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A Critical Appraisal of the Current Use of Transaction Cost Explanations for Government Make-Or-Buy Choices: Towards a Contingent Theory and Forms of Tests

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  • Tobias Johansson

Abstract

This article aims at contributing to the extant literature on government make-or-buy choices building on transaction cost economics (TCE) by explicitly theorizing about transaction alignment and its relation to performance. It is argued that current theoretical and empirical models of government make-or-buy choices are not able to make predictions that corroborate theory. They are dependent upon the assumption of perfect competition that is ill-suited for the public sector setting. Instead, contingent models that take performance differences into account constitute a more valid model of TCE in this setting. In this article, theoretical models and empirical approaches for such a research agenda are developed.

Suggested Citation

  • Tobias Johansson, 2015. "A Critical Appraisal of the Current Use of Transaction Cost Explanations for Government Make-Or-Buy Choices: Towards a Contingent Theory and Forms of Tests," Public Management Review, Taylor & Francis Journals, vol. 17(5), pages 661-678, May.
    • Handle: RePEc:taf:pubmgr:v:17:y:2015:i:5:p:661-678
    DOI: 10.1080/14719037.2013.848922
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    References listed on IDEAS

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    1. Gerdin, Jonas & Greve, Jan, 2004. "Forms of contingency fit in management accounting research--a critical review," Accounting, Organizations and Society, Elsevier, vol. 29(3-4), pages 303-326.
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    3. Douglass C. North, 1990. "A Transaction Cost Theory of Politics," Journal of Theoretical Politics, , vol. 2(4), pages 355-367, October.
    4. Shannon W. Anderson & Henri C. Dekker, 2005. "Management Control for Market Transactions: The Relation Between Transaction Characteristics, Incomplete Contract Design, and Subsequent Performance," Management Science, INFORMS, vol. 51(12), pages 1734-1752, December.
    5. Jonas Gerdin, 2005. "The Impact of departmental interdependencies and management accounting system use on subunit performance," European Accounting Review, Taylor & Francis Journals, vol. 14(2), pages 297-327.
    6. Gerdin, Jonas & Greve, Jan, 2008. "The appropriateness of statistical methods for testing contingency hypotheses in management accounting research," Accounting, Organizations and Society, Elsevier, vol. 33(7-8), pages 995-1009.
    7. Sung-Wook Kwon & In Won Lee & Richard C. Feiock, 2010. "Transaction Cost Politics and Local Service Production," International Review of Public Administration, Taylor & Francis Journals, vol. 14(3), pages 37-52, January.
    8. Hartmann, Frank G. H. & Moers, Frank, 1999. "Testing contingency hypotheses in budgetary research: an evaluation of the use of moderated regression analysis," Accounting, Organizations and Society, Elsevier, vol. 24(4), pages 291-315, May.
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    Cited by:

    1. Greve, Jan & Ax, Christian & Bedford, David S. & Bednarek, Piotr & Brühl, Rolf & Dergård, Johan & Ditillo, Angelo & Dossi, Andrea & Gosselin, Maurice & Hoozée, Sophie & Israelsen, Poul & Janschek, Ott, 2017. "The impact of society on management control systems," Scandinavian Journal of Management, Elsevier, vol. 33(4), pages 253-266.
    2. Xuesong Li & Yunlong Ding & Yuxuan Li, 2019. "M-Government Cooperation for Sustainable Development in China: A Transaction Cost and Resource-Based View," Sustainability, MDPI, vol. 11(7), pages 1-17, March.
    3. Gerdin, Jonas & Johansson, Tobias & Wennblom, Gabriella, 2019. "The contingent nature of complementarity between results and value-based controls for managing company-level profitability: A situational strength perspective," Accounting, Organizations and Society, Elsevier, vol. 79(C).

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