The underlying basis of the theory is that the relative costs of using markets as opposed to employing firm-controlled resources drive resource allocation decisions. In particular, it argues that firms realize efficiencies, typically related to cost, when there is congruence between a firm’s governance structure and attributes of the underlying transactions ( Williamson, 1975). Williamson (1981) further argued that, since uncertainty and opportunistic behavior are key determinants of transaction costs, transaction cost economics theory suggests that firms aim to avoid uncertainty. However, a reduction in exchange uncertainty is attractive only to the extent that it reduces transaction costs ( Cannon et al., 2008). Thus, firms tend to vertically integrate to avoid uncertainty and reduce costs, so as to safeguard transaction specific investments, and to adapt to environmental uncertainty associated with transactions ( Rindfleisch and Heide, 1997; Heide and John, 1988). The implication is that, the performance of firms that practice a wider arc of integration (i.e. firms that integrate with 3PLs) should be