Transactions in which there is a contract are the central object of the study of transaction cost theory. When we speak of transactions, in this case, we refer to the transfer of goods and services along the organisational boundary this concept includes both the notion of exchange and the notion of contract since the contract implies a promise of future performance because it states that one party has made an investment whose return depends on the response of the other party involved. Efficiency is the criterion by which performance is measured, which is understood as a form of cost savings attributable to organised forms such as hierarchies, e.g. the characteristics and dimensions of a transaction, trying to find those transactions or processes that can make them problematic to find the most efficient way to economise on these costs. The theory of transaction costs, as its name suggests, seeks to identify the sources of transaction costs, i.e.
All these non-price costs are called transaction costs. Definition of transaction cost theoryīusiness management entails costs that are not captured by prices, such as finding the product, negotiating contracts to carry out transactions, the cost of differentiating the relevant price and cost ensuring that what has been agreed is fulfilled. But Oliver Williamson, an American economist who won the Nobel Prize in 2009, together with Elinor Ostrom for their contributions to the “analysis of economic governance“, gave shape to what we know today as transaction cost theory. The first notions of the theory were introduced by the economist Ronald Coase, winner of the Nobel Prize in 1991, to contribute to “the importance of transaction costs and property rights for the functioning of the market”. These types of organisations have a managerial hierarchy that allows them to manage transactions to minimise costs. Transaction cost theory attempts to answer the questions “why” or “what do firms exist for”, understanding firms as a particular type of organisation.
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