The network concept from the perspective of transaction cost theory
Journal Title: International Journal of Contemporary Management - Year 2012, Vol 11, Issue 3
Abstract
In the article the network concept was discussed from the perspective of transaction cost theory (TCT) and in the context of selected theoretical approaches. The proposition was formulated that the assumptions of TCT are conducive to identifying the nature, purpose and dynamics of networks. The theory offers explanations that are original and vary from the approaches relating to the sociological concept of a social network. It enables the determining of the nature of the network as a hybrid governance structure, which should be differentiated both from the firm and from market transactions. This meaning seems, however, too broad, as it covers a wide range of cooperation forms. It is recommended that the network definition combines its properties as a hybrid structure and as a set of relatively firm relationships among entities, which form a complex adaptive system. According to TCT, the purpose of creating networks is to economize on transaction costs. The cost rationale complements the rationale of benefits from the access to complementary resources, the latter emphasized in the approaches based on the social network. In TCT one of the major determinants of managerial decisions on business relationships is opportunism as a motive for exchange partners. The majority of the approaches discussed assume trust as a basis of network functioning. The safeguards against opportunism as proposed in TCT can facilitate building trust, however the theory itself does not include partners’ learning and its impact on transaction costs. It is argued that a comprehensive analysis of the phenomenon requires combining the perspectives of transaction cost theory and of the proposals referring to the sociological approach.
Authors and Affiliations
Marta Gancarczyk
Keywords
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