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TRANSACTIONS COSTS ANALYSIS: A TEST OF THE THEORY IN A SIMULATED WHOLESALE DISTRIBUTION CONTEXT
Abstract
This research focused on the influences of broad environmental characteristics upon the organizational structure of the wholesaling activities. Previous explanations from the areas of Economics and Business Strategy were found to be incomplete and/or inconsistent in their treatments of the phenomena. The Transactions Costs paradigm expands upon previous Economic and Functions of the Firm rationales by incorporating the concepts of Bounded Rationality and Opportunistic Behavior. It also appears to be more internaly consistent than the Managerial rationale. In this study, student groups responded to business scenarios as part of a laboratory experiment. A written response described the student group's organizational strategy for the wholesaling functions. A second response classified the strategy as one of the following; the use of the existing market, a complex contractual agreement or vertical integration. A factor analysis of the 22 scenario characteristics duplicated the "a priori" specifications of the Transactions Costs environmental constructs of Volume/Density, Investment Characteristics, and Uncertainty/Complexity. A number of other tests, as well as the design characteristics of the experiment, further demonstrated high levels of internal and external validity. An Analysis of Variance of the data indicated that the Volume/Density characteristics of the environment have no significant influence upon the organization of the wholesaling activities. This decision is influenced by the Uncertainty/Complexity present in the environment and the nature of the assets employed. As the levels of these variables increase, the desire to exert greater control over the wholesaling functions and/or the tendency to vertically integrate increases as well. Pair-wise comparisons of specific cell means, as well as the results of a discriminant version of the model, suggest that the simultaneous increase of these variables further intensifies the desire to control and/or vertically integrate. Firm specific variables such as economic power and specific market control objectives were not included in this study. These variables would be considered after the Transactions Costs theory has survived refutation at the earlier stages of theory development.
Subject Area
Marketing
Recommended Citation
PHARR, STEVEN WAYNE, "TRANSACTIONS COSTS ANALYSIS: A TEST OF THE THEORY IN A SIMULATED WHOLESALE DISTRIBUTION CONTEXT" (1987). ETD collection for University of Nebraska-Lincoln. AAI8715854.
https://digitalcommons.unl.edu/dissertations/AAI8715854