Abstract

Economics and organization theory were once alien fields. However, they have been drawn closer together as economics has broadened its outlook to include organization as an important economizing instrument and as organization theory has come to recognize the value of an economic perspective and approach. Thus, whereas these two fields used to talk past one another, the relation between them has become one in which each informs and is informed by the other. Transaction cost economics is a product of this intellectual synthesis and has helped to illuminate a large set of organizational phenomena that were once regarded as puzzles. The result has been better public policy and, at times, better business practice as well.