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Transaction cost theory emerged over 80 years ago yet still continues to exert an important influence on marketing thought. In this article, I examine the past, present and future of this important theory by exploring the work of three of its key scholars: Ronald Coase, Oliver Williamson and Yochai Benkler. This examination provides an overview of each scholar’s ideas, a look at their intellectual influences, and an assessment of their impact on marketing scholarship. In addition to this in-depth exploration of transaction cost theory, I also highlight the contextual nature of how theories form, develop and change over time. My hope is that this examination will enrich our understanding of this important theory and suggest how it can be applied to a new set of marketing topics.
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Transaction cost theory: past, present and future
Aric Rindfleisch
Received: 29 March 2019 /Accepted: 11 July 2019
#Academy of Marketing Science 2019
Transaction cost theory emerged over 80 years ago yet still continues to exert an important influence on marketing thought. In this
article, I examine the past, present and future of this important theory by exploring the work of three of its key scholars: Ronald
Coase, Oliver Williamson and Yochai Benkler. This examination provides an overview of each scholars ideas, a look at their
intellectual influences, and an assessment of their impact on marketing scholarship. In addition to this in-depth exploration of
transaction cost theory, I alsohighlight the contextual nature of how theories form, develop and change over time. My hope is that
this examination will enrich our understanding of this important theory and suggest how it can be applied to a new set of
marketing topics.
Keywords Transaction cost theory .Theory development .Opportunism .Digital revolution
All moments, past, present and future, always have
existed, always will exist.”—Kurt Vonnegut
Transactions lie at the heart of marketing activity and have
long been invoked as a foundational element of marketing
thought. For example, in his seminal article, A Generic
Concept of Marketing,Kotler (1972, p. 53) suggests that
marketings core idea is market transactions.The importance
of transactions is also evident in our day-to-day experiences,
which are typically filled with a variety of transactions in both
our personal and professional lives, such as buying our morn-
ing coffee, purchasing supplies, or posting an online review.
In addition to engaging in lots of transactions, market-
ing scholars also devote a substantial degree of effort try-
ing to understand them. In particular, marketers seem es-
pecially interested in the strategies that firms use to facil-
itate transactions and how consumers respond to these
tactics (e.g., Chaudhuri and Holbrook 2001; Kohli and
Jaworski 1990; Oliver 1999). However, a substantial
number of marketing scholars also have considerable in-
terest in the manner in which transactions are organized
(e.g., Anderson 1985;HeideandJohn1992;Japand
Ganesan 2000). Much of this research has been grounded
In essence, this theory suggests that conducting transac-
tions is a costly endeavor (e.g., negotiating contracts,
monitoring performance and resolving disputes) and dif-
ferent modes of organizing transactions (e.g., within a
market or a firm) entail different costs (Coase 1937).
Hence, according to this theory, a comparative examina-
tion of the relative transaction costs (or their indicants) of
these alternative modes reveals how a particular transac-
tion should be conducted (Williamson 1985).
Although the essence of this theory may seem rather intu-
itive, its impact has been immense. To date, three different
transaction cost scholars (e.g., Ron Coase, Douglas North,
and Oliver Williamson) have won the Nobel Prize in
Economics, and this theory has received hundreds of thou-
sands of citations across a diverse array of scholarly domains,
including economics, public policy, international business,
operations, management and marketing, among others
(Macher and Richman 2008). Within marketing, transaction
cost theory has been applied to a wide variety of topics, such
as channel relations (Noordewier et al. 1990), vertical integra-
tion (Klein et al. 1990), and foreign market entry (Anderson
and Coughlan 1987), to name a few. Moreover, several lead-
ing marketing scholars (both past and present) have made
important contributions to this theory, including (but not lim-
ited to) Erin Anderson, Kersi Antia, Jim Brown, Anne
Coughlan, George Day, Bob Dhalstrom, Gary Frazier,
Shankar Ganesan, Hubert Gatignon, Inge Geyskens, Mrinal
Ghosh, Jan Heide, Mark Houston, Sandy Jap, George John,
*Aric Rindfleisch
University of Illinois, Champaign, IL, USA
AMS Review
Jack Nevin, Rob Palmatier, Torger Reve, JB Steenkamp, Ken
Wathne and Bart Weitz. Thus, it is readily apparent that trans-
action cost theory has played an important role in marketing
scholarship over a substantial period of time.
Considering its history and ubiquity, the task of trying to
craft a novel contribution to the annals of transaction cost the-
ory is rather intimidating. What can be said that hasnt been
said already? After contemplating this challenge for quite some
time, I decided to comment upon the temporal and contextual
development of this theory via a comparative examination of
the work of three of its key theorists over the past eight decades:
Ronald Coase (the past), Oliver Williamson (the present) and
Yochai Benkler (the future). For each of these scholars, I pro-
vide an overview of their key ideas, a look at their intellectual
influences and an assessment of their impact on marketing
scholarship. A comparison of each scholar is detailed in
Table 1and a synthesis of their core ideas is provided in
Figure 1. I then offer a conceptual synthesis of the key ideas
across all three of these scholars to help guide transaction cost
inquiry into a new era of marketing scholarship. My hope is
that this commentary will both enrich our understanding of
transaction cost theory and also enhance appreciation for how
theories form, develop and change over time in response to the
broader economic and technological circumstances in which
they are embedded. In essence, I am trying to tell the story of
how transaction cost theory began, where it is now and where it
appears to be headed. However, before telling this collective
story, I briefly tell my personal transaction cost story as a means
of providing some insights into the storyteller (Weick 1989).
My transaction cost story
Lousy stories are unfocused. They have no center.
Good ones often whirl around a small
nucleus.”—Twi tc hell (2004)
I first became aware of transaction cost theory during my
initial doctoral seminar at the University of Wisconsin in the
fall of 1992a marketing channels seminar taught by Jack
Nevin. Among the many topics covered in this course,
Jack seemed most intrigued by transaction cost theory.
In fact, I recall Jack telling our class that George John
(who had recently left Wisconsin to take a job at
Minnesota) gave him a copy of Oliver Williamsons
now classic treatise, The Economic Institutions of
Capitalism a few years earlier. Jack remarked, After
reading it, I wasnt quite sure what it meant, but I knew
it was important.Given this staunch endorsement, I
promptly signed up to lead the two seminar sessions
assigned to this topic (one for theory and one for appli-
cations) and, perhaps not surprisingly, decided to write
my seminar paper on this topic (i.e., a review of trans-
action cost theory). After reading my paper (which took
a year to finish), Jack recommended that I submit it to
the Journal of Marketing and predicted that it would be
the most cited article in my career!
Thus, I enthusiastically followed Jacks recommendation
and sent my paper to JM in early 1994. Although the editor
(Rajan Varadarajan) kindly offered an invitation to revise and
resubmit the paper, the volume and severity of the comments
seemed overwhelming. I was disheartened and presented my
reviews to Jack in hopes that he could provide a path forward.
After reading the reviews, Jack assured me that the
comments were actually quite encouraging and that he
believed the paper was on its way to eventual publica-
tion. He also recommended that I enlist the help of a more
experienced scholar to complete the revision. Specifically, he
suggested that I invite Jan Heide (who had recently returned to
Wisconsin as a faculty member) to join the paper as a co-
author. Fortunately, Jan agreed and encouraged me to begin
the revision process. Unfortunately, I soon became distracted
by the allure of other projects and the challenge of trying to
complete my doctoral coursework.
Table 1 Transaction cost theory: Past, Present and Future
Past Present Future
Key Theorist Ronald Coase Oliver Williamson Yochai Benkler
Time of Development 1930s 1970s 2000s
Economic Era Early Industrial Late Industrial Digital
Seminal Article Nature of the Firm(1937) Transaction Cost Economics
and the Governance of
Contractual Relations(1979)
Coases Penguin, or, Linux
and the Nature of the Firm(2002)
Exemplar Fisher Body Fisher Body Wikipedia
Key Concept Transaction Costs Specific Assets Granularity
View of Opportunism Unimportant Important One of Many Motives
Modes of Organization Market & Firm Market, Firm & Hybrid Market, Firm & Non-Market
Role of Technology Not Considered Ambivalent Critical
Approximately two years later, in the summer of 1996, I
received a stern letter from Bob Lusch (the incoming editor of
JM) warning that I had six months to submit a revision or the
paper was out! After sitting on this letter for about three
months, I finally mustered the courage to show it to Jan at
the start of the fall semester. Thankfully, Jan took my inordi-
nate delay in stride and assured me that the tight timeline was
not a problem. We decided to split up the task: I would revise
the front end of the paper (the review portion), while Jan
would revise the back end (the future directions portion). As
promised, Jan worked diligently on his part, and by
Thanksgiving, had developed a set of intriguing insights
regarding transaction costsfuture research possibilities.
