Hans Knutsson

"Doing business", being the layman expression for "performing economic transactions", seems organised along a few logical principles. This text is about organisation in general and the vertical coordination of economic transactions in particular. Transaction cost theory, as provided by Oliver E. Williamson (1975, 1985, 1996), is used as the theoretical framework. The operationalisation of transaction cost theory appears difficult, though, when searching for transaction cost explanations of why economic transactions are organised in certain ways. Accordingly, the purpose of this thesis is to explore strengths and weaknesses in the operationalisation of transaction cost theory when explaining vertical coordination forms. In order to determine the most cost-efficient organisation of transactions, transaction costs incurred in alternative forms are measured by an indirect estimation of three "attributes". This methodology is tested in a small scale, twostage empirical case study. It comprises 12 respondents. The data collection involves one questionnaire part and a subsequent interview part. In the data evaluation process, both statistical and qualitative evaluation methods have been used. The first-stage analysis treats the questionnaire data, whereas the second-stage analysis has been extended by the added information gained in the interviews. The result has been an adjusted and enhanced transaction cost analysis, which directs attention· towards operationalisation difficulties inherent in transaction cost theory. It has been suggested that these are related to three parts of the research process: 1) the production costs associated with a certain organisation form are vital to the efficiency of that particular form. However, these costs are not conceptualised in transaction cost theory. This fact makes a transaction cost analysis vulnerable to a confusion of production costs with transaction costs. 2) The formulation of the operationalisations is crucial to a transaction cost analysis, particularly since the transaction cost terminology is
rather "idiosyncratic". This may be a common-sense reflection, however not to be underestimated in its importance to a true transaction cost analysis. 3) A well-developed precognition of transaction conditions seems helpful to the researcher to better capture relevant, case-specific, transaction costs. Therefore, when explaining vertical coordination forms, in contrast to the testing of conceptual relationships, case study methodology has been suggested to be superior to quantitative surveys.