Application of the transaction cost approach to households – the demographics of households’ ‘make or buy’ decisions
This study suggests that outsourcing to service providers is becoming the third edge in the economics of households in the 21st century. By referring to the household as an organizational unit, we use the transaction cost approach of the organizational economists to discuss and conceptualize the questions of what, why, and how 21st-century households decide to outsource. Our analysis demonstrates that the efficient boundaries of households are flexible, so that the core functions of households are being outsourced with different levels of intensity and scope. Moreover, we find that better cost control, access to technical expertise, and the potential for time savings might foster outsourcing by households; while normative and social beliefs, trust problems, power relations, and asymmetric information might inhibit outsourcing. With regard to the question of how, we find that households ‘make and buy’ rather than ‘make or buy’. Both the demand and the supply aspects of the outsourcing phenomenon are further discussed with regard to institutional mechanisms. Our analysis also offers theoretical contributions to the transaction cost approach, both by proposing the governance structure of ‘make and buy’, and by emphasizing the role of power in the organizational decision-making process regarding outsourcing.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Betsey Stevenson & Justin Wolfers, 2007.
"Marriage and Divorce: Changes and their Driving Forces,"
Journal of Economic Perspectives,
American Economic Association, vol. 21(2), pages 27-52, Spring.
- Betsey Stevenson & Justin Wolfers, 2007. "Marriage and divorce: changes and their driving forces," Working Paper Series 2007-03, Federal Reserve Bank of San Francisco.
- Stevenson, Betsey & Wolfers, Justin, 2007. "Marriage and Divorce: Changes and their Driving Forces," IZA Discussion Papers 2602, Institute for the Study of Labor (IZA).
- Betsey Stevenson & Justin Wolfers, 2007. "Marriage and Divorce: Changes and their Driving Forces," NBER Working Papers 12944, National Bureau of Economic Research, Inc.
- Stevenson, Betsey & Wolfers, Justin, 2007. "Marriage and Divorce: Changes and their Driving Forces," CEPR Discussion Papers 6144, C.E.P.R. Discussion Papers.
- Francesc Ortega & Libertad González & Lídia Farré Olalla, 2009.
"Immigration, family responsibilities and the labor supply of skilled native women,"
Working Papers. Serie AD
2009-19, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Farré Lidia & González Libertad & Ortega Francesc, 2011. "Immigration, Family Responsibilities and the Labor Supply of Skilled Native Women," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-48, June.
- Farré, Lídia & Gonzalez, Libertad & Ortega, Francesc, 2009. "Immigration, Family Responsibilities and the Labor Supply of Skilled Native Women," IZA Discussion Papers 4265, Institute for the Study of Labor (IZA).
- Lidia Farre & Libertad Gonzalez & Francesc Ortega, 2009. "Immigration, Family Responsibilities and the Labor Supply of Skilled Native Women," CReAM Discussion Paper Series 0916, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
- Lídia Farré & Libertad González Luna & Francesc Ortega, 2009. "Immigration, family responsibilities and the labor supply of skilled native women," Economics Working Papers 1161, Department of Economics and Business, Universitat Pompeu Fabra.
- David M. Cutler & Edward L. Glaeser & Jesse M. Shapiro, 2003.
"Why Have Americans Become More Obese?,"
Harvard Institute of Economic Research Working Papers
1994, Harvard - Institute of Economic Research.
- David Cutler & Edward Glaeser & Jesse Shapiro, 2003. "Why Have Americans Become More Obese?," NBER Working Papers 9446, National Bureau of Economic Research, Inc.
- Shapiro, Jesse & Glaeser, Edward & Cutler, David, 2003. "Why Have Americans Become More Obese," Scholarly Articles 2640583, Harvard University Department of Economics.
- Michael Bittman & Paula England & Nancy Folbre & George Matheson, 2001. "When Gender Trumps Money: Bargaining and Time in Household Work," JCPR Working Papers 221, Northwestern University/University of Chicago Joint Center for Poverty Research.
- Karsten Hank & Michaela Kreyenfeld, 2000. "Does the availability of childcare influence the employment of mothers? Findings from western Germany," MPIDR Working Papers WP-2000-003, Max Planck Institute for Demographic Research, Rostock, Germany.
- Manser, Marilyn & Brown, Murray, 1980. "Marriage and Household Decision-Making: A Bargaining Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 31-44, February.
- Furtado, Delia & Hock, Heinrich, 2008. "Immigrant Labor, Child-Care Services, and the Work-Fertility Trade-Off in the United States," IZA Discussion Papers 3506, Institute for the Study of Labor (IZA).
- Del Boca, Daniela, 2002.
"The Effect of Child Care and Part Time Opportunities on Participation and Fertility Decisions in Italy,"
IZA Discussion Papers
427, Institute for the Study of Labor (IZA).
- Daniela Del Boca, 2002. "The effect of child care and part time opportunities on participation and fertility decisions in Italy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 15(3), pages 549-573.
- Commons, John R., 1931. "Institutional Economics," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 21, pages 648-657.
- Anne Winkler & Thomas Ireland, 2009. "Time Spent in Household Management: Evidence and Implications," Journal of Family and Economic Issues, Springer, vol. 30(3), pages 293-304, September.
- Paul H. Jensen & Robin E. Stonecash, 2005. "Incentives and the Efficiency of Public Sector-outsourcing Contracts," Journal of Economic Surveys, Wiley Blackwell, vol. 19(5), pages 767-787, December.
- Shelly Lundberg & Robert A. Pollak, 1996. "Bargaining and Distribution in Marriage," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 139-158, Fall.
- Williamson, Oliver E, 1979. "Transaction-Cost Economics: The Governance of Contractural Relations," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 233-261, October.
- Pollak, Robert A, 1985. "A Transaction Cost Approach to Families and Households," Journal of Economic Literature, American Economic Association, vol. 23(2), pages 581-608, June.
- Min, Insik & Fang, Cheng & Li, Qi, 2004. "Investigation of patterns in food-away-from-home expenditure for China," China Economic Review, Elsevier, vol. 15(4), pages 457-476.
- Patricia Cortés & José Tessada, 2011. "Low-Skilled Immigration and the Labor Supply of Highly Skilled Women," American Economic Journal: Applied Economics, American Economic Association, vol. 3(3), pages 88-123, July.
- Siv Gustafsson & Frank P. Stafford, 1994. "Three Regimes of Child Care: The United States, the Netherlands, and Sweden," NBER Chapters, in: Social Protection versus Economic Flexibility: Is There a Trade-Off?, pages 333-362 National Bureau of Economic Research, Inc.
- McIvor, Ronan, 2008. "What is the right outsourcing strategy for your process," European Management Journal, Elsevier, vol. 26(1), pages 24-34, February.
When requesting a correction, please mention this item's handle: RePEc:dem:wpaper:wp-2012-025. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Wilhelm)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.