Measuring Transaction Costs in Plural Formed Marketing Channels: An empirical investigation of franchise units in the oil industry
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http://hdl.handle.net/11250/93234Utgivelsesdato
2009Metadata
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Sammendrag
Previous empirical research has supported the predictions derived from
transaction cost economics that asset specificity, uncertainty, frequency and
complexity entail vertical integration (David and Han 2004). The underlying
assumption is that integration creates the most efficient organizational
formation. Given this assumption from transaction cost theory integration
caused by market failures due to asset specificity lead to efficiency. This test
focus on the ability of the principal company to control opportunism and to
reduce transaction costs through vertical control. Therefore, the empirical
question raised here is whether dimensions of costs can be contract related.
Contract related transaction costs unlike production costs are associated to the
incentives defined by the contract. This problem has barely been studied in
previous empirical analysis. However, the theoretical question makes it crucial
to explore a homogeneous setting like a plural formed franchise system where
third variables also including asset specificity can be kept relatively constant.
My intention, therefore, is not to test traditional hypotheses derived from
transaction cost theory, but to explore dimensions of transaction costs and to
test the prediction from the theory that costs associated to the bilateral
exchange are related to the incentive system given by the contract. The test
reveals how transaction costs are related to aspects of the bilateral contract. The
bilateral contract is dimensionalized into structural variables like centralization
and formalization and a variable describing the interactive process. The
empirical setting is an oil company (Shell) and its plural formed franchise
system in the Norwegian gasoline market, representing standardized
technology and products, and trademark specific assets equally distributed
among dealers. Both dyadic and unilateral data are used to test the hypotheses.
The results point out the importance of formal rules and procedures and the
scope and magnitude of interactions as efficient instruments of bilateral
contracting. Centralization, though, is related to both control costs and freeriding
costs.
Beskrivelse
This monograph is based on Nygaard's doctoral dissertation from 1992 and is updated with his research in this area during the period 1992-2009.
The monograph is originally published 2009 by VDM Verlag: http://www.vdm-publishing.com/