An Empirical Investigation of Ex Post Transaction Costs

Abstract

This study focuses on organizational efforts to constrain ex post transaction costs in interorganizational exchange. The theoretical model frames opportunism as a determinant of transaction costs and implicates cooperation and formalization as control structures that alleviate opportunism. The model also examines whether the proposed theoretical relationships are enduring. Franchisee-franchisor relationships in the Norwegian distribution system of a multinational oil refiner provided the context for analysis. A test of the model using multi-sample data across two time periods indicates that opportunistic behavior consistently increases transaction costs. Furthermore, cooperative interaction curbs bargaining costs and formalization reduces opportunism. Implications for nterorganizational theory and franchising management are discussed.