TCA is used in Marketing, TCI in International Business and TCE is the general/original theory, what exactly is the difference among them? I.e. how can they be distinguished?
Nicola. Transaction cost analysis originate from a Nobel laureate economist, Ronald Coase. His paper, The nature of the firm deals with the question of make or buy question. Another Nobel laureate followed up the question and developed the governance structure: make, buy or hybrid. The current supply chain management originates from these studies. Transaction costs are finding suppliers, negotiating prices, drawing up contracts and enforcing contracts. Because we can"t draw a perfect contract addressing all contingencies in the contract there will be problems
after the contract. Transaction cost analysis deals with analyzing costs of finding suppliers, negotiating prices, drawing up contracts and enforcing contracts.
Coase was pursuing an answer to a question, why one firm does not make all goods?
When you make a good inside the firm there are input costs and management costs.
If making it inside the firm is cheaper than outside, make it. Otherwise buy from outside. There are hosts of issues in making and buying and transaction cost economics deals with these issues. International sourcing or outsourcing can be analyzed from the transaction cost perspective. I have written several papers: 1. Sourcing strategies of manufacturing firms:transaction cost implications; 2. Foreign direct investment and global sourcing choices of firms in the U.S.; 3. Impact of supplier certification program in U.S. Firms. You may find these papers for references.
Global sourcing or outsourcing is called vertical integration or fragmentation in production.
Some countries have comparative advantages in certain parts and specialize them.
Global integration means that manufacturing firms use these parts by importing them.
Information technology and low transportation costs make this type of operation feasible. Parts trade has been growing in international trade.
Matching governance structure (make, buy and hybrid) with characteristics of transactions (volume, frequency, degree of asset specificity) economies transaction costs. The field of supply chain management was born to study economizing transaction costs in entire supply chain from production inputs to marketing of the final product. The Toyota's tier system of suppliers and the module system in the U.S are emerged as a way of transaction costs economizing.
Neo-classical Economics assumed that there is no transaction cost. That's why the relation between demand and supply were calculated mathematically. But insitutional economists brought out that there exists a transaction cost other than the demand-supply relation based prices. For example as Dr. Hong Park above mentioned the issue of writing a contract. This is not part of the original cost of the product. Still it has to be borne by someone (buyer or seller or both). There is also another point - information asymmetry. Neo-classicals considered zero cost of information. But we know that in real life information has its cost. When you want to buy something you need to find out where it is available, at what price; this investigation has its cost. For a firm this cost is much more (procurement costs). These two issues (transaction cost and information assymetry) were the founding blocks of institutional economics.
Thus it is clear that transcation cost economics is part of the institutional economics. But institutional economists later went beyond the economic elements and scholars like Elinor Ostrom looked into actors dynamics, rules of games, technical charactristics etc into institutional analysis. Institutional analysis thus includes analysis of political dimensions of institutions. In one of my papers "Institutionalinng Common Property Resources Management" the use of Institutional Analysis and Development Framework propounded by Ostrom has been done.
How many Perspectives may assumed in the transaction cost theory? As the theoretical ground of my PhD thesis (hypothesis) , there are four possible transaction cost perspectives for the parties in a technology transfer process!
The four perspectives are namely:
TTP1) Transferor- Transferor: Determining the technology considerations of the Transferor from the its own perspectives ,
TTP2) Transferor- tarsnferee: Determining the technology considerations of the tarsnefror from the trasnferee's perspectives,
TTP3) Transferee- Transferor: Determining the technology considerations of the transferee from the Trasnferor perspectives
TTP4) Transferee- Transferee: Determining the transfer considerations of the receiver from the its own perspectives
The main notion of technology transfer (TT) according to existing understanding of transaction cost theory is referred to second Respective (TTP2), in which it is market requirements of technology that construct the TT conditions.
Your instructions will be highly appreciated,
- Badges
- Science topic
- Similar topics
- Statistics
- Survey