Transaction costs and competitive tendering in public sector

A conceptual framework

Authors

  • Hamisi K. Sama Procurement and Supplies Department, College of Business Education, Dodoma Campus, P.O. Box 2077, Dodoma, Tanzania https://orcid.org/0000-0002-3739-1776

DOI:

https://doi.org/10.20525/ijrbs.v11i5.1896

Keywords:

Transaction Costs, Competitive Tendering, Public Procurement

Abstract

This paper presents the structure and contexts of transaction costs and competitive tendering. The model is proposed as the first step in the development of a causal link between transaction costs and competitive tendering in the public sector. It draws upon the theory of open systems to build a structural framework. Concepts relevant to transaction costs and competitive tendering in the public sector are integrated into this framework. The subsequent papers will add concepts to the model and demonstrate a generic model fit for public practitioners, decision-makers, academicians, and bidders (suppliers, contractors, and service providers) to carry out their procurement activities in a systematic and planned manner.

 

Downloads

Download data is not yet available.

References

Aghostin-Sangar, V. (2007) Human behaviour in public spaces, University of New South Wales; URL http://ideas.repec.org/p/irs/iriswp/2008-13.html

Antinoja E., Eskiocak O., Kjennerud M., Rozenkopf I., and Schatz F. (2011) Value for Money: Current Approaches and Evolving Debates, London School of Economics, London, UK vfm-current- approaches-and-evolving-debates.pdf (bigpushforward.com)

Arora, A., (2014), Sustainability strategies in supply chain management, PhD dissertation, Department of Marketing and Logistics, Georgia Southern University. http://digitalcommons.georgiasouthern.edu/etd/1063/

Arrowsmith, S., Treumer, S., Fejø, J., & Jiang, L. (2011). S. Arrowsmith (Ed.), Public procurement regulation: an introduction. University of Nottingham. http://eprints.nottingham.ac.uk/id/eprint/1689

Bushman, R. M. and Smith, A. J. (2003) Transparency, Financial Accounting Information, and Corporate Governance, Federal Reserve Bank of New York, Economic Policy Review, April 2003 0304bush-with-cover-page-v2.pdf (d1wqtxts1xzle7.cloudfront.net)

Chao, E. (2011) Formal Contractual Agreements: A Transaction Cost Study of Tanzania Firms, Faculty of Economics and Social Science, University of Agder, Kristiansand, Norway. http://hdl.handle.net/11250/135997

Chen, C. C., Peng, M. W., & Saparito, P. A. (2002). Individualism, collectivism, and opportunism: A cultural perspective on transaction cost economics. Journal of Management, 28(4), 567-583. https://doi.org/10.1016/S0149-2063(02)00144-7

Coase (1937) Nature of the Firm; https://doi.org/10.2307/2626876

Coase, R. (1961) The Problem of Social Cost, Journal of Law and Economics 3:1-44 https://doi.org/10.1086/674872

Commons, J.R. 1931, Institutional Economics American Economic Review, 21, 648-657 Institutional Economics on JSTOR

Denscombe, M. (2010) The good research guide: for small scale research projects, 4th edition, Maidenhead: McGraw-Hill Open University Press DOI 10.1007/s11192-015-1693-4

European Union (2010) Risk management in the procurement of innovation: Concepts and empirical evidence in the European Union — University of Southern Denmark (sdu.dk). https://data.europa.eu/doi/10.2777/92030

Federation of European Accountants (2010) Integrity in Professional Ethics, Code of Ethics of the International Federation of Accountants, Brussels, Belgium. ISBN: 978-1-60815-061-8. https://www.icaew.com/-/media/corporate/files/technical/ethics/integrity-in-professional-ethics-fee-discussion-paper.ashx?la=en

Gelderman, C. and Van Weele, A., (2003), Handling Measurement Issues and Strategic Directions in Kraljic’s Purchasing Portfolio Model, Journal of Purchasing and Supply Chain Management. https://doi.org/10.1016/j.pursup.2003.07.001

Gelderman, C. J. (2003). A portfolio approach to the development of differentiated purchasing strategies, Technische Universiteit Eindhoven. https://doi.org/10.6100/IR569453

Grimsey, D., & Lewis, M. K. (2005). Are Public Private Partnerships value for money?: Evaluating alternative approaches and comparing academic and practitioner views. In Accounting forum (Vol. 29, No. 4, pp. 345-378). https://doi.org/10.1016/j.accfor.2005.01.001

Grüne?Yanoff, T. (2007). Bounded rationality. Philosophy Compass, 2(3), 534-563. https://doi.org/10.1111/j.1747-9991.2007.00074.x

Gulati, R. (1995). Does familiarity breed trust? The implications of repeated ties for contractual choices in alliances’ Academy of Management Journal, 38: 85-112. https://doi.org/10.2307/256729

Harstad, R. M., & Selten, R. (2013). Bounded-rationality models: tasks to become intellectually competitive. Journal of Economic Literature, 51(2), 496-511. http://dx.doi.org/10.1257/jel.51.2.496

Heide, J. B., & Stump, R. L. (1995). Performance implications of buyer-supplier relationships in industrial markets: a transaction cost explanation. Journal of Business Research, 32(1), 57-66.

