A Multivariate Investigation Of Transaction Cost Analysis Dimensions: Do Contract Types Differ?

Abstract

Our study explored the effects of contract type on transaction cost analysis dimensions for research and development projects. Hypotheses from transaction cost analysis theory were tested using archival data from completed contracts used to govern the procurement of defense products. Our results indicate that the type of contract used in an economic exchange is associated with differences in asset specificity, uncertainty, and contract incompleteness. Two underlying dimensions were evident at the multivariate level that indicate how individual transaction cost indicators combine as a set based on the degree of contract impediments and human asset specificity. Results are also discussed in the context of contract type differences on each transaction cost analysis indicator.