Abstract
Transaction cost economics (TCE) relies on three behavioral assumptions in predicting how firms choose governance structures—bounded rationality, opportunism, and risk neutrality. We explore the implications of the neglected behavioral assumption of risk neutrality. offer an integrative appraisal of the three behavioral assumptions using trust as a unifying perspective, and explicate subjective costs and risks. We illustrate the relative ease with which previous empirical shortcomings can be addressed by incorporating risk and trust in TCE models.
Keywords
Transaction costVariable (mathematics)Variable costEconomicsBusinessActuarial scienceMicroeconomicsIndustrial organizationOperations managementManagementMathematics
Affiliated Institutions
Related Publications
Does Governance Matter? <i>Keiretsu</i> Alliances and Asset Specificity as Sources of Japanese Competitive Advantage
This empirical study suggests that Japanese competitive advantage in complex-product industries is at least partly due to differences in value chain governance and interfirm ass...
National Institutional Structures, Transaction Cost Economizing and Competitive Advantage: The Case of Japan
Japan’s economic success since World War II has been striking. Modern Japan was the first major industrial economy to emerge from outside the Western tradition. Economically dev...
BAD FOR PRACTICE: A Critique of the Transaction Cost Theory.
Organizations are not mere substitutes for structuring efficient transactions when markets fail; they possess unique advantages for governing certain kinds of economic activitie...
A Historical Comparison of Resource-Based Theory and Five Schools of Thought Within Industrial Organization Economics: Do We Have a New Theory of the Firm?
A resource-based approach to strategic management focuses on costly-to-copy attributes of the firm as sources of economic rents and, therefore, as the fundamental drivers of per...
Institutions, Institutional Change and Economic Performance
Continuing his groundbreaking analysis of economic structures, Douglass North develops an analytical framework for explaining the ways in which institutions and institutional ch...
Publication Info
- Year
- 1996
- Type
- article
- Volume
- 21
- Issue
- 1
- Pages
- 73-99
- Citations
- 946
- Access
- Closed
External Links
Social Impact
Altmetric
PlumX Metrics
Social media, news, blog, policy document mentions
Citation Metrics
946
OpenAlex
Cite This
Todd H. Chiles,
John McMackin
(1996).
Integrating Variable Risk Preferences, Trust, and Transaction Cost Economics.
Academy of Management Review
, 21
(1)
, 73-99.
https://doi.org/10.5465/amr.1996.9602161566
Identifiers
- DOI
- 10.5465/amr.1996.9602161566