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Internal and External Factors on Firms’ Transfer Pricing Decisions: Insights from Organization Studies


  • Dan Li

    (Kelley School of Business, Indiana University)

  • Manuel Portugal Ferreira

    (ESTG-Instituto Politécnico de Leiria and Globadvantage – Center of Research in International Business & Strategy)


Well understood in economics, accounting, finance, and legal research, transfer pricing has rarely been comprehensively explored in organization management literature. This paper explores some theoretical explanations of transfer pricing within multidivisional firms drawing insights from various organizational theories – primarily institutional theory, transaction cost economics, and social networks – to develop a conceptual model of transfer pricing. This model focuses on the nature of multidivisional firms’ internal transfers, internal and external technological environments, and internal and external social environments. We highlight the importance of transfer pricing as a key strategic dimension to understand intra-firm flows and their associated costs.

Suggested Citation

  • Dan Li & Manuel Portugal Ferreira, 2008. "Internal and External Factors on Firms’ Transfer Pricing Decisions: Insights from Organization Studies," Notas Económicas, Faculty of Economics, University of Coimbra, issue 27, pages 23-38, June.
  • Handle: RePEc:gmf:journl:y:2008:i:27:p:23-38

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    References listed on IDEAS

    1. Holmstrom, Bengt & Tirole, Jean, 1991. "Transfer Pricing and Organizational Form," Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(2), pages 201-228, Fall.
    2. Peter J Buckley & Mark C Casson, 1998. "Models of the Multinational Enterprise," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(1), pages 21-44, March.
    3. Cravens, Karen S., 1997. "Examining the role of transfer pricing as a strategy for multinational firms," International Business Review, Elsevier, vol. 6(2), pages 127-145, April.
    4. Colbert, Gary J. & Spicer, Barry H., 1995. "A multi-case investigation of a theory of the transfer pricing process," Accounting, Organizations and Society, Elsevier, vol. 20(6), pages 423-456, August.
    5. William G. Ouchi, 1979. "A Conceptual Framework for the Design of Organizational Control Mechanisms," Management Science, INFORMS, vol. 25(9), pages 833-848, September.
    6. Jack Hirshleifer, 1956. "On the Economics of Transfer Pricing," The Journal of Business, University of Chicago Press, vol. 29, pages 172-172.
    7. J. Christopher Westland, 1992. "Congestion and Network Externalities in the Short Run Pricing of Information System Services," Management Science, INFORMS, vol. 38(7), pages 992-1009, July.
    8. Spicer, Barry H., 1988. "Towards an organizational theory of the transfer pricing process," Accounting, Organizations and Society, Elsevier, vol. 13(3), pages 303-322, April.
    9. Julia Porter Liebeskind & Amalya Lumerman Oliver & Lynne G. Zucker & Marilynn B. Brewer, 1995. "Social Networks, Learning, and Flexibility: Sourcing Scientific Knowledge in New Biotechnology Firms," NBER Working Papers 5320, National Bureau of Economic Research, Inc.
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    1. repec:eee:accoun:v:52:y:2017:i:3:p:227-237 is not listed on IDEAS

    More about this item


    theory; value; transfer pricing; intra-firm flows; multidivisional firm.;

    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting


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