Influential Factors of the Export of Hand-woven Carpet from Transaction Cost Economics Perspective



Make or buy decision is one of the main areas of decision making for managers. Transaction cost economics (TCE), as an influential economic approach to the theory of the firm, tries to put forward a theoretical framework for this important decision. From TCE perspective, the greater the asset specificity, the more the behavioral uncertainty and the more the transaction frequency, the more will be the probability for the firm to decide on make rather than buy. Of course, this theoretical prediction is recommendable to managers only if empirical data supports it. The purpose of this paper is the empirical evaluation of TCE's hypotheses by employing data about the decision making of exporters of hand-woven carpets, collected through survey. The results confirm the theory's prediction about the asset specificity of the firm but do not confirm the expected effects of behavioral uncertainty and frequency of transactions on exports.
JEL Classification: L2, B21, C32, D2