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Level of Analysis
The level of study begins at the micro level which focuses on firm-level examination.
This theory examines the costs associated in developing and maintaining relationships among a
company's various stakeholders, like suppliers, consumers, employees, as well as investors.
It emphasizes the transaction's expenses and how they might be reduced. Additionally, it
analyzes the advantages of the transactions and how to maximize them. The transaction costs are
divided into three groups search expenses, negotiation costs, and enforcement costs. Lastly,
policing costs are the expenses incurred to ensure a transaction's terms and conditions are
adhered to. These expenses are the foundation of the transaction cost theory (DeMiguel et al.,
Understanding the intricate relationships between a transaction's various components requires a
micro-level examination.
.The Central Argument
The core premise of the paper is transaction costs theory provides an essential economic
basis for strategic decision-making. The theory of transaction costs is predicated on the notion
that expenses connected with an economic trade are not necessarily purely financial (Kim &
Level of Analysis
The level of study begins at the micro level which focuses on firm-level examination.
This theory examines the costs associated in developing and maintaining relationships among a
company's various stakeholders, like suppliers, consumers, employees, as well as investors.
It emphasizes the transaction's expenses and how they might be reduced. Additionally, it
analyzes the advantages of the transactions and how to maximize them. The transaction costs are
divided into three groups search expenses, negotiation costs, and enforcement costs. Lastly,
policing costs are the expenses incurred to ensure a transaction's terms and conditions are
adhered to. These expenses are the foundation of the transaction cost theory (DeMiguel et al.,
Understanding the intricate relationships between a transaction's various components requires a
micro-level examination.
.The Central Argument
The core premise of the paper is transaction costs theory provides an essential economic
basis for strategic decision-making. The theory of transaction costs is predicated on the notion
that expenses connected with an economic trade are not necessarily purely financial (Kim &
