Actionable and enduring implications of Oliver Williamson’s transaction cost theory

Hennart, Jean‐François; Verbeke, Alain

doi:10.1057/s41267-022-00558-y

Cited by 19 publications

(11 citation statements)

References 104 publications

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“…The quasi-internalization approach has much in common with the notion that application of TCE on MNEs is primarily a story about organizing resource interdependence in the best possible way rather than minimizing transaction costs, although transaction cost is an important aspect of this interdependence (Hennart and Verbeke, 2022). This also implies a less MNE-centric view than usually applied in the IB literature.…”

Section: The Mne In the Tce/internalization Theorymentioning

confidence: 99%

“…We might also add that a certain resource interdependence usually depends on other indirect interdependencies in a larger network, which implies that a governance structure is dependent on the judgement of transaction costs/management costs in the wider network among several actors (Forsgren and Holm, 2022). Finally, as pointed out by Hennart and Verbeke, the choice of governance should also reflect an assessment by the different parties of value-creation possibilities linked to the different governance alternatives (Hennart and Verbeke, 2022)…”

Section: The Mne In the Tce/internalization Theorymentioning

confidence: 99%

“…It has been pointed out, though, that governance choices in line with TCE theory are guided by a “ comparison between real-world alternatives rather than between an observed, supposedly unsatisfactory state and a hypothesized, but non-feasible, ideal one” (Hennart and Verbeke, 2022, p. 1559). That is, it is about efficiency in a relative sense rather than in an absolute sense.…”

Section: The Mne In the Tce/internalization Theorymentioning

confidence: 99%

“…We may add that recent approaches to present TCE as a theory on bundling complementary resources rather than on minimizing transaction costs (Hennart, 2020; Hennart and Verbeke, 2022) implies a much more complicated view on what the hierarchy and control actually means in an MNE.…”

Section: Why Does Ib Research Assume Mne Supremacy?mentioning

confidence: 99%

“…An indication of that knowledge management as a multinational advantage is less than certain is the many attempts to demonstrate a positive relationship between multinationality and performance. The results from these attempts are quite mixed to say the least (Hennart and Verbeke, 2022).…”

Section: Introductionmentioning

confidence: 99%

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The MNE as the “crown of creation”?: a commentary on mainstream theories of multinational enterprises

Forsgren

Yamin

2022

CPOIB

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Purpose The purpose of this paper is twofold: to analyse what theories assume about multinational enterprises (MNEs) when they claim these are superior and to discuss possible explanations for why MNE superiority seems to be dominant in the international business (IB) research field. Design/methodology/approach A common theme in mainstream IB theories is that multinational enterprises (MNEs) are superior in terms of cost efficiency and innovativeness compared with other types of organizations. A closer look at transaction cost economics (TCE)/internalization theory, evolutionary theory and dynamic capability theory reveal a bias toward MNE supremacy because of how MNEs are conceptualized as firms and therefore fail to explain the essence of “multinational advantage”. These revelations and the strong dependence on the benevolence to provide unbiased data means that MNE supremacy posited by mainstream IB theories is as much a rationalized myth as an empirical fact. Findings Although mainstream theories differ when it comes to the building blocks that constitute MNE supremacy, they have one attribute in common: they are silent as to why MNEs are superior compared with, for example, domestic firms or other types of economic agents. Irrespective of whether the focus is the strength of the hierarchy, the skill of managers or a common identity, nothing in the theories tells us that these factors are more pronounced in MNEs than in other types of economic actors. Originality/value The paper deals with the issue of multinational advantage. It claims that mainstream theories of MNEs tend to assume, explicitly or implicitly, that MNEs are superior in terms of cost efficiency and innovativeness compared with other types of economic agents. The analysis demonstrates that this tendency is a consequence of how MNEs are conceptualized as firms in the different theories as well as of the strong dependence in IB research on the benevolence of MNEs to provide unbiased data. It is concluded that MNE supremacy posited by mainstream IB theories is as much a rationalized myth as an empirical fact.

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Section: The Mne In the Tce/internalization Theorymentioning

confidence: 99%

Section: The Mne In the Tce/internalization Theorymentioning

confidence: 99%

Section: The Mne In the Tce/internalization Theorymentioning

confidence: 99%

Section: Why Does Ib Research Assume Mne Supremacy?mentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

The MNE as the “crown of creation”?: a commentary on mainstream theories of multinational enterprises

Forsgren

Yamin

2022

CPOIB

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Transaction governance structure, institutional voids and transaction efficiency: An analysis of small and medium‐sized enterprises in emerging markets

Masroor,

Tasneem,

Alam

et al. 2023

Bus Strat Dev

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In an emerging market and developing economies, transaction governance structure (TGS) plays a crucial role in determining transaction costs (TC) and transaction efficiency (TE) for small and medium‐sized enterprises (SMEs). The presence of institutional voids (IVs) further complicates the situation by adding uncertainty and complexity to the transactions. Therefore, understanding the interplay between TGS, TC, TE, and IVs is essential for SMEs to thrive and contribute to the overall economic growth of the country. This study investigates the impact of transaction governance structure on transaction efficiency with the moderating effect of institutional voids on small and medium‐sized IT and software firms in Bangladesh. A sample of 131 SMEs was selected using nonprobability convenience and snowball sampling techniques. Data were collected using a self‐administered structured questionnaire with a 5‐point Likert scale and analysed using the PLS‐SEM approach. The study findings reveal that TGS significantly and positively impacts TE, and IV moderates the relationship between TGS and TE positively. The results of the study reveal that TGS plays a crucial role in reducing transaction costs and enhancing transaction efficiency for small and medium‐sized firms in Bangladesh, thus presenting opportunities for inclusive growth and development in the country's software and IT sector. This study provided valuable insights for policymakers and practitioners on the importance of TGS and IV in enhancing transaction efficiency. Additionally, the study acknowledges the significance of meeting social and environmental needs by leveraging corporate assets and expertise, strengthening a company's competitive strategy, and developing new business opportunities.

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Examining the conditions for signing a strategic alliance contract: a configurational approach to the biotechnology sector

2023

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Actionable and enduring implications of Oliver Williamson’s transaction cost theory

Cited by 19 publications

References 104 publications

The MNE as the “crown of creation”?: a commentary on mainstream theories of multinational enterprises

The MNE as the “crown of creation”?: a commentary on mainstream theories of multinational enterprises

Transaction governance structure, institutional voids and transaction efficiency: An analysis of small and medium‐sized enterprises in emerging markets

Examining the conditions for signing a strategic alliance contract: a configurational approach to the biotechnology sector

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