Transaction cost theory
DESCRIPTION
A theory that departs from the view of the firm as a complex structure of marketing exchanges to one that is based on governance mechanisms that improve efficiency of operations and internal resource allocations, reducing transaction costs.
A theory that departs from the view of the firm as a complex structure of marketing exchanges to one that is based on governance mechanisms that improve efficiency of operations and internal resource allocations, reducing transaction costs.
KEY INSIGHTS
The theory as applied to marketing addresses mechanisms for interorganizational governance in marketing channels. It accounts for the efficiency implications of organizing relationships in marketing channels through means for reducing potential costs related to carrying out safeguarding, adaptation, and evaluation processes of marketing relationships (Heide 1994).
The theory as applied to marketing addresses mechanisms for interorganizational governance in marketing channels. It accounts for the efficiency implications of organizing relationships in marketing channels through means for reducing potential costs related to carrying out safeguarding, adaptation, and evaluation processes of marketing relationships (Heide 1994).
KEYWORDS Governance, channels, interorganizational relationships
IMPLICATIONS
A greater knowledge of transaction cost theory-based research can potentially assist the marketer with the more effective structuring of inter-firm relationships. Decisions about where decision-making should lie, for example, are focal issues which are directly assessed with the transaction cost theory perspective.
A greater knowledge of transaction cost theory-based research can potentially assist the marketer with the more effective structuring of inter-firm relationships. Decisions about where decision-making should lie, for example, are focal issues which are directly assessed with the transaction cost theory perspective.
APPLICATION AREAS AND FURTHER READINGS
Marketing Strategy
Chiles, Todd H., and McMackin, John F. (1996). ‘Integrating Variable Risk Preferences, Trust, and Transaction Cost Economics,’ Academy of Management Review, 21(1), January, 73–99.
Chiles, Todd H., and McMackin, John F. (1996). ‘Integrating Variable Risk Preferences, Trust, and Transaction Cost Economics,’ Academy of Management Review, 21(1), January, 73–99.
Rangan, V. K., Corey, E. R., and Cespedes, F. (1993). ‘Transaction Cost Theory: Inferences from Clinical Field Research on Down Stream Vertical Integration,’ Organization Science, 4, 454–477.
Marketing Management
Heide, Jan B., and John, George (1992). ‘Do Norms Matter in Marketing Relationships?’ Journal of Marketing, 56(2), April, 32–44.
Heide, Jan B., and John, George (1992). ‘Do Norms Matter in Marketing Relationships?’ Journal of Marketing, 56(2), April, 32–44.
Rugman, A. M., and Verbeke, A. (1992). ‘A Note on the Transnational Solution and the Transaction Cost Theory of Multinational Strategic Management,’ Journal of International Business Studies, 23(4), 761–771.
International Marketing
Hennart, Jean-François (1991). ‘The Transaction Costs Theory of Joint Ventures: An Empirical Study of Japanese Subsidiaries in the United States,’ Management Science, 37(4), April, 483–497.
Hennart, Jean-François (1991). ‘The Transaction Costs Theory of Joint Ventures: An Empirical Study of Japanese Subsidiaries in the United States,’ Management Science, 37(4), April, 483–497.
Business-to-Business Marketing
Dahlstrom, Robert, and Nygaard, Arne (1999). ‘An Empirical Investigation of Ex Post Transaction Costs in Franchised Distribution Channels,’ Journal of Marketing Research, 36(2), May, 160–170.
Dahlstrom, Robert, and Nygaard, Arne (1999). ‘An Empirical Investigation of Ex Post Transaction Costs in Franchised Distribution Channels,’ Journal of Marketing Research, 36(2), May, 160–170.
BIBLIOGRAPHY
Heide, J. B. (1994). ‘Interorganizational Governance in Marketing Channels,’ Journal of Marketing, 58(1), 71–91.
Heide, J. B. (1994). ‘Interorganizational Governance in Marketing Channels,’ Journal of Marketing, 58(1), 71–91.
Williamson, O. E. (1998). ‘Transaction Cost Economics: How it Works; Where it is Headed,’ De Economist, 146(1), 23–58.
Williamson, O. E. (1979). ‘Transaction-Cost Economics: The Governance of Contractual Relations,’ Journal of Law and Economics, 22, October, 233–261.