However, I became distracted by the demands of the
academic job market and spent most of that semester
flying to various campuses across the country in search
of employment. After landing a job at the University of
Arizona later that semester, I finally got started with my
portion of the revision (about the same time Jan was
finishing his portion) and spent the final weeks of the
year frantically trying to meet the editors deadline.
Fortunately, after many long days and nights, I was able
to finish my part of the revision, integrate it with Jans
part and resubmit the paper by the end of 1996. This
was a massive revision that included about 20 pages of
new material crafted by Jan as well as a complete over-
haul of my initial review of the transaction cost litera-
ture. I recall comparing the revision to my initial sub-
mission just before sending it off and noticing that the
only parts of the paper that remained unchanged were
the opening and closing sentences! About three months
later, we received the reviews.
Fortunately, the reviewers were pleased with our ef-
forts and the editor decided to conditionally accept the
paper, which was eventually published in the Journal of
Marketing in September 1997. As predicted by Jack,
this review paper (Rindfleisch and Heide 1997)has
attracted considerable recognition (i.e., 1997 Harold
Maynard Award & 2004 Stern Award) and is easily
the most cited article (with over 2,400 Google Scholar
citations) that I have published thus far in my career.
Despite this early success, most of my research energy
over the past two decades has been directed towards
other topics (e.g., materialism, new product develop-
ment, and 3D printing) and my few excursions back
into the transaction cost domain have tried to provide
fresh perspectives and explore new applications (e.g.,
Jap et al. 2013; Rindfleisch et al. 2010). Thus, I wel-
come the opportunity to return to my intellectual roots
and provide a look at where transaction cost theory has
come from, where it currently resides, and where it may
be headed. Lets begin by taking a look at the origin of
this intriguing theory.
The past: Coase
The main reason why it is profitable to establish a firm
would seem to be that there is a cost of using the price
mechanism”—Coase (1937)
Ronald Coase is widely regarded as the father of transaction
cost theory (Benkler 2006; Williamson 1985). In his seminal
article, The Nature of the Firm(which was published in the
American Economic Review in 1937), Coase sought to under-
stand why a firm emerges at all in a specialized exchange
economy(Coase 1937, p. 390). At the time, economists ac-
knowledged that firms represented an alternative mode of
economic organization but lacked a fully formed theory to
explain why they existed. Thus, Coase sought to solve this
problem by developing a theoretical treatise that explained the
existence of firms. After dismissing a set of existing economic
arguments (such as technological inseparability), Coase
(1937) posited that The main reason why it is profitable to
establish a firm would seem to be that there is a cost of using
the price mechanism(p. 390). In essence, Coasesmainpre-
mise was that market transactions entail a set of costs, which
may be reduced if transactions take place within a firm. Thus,
his conceptualization of transaction costs is inherently com-
parative in nature. As Coase noted 50 years later, Whether a
transaction would be organized within the firm or whether it
would be carried out on the market by independent contractors
depended on a comparison of the costs of carrying out these
market transactions with the costs of carrying out these trans-
actions within an organization, the firm(Coase 1993b,p.47).
This seemly simple yet profound idea, that markets and firms
differ in their costs, laid the foundation for transaction cost
In addition to establishing the concept of transaction costs,
Coases1937 article also provides important insights into the
nature of these costs. Based on the standard economic as-
sumption that price is a form of information, Coase suggests
that The most obvious costis that of discovering what the
relevant prices are(p. 390). He goes on to note that The
costs of negotiating and concluding a separate contract for
each exchange transactionmust also be taken into account
(p. 390391). Coase provides further details about the nature
of transaction costs in some of his subsequent writings. For
example, in his other widely heralded article, the Problem of
Social Cost,Coase (1960) supplies additional examples of
transaction costs, including the costs of locating exchange
partners and conducting inspections. He also elaborates about
his conception of transaction costs in his Nobel acceptance
speech: I was to realize that there were costs of using the
pricing mechanismThere are negotiations to be undertaken,
contracts have to be drawn up, inspections have to be made to
settle disputes and so on. These costs have come to be known
as transaction costs(Coase 1993d, p. 230). Collectively,
Coases writings set the conceptual grounding for the subse-
quent specification of transaction costs as occurring both ex
ante (e.g., costs of negotiation) and ex post (e.g., costs of
settling disputes). In sum, Coases work played a foundational
role by establishing the existence and nature of transaction
costs and proposing that a comparative examination of these
costs determine if a transaction is conducted by the market or
within a firm.
Coase was born in 1910 and grew up in the United Kingdom
during the tail end of the early industrial revolution, a period in
which advances in mass production enabled large scale
factory-based production. For example, Fordsmassive
River Rouge factory (which opened in Detroit in 1928), had
a 12,000-acre factory floor, employed nearly 100,000 workers
and was capable of producing over 800 automobiles a day. In
fact, during a year-long visit (193132) to the United States as
part of his doctoral studies at the London School of
Economics (LSE), Coase visited both the Fisher Body factory
in Detroit and the A. O. Smith automobile framing factory in
Milwaukee (Coase 1993d). In a reflective essay upon the in-
fluences behind The Nature of the Firm,Coase (1993d)
fondly recalls that the memory of the A. O. Smith plant
remains with me(p. 71). Thus, it is likely more than coinci-
dence that although the Nature of the Firmwas published in
1937, Coase formulated the basic ideas of his theory in 1932
(Coase 1993e). Indeed, as Coase notes in another reflective
essay, I tried to find the reason for the existence of the firm in
factories and offices(Coase 1993c,p.51).
In addition to his formative experience of witnessing large-
scale factory production up-close and personal, Coasesthink-
ing about transaction costs was also distally influenced by the
ideological battle between Russias central planned economy
versus Americas market economy (Coase 1993b). Although
we now know how this battled ended, during Coasesforma-
tive years, it was unclear which approach would ultimately
prove superior. In fact, comparative assessments about the
pros and cons of these two competing systems was a topic
of considerable academic debate during the early twentieth
century (von Hayek 1944). Hence, Coases theoretical focus
on the comparative assessment of the transaction costs of
firms versus markets appears to have been shaped by this
broader intellectual discourse (Coase 1993b). Thus, as de-
tailed by Coase himself, the early foundations of transaction
cost theory were strongly shaped by broader economic and
technological circumstances taking place at the time of its
theoretical development.
In addition to being the wellspring of transaction cost theory,
Coase also heavily influenced the thinking of both Williamson
and Benkler (Benkler 2006; Williamson 1985). For example,
Williamson (2010)admitsthat,The specific issue that drew
me into this research project was the puzzle posed by Ronald
Coase in 1937(p. 673). Likewise, Benkler (2002) notes that,
Ronald Coaseoriginated the transaction costs theory of the
firm that provides the methodological template for the positive
analysis of peer production that I offer here(p. 369). Thus,
the seminal impact of Coases research has been immense.
The foundation of any good theory is a clear set of concepts
and Coase created the concept of transaction costs. Without
this concept, transaction cost theory would not exist. In rec-
ognition of the significance or his ideas, Coase was awarded
the Nobel Prize in Economics in 1991, and his seminal article,
The Nature of the Firm(Coase 1937) has received over
43,000 citations, while his follow-up article, The Problem
of Social Cost(Coase 1960) has been cited over 33,000
Despite his important influence, the impact of the ideas
expressed in The Nature of the Firmtook some time to gain
traction. In fact, Coase (1993d, p. 61) laments that the initial
reception of my article by my elders and betters at the LSE
was a complete lack of interestand that it was virtually ig-
nored by the broader scholarly community until the 1960s.
Likewise, Coases impact upon marketing scholarship is fairly
recent and largely derivative in nature. Indeed, Coase was not
cited by any marketing scholar until the 1980s (i.e., Anderson
1985;John1984;Philips1982) and since then, most market-
ing articles that cite Coase do so in conjunction with
Williamson (Joshi and Stump 1999; Wathne and Heide
2000; Webster Webster 1992). These articles often attribute
transaction cost theory to Williamson, but also acknowledge
that the idea of transaction costs can be traced back to Coase.
For example, Slater (Slater 1997) notes that, Building on the
seminal work of Ronald Coase (1937), who proposed that
transaction cost economizing is a primary reason for the exis-
tence of the firm, Oliver Williamson (1975) developed an
alternative to the neoclassical view of the firm(p. 163).
Thus, Coasesimpact on marketing thought appears to have
been largely indirect, through his influence on the Oliver
Williamsons enrichment of transaction cost theory, which
we explore next.
The present: Williamson
By opportunism, I mean self-interest seeking with
guile. This includes but is scarcely limited to more bla-
tant forms, such as lying, stealing, and cheating.”––
Williamson (1985)
While Coase gave birth to transaction cost theory, Williamson
helped raise it to maturity. According to Coase (1993a),
Williamsons influence has been immense. In a real sense,
transaction cost economics, through his writing and teaching,
is his creation(p. 98). Although Coases comment displays his
penchant for modesty, it also acknowledges the dedication and
focus that Williamson has given to this theory. In contrast to
Coase, who worked on transaction costs mainly at the start
and end of his academic career, Williamsons contributions to
transaction cost theory have been prolific and steady. To date,
Williamson has published nearly 100 articles and five books on
this topic across a span of nearly five decades!
