1. From transaction cost to transactional value analysis: implications for the study of interorganizational strategies
Edward J. Zajac & Cyrus P. Olsen
Journal of Management Studies, 30 (1):
Presented by Jiayue (Julie) Ao, Fall 2016

2. Overview Interorganizational Strategies
Limitations of Transaction Cost Perspective
A Single Firm, Cost Minimization Emphasis
A Structural Emphasis
Transactional Value Analysis
Joint Value Maximization Emphasis
A Processual Emphasis
Conclusions

3. Interorganizational Strategies
Interorganizational strategies are formed voluntarily by two (or more) organizations seeking to create and sustain a relationship that is valuable to both firms.
Crucial transactional issue is both organizations’ concern.
There is a fundamental transformation in interorganizational exchange relationships.
Example: Joint ventures

4. Limitations of Transaction Cost Perspective
When applied to interorgnaizational strategies, the standard transaction cost analysis involves only one of the two parties engaged in an interdependent exchange relationship.
Neglects the interdependence between exchange partners
Williamson’s view overemphasizes the structural analysis of interorganizational exchange relationships and neglects processual issues.
Neglects development processes

5. A Single Firm, Cost Minimization Emphasis
Williamson ( )
Vertical integration
The efficient solution to a transaction cost minimization problem
Example: Firm Upstream (Firm U) and Firm Downstream (Firm D)
The decision to integrate vertically reflects:
A single firm, rather than multi-firm
One firm’s “make or buy” decisions
Consider only its own transaction costs

6. A Structural Emphasis Williamson (1975-1985)
Logic of market structure- conduct-performance paradigm
Small numbers (number of buyers or sellers) & Bilateral monopoly (number of firms in an industry)
Asset specificity & Exit barriers
Having certain structural properties before contract execution and other structural properties after contract execution (ex ante and ex post) Fails to recognize that “fundamental transformation” is a process

7. A Joint Value Maximization Emphasis
How to estimate expected value over the expected duration of the interorganizational strategy?
How to create that value with the partner firm?
Gains that emerge form differences in interests (traded off to create mutual benefit)
Gains that emerge form similarities in interests (blocked or hidden)
Need for taking a processual approach
How to claim that value?

8. A Processual Emphasis

9. Conclusions
The article integrates strategic, learning, and transaction cost approach
A different approach from transaction cost perspective in interorganizational strategies

10. Perspectives

11. What I Have Learned Transaction Value vs. Transaction Cost
Greater value or Minimize costs
More optimistic view or more pessimistic view
Multi-firm or Single firm
Think differently
Derive new theories based on classic ones
Different environment
Different industries

12. Thank you