IDEAS home Printed from https://ideas.repec.org/a/sae/jinter/v32y2020i2p180-199.html
   My bibliography  Save this article

From Hybrid Organizations to Social-purpose Hierarchies: Toward a Transaction Cost Economics of Social Enterprises

Author

Listed:
  • Alejandro Agafonow

Abstract

Building on Oliver E. Williamson’s work, this article lays the basis for a transaction cost theory of social enterprises. It is submitted that the more proprietary-centred the creation of value is, the lower the governance costs of economizing on bounded rationality to protect patrons from the hazard of opportunism. Since not all productive activities can be organized within the range of the lowest governance costs, a discrete structural analysis is developed, with different ranges of governance costs suitable for different purposes depending on the kinds of value creation intended and the class of patrons to be protected. Accepting higher governance costs is justified by preventing the exploitation of bargaining asymmetries at the expense of selected classes of patrons like disadvantaged customers and stakeholders at large, subject to what is feasible, or Williamson’s remediableness standard . JEL: D23, M14

Suggested Citation

  • Alejandro Agafonow, 2020. "From Hybrid Organizations to Social-purpose Hierarchies: Toward a Transaction Cost Economics of Social Enterprises," Journal of Interdisciplinary Economics, , vol. 32(2), pages 180-199, July.
    • Handle: RePEc:sae:jinter:v:32:y:2020:i:2:p:180-199
    DOI: 10.1177/0260107919846791
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0260107919846791
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0260107919846791?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Peter G. Klein & Michael E. Sykuta (ed.), 2010. "The Elgar Companion to Transaction Cost Economics," Books, Edward Elgar Publishing, number 4136.
    2. Michael C. Jensen, 2010. "Value Maximization, Stakeholder Theory, and the Corporate Objective Function," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 32-42, January.
    3. Williamson, Oliver E, 1979. "Transaction-Cost Economics: The Governance of Contractural Relations," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 233-261, October.
    4. Steven Tadelis & Oliver E.Williamson, 2012. "Transaction Cost Economics [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    5. Valentinov, Vladislav, 2015. "Value devolution in social enterprises: Institutional economics and systems theory perspectives," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 47(9), pages 1126-1133.
    6. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-741, September.
    7. Cosmides, Leda & Tooby, John, 1994. "Better than Rational: Evolutionary Psychology and the Invisible Hand," American Economic Review, American Economic Association, vol. 84(2), pages 327-332, May.
    8. Marcoux, Alexei M., 2003. "A Fiduciary Argument Against Stakeholder Theory," Business Ethics Quarterly, Cambridge University Press, vol. 13(1), pages 1-24, January.
    9. Jean-Francois Hennart, 1993. "Explaining the Swollen Middle: Why Most Transactions Are a Mix of “Market” and “Hierarchy”," Organization Science, INFORMS, vol. 4(4), pages 529-547, November.
    10. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    11. Valentinov, Vladislav, 2008. "The transaction cost theory of the nonprofit firm: Beyond opportunism," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 37(1), pages 5-18.
    12. Hansmann, Henry, 1988. "Ownership of the Firm," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(2), pages 267-304, Fall.
    13. Williamson, Oliver E, 1988. "The Logic of Economic Organization," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(1), pages 65-93, Spring.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alejandro Agafonow & Marybel Perez, 2023. "How A Social Enterprise Wanes: The Transaction Costs of Credible Commitments at Etsy.com," Journal of Interdisciplinary Economics, , vol. 35(1), pages 83-107, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mikko Ketokivi & Joseph T. Mahoney, 2020. "Transaction Cost Economics As a Theory of Supply Chain Efficiency," Production and Operations Management, Production and Operations Management Society, vol. 29(4), pages 1011-1031, April.
