Integrating transaction cost economics and the resource-based view in services and innovation

Abstract

This study examines the complementary nature of Williamson's transaction cost theory and that of the resource-based view in the integration or externalisation of activities, with particular reference to services. Assessing comparative costs, idiosyncratic demands and core competences form the criteria for make or buy decisions, although the analysis of services endows idiosyncratic demands with particular relevance when internalisation of services does neither contribute cost advantages nor others related to the core competences of the firm. In addition to these make or buy questions, this study considers the front/back model in cases where the firm manages services internally.

Keywords:

• services
• core competences
• comparative costs
• idiosyncratic demand
• front/back model