Organisational capabilities and transaction costs in the analysis of activities and their externalisation: implications for the service industry

[EN] Transaction cost theory and the organisational capability view are complementary in the analysis of the firm and in examining the decision to integrate or externalise activities. This article discusses the essential contributions of both theories to understanding the core aspects of the internal organisation of the firm, and goes onto address the key questions of why activities are organised internally or why certain components or services are obtained from suppliers or distributors; and finally looks at the cases in which firms make decisions with regard to supply, distribution or retail sales.Peris-Ortiz, M.; Rueda Armengot, C. (2010). Organisational capabilities and transaction costs in the analysis of activities and their externalisation: implications for the service industry. Service Business. 4(2):105-122. doi:10.1007/s11628-009-0079-110512242Alchian AA, Demsetz H (1972) Production, information cost and economic organization. Am Econ Rev 62(5):777–795Barney JB (1996) Gaining and sustaining competitive advantage. Addison-Wesley, New YorkChandler AD Jr (1977) The visible hand. Harvard University Press, LondonCoase RH (1937) The nature of the firm. Economics 4:386–405Coase RH (1972) Industrial organization: a proposal for research. In: Fuchs VR (ed) Policy issues and research opportunities in industrial organization. National Bureau of Economics Research, New York, pp 59–73Coase RH (1991) The institutional structure of production, Prize lecture to the memory of Alfred Nobel, December 9, 1991, in http://www.nobel.se/economics/laureates/1991/coase-lecture.htmlConner K, Prahalad CK (1996) A resource-based theory of the firm: knowledge versus opportunism. Organ Sci 7(5):477–501Frei FX (2008) The four things a service business must get right. Harv Bus Rev April:70–80Grant RM (1995) Contemporary strategy analysis. Blackwell Publishers Inc, CambridgeJacobides MG (2008) How capability differences, transaction costs, and learning curves interact to shape vertical scope. Organ Sci 19(2):306–326Jacobides MG, Winter SG (2005) The co-evolution of capabilities and transaction costs: explaining the institutional structure of production. Strateg Manag J 26(5):395–413Kaldor N (1934) The equilibrium of the firm. Econ J 44:60–76Kogut B, Zander U (1996) What firms do? Coordination, identity, and learning. Organ Sci 7(5):402–518Madhok A (1996) The organization of economic activity: transaction costs, firm capabilities, and the nature of governance. Organ Sci 7(5):577–590Madhok A (1997) Cost, value and foreign market entry mode: the transaction and the firm. Strateg Manag J 18(1):39–61Madhok A (2002) Reassessing the fundamental and beyond: Ronald Coase, the transaction costs and resource based theories of the firm and the institutional structure of production. Strateg Manag J 23(6):535–550Nelson RR, Winter SG (1982) An evolutionary theory of economic change. Harvard University Press, CambridgeOrlikowski WJ (1992) The duality of technology: rethinking the concept of technology in organizations. Organ Sci 3(3):398–427Prahalad CK, Hamel G (1990) The core competence of the corporation. Harv Bus Rev May–June:79–91Smith A (1937 [1776]) Wealth of nations. Modern Library, New YorkWeick KE, Roberts K (1993) Collective mind in organizations: heedful interrelating on flight decks. Adm Sci Q 38:357–381Williamson OE (1975) Markets and hierarchies: analysis and antitrust implications. Free Press, New YorkWilliamson OE (1981) The modern corporation: origins, evolution, attributes. J Econ Lit 19:1537–1568Williamson OE (1985) The economics institutions of capitalism: firms, markets, relational contracting. Free Press, New YorkWilliamson OE (1991) Comparative economic organization: the analysis of discrete structural alternatives. Adm Sci Q 36:269–296Williamson OE (1993) Calculativeness, trust and economic organization. J Law Econ 36. In: Williamson OE (1996) The mechanisms of governance. Oxford University Press, New York, pp 250–278Williamson OE (1999) Strategy research: governance and competence perspectives. Strateg Manag J 20:1087–1108Williamson OE (2008) Outsourcing: transaction cost economics and supply chain management. J Supply Chain Manag 44(2):5–16Winter SG (2000) The satisfying principle in capability learning. Strateg Manag J 21:981–996Winter SG (2003) Understanding dynamic capabilities. Strateg Manag J 24(10):991–995Zollo M, Winter SG (2002) Deliberate learning and the evolution of dynamic capabilities. Organ Sci 13(3):339–35