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

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  • 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
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    References listed on IDEAS

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    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.
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    Cited by:

    1. Agafonow, Alejandro & Perez, Marybel, 2024. "In search of a non-anthropocentric middle-range theory of the firm: On how the Patagonia Purpose Trust granted a controlling stake to nature," Ecological Economics, Elsevier, vol. 217(C).
    2. Alexandra Birkmaier & Adhurim Imeri & Gerald Reiner, 2024. "Improving supply chain planning for perishable food: data-driven implications for waste prevention," Journal of Business Economics, Springer, vol. 94(6), pages 1-36, August.
    3. 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.
    4. Agafonow, Alejandro & Perez, Marybel, 2024. "Overhauling multinationals for the Anthropocene: How a rogue subsidiary offers a blueprint for sustainable development," Ecological Economics, Elsevier, vol. 222(C).

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    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

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