While marketing scholars may be most familiar with
Williamsons1985 book, The Economic Institutions of
Capitalism, the key ideas in this book were first captured in a
seminal 1979 article that Williamson published in the Journal
of Law and Economics titled, Transaction Cost Economics:
The Governance of Contractual Relations.In this article,
Williamson (1979) notes that, Transaction costs have a well-
deserved bad name as a theoretical devicethe concept waits
for definition(p. 233). He then proceeds to offer a solution by
outlining two important assumptions about economic actors
(i.e., bounded rationality and opportunism) as well as three
key dimensions of economic transactions (i.e., asset specificity,
frequency and uncertainty). In essence, while Coase established
the existence of transaction costs, Williamson identified the
attributes (of both actors and transactions) to help explain
why and when they occur. Specifically, Williamson argues that
transactions that require a substantial degree of specific assets,
occur frequently, and/or face a high degree of future uncertainty
have higher costs due to the fact that economic actors have
limits to their rationality and may act opportunistically.
Williamson also proposes that the identification of these attri-
butes enables scholars to engage in A discriminating analysis
to explain which transactions are located where and give the
reasons why(Williamson 1979, p. 234).
In addition to refining and operationalizing the parameters
of transaction cost theory, Williamson also extended its scope
by considering firms and markets as opposite ends of a con-
tinuum rather than just two discrete options (as conceptualized
by Coase). In fact, in his 1979 article, Williamson notes that he
was mainly concerned with intermediate-product market
transactionsthe analysis here is symmetrical and deals with
market, hierarchical, and intermediate modes of organization
alike(Williamson 1979,p.234).Forexample,hesuggests
that detailed contracts that allow buyers and sellers to make
price and quantity adjustments in response to changing cir-
cumstances represent an intermediate (i.e., hybrid) mode of
organizing frequently occurring transactions. Williamsons
conceptualization of hybrid forms is further elucidated in
The Economic Institutions of Capitalism (Williamson 1985),
in which he explicitly identifies Firms, Markets and
Relational Contracting in its subtitle. In sum, Williamson suc-
cessfully builds upon the foundation laid by Coase by not only
offering a clearly delineated set of assumptions and attributes
for putting transaction cost theory to the test but also present-
ing a broader array of organization modes that could be tested.
As we will discuss shortly, these refinements were crucial to
the dissemination and utilization of this theory.
Williamson was born in 1932 and earned a PhD in economics
from Carnegie Mellon University in 1965. In a recent retro-
spective essay, Williamson fondly refers to his time at
Carnegie Mellon as the Camelot Yearsand that, while there,
he had the opportunity to be mentored by eminent interdisci-
plinary scholars such as James March and Herbert Simon
(Williamson 2016, p. 37). Beyond his professors,
Williamson acknowledges that his thinking about transaction
costs was also heavily influenced by the writings of diverse
array of external scholars, most notably, Ronald Coase.
Indeed, in nearly all of his writings, Williamson pays homage
to Coase and identifies him as the progenitor of transaction
costs. Here is one example: Coaseposed the fundamental
inquiries that invite follow-on research(Williamson 1993,p.
5). In addition to Coase, Williamsons conceptualization of
transaction costs was also heavily influenced by Alfred
Chandler (business history), John R. Commons (institutional
economics), and Chester Barnard (organization theory)
(Williamson 1985,1991,2010). This eclectic set of scholarly
influences is clearly evident in Williamsonsinterdisciplinary
perspective of economic institutions. For example, his seminal
treatise declares that Transaction-cost economics is an inter-
disciplinary undertaking that joins economics with aspects of
organization theory and overlaps extensively with contract
law(Williamson 1979,p.261).
Williamsons thinking about transaction costs was also
heavily impacted by both his teaching and work experience.
After graduating from Carnegie Mellon, Williamson landed
an assistant professorship at the University of Pennsylvania.
Shortly thereafter, he took a one year leave of absence to work
at the Antitrust Division in the Department of Justice. This
was a formative experience, asit provided him the opportunity
to gain firsthand knowledge of how the U.S. government
viewed vertical integration. Williamson soon took umbrage
with this view and Resolved to examine the economic liter-
ature on these topics when I returned to teaching at the
University of Pennsylvania(Williamson 2010, p. 229).
After returning to academia in 1967, Williamsons dean asked
him to teach an organization theory seminar. Much like
Thomas Kuhn, whose writing about the philosophy of science
arose from teaching a course on this topic (Kuhn 1962),
Williamsons views of transaction cost theory were facilitated
by teaching this seminar, which he used as an opportunity to
combine economics, law, and organization theory. Indeed,
Williamson recollects that his version of transaction cost the-
ory had its origins in this class(Williamson 2010,p.230).
Thus, much like Coase, Williamsons thoughts about trans-
action cost theory began to form at an early stage in his career
(i.e., 19651975). This time period was arguably the tail end
of the industrial era, which was soon to be reshaped by the
coming digital revolution. Thus, although Williamsonsthink-
ing took shape nearly four decades after Coase, the economic
and technological environment in which they lived and
worked were largely similar. Consequently, it is not surprising
that the types of economic entities discussed by both Coase
and Williamson are largely the same (e.g., factories, mills, and
stores). As we know, the digital revolution resulted in the
death of scores of factories, mills, and stores and gave birth
several new types of economic entities. Williamson is alive
today and still writing about transaction costs (Williamson
2016). However, even though he has lived through this dra-
matic economic transformation it does not appear to have
affected his views about transaction costs. Indeed, none of
his recent writings mention the digital revolution and the
world he describes in 2016 seems quite similar to the world
he described back in 1979. Thus, it seems fair to surmise that
the digital revolution has had little influence upon
Williamsons version of transaction cost theory.
Of these three transaction cost theorists, Williamson has had
the strongest impact on academic scholarship in general and
marketing thought in particular. In addition to winning the
2009 Nobel Prize in Economics, Williamson is also credited
by Coase in his 1991 Nobel Prize acceptance (Coase 1993d).
Specifically, Coase acknowledges Williamson (as well as a
few other scholars) for his outstanding contributions to the
subjectand believes that without Williamsonshelp,Idoubt
whether the significance of my writings would have been
recognized(p. 63). Although Coases initial formulation
identified firms and markets as organizational alternatives that
differ in terms of their transaction costs, Williamson identified
the attributes that determine these costs (Coase 1993d;
Williamson 1999). In essence, Williamsons refinement of
the foundation laid by Coase provided the necessary frame-
work for empirically assessing of the validity of transaction
cost theory and also helped bring Coases work to the attention
of a new generation of scholars. This coattail effect is clearly
illustrated in Fig. 2, which shows a dramatic increase in the
citations of Coases1937 article between 1986 and 2013 (and
then a decline thereafter). In fact, 95% of this articles citations
occurred after the publication of Williamsons1985 book.
Williamsons efforts to operationalize transaction cost theo-
ry opened the floodgates of empiricism. As documented by
Macher and Richman (2008), Williamsons treatise has been
empirically examined by over 900 studies across a wide range
of scholarly domains. Since their assessment was a decade ago,
the total number of empirical transaction cost studies likely
numbers well over 1,000. As detailed by Macher and
Richman (2008), marketing accounts for nearly 10% of this
total. Thus, Williamsons work has inspired approximately
100 empirical articles by marketing scholars as well as several
reviews of this empirical body of work (e.g., Geyskens et al.
2006; John and Reve 2010; Rindfleisch and Heide 1997). With
few exceptions, these empirical assessments (both within and
outside of marketing) provide strong support for Williamsons
theory. In the words of Williamson and Ghani (2012), transac-
tion cost theory is an empirical success story(p. 80).
The first marketing study to examine Williamsonstheory
was Erin Andersonsclassic 1985 article, The Salesperson as
Outside Agent or Employee: A Transaction Cost Analysis.
This article, which was one of the earliest studies across any
domain to empirically assess the attributes of transaction cost
theory, provided broad support for Williamsons logic and
helped introduce this theory to the marketing domain. By
the end of the twentieth century, Williamsons transaction cost
framework became one of the most important theoretical per-
spectives in the marketing domain and had been employed
across a broad range of topics, including channel relations,
marketing strategy and brand management (John and Reve
2010; Williamson and Ghani 2012). Several of these studies
have won awards, become classics in our field and have gar-
nered thousands of citations (e.g., Anderson and Gatignon
1986;AndersonandWeitz1992; Ganesan 1994;Heide
1994; Heide and John 1988,1990,1992; Jap and Ganesan
2000;Noordewieretal.1990; Rindfleisch and Heide 1997;
Wathne a nd H ei de 2000). In sum, Williamsons influence up-
on marketing thought has been immense and has made an
indelible imprint on how marketing scholars conceptualize
and examine transactions.
