Transaction costs and organizational choice: Modeling governance in offshore drilling

Christopher J. Jablonowski, Andrew N. Kleit

Research output: Contribution to journalArticle

6 Scopus citations

Abstract

This research examines oil company decisions to vertically integrate into the drilling function using a transaction cost economics framework. Risk preference is also investigated as an explanation of organizational choice. Econometric models are specified and estimated for organizational choice and for the cost functions of competing organizational options. Estimation of the cost functions permits isolation of the effects of transaction attributes to each form of organization, shedding light on the relative impacts of hazards of exchange and internal costs. Results provide support for both the transaction cost and risk preference hypotheses as determinants of organizational form. The cost functions also enable estimation of the transaction costs and incentive gains of outsourcing.

Original languageEnglish (US)
Pages (from-to)28-58
Number of pages31
JournalEngineering Economist
Volume56
Issue number1
DOIs
StatePublished - Jan 1 2011

All Science Journal Classification (ASJC) codes

  • Education
  • Economics and Econometrics
  • Engineering(all)

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