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Transacting in the State of Union: A Case Study of Exchange Governed by Convergent Interests[Note 1. Address for reprints: Peter Smith Ring, Department of Management, ...]
Author(s) -
Smith Ring Peter
Publication year - 1997
Publication title -
journal of management studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.398
H-Index - 184
eISSN - 1467-6486
pISSN - 0022-2380
DOI - 10.1111/1467-6486.00040
Subject(s) - transaction cost , argument (complex analysis) , state (computer science) , corporate governance , law and economics , database transaction , business , economics , production (economics) , industrial organization , public economics , european union , microeconomics , economic system , international trade , finance , computer science , biochemistry , chemistry , algorithm , programming language
Transaction cost economics (TCE) treatments rarely devote extended consideration to the comparative advantages of non‐contractual governance. This paper focuses on one form of non‐contractual alternative. After addressing the concept of a `state of contract' as it may be inferred from TCE theory. I offer an alternative, `the state of union', in which the parties to an exchange can have their cake (efficient production frontiers) and eat it too (equitable outcomes without costly safeguards). An application of the concept is presented in a case study. The paper concludes with an assessment of implications of the argument for scholars and managers.