As just discussed, Williamson successfully laid the ground-
work for both the empirical verification and popularization of
transaction cost theory, and as he notes, the results have clearly
been a success story. Despite this success, Williamsonsviews
of transaction costs have received a good deal of critique. For
example, Hill (1990) criticized Williamsons views on oppor-
tunism, while Ghosal and Moran (1996) declared that his the-
ory was bad for practice(p. 13). Although these types of
critiques have received considerable attention, Williamson has
shown a remarkable ability to deflect them via a set of clever
counter-arguments (e.g., Williamson 1993,1996). Thus, the
real threat to Williamsons intellectual legacy is likely not crit-
icism but neglect. Indeed, by the end of the twentieth century,
scholars interested in how and why transactions were organized
began to gravitate towards rival theoretical explanations such as
learning, capabilities and resources (Barney 1991;Grant1996;
Teece et al. 1997). Sensing this threat, at the end of the last
century, Williamson offered comparative assessments of the
benefits of transaction cost theory vis-à-vis resource-
capability theory in an effort to sustain his legacy
(Williamson 1999,2000). In these assessments, Williamson
argues that compared to these rival perspectives, transaction
cost theory offers a comparative advantage in terms of both
its degree of operationalization and its body of empirical evi-
dence. However, he also acknowledges that transaction cost
theory needs to be more dynamicin nature and that it should
push beyond generic governance(Williamson 1999,p.
1087). These qualities can be clearly seen in the work of
Yochai Benkler, which we examine next.
Mode of Economic Organization
Technology Attributes
Behavioral Assumptions &
Transaction Attributes
Monetary Non-
Fig. 1 Synthesis of transaction
cost theory across Coase,
Williamson, and Benkler
Fig. 2 Citations of the Nature of
the Firm(Coase 1937). Note:
This chart displays the number of
Google Scholar citations of Coase
(1937) from 1986 to 2018.
Accessed from www.scholar. on June 15, 2019
The future: Benkler
Most practices of productionsocial or market-
basedare already embedded in a given technological
context”—Benkler (2006)
As we entered the twenty-first century, signs began to appear
that transaction cost theory may be past its salad days. In addi-
tion to the mounting critiques and challenges from alternative
theoretical perspectives, the digital revolution enabled new
mechanisms for organizing economic activity (e.g., open-
source software, idea crowdsourcing, and customer co-crea-
tion) and academics began to take notice (e.g., Bendapudi
and Leone 2003; Prahalad and Ramaswamy 2004; Sawhney
et al. 2005). As noted by Galbraith (1958), Ideas are inherently
conservative. They yield not to the attack of other ideas but to
the massive onslaught of circumstances with which they cannot
contend(p. 26). Thus, in a world in which a growing number
of transactions were starting to take place in new types of eco-
nomic arrangements, a theory that focuses on markets vs. firms
began to face challenges from changing circumstances.
The work of Yochai Benkler is, in many ways, an effort to
modernize transaction cost theory in response to these changes.
Although, Benklers thoughts about transaction cost theory are
most fully elaborated in his 2006 book, The Wealth of
Networks, his ideas first appear in his 2002 Yale Law Review
article, Coases Penguin, or, Linux and The Nature of the
Firm.As can be inferred by the title of this article, Benklers
work seeks to bring transaction cost theory into the digital age.
While both Coase and Williamson are rather agnostic about the
role of technology, Benklers version of transaction cost theory
revolves around technology. In brief, Benkler suggests that the
democratization of digital tools such as the Internet, personal
computer and video cameras has enabled new forms of eco-
nomic organization such as crowdsourcing, idea competitions
and user innovation (Benkler 2002,2006,2017). He broadly
refers to these new forms of organization as social production
and proposes that this new form of production represents an
alternative to both firms and markets. As examples of social
production, Benkler often mentions new, digitally enabled co-
operative efforts such as Linux, SETI@Home, and Wikipedia.
According to Benkler (2006), Social production of goods and
services, both public and private, is ubiquitous, though
unnoticed...It is, to be fanciful, the dark matter of our economic
production universe(p. 118).
Thus, Benklers main contribution to transaction cost the-
ory is his introduction of a new form of economic production
(i.e., social production). As he notes in his seminal article,
traditional transaction cost theory views economic production
as a choice (or continuum) between markets and hierarchies
and that, The institutions of the late twentieth-century
America resist the idea that thousands of volunteers could
collaborate on a complex economic project(Benkler 2002,
p. 371). Benkler seeks to overcome this resistance by legiti-
mizing social production as a form of economic organization.
Specifically, he suggests that markets and firms are not as
distinct as suggested by Coase and Williamson, as both are
part of a broader market system that is competitive in nature
and motivated by monetary rewards. In contrast, he suggests
that social production is more cooperative in nature and is
largely motivated by non-monetary rewards (e.g., social rec-
ognition). He also proposes that social production is distinct
from markets and firms and increasingly becoming an alter-
native mechanism of producing a growing number of
information-based offerings.
In addition to identifying the importance of social produc-
tion as a form of economic organization and arguing for the
salience of non-monetary rewards, Benkler also identifies the
attributes that determine if a transaction will be conducted via
social production vs. market production (i.e., markets or
firms). Specifically, he suggests that transactions are more
likely to be organized via social production if they have high
levels of modularity and granularity. He defines modularity as
a property of a project that describes the extent to which it
can be broken down into smaller components, or modules,
that can be independently produced before they are assembled
into a whole(Benkler 2006,p.96).Hedefinesgranularity as
the size of the modules, in terms of the time and effort that an
individual must invest in producing them(Benkler 2006,p.
100). As an example, he notes that the modular and granular
nature of Wikipedia allows it to be decentrally created by tens
of thousands of individuals across the globe, who can mean-
ingfully contribute to its collective production with a minimal
amount of time and effort. In sum, while Benklersversionof
transaction cost theory rests on both the foundation built by
Coase as well as the refinements offered by Williamson, it
represents a rather radical departure from both of
his towering predecessors.
Benkler was born in 1964 and earned a JD from Harvard
University in 1994. Thus, there is considerably less information
available about his academic influences. Benkler is currently on
the faculty at Harvard Law School, where he also serves as the
Co-Director of the Berkman Klein Center for Internet &
Society. According to its webpage, the mission of this center
is to explore and understand cyberspace; to study its develop-
ment, dynamics, norms, and standards; and to assess the need
or lack thereof for laws and sanctions.Thus, Benkler is clearly
interested in and influenced by the technology of the digital
age. In particular, based on his writings, his view of economic
organization appears to have been heavily influenced by large-
scale peer-produced offerings such as SETI@Home and
Wikipedia that arose in the wake of the digital revolution.
In addition to being influenced by the rise of the digital, it is
also clear that Benklers thinking about transaction costs has
been also heavily influenced by Coase and Williamson and he
liberally mentions both of these scholars in his writings. For
example, in The Wealth of Networks, he notes that Industrial
organization literature provides a prominent place for the trans-
action costs view of markets and firms, based on insights of
Ronald Coase and Oliver Williamson(Benkler 2006,p.59).
Moreover, the first word in the title of his seminal 2002 article
is Coase.Thus, although Benklers ideas may seem like hear-
say to transaction cost traditionalists, it clearly builds upon the
work of both Coase and Williamson. In a sense, what Benkler
sees when he visits Wikipedia seems to a be modern-day cor-
ollary of what Coase saw when he visited Fisher Body: A new
form of economic organization waiting to be explained.
In contrast to both Coase and Williamson, Benkler is not an
economist and is clearly the most junior among these three
scholars (Benkler is currently 55, Williamson is 87 and Coase
lived to the ripe old age of 102). Thus, an evaluation of
Benklers assessment to transaction cost theory is more like
a mid-term assessment than a final evaluation. Although he
may be least familiar of these three theorists, Benkler is a
world class scholar (Berkman Professor of Entrepreneurial
Legal Studies at Harvard Law School) with a large TED talk
following (
To date, BenklersCoases Penguinarticle has been cited
nearly 3,000 times, while his book, The Wealth of Networks has
over 11,000 citations. On top of this, he has several other highly
cited articles that expound upon the nature of transaction costs
in the information age. Despite his impressive scholarship,
Benkler has accumulated less than 100 citations in the market-
ing literature and most of these mentions focus on his views
about open-source software and the sharing economy rather
than his thoughts about transaction cost theory (e.g.,
Arvidsson 2011; Lamberton and Rose 2012;Pittetal.2006).
In fact, only one marketing article mentions Benklerscontri-
butions to transaction cost theory (Rindfleisch et al. 2010).
Hence, it is fair to say that Benklers influence upon marketing
thought largely rests in its future potential rather than its
achievements to date. This potential is explored in more detail
in the next section of this article.
Transaction cost theory amphisbaena
Fundamentally, we all stalk the amphisbaena and are
haunted and hunted by it.”—Sidney Levy
In November 1996, I accepted my first academic job as an
assistant professor of marketing at the University of Arizona.
