Showing papers by "Oliver E. Williamson published in 1988"
TL;DR: In this article, a combined treatment of corporate finance and corporate governance is proposed, where both debt and equity are treated not mainly as alternative financial instruments, but rather as alternative governance structures.
Abstract: A combined treatment of corporate finance and corporate governance is herein proposed. Debt and equity are treated not mainly as alternative financial instruments, but rather as alternative governance structures. Debt governance works mainly out of rules, while equity governance allows much greater discretion. A project-financing approach is adopted. I argue that whether a project should be financed by debt or by equity depends principally on the characteristics of the assets. Transaction-cost reasoning supports the use of debt (rules) to finance redeployable assets, while non-redeployable assets are financed by equity (discretion). Experiences with leasing and leveraged buyouts are used to illustrate the argument. The article also compares and contrasts the transaction-cost approach with the agency approach to the study of economic organization.
2,366 citations
TL;DR: The transaction cost logic of economic organization had its origins in a tautology, which Ronald Coase wryly defines as "a proposition that is clearly right" (1988:00) as mentioned in this paper.
Abstract: The transaction cost logic of economic organization had its origins in a tautology, which Ronald Coase wryly defines as "a proposition that is clearly right" (1988:00). The basic insight, first advanced by Coase in his classic 1937 article (1952:341) and restated for this conference, is this: "A firm . . . [has] a role to play in the economic system if ... transactions [can] be organized within the firm at less cost than if the same transactions were carried out through the market. The limit to the size of the firm ... [is reached] when the costs of organizing additional transactions within the firm [exceed] the costs of carrying out the same transactions through the market" (1988). Albeit "clearly right," the argument is also subject to the objection that "almost anything can be rationalized by invoking suitably specified transaction costs" (Fisher: 322, n. 5). That the state of transaction cost economics in 1972 was approximately where Coase had left it in 19371 is largely attributable to the failure, for thirty-five years, to operationalize this important concept. That this flat trajectory has been supplanted by exponential growth during the past fifteen
426 citations
388 citations
TL;DR: The authors argue that technology is neither fully determinative of nor irrelevant to economic organization and that transaction cost economizing occupies a prominent position in any effort to assess the efficacy of alternative forms of economic organization.
Abstract: I argue here, as I have previously, that technology is neither fully determinative of nor irrelevant to economic organization. Transaction cost economizing occupies a prominent position in any effort to assess the efficacy of alternative forms of economic organization.
97 citations
01 Jan 1988
TL;DR: In this article, the authors argue that the understanding of some complex organizational phenomena might be better served by working out of several well-focused perspectives, and that exposing the powers and limits of each of the leading approaches and the tensions and complementarities between them can be a productive enterprise.
Abstract: The intellectual appeal of a single, unified theory of organization notwithstanding, we are at present operating in a preunified stage of development. Even if a comprehensive, integrated theory were in prospect, which it is not, our understanding of some complex organizational phenomena might be better served by working out of several well-focused perspectives. Exposing the powers and limits of each of the leading approaches and the tensions and complementarities between them can be, and often is, a productive enterprise.
34 citations