1.1 BACKGROUND TO THE STUDY
Inter-firm collaboration in becoming
very common between organizations in recent times and ranges from the
simplicity of a partnership and crowd funding to the complexity of a
multinational corporation. Inter-firm collaboration depicts relationship
between two or several organizations in which the participating parties
agree to invest resources, mutually achieve goals, share information,
resources, rewards and responsibilities, as well as jointly make
decisions and solve problems (Chan and Prakash, 2012). Collaboration
between firms can be effective in tackling complex policy problems, but
may be handled more effectively by committed boundary-spanning teams and
networks than by formal organizational structures (Fischer, 2013).
Collaboration between team members of different firms allows for better
communication between the organizations and throughout the supply
chains. It is a way of coordinating different ideas from numerous people
to generate a wide variety of knowledge which as proven to have a
significant reduction on transactions costs. Collaboration with a
selected few firms as opposed to collaboration with a large number of
different firms has been shown to positively impact transaction costs
and innovation outcomes (Eisingerich, Rubera and Seifert, 2009). The
recent improvement in technology has provided the world with high speed
internet, wireless connection, and web-based collaboration tools like
blogs, and wikis, and has as such created a mass collaboration thereby
reducing the cost of communication and knowledge. People from all over
the world are efficiently able to communicate and share ideas through
the internet, or even conferences, without any geographical barriers.
The power of social networks is beginning to permeate into business
culture where many collaborative uses are being found including file
sharing and knowledge transfer
Transaction cost economics seeks to
explain why there are some markets with many organizations in them and
why there are some industries dominated by just a few large
organizations called hierarchies. Williamson (2009) sketched a
historical argument that explains the transformation of an economy based
on many small transactions into one based on large hierarchies that
transact among themselves and into which individuals are absorbed. The
organizational developments that characterize today’s economy, dominated
as it is by such hierarchies, are seen as a more efficient way to
organize economic relationships through inter-firm cooperation.
Inter-firm collaboration is the process
of two or more organizations working together to realize or achieve
something successfully (Marinez-Moyano, 2006). Inter-firm collaboration
is very similar to, but more closely aligned than, inter-firm
cooperation, and both are an opposite of inter-firm competition
(Marinez-Moyano, 2007). Most inter-firm collaboration requires
leadership, although the form of leadership can be social within a
decentralized and business group. Teams that work collaboratively can
obtain greater resources, recognition and reward when facing competition
for finite resources through transaction costs reduction (Spence,
Structured methods of inter-firm
collaboration encourage introspection of behavior and communication.
These methods specifically aim to increase the success of firms as they
engage in collaborative problem solving. Inter-firm collaboration
towards minimizing transaction costs involves active participation in
joint resources and development (R&D) and other innovation projects
with other organizations (with other enterprises or non-commercial
institutions). It does not necessarily imply that both partners derive
immediate commercial benefit from the venture. Pure contracting out of
work, where there is no active working together towards the same goal,
is not regarded as collaboration.
1.2 STATEMENT OF THE PROBLEM
Effective inter-firm relationships are
considered an essential component in creating and maintaining reasonable
transaction costs and competitiveness. Even when other conditions are
favorable, end market demand is strong, quality inputs are affordable,
technologies are efficient, supporting markets function well, and so
on—ineffective relationships can jeopardize the competitiveness of a
value chain and its ability to generate economic growth, employment and
incomes. In the light of the foregoing, the researcher is examining the
effects of transaction costs economics on inter-firm collaboration in
1.3 OBJECTIVES OF THE STUDY
The following are the objectives of this study:
- To examine the effects of transaction costs economics on inter-firm collaboration in Nigeria.
- To examine the relationships between transaction costs and inter-firm collaboration in Nigeria.
- To identify the factors affecting inter-firm collaborations in Nigeria.
1.4 RESEARCH QUESTIONS
- What are the effects of transaction costs economics on inter-firm collaboration in Nigeria?
- What are the relationships between transaction costs and inter-firm collaboration in Nigeria?
- What are the factors affecting inter-firm collaborations in Nigeria?
HO: There is no significant relationship between transaction costs and inter-firm collaboration in Nigeria
HA: There is significant relationship between transaction costs and inter-firm collaboration in Nigeria
1.6 SIGNIFICANCE OF THE STUDY
The following are the significance of this study:
- The findings from this study will educate entrepreneurs, business
administrators in Nigeria and the general public on the effects of
transaction costs economics on inter-firm collaboration in Nigeria.
- This research will be a contribution to the body of literature in
the area of the effects of transaction costs economics on inter-firm
collaboration in Nigeria, thereby constituting the empirical literature
for future research in the subject area.
1.7 SCOPE/LIMITATIONS OF THE STUDY
This study is limited to the
manufacturing sector of the Nigerian economy. It will also cover the
effects of transaction costs economics on inter-firm collaboration in
LIMITATION OF STUDY
Financial constraint- Insufficient fund
tends to impede the efficiency of the researcher in sourcing for the
relevant materials, literature or information and in the process of data
collection (internet, questionnaire and interview).
Time constraint- The researcher will
simultaneously engage in this study with other academic work. This
consequently will cut down on the time devoted for the research work.
Chan, Felix T. S.; Prakash, Anuj
(2012-08-15). "Inventory management in a lateral collaborative
manufacturing supply chain: a simulation study". International Journal
of Production Research. 50 (16): 4670–4685.
doi:10.1080/00207543.2011.628709. ISSN 0020-7543.
Eisingerich, Andreas B.; Rubera, Gaia;
Seifert, Matthias (May 2009). "Managing Service Innovation and
Interorganizational Relationships for Firm Performance: To Commit or
Diversify?". Journal of Service Research. 11: 344–356.
Fischer, Michael Daniel. "An
ethnographic study of turbulence in the management of personality
disorders: an interorganisational perspective". 2008, PhD Thesis.
Imperial College London, University of London. Retrieved 22 February
Marinez-Moyano, I. J. Exploring the
Dynamics of Collaboration in Interorganizational Settings, Ch. 4, p. 83,
in Schuman (Editor). Creating a Culture of Collaboration. Jossey-bass,
2006. ISBN 0-7879-8116-8.
Spence, Muneera U. "Graphic Design:
Collaborative Processes = Understanding Self and Others." (lecture) Art
325: Collaborative Processes. Fairbanks Hall, Oregon State University,
Corvallis, Oregon. 13 April 2006.
Williamson, Oliver E. (1981). "The
Economics of Organization: The Transaction Cost Approach," The American
Journal of Sociology, 87(3), pp. 548-577