, the functional filling subsystems of the organizational structure were determined. Transaction costs, in accordance with their classification, are structured according to these subsystems, they represent the elements of digitalization recommended for use in the business processes of a manufacturing company to reduce its transaction costs. The introduction of digitalization processes of business tasks into the management structure helps to increase the level of validity and speed of decisions in the subsystems of the organizational structure of the company. (shrink)

In this paper we investigate the legal arrangements involved in UK surrogate motherhood from a transaction-cost perspective. We outline the specific forms the transaction costs take and critically comment on the way in which the UK institutional and organisational arrangements at present adversely influence transaction costs. We then focus specifically on the potential role of surrogacy agencies and look at UK and US evidence on commercial and voluntary agencies. Policy implications follow.

Using concepts of neoinstitutional economics, such as transaction cost economics, institutional economics, property rights theory, and information economics, the development of the Open Source movement is investigated. Following the evolution of institutions in Open Source, it is discussed what the comparative institutional advantages of this model are. The conclusion is that it is the institutional framework of Open Source, not merely the low cost of Open Source software that makes it an attractive alternative (...) mode of organizing the production and distribution of software and software-related services. Alternative organizations will be formed and existing organizations will be transformed to take advantage of its opportunities. (shrink)

The article addresses the role of scarcity in negotiating the relationship between intellectual property, particularly from a legal-economic perspective, and property rights, as understood by transaction cost economics, to shed light on the deadlock faced by those suffering from neglected tropical diseases (NTDs). The consistency of the law and economics fundamentals that support the trade on knowledge goods, namely patents on essential medicines, is put under check by Scott Veitch’s scholarship on legal irresponsibility. The damages that (...) emerge from the operations of the intellectual property system are registered in the novel concept of negative public domain, and are due mainly to the lack of access to treatments that end up being unaffordable, or to innovation that leads to new drugs that is not sufficiently incentivised though price signals. The accountability for such damages is taken into consideration by arguing that the disavowal of responsibility is made possible by the negative public domain, which is balanced by the construction of a positive response through the language of rights. As such, responsibility per se is preserved, evading one instantiation of Teubner’s legal paradoxes, but rendered ineffective by design. In other words, even if the harms endured by those affected by the NTDs can be traced back to the operations of the intellectual property system, there is no one to hold accountable. The main goal pursued through the article is to make such an arrangement explicit, by giving centrality to the notion of scarcity and its interplay between legal and economic theory, alongside the novel concept of negative public domain as a site where the actual consequences of irresponsibility lie, to hopefully inform further critique in subsequent works. (shrink)

This book brings together in one place the work of one of our most respected economic theorists, on a field in which he has played a large part in originating: the New Institutional Economics. Transaction cost economics, which studies the governance of contractual relations, is the branch of the New Institutional Economics with which Oliver Williamson is especially associated.Transaction cost economics takes issue with one of the fundamental building blocks in microeconomics: the (...) theory of the firm. Whereas orthodox economics describes the firm in technological terms, as a production function, transaction cost economics describes the firm in organizational terms, as a governance structure. Alternative feasible forms of organization--firms, markets, hybrids, bureaus--are examined comparatively. The analytical action resides in the details of transactions and the mechanisms of governance.Transaction cost economics has had a pervasive influence on current economic thought about how and why institutions function as they do, and it has become a practical framework for research in organizations by representatives of a variety of disciplines. Through a transaction cost analysis, The Mechanisms of Governance shows how and why simple contracts give way to complex contracts and internal organization as the hazards of contracting build up. That complicates the study of economic organization, but a richer and more relevant theory of organization is the result. Many testable implications and lessons for public policy accrue to this framework. Applications of both kinds are numerous and growing.Written by one of the leading economic theorists of our time, The Mechanisms of Governance is sure to be an important work for years to come. It will be of interest to scholars and students of economics, organization, management, and law. (shrink)

Western buying companies impose Supplier Codes of Conduct (SCC) on their suppliers in developing countries; however, many suppliers cannot fully comply with SCC and some of them even cheat in SCC. In this research, we link contract characteristics - price pressure, production complexity, contract duration - to the likelihood of supplier's commitment to SCC through a mediating process: how the buying companies govern their suppliers. Our structural equation model analysis shows that the hierarchy/relational norms governance is a perfect mediator of (...) contract characteristics' effects on the likelihood of supplier's commitment; the market governance, an insignificant one. The managerial implications are provided for successfully implementing SCC in global supply chains. (shrink)

