Advances in Transaction Cost Economics

The aim of this course is to offer recent, advanced insights related to the theoretical and empirical content of recent work in the transaction cost economics field, particularly as it applies to management applications.

Transaction cost economics has long been a distinct voice in the conversation of management scholars (e.g., in strategy, international business, organization, technology management, and many other management research areas).  While long associated with the seminal contributions of Oliver Williamson, in recent years many scholars have made fundamental contributions to TCE that has strongly expanded its realism and explanatory scope. Ideally, at the end of the course students are able to engage in theory-building activities in behavioral strategy. In addition, students are able to identify suitable empirical methods and approaches for researching behavioral strategy.

The key idea of the course is to demonstrate the continuing viability of transaction cost economics as a progressive research program that expands by tackling new phenomena and problems by means of extending classical TCE thinking (i.e., the work of Oliver Williamson). This aim is achieved by presenting a number of the developments that have pushed the TCE envelope over the last two to three decades and featuring a number of those scholars who have been primarily responsible for these developments. Thus, the course will consider extensions and refinements of the basic behavioral assumptions of classic TCE, advances in how to use TCE empirically, expansions of classical TCE into the CATO framework, as well as new applications to international business and competitive strategy, as well as ecosystems and the blockchain.

The structure of the course is mainly based on interactive lectures by a broad international panel of scholars, all of whom have made important contributions to the behavioral strategy field.

In addition, there will be the option of participating in one or two paper development workshops, in which students can sign up detailed feedback from the faculty-discussant on how to further develop a specific working paper (previously submitted). Typically, only a subset of participants are interested in this activity, so only two afternoons have been reserved for this (allowing for feedback on and discussion of up to six  papers).

 The program is laid out such that it provides a comprehensive view of key research themes in transaction cost economics. All speakers are top-scholars that have made core contributions to TCE.

All speakers have accepted to participate. However, all the listed titles are so far tentative. Readings will added later. Indicative literature is provided at the end of the program.

DAY 1:  Introduction

Monday 22 May, 2023

1200-1500:   Nicolai J Foss, Copenhagen Business School: “TCE: An Evolving Research Program.”

Readings:     TBA

1600-1900:   Scott Masten, University of Michigan: “Empirical Research in Transaction Cost Economics.”

Readings:      TBA

DAY 2: Extending the Behavioral Assumptions of TCE

Tuesday, 23 May, 2023

1400-1700:   Nicolai J Foss, Copenhagen Business School: “Behavioral assumptions in TCE.”

Readings:     TBA

1800- 2000: Libby Weber, UC Irvine: “Bounded Rationality in TCE: Heuristics and Biases”

Readings:     TBA

DAY 3: Comparative Adjustment Costs and Problem-Solving

Wednesday, 24 May, 2023

1300-1500:   Paper development workshop

1500-1700:   Nicholas Argyres, Washington University in St. Louis: “The Role of Adjustment Costs”

Readings:     TBA

1800-2000:   Jackson Nickerson, Washington University in St. Louis: “TCE and Problem-solving:”

Readings:     TBA

DAY 4:  New Applications of TCE: International Business and Competitive Strategy

Thursday, 25 May, 2023

1100-1230:   Marcus Møller Larsen, Copenhagen Business School: “International Business”

Readings:     TBA

1300-1430:   Christian Geisler Asmussen, Copenhagen Business School: “Economizing and Strategizing.”

Readings:     TBA

1445-1600:   Paper Development Workshop

DAY 5: New Applications of TCE: The Blockchain and Ecosystems

Friday, 26 May, 2023

1100-1300    Fabrice Lumineau, HKU Business School: “The Blockchain in a TCE Perspective.”

Readings:     TBA

1330-1530:   Nicolai J Foss, CBS: “A TCE Perspective on Business Ecosystems.”

Readings:     TBA

1530-1630:   Nicolai J Foss, CBS:  “Open Issues in TCE and Closing.”   

Readings:     TBA

Indicative Literature
Argyres, N., Mahoney, J., & Nickerson, J.A. 2019. Strategic responses to shocks: Comparative adjustment costs, transaction costs, and opportunity costs. Strategic Management Journal, 40: 357-376.

Asmussen, C., Foss, K., Foss, N.,J., & Klein. 2021. Economizing and Strategizing: How Coalitions and Transaction Costs Shape Value Creation and Appropriation. Strategic Management Journal, 42: 413-434.

Coase, R.H. 1937. The nature of the firm. Economica, 4: 386-405.

Cuypers, I. R., Hennart, J. F., Silverman, B. S., & Ertug, G. 2021. Transaction cost theory: Past progress, current challenges, and suggestions for the future. Academy of Management Annals, 15(1), 111-150.

Larsen, M.M. 2013. Uncovering the hidden costs of offshoring: The interplay of complexity, organizational design, and experience . Strategic Management Journal, 34: 533-552.

Lumineau, F., Wang, W., & Schilke, O. 2021. Blockchain Governance—A New Way of Organizing Collaborations? Organization Science.

Mayer, K. J., & Argyres, N. S. 2004. Learning to contract: Evidence from the personal computer industry. Organization Science, 15: 394–410. 

Nickerson, J. A., & Zenger, T. R. 2004.  A knowledge-based theory of the firm—The problem-solving perspective. Organization Science. 15: 617–632.

Nickerson, J. A., & Zenger, T. R. 2008. Envy, comparison costs, and the economic theory of the firm. Strategic Management Journal, 29: 1429–1449.

Weber. L., & Mayer, K. J. 2014. Transaction cost economics and the cognitive perspective: Untangling the impact of informational and interpretive uncertainty on governance choice. Academy of Management Review.

Williamson, O. E. 1975. Markets and Hierarchies. New York: Free Press.

Williamson, O. E. 1985. The Economic Institutions of Capitalism. New York: Free Press.

Williamson, O. E. 1991. Comparative economic organization: The analysis of discrete structural alternatives . Administrative Science Quarterly, 36: 269–296.

Williamson, O. E. 1996a. The Mechanisms of Governance. Oxford: Oxford University Press.