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The transaction costs perspective on international supply chain management; evidence from case studies in the manufacturing industry in the Netherlands

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  • Ebel Berghuis
  • Frank A. G. den Butter

Abstract

Transaction costs are barriers for internationalisation processes. This paper investigates the practical relevance of transaction costs economics (TCE) for international supply chain management (SCM) in this era of globalisation, which is characterised by splitting up the supply chain in more and more parts. The analysis is based on data from in-depth interviews with seven manufacturing companies in the Netherlands which are actually engaged in this modern way of organising production. It is shown that the balance between transaction costs and sheer production costs (transformation costs) plays a prominent role in the strategic decisions on how and where to organise production. Especially intangible (or ‘soft’) transaction costs are important in this respect. The analysis provides insight in practical experience in the manufacturing industry in the Netherlands with transaction costs and shows how transaction costs affect decisions on transaction management, personnel policy and internationalisation of R&D. This study is to our knowledge the first to confront the theory of TCE with practice of manufacturing firms in their internationalisation decisions using in-depth interviews instead of survey data.

Suggested Citation

  • Ebel Berghuis & Frank A. G. den Butter, 2017. "The transaction costs perspective on international supply chain management; evidence from case studies in the manufacturing industry in the Netherlands," International Review of Applied Economics, Taylor & Francis Journals, vol. 31(6), pages 754-773, November.
    • Handle: RePEc:taf:irapec:v:31:y:2017:i:6:p:754-773
    DOI: 10.1080/02692171.2017.1324409
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    References listed on IDEAS

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    1. Frank A.G. den Butter, 2012. "Managing Transaction Costs in the Era of Globalization," Books, Edward Elgar Publishing, number 14748, March.
    2. Davide Castellani & Alfredo Jimenez & Antonello Zanfei, 2013. "How remote are R&D labs? Distance factors and international innovative activities," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 44(7), pages 649-675, September.
    3. Frank A.G. Den Butter, 2012. "The transaction management perspective on procurement in the era of globalisation," International Journal of Procurement Management, Inderscience Enterprises Ltd, vol. 5(2), pages 123-139.
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    2. Farok J. Contractor, 2022. "The world economy will need even more globalization in the post-pandemic 2021 decade," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(1), pages 156-171, February.

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