One of the chief reasons I accepted the Arizona offer was the
opportunity to have the legendary Sidney Levy (who was
joining Arizona at the same time) as my department head.
One month later, Sidney published an intriguing article in
the Journal of Consumer Research titled, Stalking the
Amphisbaena(Levy 1996). Given the fact that Sidney was
soon to be my new boss, I read this article with great interest.
This article is ambitious in scope and provides both a retro-
spective and prospective commentary on a broad range of
topics, including research, branding, and the family dinner.
As we know, Sidney was a strong believer in the power of
symbols (e.g., Levy 1959). Thus, as a means of symbolizing
the various ideas in this article, he invokes the imagery of the
Amphisbaena, a mythical two-headed creature that stands for
our ability to look in all directions, to see where we have been
and where we are going(Levy 1996, p. 163). Inspired by
Sidney, I also invoke the imagery of the Amphisbaena to offer
some closing thoughts about where transaction cost theory has
been and where it may be going.
Where transaction cost theory has been
In a recent AMS Review editorial, Manjit Yadav suggests that,
Looking back rigorously should become an important
priorityjust as important as our quest to look ahead in our
research programs(Yadav 2017, p. 2). Thus, our exploration
of transaction cost theory amphisbaena begins with an inte-
grative examination of how this theory developed across eight
decades, from Coase to Benkler. My hope is that this retro-
spective examination provides some insights about this theory
in particular, as well as how theories generally develop in
relation to the economic and technological circumstance in
which they are embedded (Granovetter 1985).
As seen from this review, transaction cost theory has a rich
history. It recently celebrated its 80th birthday yet still exhibits
a remarkable degree of vibrancy. Its robustness is a reflection
upon the contributions of many scholars across different eras,
most notably, Ronald Coase, Oliver Williamson and Yochai
Benkler. In addition to these three key theorists, several other
scholars have also made important contributions to this theory,
including Douglas North, who examined transaction costs
through a historical lens and illustrated its path dependencies
(North 1981), Armen Alchian, who contrasted transaction
costs vs. production costs (Alchian and Demsetz 1972), and
Paul Joskow, who provided early empirical evidence of trans-
action cost logic (Joskow 1985), as well as the many market-
ing scholars listed earlier.
As noted by Yadav (2017), scientific knowledge is a cumu-
lative process that develops across both people and time.
Transaction cost theory proves this premise. Coasesseminal
1937 article placed the concept of transaction costs into the
public domain of knowledge(Yadav 2017, p. 1). Williamson
then plucked this concept from this domain four decades later
and added several important refinements, such as its underlying
assumptions about human actors and the dimensions that deter-
mineatransactions cost (Williamson 1979). As we began the
new millennium, Benkler (2002) entered this domain and ex-
panded the boundaries of transaction cost theory to accommo-
date a new set of transactions that refuses to fit our
longstanding perceptions of how people behave and how eco-
nomic growth occurs(p. 446). As depicted in Fig. 3,Coase
inaugurated this theory by identifying the nature of transaction
costs, Williamson refined this theory by identifying its key
attributes, and Benkler updated this theory by identifying the
role of technology.
As transaction cost scholars, Coase, Williamson, and
Benkler share a set of common beliefs about both the nature
of transaction costs as well the need to compare these costs
across different modes of economic organization. However,
these three scholars differ in their views of human nature,
economic organization and the role of technology. These dif-
ferences are outlined in the latter portion of Table 1.
One stark distinction between Coase, Williamson, and
Benkler is their views about the nature of human motives.
Williamsons version of transaction cost theory is heavily
invested in the belief that people lie, steal, and cheat and that
opportunism is human nature as we know it(Williamson
1985, p. xiii). In contrast, Coase makes no mention of oppor-
tunism in his initial formulation and suggests in his later writ-
ings that, the propensity for opportunistic behavior is usually
effectively checked by the need to take account of the firms
actions on future business(Coase 1993d, p. 71). Benkler
adopts a more expansive approach and proposes that diverse
motives animate human beings(Benkler 2006,p.378).
Specifically, he suggests that human behavior is motivated
by both monetary as well non-monetary rewards and that, in
some cases, these two types of rewards are inversely related
(Benkler 2006, p. 378). Thus, these three theorists exhibit very
different views about human motives: Coase suggests that
opportunism plays a minor role in economic transactions,
Williamson asserts that opportunism is essential to transaction
cost theory, Benkler believes that humans are inspired to act
by both selfish and social motives.
These three theorists also offer somewhat different perspec-
tives about the types of economic organizations in which
transactions occur. Coases initial formulation focuses on
two forms of economic organization (i.e., markets vs. firms),
while Williamson adds a third organizational form (i.e., hy-
brid). Benkler diverges from both Coase and Williamson by
characterizing markets and firms as two types of market pro-
duction and then contrasting both with social production.
Thus, as transaction cost theory has matured over time, its
scope of economic organizations has expanded in response
to changes in the economic landscape.
Coase, Williamson, and Benkler also differ in their views
about the impact of technology upon transaction costs.
Specifically, Coase is largely silent about the role of
technology. In a retrospection of his seminal 1937 article,
Coase (1993a) notes that during the 1930s, technological ad-
vantage was the dominant explanation for vertical integration.
Thus, given that Coase sought to provide a new theoretical
perspective for vertical integration in specific, and the nature
of firms in general, it is not surprising that his theory avoids the
role of technology. In comparison to Coase, Williamson pro-
vides considerably more commentary about the role of technol-
ogy within transaction cost theory. However, his views about
technology seem rather equivocal (Englander 1988). For exam-
ple, in his 1985 book, Williamson acknowledges that Changes
in markets and technology thus have sweeping contracting
ramifications(p. 37). In contrast, in a 1993 article he also
suggests that, the choice between firm and market organiza-
tion is neither given, nor largely determined, by technology
(Williamson 1993, p. 12). Compared to both Coase and
Williamson, Benkler is considerably more outspoken about
the impact of technology on transaction cost. For example, in
his 2006 book, he proclaims that technology creates feasibility
spaces for social practice. Some things become easier and
cheaper, others harder and more expensive to do or to prevent
under different technological conditions(p. 31). In essence,
Benkler views technology as an enabling force that allowed
transactions that were formally conducted by centralized firms
to gravitate towards decentralized individuals empowered by
and connected via the digital revolution. In sum, as transaction
cost theory has evolved over time, it appears to have adopted a
greater appreciation for the role of technology.
Where transaction cost theory may be going
As famously quipped by Yogi Berra, Its tough to make pre-
dictions, especially about the future.Thus, any proclamation
about the future of transaction cost theory is likely to be some-
what speculative in nature. In order to minimize this risk,
projections about the future should be informed by the
wisdom of the past (Ouellette and Wood 1998). So, lets take
a look at where transaction cost theory has been in order to
gauge where it might be headed.
According to Weick (1989) theory development is a
sensemaking process in which theorists seek to understand
the world around them. This desire for sensemaking can be
seen in the work of all three of these seminal transaction cost
scholars. Specifically, Coase sought to understand the early
industrial era in which transactions were increasingly
Fig. 3 Evolution of transaction cost theory: Past, Present and Future
conducted in large-scale factories, Williamson tried to explain
the late industrial era that produced a variety of complex firm
(and interfirm) structures, and Benkler sought to make sense
of the emergence of crowdsourcing as a new form of econom-
ic production. As part of this sensemaking process, each of
these theorists developed concepts to help interpret the world
around them (e.g., Coase: transaction costs, Williamson: spe-
cific assets, Benkler: granularity). These concepts were devel-
oped based on each scholars personal reflections upon reality
and serve as reminders about the contextual nature of theory
development. As noted by Peter and Olson (1983), Scientific
knowledge is relative to a particular context and time in his-
tory(p. 119). Thus, Benklers experience as a scholar caught
in the midst of the digital revolution provided a perspective
about the role of technology that was considerably different
than either Coase or Williamson.
As our world becomes increasingly more digital and ever
more dependent upon technology, marketing scholars across all
domains need to carefully consider its promise and perils
(Malter and Rindfleisch 2019). According to the World
Economic Forum, we are currently on the brink of the Fourth
Industrial Revolution (Schwab 2017). In essence, this new rev-
olution is represented by a collection of new technologies, such
as artificial intelligence, biotechnology, and 3D printing, that
are predicted to lead to a merging of the biological, digital and
physical. This merger is expected to dramatically transform our
society and economy in a variety of ways. For example, 3D
printing has the potential to reduce the need for both firm-based
manufacturing as well as traditional supply chains by providing
individuals with the ability to self-manufacture an increasing
variety of products (Rindfleisch et al. 2017). Likewise,
blockchain may enable complex tasks such as tracking and
verifying transactions to be conducted by a collection of loose-
ly connected individuals rather than formal organizations
(Montecchi et al. 2019). As noted by many scholars, these
new technologies present many potential perils, such as the
invasion of privacy and risk of fraud (e.g., Tan et al. 2016), they
also have great potential to dramatically reduce the costs of
coordinating and monitoring transactions (e.g., Prasad and
Shivarajan 2015). Due in part to the challenges posed by these
new technologies, the business historian Jerry Davis suggests
that, The traditional large corporation that dominated the
twentieth-century US economy has reached its twilight. It is
no longer suited to fulfilling the functions that it did for much
of the past century(Davis 2013, p. 299). Thus, it seems rea-
sonable to expect that the increasing pace of technological (and
social) change will likely have an important influence upon the
future of transaction cost theory.
