| Research Abstract |
Over the past 25 years, transaction cost theory (Williamson, 1975, 1985, 1986, 1999) has emerged as one of the dominant theoretical perspectives to explain the forward channel choice by manufacturers. Transaction cost theory focuses on opportunism and bounded rationality in the realm of transactions and argues that asset specificity and uncertainty have positive effects on the degree of channel integration or control. However, several unanswered questions remain in transaction cost analyses. Intriguing questions include the impact of uncertainty on channel choice and the roles of transaction costs and capabilities in channel choice (cf. Rindfleisch and Heide, 1997 ; Rindfleisch et al., 2010). In such situations, currently, capabilities theory (Langlois 1992, 2004, 2007 ; Foss, 1993, 1996 ; Langlois and Robertson, 1995 ; Langlois and Foss, 1999) has emerged as a complementary approach to transaction cost theory. Also, growing numbers of scholars have recognized that a firm's capabilities, as well as transaction costs, can influence the channel governance decisions (cf. Rindfleisch et al., 2010 ; Teece, 2010). This study sought to examine the influences of transaction cost factors and capabilities factors in determining the degree of channel integration and control. The theoretical and empirical result is as follows. First, the degree of channel integration was influenced by transaction cost factors and capabilities factors. Also, capabilities factors had stronger relationships with the degree of channel integration than do transaction cost factors. Second, the degree of channel control was influenced by transaction cost factors.
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