Jin, X., Zhang, G., Ke, Y., & Xia, B. (2017) Factors influencing transaction costs in construction projects : a critical review. Proceedings Of The 20Th International Symposium On Advancement Of Construction Management And Real Estate, 23-25 October 2015, Hangzhou, China , 949-958. https://doi.org/doi:10.1007/978-981-10-0855-9_84

Jobin, D. (2008) A Transaction Costs-Based Approach to Partnership Performance Evaluation, SAGE Publications, 14(4), 437- 465 London UK. https://doi.org/10.1177/1356389008095487

Kabega, C., Kule, J. W., & Mbera, Z. R. (2016) Effect of procurement practices on performance of public projects in Rwanda. International Journal of Economics, Commerce and. Management United Kingdom, IV, 5, 377-397. http://ijecm.co.uk/wp-content/uploads/2016/05/4526.pdf

Kenyanya N. P., Mamati, W. F., and Onyango O. J. (2010) Evaluation of the Influence of the Public Procurement Regulations on Procurement Practices among Secondary Schools in Mosocho Division, Kisii County, Kenya: http://erepository.uonbi.ac.ke/bitstream/handle/11295/58653/

Kong, X. (2011). Why are social network transactions important? Evidence based on the concentration of key suppliers and customers in China. China Journal of Accounting Research, 4(3), 121-133. https://doi.org/10.1016/j.cjar.2011.06.003

Kruis, A.M. (2008) Management Control System Design and Effectiveness, Nyenrode Business University, Rotterdam. https://ssrn.com/abstract=1441243

Le, M. V., & Suruga, T. (2005). The effects of FDI and public expenditure on economic growth: From theoretical model to empirical evidence. Graduate School of International Cooperation Studies, Kobe University.ietke, B. and Boslau, M. (2005) Exploring the Transaction Dimensions of Supply Chain Management, Georg-August-University, Goettingen, Institute for Marketing and Retailing, Goettingen, Germany. https://www.research.kobe-u.ac.jp/gsics-publication/gwps/2005-02.pdf

Lewis, C., & Fall, F. (2017). Enhancing public sector efficiency and effectiveness in the Czech Republic. https://doi.org/10.1787/18151973

McCue, C.P. and Gianakis, G.A. (2001). Public purchasing: who’s minding the store?, Journal of Public Procurement,(1)1, 71-95. https://doi.org/10.1108/JOPP-01-01-2001-B002

Muris, T. J. (1980). Opportunistic behavior and the law of contracts. Minn. L. Rev., 65, 521. https://scholarship.law.umn.edu/mlr/2443

Muzumara, P. M. (2018) Ethics, Morals and Values in Education, Dorrance Publishing. eISBN: 9781480950252

Nemec, J., Šumpíková, M., Orviska, M., Bušina, F., & Grega, M. (2016). Transaction costs in the public procurement: Selected findings in Czech and Slovak conditions. Corpus ID: 168965550. https://msed.vse.cz/msed_2016/article/281-Sumpikova-Marketa-paper.pdf

Ngugi, J. K. and Mugo, H. W. (2012) Internal Factors Affecting Procurement Process of Supplies in the Public Sector; A Survey of Kenya Government Ministries http://www.ippa.org/images/PROCEEDINGS/IPPC5/Part8/PAPER8-9.pdf

Odhiambo, W. and Kamau, P. (2003) The integration of developing countries into the world trading system: Public procurement lessons from Kenya, Tanzania and Uganda, available on http:/www.oecd.org, on 14th May 2021. https://doi.org/10.1787/804363300553

Parkhe, A. (1993). Strategic alliance structuring: A game theoretic and transaction cost examination of interfirm cooperation. Academy of management journal, 36(4), 794-829. https://doi.org/10.5465/256759

PMBOK Guide (2017) A Guide to the Project Management Body of Knowledge (PMBOK® Guide) Sixth Edition LCCN 2017035597 eISBN 9781628253900

Public Procurement Act (2011) Government Printer, Dar es Salaam, Tanzania. ISSN 0856 – 01001X

