Transaction cost economics predicts that investments in management control will enable risky interfirm transactions. Risk is rarely eliminated, because firms trade off costs of management control and expected costs of control loss (together, the “cost of control”). The resultant solution...

Firms typically use a ‘one-size-fits-all' (OSFA) compensation contract that specifies a common formulaic relation between performance and compensation (i.e., a performance bonus) for nonexecutive managers in similar jobs. However, a contract that is appropriate on average, may be suboptimal...

We examine the portfolio of management controls to mitigate alliance risks of three firms' in order to analyze the suitability of three management control frameworks as descriptors of controls used in interfirm alliances: Simons (1995), Merchant and Van der Stede (2007), and Jensen and Meckling...

In this chapter, we review the use of TCE in the study of interfirm relationships. An extensive literature in economics and business strategy delves into interfirm governance choices. In our review, we focus on accounting and non-accounting studies to assess how TCE has contributed and can...