    2. Alexander Brink, 2010. "Enlightened Corporate Governance: Specific Investments by Employees as Legitimation for Residual Claims," Journal of Business Ethics, Springer, vol. 93(4), pages 641-651, June.
    3. Dow,Gregory K., 2019. "The Labor-Managed Firm," Cambridge Books, Cambridge University Press, number 9781107589650.
    4. Setene, Letlama & Jordaan, Daniel du P.S., 2021. "The trade-off between chain performance and fragility considering coordination strategies of agri-food chains: a South African egg chain's case study," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 24(3), March.
    5. Magali Fia & Lorenzo Sacconi, 2019. "Justice and Corporate Governance: New Insights from Rawlsian Social Contract and Sen’s Capabilities Approach," Journal of Business Ethics, Springer, vol. 160(4), pages 937-960, December.
    6. Marcos, Javier & Prior, Daniel D, 2017. "Buyer-supplier relationship decline: A norms-based perspective," Journal of Business Research, Elsevier, vol. 76(C), pages 14-23.
    7. Oliver E. Williamson, 2005. "The Economics of Governance," American Economic Review, American Economic Association, vol. 95(2), pages 1-18, May.
    8. Lydia Bals & Jon F. Kirchoff & Kai Foerstl, 2016. "Exploring the reshoring and insourcing decision making process: toward an agenda for future research," Operations Management Research, Springer, vol. 9(3), pages 102-116, December.
    9. Danny Zhao‐Xiang Huang, 2022. "An integrated theory of the firm approach to environmental, social and governance performance," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(S1), pages 1567-1598, April.
    10. David Colman, 1994. "Ethics And Externalities: Agricultural Stewardship And Other Behaviour: Presidential Address," Journal of Agricultural Economics, Wiley Blackwell, vol. 45(3), pages 299-311, September.
    11. Olivier Meier & Aurélie Sannajust, 0. "The smart contract revolution: a solution for the holdup problem?," Small Business Economics, Springer, vol. 0, pages 1-16.
    12. Chari, Murali D.R. & Dixit, Jaya, 2015. "Business groups and entrepreneurship in developing countries after reforms," Journal of Business Research, Elsevier, vol. 68(6), pages 1359-1366.
    13. Andræs Barge-Gil, 2013. "Open Strategies and Innovation Performance," Industry and Innovation, Taylor & Francis Journals, vol. 20(7), pages 585-610, October.
    14. Goeree, Jacob K. & Riedl, Arno & Ule, Aljaz, 2009. "In search of stars: Network formation among heterogeneous agents," Games and Economic Behavior, Elsevier, vol. 67(2), pages 445-466, November.
    15. Simshauser, P., 2020. "Merchant utilities and boundaries of the firm: vertical integration in energy-only markets," Cambridge Working Papers in Economics 2039, Faculty of Economics, University of Cambridge.
    16. Luigi Cantone & Pierpaolo Testa & Svend Hollensen & Giuseppe Fabio Cantone, 2019. "Outsourcing New Product Development Fostered By Disruptive Technological Innovation: A Decision-Making Model," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 23(01), pages 1-45, January.
    17. Naeem Ashraf & Alireza Ahmadsimab & Jonatan Pinkse, 2017. "From Animosity to Affinity: The Interplay of Competing Logics and Interdependence in Cross-Sector Partnerships," Journal of Management Studies, Wiley Blackwell, vol. 54(6), pages 793-822, September.
    18. repec:eee:labchp:v:3:y:1999:i:pb:p:2373-2437 is not listed on IDEAS
    19. Roland E. Kidwell & Arne Nygaard, 2011. "A Strategic Deviance Perspective on the Franchise Form of Organizing," Entrepreneurship Theory and Practice, , vol. 35(3), pages 467-482, May.
    20. Klaus Möller & Ramin Gamerschlag & Finn Guenther, 2011. "Determinants and effects of human capital reporting and controlling," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 22(3), pages 311-333, November.
    21. John A. List, 2006. "The Behavioralist Meets the Market: Measuring Social Preferences and Reputation Effects in Actual Transactions," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 1-37, February.

    More about this item

    Keywords

    Transaction costs; hybrid organizations; social enterprises; benefit corporations;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:jinter:v:32:y:2020:i:2:p:180-199. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.