Rindfleisch, A., Antia, K., Bercovitz, J., Brown, J. R., Cannon, J., Carson, S. J., Ghosh, M., Helper, S., Robertson, D. C., & Wathne, K. H. (2010). Transaction costs, opportunism, and governance: Contextual considerations and future research opportunities. Marketing Letters, 21(3), 211-222. https://doi.org/10.1007/s11002-010-9104-3

Rönnbäck, Å. (2012). Quality in the public procurement process, The TQM Journal,(24 No. 5, pp. 447-460. https://doi.org/10.1108/17542731211261593

Shin, H.D. (2003) The Role of Uncertainty in Transaction Cost and Resource-Based Theories of the Firm, issertation Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of the Ohio State University https://etd.ohiolink.edu/apexprod/rws_etd/send_file/send?accession=osu1060713481&disposition =inline

Sorana, V. (2003) Competitive Procurement and Asset Specificity. CentER Discussion Paper No. 2003- 96, Available at SSRN: https://ssrn.com/abstract=556585 or http://dx.doi.org/10.2139/ssrn.556585

Tadelis, S., & Bajari, P. (2001) Incentives Versus Transaction Costs: A Theory of Procurement Contracts. Rand journal of Economics, 387-407. https://doi.org/10.2307/2696361

Telles, J. C. F. (2012). The boundary element method applied to inelastic problems (Vol. 1). Springer Science & Business Media. https://books.google.co.tz/books/about/The_Boundary_Element_Method_Applied_to_I.html?id= 8L_yCAAAQBAJ&redir_esc=y

Telles, P. (2012) Low Value Procurement and Transparency: Squaring Circle, International Public Procurement Conference, August 17th, 2012, Seattle, USA. http://www.ippa.org/images/PROCEEDINGS/IPPC5/Part6/PAPER6-6.pdf

Thai, K. V. (2009). International Handbook of Public Procurement, CRC Press, Boca Raton, United States of America. ISBN 9781420054576

Tukamuhabwa, B. R. (2012) Antecedents and Consequences of Public Procurement Non-compliance Behavior, Journal of Economics and Behavioral Studies, (4) 1, 34-46. https://doi.org/10.22610/jebs.v4i1.300

Ugoji, K. (2007) Does business ethics pay? Revisited – the value of ethics training, London: Institute of Business Ethics. ISBN(s): 0954928857 9780954928858

UNDP (2004) Public Sector Transparency and Accountability in Selected Arab Countries: Policies and Practices, Division for Public Administration and Development Management, Department of Economic and Social Affairs, United Nations, New York, NY 10017, USA. https://publicadministration.un.org/publications/content/PDFs/E- Library%20Archives/2005%20Public%20Sector%20Transp%20and%20Accountability%20in%2 0SelArab%20Countries.pdf

United Nations Commission on International Trade Law [UNCITRAL] Model Law (2011) Public Procurement UNCITRAL Secretariat, Vienna International Centre, Vienna, Austria. eISBN: 978- 92-1-054194-7

United Nations Office for Project Services (UNOPS, 2010) Procurement Manual, Copenhagen, Denmark. https://www.un.org/Depts/ptd/sites/www.un.org.Depts.ptd/files/files/attachment/page/pdf/pm.pdf

United Nations Procurement Practitioner’s Handbook Ver. (2022) United Nations High Level Committee on Management, Procurement Nerwork. https://www.ungm.org/Shared/KnowledgeCenter/Document?widgetId=3518&documentId=1294 233

Williamson, O. E. (1981) The Economics of Organization: The Transaction Cost Approach, American Journal of Sociology, Issue No. 87, pp 548 – 77. http://www.jstor.org/stable/2778934

Williamson, O. E. (1998) Transaction Cost Economics: How It Works, Where It Is Headed, De Economist, 146 (January), 23-58. https://doi.org/10.1023/A:1003263908567

Williamson, O.E. (2005). Transaction Cost Economics: an overviewhttps://doi.org/10.4337/9781849806909.00007

World Bank. (2015) Mind, Society, and Behavior, World Bank Group Flagship Report. https://www.worldbank.org/content/dam/Worldbank/Publications/WDR/WDR%202015/WDR- 2015-Full-Report.pdf

Downloads

Published

2022-06-29

How to Cite

Sama, H. K. (2022). Transaction costs and competitive tendering in public sector: A conceptual framework. International Journal of Research in Business and Social Science (2147- 4478), 11(5), 512–522. https://doi.org/10.20525/ijrbs.v11i5.1896

Issue

Section

Related Topics in Social Science