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A Transaction Cost Approach to Sport Sponsorship

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  • Michael P. Sam
  • Richard Batty
  • Rebecca G.K. Dean

Abstract

Sport sponsorship is an evolving area of interest to both academics and business practitioners. Despite recent advances, scholarly reviews of sponsorship attest to a lack of underlying theories and conceptual foundations on which to base empirical enquiries. This paper draws from the economics literature to provide an overview of Transaction Cost Theory – an approach that draws attention to the costs involved in negotiating, retaining and monitoring sponsorship exchanges. The term “costs” refers to those characteristics or dimensions of a sponsorship transaction that make exchange problematic. From the perspective of sport organisations, three sources of sponsorship costs are outlined relating to the need for: (1) planning and safeguarding, (2) adapting and servicing, and (3) monitoring and evaluating. Transaction cost theory introduces implications for sponsorship relations, particularly with respect to the possibility for costs to expand over time, the consequences of sponsor-specific investments and the choices of governing mechanisms used to manage costs. Critiques of the approach are discussed, followed by recommendations for empirical research and methodological considerations using transaction cost theory.

Suggested Citation

  • Michael P. Sam & Richard Batty & Rebecca G.K. Dean, 2005. "A Transaction Cost Approach to Sport Sponsorship," Sport Management Review, Taylor & Francis Journals, vol. 8(1), pages 1-17, January.
  • Handle: RePEc:taf:rsmrxx:v:8:y:2005:i:1:p:1-17
    DOI: 10.1016/S1441-3523(05)70030-9
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    Cited by:

    1. Batty, Rachel J. & Gee, Sarah, 2019. "Fast food, fizz, and funding: Balancing the scales of regional sport organisation sponsorship," Sport Management Review, Elsevier, vol. 22(1), pages 167-179.
    2. Joe, Cobbs, 2011. "Legal battles for sponsorship exclusivity: The cases of the World Cup and NASCAR," Sport Management Review, Elsevier, vol. 14(3), pages 287-296, August.
    3. Cousens, Laura & Babiak, Kathy & Bradish, Cheri L., 2006. "Beyond Sponsorship: Re-Framing Corporate-Sport Relationships," Sport Management Review, Elsevier, vol. 9(1), pages 1-23, May.
    4. Meiklejohn, Trevor & Dickson, Geoff & Ferkins, Lesley, 2016. "The formation of interorganisational cliques in New Zealand rugby," Sport Management Review, Elsevier, vol. 19(3), pages 266-278.
    5. Jackson, Steven J. & Sam, Michael P., 2007. ""Yes, Prime Minister" and the Dilemmas of Sport Policy," Sport Management Review, Elsevier, vol. 10(3), pages 307-323, November.

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