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Transaction Cost Theory ¶
- Different forms of economics organizations such as
- market
- hierarchical
- clans
- market
- are the result of transaction costs.
- Transaction costs generally refers to costs involving other than manufacturing products. For example,
- gathering information
- evaluating alternative options
- negotiating
- contracting
- physical transactions of objects
- gathering information
- These costs occur due to the complexity and uncertainty of economic system, which is a big argument against "rational choice" model of economic system.
- Such statuses are consequences of unequal distribution of information between economic actors involved in the transaction.
- Therefore, organizational forms are the result of managing uncertainties.
Readings and Applications ¶
- Ebers, Mark, & Oerlemans, Leon. (2013). The Variety of Governance Structures Beyond Market and Hierarchy. Journal of Management.
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doi: 10.1177/0149206313506938
- Cordella, Antonio. (2006). Transaction costs and information systems: does IT add up? Journal of Information Technology, 21(3), 195-202.
- http://sprouts.aisnet.org/118/1/040206.pdf
- Robins, James A. (1987). Organizational Economics: Notes on the Use of Transaction-Cost Theory in the Study of Organizations. Administrative science quarterly, 32(1).
- Software Development Strategy: A Practical Application of Transaction Cost Economics
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