Transaction cost and modern property rights theories of the firm take the transaction as the fundamental unit for analyzing governance choices. This paper explores the limits of the theories when transactions cannot be analyzed and governed separately; that is, when they are subject to...

We study the determinants of make-or-buy decisions for engines made by every recorded U.S. auto firm during 1917-1933. Most make-or-buy studies testing predictions of transaction cost economics exclude smaller firms, even though their make-or-buy behavior might be different from large firms' due...

A large literature has developed in recent years that attempts to compare transaction cost and capabilities explanations of firms' vertical boundaries. Much of this literature has treated comparative capabilities (buyers' vs. potential suppliers') as determinants that are independent of...

This paper explores mechanisms through which a party's choice of governance mode for a focal transaction is constrained by the governance choices it made for other, prior transactions. We argue that this condition of "governance inseparability" plays an important role in determining the...