Transaction Cost Economics and Open Innovation: Implications for Theory and Practice

Remneland-Wikhamn, Bj�rn; Knights, David

Abstract

Transaction cost economics (TCE) has had a strong impact on theories of economic exchange but also on open innovation, even though the relationship is often implicit rather than explicit. In this paper, we highlight what we consider to be the problematic use of TCE in the context of open innovation, suggesting that it has a limited descriptive power and potentially does normative damage to open innovation practice. A case study of the Volvo Group will be drawn upon to illustrate these claims. The case questions the belief that hierarchical control eliminates transaction costs. Also, it suggests that an overemphasis on calculative reduction of transaction costs together with a focus on governance and rationality leave little space for an innovative climate, thus diverting attention away from the creative potential of transactions. Indeed the self-fulfilling prophecy character of subscribing to the assumptions of TCE may not merely limit but actually undermine innovation. © 2012 Blackwell Publishing Ltd.

Citation

Remneland-Wikhamn, B., & Knights, D. (2012). Transaction Cost Economics and Open Innovation: Implications for Theory and Practice. Creativity and Innovation Management, 21(3), 277-289. https://doi.org/10.1111/j.1467-8691.2012.00639.x

• Journal Article Type: Article
• Publication Date: Sep 1, 2012
• Journal: Creativity and Innovation Management
• Print ISSN: 1467-8691
• Electronic ISSN: 1467-8691
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 21
• Issue: 3
• Pages: 277-289
• DOI: https://doi.org/10.1111/j.1467-8691.2012.00639.x
• Keywords: economics, transaction cost economics, open innovation, economic exchange, innovation management
• Public URL: https://uwe-repository.worktribe.com/output/946523
• Publisher URL: http://dx.doi.org/10.1111/j.1467-8691.2012.00639.x