Transaction Cost Economics: A theoretical overreach into Managerial Practice

The application of Transaction Cost Economics (TCE) as a tool to understand managerial decision making has been a contentious issue over the last 35 years. Williamson (1985) founded and defended the TCE theory his entire career, eventually winning the Noble Prize in Economics in 2009. Many management scholars were either skeptical or hostile to the usefulness of TCE in management, reaching a nadir in 1996 with the publication of Ghoshal and Moran’s critique. Other more general criticism followed (Zingales, 2000; Ferraro, et al 2005; Tsang, 2006). To some extent the period that followed was relatively calm, with TCE being considered a legitimate theoretical analysis, but of questionable value to practicing managers. However, a recent paper by Cuypers, et al (2020) argued for a robust return to the application of TCE in a wide variety of managerial research areas. the purpose of this project is to rebut Cuypers as a form of theoretical and economic imperialism that is destructive to improving managerial practice.

Faculty Supervisor:

Rick Molz

Student:

Partner:

Sumy State University

Discipline:

Business

Sector:

Finance and Insurance; Public Service, Policy, and Governance; Other

University:

Concordia University

Program: