Commemorating Oliver Williamson, a founding father of transaction cost economics

Abstract

This contribution commemorates Oliver Williamson, who recently passed away, as one of the founding fathers of Transaction Cost Economics (TCE). It does so by touching on some of the details of his personal life and connecting these with his professional career. The latter was devoted to putting the study of institutions on the economic agenda. Closer scrutiny reveals that three phases may be identified. Williamson first developed an interest in analysing vertical integration. During the second phase, he elaborated this interest in TCE, and during the third, he positioned his contributions within the area of institutional economics. Furthermore, the article considers the various influences of institutional and organizational economists on Williamson. Finally, the article considers the reception, criticism, and further elaborations of Williamson's contributions.

Sustainable Ground Transportation and the E-Commerce Revolution: Innovations and Challenges at the Intersection

“…Transaction cost theory helps analyse how organisations have successfully adapted to the pandemic and overcome the critical situation. Sent and Kroese [28] suggest that consumers' limited rationality and opportunistic behaviours can be incorporated into the theory to improve business outcomes.…”

Transactions in Paraná’s dairy AGS: a study based on transaction and measurement costs

“…As Sent & Kroese (2022) state, Williamson was one of the main theorists to operationalize the concepts of NIE, from the theoretical apparatus of TCE in three main phases: first, by analyzing in depth governance through vertical integration; second, by developing the theoretical construct of TCE; third, by placing its main contributions in the area of Institutional Economics. To develop TCE, Williamson (1985) identifies three important groups of parameters and theoretical dimensions: behavioral assumptions; transaction attributes and governance structures -which provide the explanatory power of his theory (Carter & Hodgson, 2006).…”

“…Such governance structures differ among market, hybrid forms and hierarchy or vertical integration (Williamson, 1991), and as Sent & Kroese (2022) highlight, they are seen as an economizing response to transaction costs. As Williamson (2002) presents, each governance structure has strengths and weaknesses that combined with its characteristics and transaction attributes, justify the best way to coordinate transactions among agents.…”

“…In short, it is understood that market and hierarchy are polar structures, and when moving from market to hierarchy agents experience a trade-off between higher level of incentives and higher level of control (Williamson, 1991;Carter & Hodgson, 2006;Crook et al, 2013;Sent & Kroese, 2022). Considered as an intermediary between market and hierarchy, the hybrid governance structure has medium levels of incentives and control.…”

The role of the information and communication technologies in the institutional and economic sustainability of the post-pandemic small and medium enterprises

“…Evolutionary institutionalist theories of firms are built on concepts such as corporations, firm power, pricing-setting behaviour, etc. New institutional economics, by contrast, draws upon the transaction-cost theory proposed by Ronald Coase and Oliver Williamson, which provides an explanation of the transitions between alternate mechanisms for coordinating economic activities (markets and hierarchies) and for the rise of institutions (Williamson, 2010;Rindfleisch, 2020;Sent and Kroese, 2022). With new developments in the economic theories of organisation, information, property rights, and transaction costs, there has been an effort to integrate institutionalism with the most recent developments of the main stream economy, referred to as the New Institutional Economics (NIE).…”