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Abstract
We forge linkages between the economics of property rights (Coase, Demsetz,
Cheung, Barzel) and strategic management. Property rights to resources consist
of the rights to consume, obtain income from, and alienate these resources.
Transaction costs are the costs of exchanging, protecting and capturing property
rights. We clarify the key role of transaction costs with respect to understanding
value creation and the limitations and opportunities of strategizing relative to
competitive forces. The economics of property rights identifies new sources of
value creation (i.e., reducing the dissipation caused by transaction costs), and
new types of resources (i.e., capture and protection capabilities), clarifies the role
of contracting in the exercise of market power, and suggests that "strategizing"
and "economizing" perspectives are related to a larger extent than is normally
recognized. Refutable propositions are derived. |
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