2020 (17), №1

Internal Transaction Costs of Firm as a Consequence of the Limited Locus of Control

For citation: 

Anokhov, I. V. (2020). Internal Transaction Costs of Firm as a Consequence of the Limited Locus of Control. Zhurnal Economicheskoj Teorii [Russian Journal of Economic Theory], 17 (1), 213-224


The article considers a production company as a link between two poles (suppliers and buyers), which ensures the transformation of resources in the interests of consumers. This requires specific efforts from the company, which are not related to the actual production process.
Transaction costs are formed in functionally separate levels of the firm activity: design and technology (integration of the firm into the market environment); economic (distribution of the cost of the product sold between the firm and resource suppliers); providing (preparation and accumulation of the firm’s resources in production areas); production (resource transformation).
Transaction costs are generated by the locus of control, that is the ability of the company’s management to focus attention and intellectual resources on a limited area of the market. Therefore, it cannot perceive cause-effect relationships holistically and reconcile long-term interests with internal and external actors. For these reasons, the company has to overcome the resistance of the internal and external environment, that is to bear transaction costs. Based on this, to minimize transaction costs, the article considers ways to overcome the limited rationality, uncertainty of the environment and mismatch of interests.
In order to reduce internal transaction costs, it is proposed to direct the firm’s efforts to select employees with long-term interests that will create a commitment to the company. The value of which is higher the longer the employee has worked and the more he/she has invested in its development. Maximizing rights and personal responsibility facilitates the employee’s long- term investment in this specific asset. In the long term, the reduction of internal transaction costs is achieved by increasing the emotional and value-semantic level of all employees of the company.

PDF full
Downloaded: 6

Igor Vasil’evich Anokhov — PhD in Economics, Associate Professor of the Department of the Enterprise Economy and Entrepreneurship, Baikal State University (Irkutsk, Russian Federation; e-mail: i.v.anokhov@yandex.ru).

Anan’in, V. I. (2005). Ustoychivost’ upravleniya IT-proektami v usloviyakh neopredelennosti [Sustainability of IT project management in conditions of uncertainty]. Upravlenie proektami [Management of projects], 1(1), 35–43. (In Russ.)

Artamonov, I. V. (2013). Ispol’zovanie okrashennyh setej Petri dlya modelirovaniya biznes-tranzakcij v servis-orientirovannoj srede [Using coloured Petri nets to model business transactions in a service-oriented environment]. // Izvestiya Irkutskoy gosudarstvennoy ekonomicheskoy akademii [Izvestiya of Irkutsk State Economic Academy], 5, 25. (In Russ.)

Il’inskiy, S. V. (2014). Social’no-psihologicheskie faktory loyal’nosti rabotnikov k organizacii [Social and psychological factors employee loyalty to the organization]. Vestnik Samarskoy gumanitarnoy akademii. Seriya: Psihologiya, [The Bulletin of the Samara Humanitarian Academy. A series of “Psychology”], 2(16), 69–84. (In Russ.)

Patosha, O. I. (2019). Psihologicheskie faktory prinyatiya ekonomicheskih resheniy [Psychological factors of economic decision making]. Universum: psihologiya i obrazovanie [Universum. Psychology and education], 1 (55), 19–22. (In Russ.)

Polyakova, N. V. (2012). Vnutrifirmennye uslugi v kontekste teorii marketinga: aktual’nost’ i vozmozhnosti razvitiya [Intra-company services in the context of marketing theory: relevance and possibilities of development]. Izvestiya Irkutskoy gosudarstvennoy ekonomicheskoy akademii [Izvestiya of Irkutsk State Economic Academy], 3, 80–85. (In Russ.)

Rubtsova, N. V. (2012). Mezhfirmennaya koordinaciya kak mekhanizm povysheniya effektivnosti funkcionirovaniya turistsko-rekreacionnyh klasterov. [Intercompany coordination as tool for improvement of tourism and recreation cluster efficiency]. Izvestiya Irkutskoy gosudarstvennoj ekonomicheskoy akademii [Izvestiya of Irkutsk State Economic Academy], 1, 81–86. (In Russ.)

Rudyakov, V. A. (2015). Transakcionnye izderzhki: metody upravleniya [Transaction costs: management methods]. Rossiyskaya ekonomika v sovremennyh usloviyah [Russian economy in modern conditions], 93–99. (In Russ.)

Tagarov, B. Zh., & Tagarov, Zh. Z. (2018). Osobennosti informacionnogo neravenstva v sovremennoj ekonomike [Specific features of an information inequality in a modern economy]. Kreativnaya ekonomika [Journal of creative economy], 12(5), 543–554. (In Russ.)

Shupletsov, A. F., & Haritonova, P. V. (2013). Ekonomiko-matematicheskaya model’ sovershenstvovaniya vnutrifir- mennogo planirovaniya v promyshlennoj kompanii [Economic and mathematical model of improving internal planning at industrial company]. Izvestiya Irkutskoy gosudarstvennoy ekonomicheskoy akademii [Izvestiya of Irkutsk State Economic Academy], 6, 16. (In Russ.)

Yakimova, E. M. (2018). Gosudarstvennyy mekhanizm zashchity sub’ektov predprinimatel’skoy deyatel’nosti v sovremennoy Rossii [State mechanism of protection of subjects of entrepreneurial activity in modern Russia]. Vestnik Tomskogo gosudarstvennogo universiteta. Pravo [Tomsk State University Journal of Law], 28, 83–97. (In Russ.)

Collins, A. L., Jordan, P. J., Lawrence, S. A., & Troth, A. C. (2015). Positive affective tone and team performance: The moderating role of collective emotional skills. Cognition & emotion, 30(1), 167–182. DOI: 10.1080/02699931.2015.1043857.

Jarvis, S. (1970). The emotional tone-scale ladder. The Manchester medical gazette, 50(1), 29–31.

Liagkouras, K., & Metaxiotis, K. (2017). Multi-period mean-variance fuzzy portfolio optimization model with transaction costs. Engineering applications of artificial intelligence, 67, 260–269.

Pfeffer, J., & Salancik G. R. The External Control of Organizations: A Resource Dependence Perspective. New York. Harper & Row, 1978.

Williams, K. N., Boyle, D. K., Herman, R. E., Coleman, C. K., & Hummert, M. L. (2012). Psychometric Analysis of the Emotional Tone Rating Scale: A Measure of Person-Centered Communication. Clinical gerontologist, 35(5), 376–389. DOI: 10.1080/07317115.2012.702648.

Yin, Y., Wang, Y., & Lu, Y. (2019) Why firms adopt empowerment practices and how such practices affect firm performance? A transaction cost-exchange perspective. Human resource management review, 29(1), 111–124.

Zhang, L. L. (2016). Positive group affective tone and employees’ work engagement: Based on emotional contagion theory. International journal of psychology, 51, 786–786.