A Transaction Cost Economics Approach
Organization theory has the task of explaining three things:
the nature of organizations, their development, and their
functioning at any particular point in time. Of critical concern
is the interface between successive stages of production
and distribution. Each discrete stage can be seen
as one for which a careful assessment of the make-or-buy
position is warranted. In the tradition of TCE, many studies
have been undertaken concerning vertical integration
decisions, which mainly focus on manufacturing (see, for
example, [23-27]). The forward integration from
manufacturing into distribution is less well developed
(except in the studies of Anderson and Schmittlein[28],
Gardner[29] and Palay[30]. This article focuses on the
integration of the physical distribution function using TCE.