Transaction Cost Economics as a Constructive Stakeholder Theory

We submit that the central managerial messages of transaction cost economics (TCE) have been lost or misconstrued in academic debates that miss the underpinning logic of the theory. Critiques of TCE are often based on narrow and selective interpretations, indeed caricatures. Our goal is to set the record straight by examining TCE's fundamentally constructive aims, logic, and its applicability in the classroom. Looks can be deceiving: While TCE candidly acknowledges that bad things sometimes happen, the main message is not only constructive and positive, but also consistent with a stakeholder theory of management. Indeed, we maintain that TCE can be applied as a constructive stakeholder theory.