If Davisprediction is correct, the future of transaction cost
theory will likely be more similar to Benkler than Coase or
Williamson. In contrast to these two earlier scholars,
Benklers theory focuses on individuals rather than firms.
This shift in focus has far-reaching implications for the future
of transaction cost theory in terms of both scholars and topics.
To date, transaction cost theory has been almost exclusively
employed by strategy and channels scholars to understand tra-
ditional B2B topics such as buyer-seller relationships (e.g.,
Heide and John 1990), salesforce integration (e.g., Anderson
and Coughlan 1987), and channel contracts (e.g., Antia and
Frazier 2001). Thus, this theory has been virtually untouched
by marketing academics (e.g., consumer behavior scholars)
who are interested in individuals rather than firms. However,
as individuals take over more of the transactions traditionally
conducted by firms, transaction cost theory (Benklers version)
has the potential to play an important role in understanding and
predicting these transactions. For example, peer-to-peer sharing
platforms such as Airbnb and Uber are transforming many
traditional industries and placing individuals in roles previously
served by firms (Eckhardt et al. 2019). Thus, transaction cost
theory could be employed to help understand the nature of the
sharing economy as well as other emerging new forms of trans-
actions such as self-manufacturing via 3D printing and the role
of blockchain in marketing transactions.
In addition to shifting its focus towards individuals, future
applications of transaction cost theory may also need to rethink
the role and relevance of opportunism. As noted earlier, oppor-
tunism is a central component of Williamsons version of trans-
action cost theory and has been the subject of a considerable
degree of marketing scholarship (e.g., Brown et al. 2000;Jap
and Anderson 2003; Jap et al. 2013; John 1984;Wathneand
Heide 2000). However, even Coase was doubtful about the
validity of Williamsons treatment of opportunism’” (Coase
1993a, p. 98). Likewise, opportunism is hardly a blip
on Benklers radar screen. Indeed, the rise of new technologies
like artificial intelligence and blockchain combined with the
growing ubiquity of online review and reputation mechanisms
will likely make opportunistic behavior an increasingly risky
and difficult endeavor (ter Huurne et al. 2017). As recently
noted by Davidson et al. (2018), A hierarchical organization
is a method for controlling opportunism. It is protection against
opportunism that gives rise to the transaction cost efficiency of
hierarchies and relational contracting over markets. But the
valuable prospect of blockchain is precisely to eliminate oppor-
tunism by cryptoeconomic mechanisms(p. 9). Many transac-
tion cost scholars may find it difficult to imagine this theory
without opportunism. However, its initial version (i.e., Coase
1937)didnt invoke this concept, and instead, suggested that
transaction costs were largely due to uncertainty rather than
malfeasance. Furthermore, omitting (or at least de-
emphasizing) opportunism would likely make this theory more
palatable to scholars who find this view of human nature to be
inaccurate or problematic (e.g., Ghosal and Moran 1996;Hill
1990; Remneland-Wikhamn and Knights 2012).
A future transaction cost theory that is unencumbered by
the assumption of opportunism, focused on individuals mo-
tived (in part) by social rewards, and applied to consumer-
based transactions would clearly look quite different than the
transaction cost theory that has become familiar to most mar-
keting scholars. This break from the past would likely be
jarring to many and would present a severe challenge to trans-
action cost theorysdisciplinary memory(Yadav 2017,p.
1). However, as noted by Peter and Olson (1983), theories
have life cycles that are modified over time in response to
changing circumstances. It is hard to look at the developments
currently happening in todays technological, social, and eco-
nomic landscape and not conclude that circumstances are in-
deed changing. My hope is that this commentary will help
transaction cost theory keep pace with these changes and that
its next 80 years will be as remarkable as its first!
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... To investigate the factors that contribute to successful IoT implementations in agriculture Diffusion of innovation theory [248,249,250] Structural equal modeling for comprehending the antecedents of IoT diffusion in the agricultural sector [83,75,251,252,253,243] To explore the determinants of perceived usefulness and ease of use of the IoT in agriculture Technology acceptance model [254,255] Empirical studies to test adoption constructs, such as system complexity, perceived usefulness, and network compatibility of the IoT in agriculture [242,256,257,83,258] To examine farmers' intention to apply the technology to different farming processes Theory of planned behavior [259,260,261] Surveys using the theory of planned behavior to explore the attitudes toward IoT-enabled agriculture [140]; [262,84,75,81,207] To understand attitudes of farmers towards IoT adoption and the functional barriers that hamper the implementation of the technology in agriculture Innovation resistance theory [263,264,265] Interviews to inform the policy and efforts of farmers seeking to establish IoT-based agricultural processes [219,266,220,267,2,204,71,76] To identify potential stakeholders involved in IoT agriculture, explain their influences, and their requirements Stakeholder theory [268,269,270] Experiments to investigate how the IoT can drive the operationalization of holistically sustainable farming models [271,185,272,273,274] To examine the IoT's contribution to operational efficiencies in terms of cost savings by reducing transaction costs and improving agri-food supply chain collaboration Transaction cost theory [275,276,277] Simulation approaches for modeling transaction costs in IoT-enabled agri-food supply chains [278,279,280,281] To investigate how farmers and their supply chains reconfigure their structures after IoT adoption Institutional theory [282,283] AI techniques to understand and enhance reconfiguration processes of farming operations [284,278,251,285,281,286] To study how the IoT can help farmers and their operations to establish operations capability to achieve competitiveness and boost sustainability Theory of dynamic capabilities [287][288][289] Simulation approaches for modeling farming systems and agri-food supply chains with a view to efficient and sustainable processes and resources control during complex and dynamic events [290,291,292,293,294] To apprehend how the IoT can facilitate farming operations during emergencies Contingency theory [295,296,297] Case studies and AI approaches to examine different strategies to adapt to changes in the IoT ecosystem [298,299,300,301,302] A. Rejeb et al. addition, we discuss various challenges of IoT implementations in agriculture. Our review has some limitations. ...
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The proliferation of the Internet of Things (IoT) has fundamentally reshaped the agricultural sector. In recent years, academic research on the IoT has grown at an unprecedented pace. However, the broad picture of how this technology can benefit the agricultural sector is still missing. To close this research gap, we conduct a bibliometric study to investigate the current state of the IoT and agriculture in academic literature. Using a resource-based view (RBV), we also identify those agricultural resources that are mostly impacted by the introduction of the IoT (i.e., seeds, soil, water, fertilizers, pesticides, energy, livestock, human resources, technology infrastructure, business relations) and propose numerous themes for future research.
... The finding is also in consonance with Said, (2021) who explored supply chain practices and marketing performance of SMEs: a field study on furniture manufacturing in Egypt and showed that a positive relationship exists between supply chain practices dimensions; (supplier relationship management and customer relationship management) and marketing performance. Similarly, our finding agrees with the theory of Transaction cost economics (TCE), that the element of opportunism in most transactions is an enemy to both supplier relationship management and information sharing (Rindfleisch, 2019). Finally, the finding is in sync with Poi & Okwandu, (2021) who analyzed the relationship between supply chain integration and marketing performance of oil servicing firms in Nigeria and found that supply chain integration (strategic alliance and information sharing) can positively and significantly enhance marketing performance (customer satisfaction and customer loyalty) of oil servicing firms in Nigeria. ...
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Due to the globalization of markets world over, supply chain management practices have become conduits for high marketing performance for business organizations. This study examined the influence of supply chain management practices on marketing performance of Boutiques in Port Harcourt. A quantitative and causal research design was adopted to take on board the four (4) hypotheses formulated for the study. The population of this study consists of eight hundred and eighty-nine (889) registered Boutiques in Port Harcourt, whose authentic list was derived from the Business Directory of the Rivers State Ministry of Commerce and Industry, and sample size of two hundred and sixty-nine (269) was attained with the Krejcie and Morgan table. A self-structured questionnaire designed in the five-point Likert scale was used to obtained primary data from five hundred and thirty-eight (538) respondents (key informants; sales representatives and customer relationship managers), purposely chosen from the selected two hundred and sixty-nine (269) Boutiques, through a cross-sectional survey. The face validity of the questionnaire was established by professionals consisting of scholars and business practitioners with adequate knowledge of the subject matter. The construct and content validity were confirmed from previous researchers who used it, with slight adjustments. The research hypotheses were tested with the simple regression technique with the aid of Statistical Package for Social Sciences (SPSS) version 22.0. The results show that strategic supplier partnership has a very strong, significant and positive influence on customer patronage and brand awareness, and information sharing has a strong, significant and positive influence on customer patronage and brand awareness. The study therefore concludes that supply chain management practices positively and significantly influence marketing performance of Boutiques in Port Harcourt. Therefore, the study recommends that the management of Boutiques in Port Harcourt should scrutinize their supply chain management practices and ensure incessant modernization of strategic supplier partnership and information sharing in order to enhance their marketing performance.
