Article Title

Transaction costs and information costs as determinants of the organizational form: A conceptual synthesis



Many researchers have invoked the transaction cost economics rationale to explain the choice of an organizational form. On the other hand, some authors have asserted that an organization is an information processing social system. This view promises to, andhas infact, already started to gain prominence in research and practice in the Information Age. Consistent with this approach, it is argued that one needs to considercostsof acquiring, storing, processing, and disseminating information in addition to transaction costs to be able to predict the organizational form. Both information costs and transaction costs are dependent on three transaction parameters: asset specificity, frequency, and uncertainty. Whereas both types of costs are qualitatively similar in their influence on a transaction with respect to asset specificity, this may not be the case with the other two transaction parameters.