Transaction Cost
Introduction
In order to explain and discuss with practical example the concepts of TCE, firm v market, vertical boundaries of the firm, and vertical chain make-or-buy dilemma, I have chosen FAO (Food and Agriculture Organization) of UN, a non-profit specialized United Nation agency, the one I am currently working for.
It would be very challenging to describe how TCE theory apply to big international non-profit organizations in terms of complex transaction’s exchanges occurring among UN agencies, members countries and donors aimed to the achievement of difficult multiple Millennium goals (UN,2012) and FAO(2012)[1], not explainable through the model of profit maximization or organization as black-box. Therefore my TCE analysis is restricted to the current internal project GRMS FAO(2012) [3] as one of technical team leader.
However I will focus about internal GRMS project managed by AF (Corporate services and procurement, human Resources and finance divisions) and CIO IT divisions.
GRMS project is about the implementation of IPSAS (international accounting standard) and the extension of ERP processes and services to all worlds’ offices. The creation of a more consistent administration structure of tools, processes and support is needed by managers to delegate responsibilities more effectively and support the decentralization of emergency operations.
Another important benefit is a more efficient management of all 8,000 non-staff human resource employees (NSHR). For the success of the project PRINCE2 (PRINCE2[1]) Process Model has been adopted as shown below Figure2 and than translated in the project vertical chain shown in Figure3.
Figure2
TCE literature
Transaction cost economics (TCE) theory become popular during the 80s and 90s, however its first definition can be found in the famous Coase’s paper on “The Nature of the Firm”.
Coase, in contraposition with economist’s idea since Adam Smith (1776) that market mechanism was the
In order to explain and discuss with practical example the concepts of TCE, firm v market, vertical boundaries of the firm, and vertical chain make-or-buy dilemma, I have chosen FAO (Food and Agriculture Organization) of UN, a non-profit specialized United Nation agency, the one I am currently working for.
It would be very challenging to describe how TCE theory apply to big international non-profit organizations in terms of complex transaction’s exchanges occurring among UN agencies, members countries and donors aimed to the achievement of difficult multiple Millennium goals (UN,2012) and FAO(2012)[1], not explainable through the model of profit maximization or organization as black-box. Therefore my TCE analysis is restricted to the current internal project GRMS FAO(2012) [3] as one of technical team leader.
However I will focus about internal GRMS project managed by AF (Corporate services and procurement, human Resources and finance divisions) and CIO IT divisions.
GRMS project is about the implementation of IPSAS (international accounting standard) and the extension of ERP processes and services to all worlds’ offices. The creation of a more consistent administration structure of tools, processes and support is needed by managers to delegate responsibilities more effectively and support the decentralization of emergency operations.
Another important benefit is a more efficient management of all 8,000 non-staff human resource employees (NSHR). For the success of the project PRINCE2 (PRINCE2[1]) Process Model has been adopted as shown below Figure2 and than translated in the project vertical chain shown in Figure3.
Figure2
TCE literature
Transaction cost economics (TCE) theory become popular during the 80s and 90s, however its first definition can be found in the famous Coase’s paper on “The Nature of the Firm”.
Coase, in contraposition with economist’s idea since Adam Smith (1776) that market mechanism was the