The objective of this paper is to suggest types of analysis that can help managers effectively choose NGO partners that help them meet their international corporate sustainability and social responsibility goals. NGO partner choices should offer a good fit to corporate goals/objectives and create opportunities to reap the benefits of social responsibility and sustainability efforts, which include public image, environmental protection, customer and stakeholder satisfaction, employee morale, and the completion of work that serves a social responsibility or sustainability goal. Examples (...) of this type of goal include providing income generation activities for persons with HIV/AIDS, and educational opportunities for people who would not normally get them. The paper exploresthree lenses through which partner choice may be viewed: agency theory, transaction cost economics, and resource dependency. Areas for further exploration are suggested, and a comprehensive research agenda/model is discussed. (shrink)

The objective of this paper is to suggest types of analysis that can help managers effectively choose NGO partners that help them meet their international corporate sustainability and social responsibility goals. NGO partner choices should offer a good fit to corporate goals/objectives and create opportunities to reap the benefits of social responsibility and sustainability efforts, which include public image, environmental protection, customer and stakeholder satisfaction, employee morale, and (most importantly) the completion of work that serves a social responsibility or sustainability (...) goal. Examples of this type of goal include providing income generation activities for persons with HIV/AIDS, and educational opportunities for people who would not normally get them. The paper exploresthree lenses through which partner choice may be viewed: agency theory, transaction cost economics, and resource dependency. Areas for further exploration are suggested, and a comprehensive research agenda/model is discussed. (shrink)

Covering both practical and theoretical aspects of strategic management, this three-volume work brings the complex topic down to earth and enables readers to gain competitive business advantages in their marketplace. This clear, insightful, and interesting work covers all aspects of strategic management, including chapters that discuss SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis, the Resource-Based View, transaction cost economics, and real options theory. Unlike other books, this three-volume work examines strategic management from different perspectives, effectively interweaving seemingly (...) disparate subdisciplines, such as entrepreneurship and international business, with specialized foci, such as creativity, innovation, and trust. Incorporating information from contributors as varied as a proprietor of a worldwide motorcycle business to one of the most published scholars in the field of international strategic management, the practical and theoretical perspectives presented in Strategic Management in the 21st Century will benefit business strategists, professors of strategic management, and graduate students in the field. (shrink)

Nowadays, neo-institutionalistic approaches are prominent in economics, political science, the science of public administration and sociology. There is a general complaint about the vagueness of the concept of institutions and the apparent disparity of phenomena falling under it. This article shows how institutional legal theory provides a typology of institutions as sets of rules and corresponding patterns of regulated behaviour that can help to avert much confusion. The typologys usefulness is tested by applying it to an array of private (...) governance structures distinguished by transaction cost economics. (shrink)

One challenge that globalization has brought to business is that firms, as they expand their market globally through cross-border alliances, need to deal with partner firms from countries of different religious background. The impact of a country’s dominant religion on its firms’ international market entry mode choices has not been examined in traditional approaches. Focusing on hypothesizing the influence of Christian beliefs and atheism (i.e., the absence of belief in any deities), this research aims to fill the gap by exploring (...) religion’s role in providing moral restraint on managers’ propensity for opportunism, which in turn affects these managers’ choices of their firms’ international market entry via non-equity alliances or joint ventures. A study of 22,156 cross-border alliances formed in 48 industries world-wide over 9 years provides new insight toward understanding religion’s influence on firms’ international market entry mode decisions through the ethical dimension of strategic leadership. (shrink)

Stakeholder theory provides a framework for investigating the relationship between corporate social performance (CSP) and corporate financial performance. This relationship is investigated by examining how change in CSP is related to change in financial accounting measures. The findings provide some support for a tenet in stakeholder theory which asserts that the dominant stakeholder group, shareholders, financially benefit when management meets the demands of multiple stakeholders. Specifically, change in CSP was positively associated with growth in sales for the current and subsequent (...) year. This indicates that there are short-term benefits from improving CSP. Return on sales was significantly positively related to change in CSP for the third financial period, indicating that long-term financial benefits may exist when CSP is improved. (shrink)

In the economic literature on the firm, especially in the transaction-cost tradition, a sharp distinction is drawn between so-called “market transactions” and “administered transactions.” This distinction is of enormous importance for business ethics, since market transactions are governed by the competitive logic of the market, whereas administered transactions are subject to the cooperative norms that govern collective action in a bureaucracy. The widespread failure to distinguish between these two types of transactions, and thus to distinguish between adversarial and (...) non-adversarial relations, has led many business ethicists to develop a “uniform” moral code. Yet in market transactions, the checks and balances built into the system of commercial exchange are such as to permit more instrumental forms of behavior. In administered transactions, by contrast, these checks and balances are absent, and thus the institutional context calls for much greater exercise of moral restraint. In this paper, I begin the task of developing an adversarial ethic for business. According to this view, the competitive environment licenses a greater range of “self-interested” behavior, but also imposes its own constraints on the strategies that firms may adopt in the pursuit of their interests. (shrink)