The Role of Transaction Cost Economics in Selecting Firm Strategy

Abstract

From the first beginning Transaction Cost Economics (TCE) was concerned by the reason and circumstances when the firms choose the hierarchy instead of market for organizing a transaction. Further this analysis model was expended to considering other governance modes, as relational contracting. Even it was mostly criticized Transaction Cost Economics has an important role in choosing the firm strategy based on a transaction costs analysis. The purpose of this present paper is to offer an transaction assessment griddle – a new instrument for managers in choosing the firm strategy.

Keywords

• transaction costs
• complexity costs
• relational contracting
• transaction assessment griddle