#TRANSACTION COST ECONOMICS THEORY SOFTWARE#

federal government regulated the airline industry by dictating what routes each airline would fly and what prices it would charge.

Thus just as harsh environmental changes are believed to have made dinosaurs extinct, changes in the business environment can destroy organizations regardless of how clever and insightful executives are. Environmental determinism views organizations much like biological theories view animals-organizations (and animals) are very limited in their ability to adapt to the conditions around them. No airline has ever been able to enact the environment, however, perhaps because the airline industry is so fragmented.Įnvironmental determinism offers a completely opposite view from enactment on why some firms succeed and others fail. More recently, Apple has been able to reshape its environment by introducing innovative products such as the iPhone and the iPad that transcend the traditional boundaries between the cell phone, digital camera, music player, and computer businesses.

#TRANSACTION COST ECONOMICS THEORY SOFTWARE#

Figure 4.19 Other Theories about Firm Performance īy the 1990s, Microsoft had been so successful at reshaping the software industry to its benefit that the firm was the subject of a lengthy antitrust investigation by the federal government. This is accomplished by putting strategies in place that reshape competitive conditions in a favorable way ( Figure 4.19 “Other Theories about Firm Performance”). Enactment contends that an organization can, at least in part, create an environment for itself that is beneficial to the organization.

Enactment treats executives as the masters of their domains. Be able to apply different theories to help explain competition in different industries.Īlthough resource-based theory stands as perhaps the most popular explanation of why some organizations prosper while others do not, several other theories are popular.Be able to discuss other theories about firm success and failure beyond resource-based theory.

Transaction cost economics theory