... The TCT posits that firms strive for a closer relationship with business partners when it is mutually profitable. Coase (1937), Rindfleisch (2020), Williamson and Ghani (2012) these profits are derived from reduced transaction costs (Capaldo and Giannoccaro, 2015). Market transactions entail a set of costs, which may be reduced if transactions take place within a firm (John and Reve, 2010). ...
Purpose The purpose of this study is to analyze trust perceptions between farmers and traders from a dyadic context in developing countries using mixed-method with a specific focus on fresh and dry commodities under contracted and non-contracted markets. Design/methodology/approach A mixed approach was employed. Cross-sectional data were collected from 202 farmers and 188 traders using questionnaires and an interview guide. The Mann–Whitney test was used to assess differences in trust perception. Differences in the excerpts were assessed through content analysis. Findings Results show differences in perception of trust between farmers and traders on integrity, benevolence and competence in marketing fresh and dry commodities. No detectable differences in trust perception between contract and non-contract markets were observed. Research limitations/implications Data are limited to Northern Uganda and were collected on trust perception. Besides, there is a scarcity of formal contracts and difficulty in having a matched dyad which could affect generalization. Originality/value This is the first study to analyze differences in trust perceptions using a mixed approach in a dyadic context between fresh and dry chains in different markets typologies in developing countries.
... The transaction cost theory, although very attractive at explaining the behaviour of firms and has since been adopted in other fields (e.g. Rindfleisch, 2020), nevertheless is subject to many limitations. Notably, all scholars consider manufacturing firms, and base the theories on very limited assumptions. ...
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This paper reviews the key theories of the firm and considers their relevance to studying and understanding academic spinoffs as a special case of firms. The theory of the firm is an important aspect in entrepreneurship literature, as without clear understanding of the parameters influencing firm's behaviour, it remains difficult to predict its decisions to secure sustainable growth and ensure development of the economy overall. The paper considers the contribution of transaction cost theory, managerial theory, resource-based view, knowledge-based view, and dynamic capabilities, to the understanding of the academic spinoff. In essence, these theoretical explanations lend multiple perspectives that offer a greater insight into the academic spinoff firm by illuminating the issues of its boundaries, entrepreneurs, resources, knowledge, and networks. It is concluded that understanding academic spinoffs requires acknowledging this theoretical plurality. In response to this challenge, the paper proposes the Academic Spinoff Theory of the Firm.
... Environmental uncertainty refers to unanticipated changes in environments surrounding an exchange. But when operationalised in empirical studies, amongst all the transaction cost analysis construct, environmental uncertainty seems to be the most problematic from a measurement standpoint (Rindfleisch 2019). In cases of high uncertainty, Rogers (1995) proposed either trying to create an elaborate contract to handle possible uncertainties or to insource. ...
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Background: Cloud computing simplifies the access of applications and data from any location worldwide using Internet connected devices. Whilst adoption of cloud computing seems to be attractive, most companies are still using the on-premise enterprise resource planning (ERP) systems. Cloud computing provides organizations with scalable computer resources; nevertheless, state-owned corporations in South Africa have a poor adoption rate for integrating ERP and, in particular, payroll into the cloud (SOEs). Objectives: The goal of the study was to investigate factors affecting the adoption of ERP payroll cloud solutions in SOEs and basing on these factors develop an ERP payroll cloud solution adoption model. Method: In this study, a qualitative research approach was employed. Data were collected through observation, interviews and document reviews, and were analysed using thematic analysis method. Results: The a priori themes for this study: policy, security, cost, compliance and privacy were confirmed, whilst Protection of Personal Information Act, data centre location and top management emerged and were found to have a substantial influence in cloud ERP Payroll adoption process in SOEs. Conclusion: To move from on-premise to cloud ERP solution, SOEs managers need clarity on: Protection of Personal Information Act (POPI) act adherence, data centre location, top management support, privacy assurance, security guarantee, cost effectiveness, compliance controls and policy formulation adoption and implementation. The studied SOEs were not yet ready to migrate from on-premise solution to a cloud solution because of these factors. Addressing the above-mentioned concerns may enable SOEs’ managers to gain confidence in adopting cloud services.
This study (1) distinguishes between the effects on direct distribution of two distinctive dimensions of asset specificity (human asset specificity and physical asset specificity); (2) explores the sensitivity of these two relationships to variations in industry type (B2B versus B2C); and (3) compares the strength of these two relationships within B2B markets. In addition, we compare the sensitivity of firm decisions regarding human and physical asset specificity to firm variations in product complexity. The empirical analysis is based on data collected from Japanese manufacturers operating in B2B (n = 451) and B2C (n = 238) markets. Our results indicate that the level of physical asset specificity is positively and significantly related with the level of direct distribution in both B2B and B2C markets in Japan. In contrast, the level of human asset specificity is positively and significantly related with the level of direct distribution only in Japanese B2B markets. However, within those markets human asset specificity has a relatively larger effect, relative to physical asset specificity, on direct distribution. Given these findings, in future studies scholars should test for the appropriateness of combining items that measure human and physical asset specificity into an aggregate measure of asset specificity.
Smallholder tree planting has long been practiced by rural people throughout the tropics. However, the competitiveness of Indonesian wood products has decreased in the global market. Indonesia’s wooden furniture for instance, was assessed to have declined in competitiveness during 2006 to 2015. In addition, the World Economic Forum in its latest annual Global Competitiveness Index report (2019) lowered Indonesia’s position from 45th position to 50th in the product market. Although the small- and medium-scale wood processing businesses have begun to focus on commercial forest management goals, the way in which the competitiveness of their timber products is affected by forestry regulations remains a debate with significant policy implications. New regulations have been designed and implemented to solve various problems associated with smallholder-managed forests, such as specific administration of smallholder forest products, regulation of access to forests for people living near forests, and attempts to bridge the gap in forest management expertise between forestry companies and rural communities. However, rather than producing positive results for those concerned, new regulations appear to have become an additional constraint. This study aimed to map how regulations have influenced small-scale tree planting and wood processing industries in Indonesia, both directly and indirectly. It also examines the extent to which these regulations can be reformed to become an efficient and effective legal instrument in governing small-scale tree planting and wood processing industries. In addition, this study explored two less examined issues, namely: (1) Have the regulations become too complex and constraining? and (2) How does Indonesia create an ‘enabling’ regulatory environment? The study found that excessive regulation of commercial timber production reduces the interest by smallholders in tree growing. In addition, complicated regulations tend to increase the transaction costs incurred by those involved in commercial timber production.
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This study advances the remittance-entrepreneurship research by examining the effectiveness of e-government as a mechanism for reducing migrants’ transaction costs and promoting remittance-based opportunity entrepreneurship in 55 remittance-recipient countries. The study is grounded in the Transaction Cost Economics theory and uses the panel Feasible Generalized Least Squares and the Driscoll–Kraay estimation techniques with biennial data from 2007 to 2019. The findings reveal that using e-government to provide services to migrants generates a positive net association between remittances and new formal business creation. Second, there is a positive association between remittances and entrepreneurship across regional and income groups conditional on e-government development. Third, online service and telecommunication infrastructure indices positively moderate the association between remittances and entrepreneurship, with telecommunication infrastructure development playing the most important role. Lastly, entrepreneurship is positively influenced by economic globalization, financial development, and different measures of institutional quality. The policy implication is that achieving a sufficient level of government digital infrastructure development is crucial for the effective engagement of migrants, reduction of transaction costs, and increased remittance-based formal entrepreneurship in developing countries.
Business-to-business companies often differentiate themselves from competitors by complementing goods with services. While extant literature on servitization points to substantial benefits for companies and underscores the importance of the sales force for successful servitization, it has rarely empirically investigated the negative effects of and barriers to effective selling of servitized offerings at the salesperson level. Drawing on transaction cost theory, we propose that with rising service shares, the specificity of offers and transaction costs grow, partially offsetting the financial benefits. We derive four salesperson factors that moderate the effect of salespeople’s industrial service share on salespeople’s profit. These factors pertain to the extent to which salespeople individualize offers and effectively manage offers’ specificity (adaptiveness, customer valuation skills, experience). We test our conceptualization with data from 220 salespeople and company records. The results are robust to endogeneity and show that service share has a diminishing positive effect on salesperson profit. While salespersons’ offer individualization enforces this harmful effect, salesperson adaptiveness and customer valuation skills show beneficial moderating effects. This study provides valuable insights for researchers and managers into the role of the sales force in servitization and into salesperson factors conducive to realizing the full profit potential of servitized offerings.
