, Volume 4, Issue 2, pp 105-122
Date: 08 Nov 2009

Organisational capabilities and transaction costs in the analysis of activities and their externalisation: implications for the service industry

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Transaction cost theory and the organisational capability view are complementary in the analysis of the firm and in examining the decision to integrate or externalise activities. This article discusses the essential contributions of both theories to understanding the core aspects of the internal organisation of the firm, and goes onto address the key questions of why activities are organised internally or why certain components or services are obtained from suppliers or distributors; and finally looks at the cases in which firms make decisions with regard to supply, distribution or retail sales.