Edited by Gary L. Lilien and Rajdeep Grewal
Chapter 4: Progress and Prospects for Governance Value Analysis in Marketing: When Porter Meets Williamson
Mrinal Ghosh and George John Firms rarely create value in isolation, and cooperation between firms has become so pervasive that it has fundamentally reshaped the field of marketing strategy (Webster 1992, p. 1). Indeed, such cooperation and coordination between firms has been fundamental to the successes of many prominent companies in a variety of channels contexts, including business-format franchising (e.g. McDonald’s, Coca-Cola), original equipment manufacturers (OEMs) and supplier relationships (e.g. Toyota and its Keiretsu system), industrial distribution (e.g. Caterpillar’s dealer network) and the PC industry (e.g. the Wintel systems of Microsoft and Intel), to name a few. In accordance with this shift, increasing attention has been paid by academicians to understand the design and management of relationships between B2B companies in a variety of marketing contexts, including industrial purchasing, channel relationships, international market entry and so on. During the past 25 years, transaction cost analysis (TCA) has been the most dominant framework used to analyze these and related issues. Since the pioneering work of the Nobel Prize-winning economists Ronald Coase and Oliver Williamson, the focus of TCA has been to understand how firms structure their formal as well as informal relationships with other value-chain partners (e.g. suppliers, distributors, customers) and their rationale for these choices. TCA argues that the central role of governance in an exchange is to provide safeguards and foster adaptation with the purpose of curbing potential conflict between parties to an exchange that could undermine opportunities to realize mutually beneficial gains. This core principle has generated refutable...
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