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We live in a world that is increasingly digital, but not yet completely digital, which makes it quite interesting. The transition from the pre-digital age, just a few short years ago, to a new digital reality provides fertile ground for scholars to study a landscape that is shifting before our eyes (Lane & Levy, 2019). We are participant-observers in this great transformation, both recording changes as they occur while contributing to new waves of change. The next generation of not-yet-imagined digital technology and software applications will further transform markets, society, and everyday life (Hofacker, 2019). This revolution has already impacted nearly every corner of modern life. Over the past two decades, digital technologies have profoundly altered marketing and consumption, and the change will continue in both expected and unexpected directions in the decades to come. Engineers and entrepreneurs, marketers, and ordinary consumers are constantly co-creating and updating the digital world, and their innovations are shared and adopted around the globe at unprecedented speed (Ratchford, 2019). These market disruptions not only offer excitement and opportunity but are also daunting and overwhelming to a great many consumers, companies, and institutions, struggling to keep up with the magnitude and pace of change (Dholakia, 2019). In this chapter, we explore three main features of this new digital world. First, the digitalization of modern life has progressed so far and so fast that it is easy to overlook that we are still in the very early stages of this transformation. Second, the digital innovations that currently dominate consumer and commercial life in 2019 were largely unanticipated as recently as 1999. These innovations have come in rapid succession, rendering pre-digital life largely unrecognizable to the new generation of digital natives. With the benefit of 20 years of hindsight, it is now possible to see and appreciate just how rapid and Marketing in a Digital World
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The last decade has seen the emergence of the sharing economy as well as the rise of a diverse array of research on this topic both inside and outside the marketing discipline. However, the sharing economy’s implications for marketing thought and practice remain unclear. This article defines the sharing economy as a technologically enabled scoioeconomic system with five key characteristics (i.e., temporary access, transfer of economic value, platform mediation, expanded consumer role, and crowdsourced supply). It also examines the sharing economy’s impact on marketing’s traditional beliefs and practices in terms of how it challenges three key foundations of marketing: institutions (e.g., consumers, firms and channels, regulators), processes (e.g., innovation, branding, customer experience, value appropriation), and value creation (e.g., value for consumers, value for firms, value for society) and offers future research directions designed to push the boundaries of marketing thought. The article concludes with a set of forward-looking guideposts that highlight the implications of the sharing economy’s paradoxes, maturation, and technological development for marketing research. Collectively, this article aims to help marketing scholars not only keep pace with the sharing economy but also shape its future direction.
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Recent trends in industrial markets indicate that buyers and sellers are increasingly supplanting conventional “arm's length” arrangements with “alliances” involving closer ties. The authors develop a theoretical model of industrial buyer-supplier ties that presents joint action as a key aspect of closeness. Whereas conventional ties emphasize a clearly defined division of labor, these newer relationships are distinguished by more tightly integrated roles based on undertaking activities jointly. Drawing primarily on a normative theory of transaction costs, the authors identify the conditions under which these relationships are useful. The utility of the relationships derives from an ability to safeguard relationship-specific investments and to facilitate adaptation to uncertainty. Using data from a sample of industrial firms and their suppliers, the authors test these predictions. The results show good support for the model. Consequences for research and practice in marketing are drawn.
The Fourth Industrial Revolution is changing everything - from the way we relate to each other, to the work we do, the way our economies work, and what it means to be human. We cannot let the brave new world that technology is currently creating simply emerge. All of us need to help shape the future we want to live in. But what do we need to know and do to achieve this? In Shaping the Fourth Industrial Revolution, Klaus Schwab and Nicholas Davis explore how people from all backgrounds and sectors can influence the way that technology transforms our world. Drawing on contributions by more than 200 of the world's leading technology, economic and sociological experts to present a practical guide for citizens, business leaders, social influencers and policy-makers this book outlines the most important dynamics of the technology revolution, highlights important stakeholders that are often overlooked in our discussion of the latest scientific breakthroughs, and explores 12 different technology areas central to the future of humanity. Emerging technologies are not predetermined forces out of our control, nor are they simple tools with known impacts and consequences. The exciting capabilities provided by artificial intelligence, distributed ledger systems and cryptocurrencies, advanced materials and biotechnologies are already transforming society. The actions we take today - and those we don't - will quickly become embedded in ever-more powerful technologies that surround us and will, very soon, become an integral part of us. By connecting the dots across a range of often-misunderstood technologies, and by exploring the practical steps that individuals, businesses and governments can take, Shaping the Fourth Industrial Revolution helps equip readers to shape a truly desirable future at a time of great uncertainty and change.
In a global marketplace, customers often are unaware of the exact sources of the products they purchase and consume. To address this lack of awareness, blockchain technology can be implemented in supply chains to increase customers’ knowledge of products’ provenance. Provenance knowledge—information about products’ origin, production, modifications, and custody—enables customers to be assured of their purchasing decisions. This assurance comes from information on the origin, authenticity, custody, and integrity of the product that helps reduce risk perceptions. We develop a provenance knowledge framework and show its application to enhance assurances and reduce perceived risks through the application of blockchain. We present a guide on how to implement blockchain to establish provenance knowledge and close with a kind warning on the importance of demonstrating the value of blockchain to customers.
The author examines the determinants of control loss in the marketing channels of 40 U.S. manufacturers, each of which has vertically integrated into wholesale distribution by the establishment of manufacturers’ sales branches. The central hypothesis tested is that the efficiency of a vertically integrated system depends on the adoption of organizational forms which enable the firm to limit the degree of control loss and subgoal pursuit predictably resulting from vertical expansion. Control loss is operationalized in terms of the extent to which the travel and entertainment expenses of branch sales personnel exceed necessary levels. The results demonstrate the important influence of organizational structure and control systems on the efficiency of marketing operations. The findings are interpreted in terms of Williamson's organizational failures framework.
Commitment in channel relationships is modeled as a function of (1) each party's perception of the other party's commitment, (2) self-reported and perceived pledges (idiosyncratic investments and contractual terms) made by each party, and (3) other factors such as communication level, reputation, and relationship history. A dyadic model represented by a simultaneous equation system is estimated with data from 378 pairs of manufacturers and industrial distributors. The results indicate that one type of pledge, idiosyncratic investments, has a strong effect on the commitment of both parties to the relationship. In addition, each party's commitment is affected by the perceived commitment of the other party. Finally, idiosyncratic investments signal commitment, affecting each party's perceptions of the other party's commitment.
The author examines the determinants of opportunistic behavior in an interfirm relationship. Data from a franchise setting are examined for the effects of inter-organizational structure and interfirm influence on attitudes and opportunistic behavior. The results indicate that opportunism is affected by attitudes as well as such factors as interorganizational structure. Theoretical and managerial implications for the analysis of marketing channels are offered.
Manufacturers introducing an industrial product to a foreign market face a difficult decision. Should the product be marketed primarily by captive agents (company salesforce and company distribution division) or by independent intermediaries (outside sales agents and distributors)? This is an issue of downstream vertical integration. The authors explore the issue through an empirical investigation of distribution channel choice in foreign markets by U.S. semiconductor companies. Using original interview data, they develop scales to measure key variables. With these measures they build a logistic regression model of what factors affect the form of the distribution channel chosen in various foreign markets. The results indicate that integration is associated with the degree of transaction specificity of assets in the distribution function and whether or not the product being introduced is highly differentiated. There is evidence that the product will be sold through whatever channel is already in place, if any. Further, American firms seem more likely to integrate the distribution channel in highly developed industrialized countries (Western Europe) than in Japan and Southeast Asia, which are more culturally dissimilar. Implications for managers faced with a channel choice are explored.
Both practitioners and academics understand that consumer loyalty and satisfaction are linked inextricably. They also understand that this relation is asymmetric. Although loyal consumers are most typically satisfied, satisfaction does not universally translate into loyalty. To explain the satisfaction–loyalty conundrum, the author investigates what aspect of the consumer satisfaction response has implications for loyalty and what portion of the loyalty response is due to this satisfaction component. The analysis concludes that satisfaction is a necessary step in loyalty formation but becomes less significant as loyalty begins to set through other mechanisms. These mechanisms, omitted from consideration in current models, include the roles of personal determinism (“fortitude”) and social bonding at the institutional and personal level. When these additional factors are brought into account, ultimate loyalty emerges as a combination of perceived product superiority, personal fortitude, social bonding, and their synergistic effects. As each fails to be attained or is unattainable by individual firms that serve consumer markets, the potential for loyalty erodes. A disquieting conclusion from this analysis is that loyalty cannot be achieved or pursued as a reasonable goal by many providers because of the nature of the product category or consumer disinterest. For some firms, satisfaction is the only feasible goal for which they should strive; thus, satisfaction remains a worthy pursuit among the consumer marketing community. The disparity between the pursuit of satisfaction versus loyalty, as well as the fundamental content of the loyalty response, poses several investigative directions for the next wave of postconsumption research.