Edited by Michael Dietrich and Jackie Krafft
Chapter 13: Transaction Cost Empirical Work
Richard Carter 13.1 INTRODUCTION The transaction cost theoretical framework has been exposed to substantial empirical testing: Macher and Richman (2008), in a recent review of the empirical literature, identified around 900 studies that tested some aspect of the transaction cost economics (TCE) theory in a broad range of circumstances.1 TCE empirical work came to prominence with some early articles that are now landmark studies in the field (Monteverde and Teece, 1982; Anderson and Schmittlein, 1984; Masten, 1984). The focus of these studies and the many others that followed was on testing the transactional alignment predictions of TCE. More recently, a ‘second generation’ of studies has emerged that employs empirical methods that address some of the inherent limitations of the reduced-form analysis that has been employed in the majority of the TCE empirical work (Yvrande-Billon and Saussier, 2004). Empirical work provides vital feedback on the TCE theoretical framework and hence to the theory of the firm debate. It has been claimed both that TCE is an empirical success story and that the empirical work is broadly corroborative of the predictions of TCE (Williamson, 1985, 1999, 2000). These claims are very significant for the academic debate and hence it is essential that they are well founded. This review argues that the empirical support for TCE is in fact rather mixed and that the more recent empirical work suggests that governance (or integration) decisions can be helpfully informed by TCE alongside alternative theoretical perspectives. This review focuses on empirical studies in two areas...
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