Strategic Management Review > Vol 2 > Issue 1

The Firm versus the Market: Dehomogenizing the Transaction Cost Theories of Coase and Williamson

Per L. Bylund, Spears School of Business, Oklahoma State University, USA, Per.Bylund@okstate.edu
 
Suggested Citation
Per L. Bylund (2021), "The Firm versus the Market: Dehomogenizing the Transaction Cost Theories of Coase and Williamson", Strategic Management Review: Vol. 2: No. 1, pp 79-118. http://dx.doi.org/10.1561/111.00000018

Publication Date: 15 Feb 2021
© 2021 now Publishers, Inc.
 
Subjects
Micro-foundations of strategy,  Leadership and governance,  Organization and strategy,  Strategic decision-making
 
Keywords
Transaction costsTCEtheory of the firmRonald CoaseOliver Williamson
 

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In this article:
Introduction 
Transaction Costs, Specificity, and Specialization 
Coase's Market and Transaction Costs 
Williamson's Market and Transaction Costs 
Comparing Transaction Cost Analyses 
Implications for Strategy 
Conclusion 
Acknowledgments 
References 

Abstract

It has become commonplace in management research to refer to "transaction cost theory," a joint Coase–Williamson approach to economic organizing. This off-the-cuff usage overlooks their differences by treating Coase as a pre-Williamsonian. I argue that their theoretical frameworks are different, and that they use different theoretical assumptions leading to different views of transaction costs, markets, and the firm. These differences are wide enough that they should be considered two distinct theoretical approaches to the firm. I outline their differences and elaborate on the implications of reconsidering Coase's distinct theory for management and strategy research.

DOI:10.1561/111.00000018