Transaction cost analysis of strategy‐structure choice

TLDR

The study examines three questions: the limits of growth through internalization, why firms pursue different growth strategies, and what drives changes in strategy and structure over time. The authors aim to analyze how strategy and structure affect organizational performance using a transaction‑cost framework and to integrate strategic management theory into a coherent framework for corporate strategy choice. They employ a transaction‑cost approach to assess the relationship between strategy, structure, and performance. The analysis yields a framework that integrates strategic management literature and guides the evaluation of corporate strategy choice.

Abstract

Abstract Using a transaction cost approach this paper analyzes the relationship between strategy, structure and organizational performance. It addresses three related questions. First, what determines the limit to growth through internalization for a firm pursing a particular strategy? Second, why does a firm pursue different strategies for achieving growth? Third, what determines changes in the strategy and structure used by the firm over time? This analysis serves to integrate work in strategic management and provides a framework for analyzing corporate strategy choice.