Economics and management of enterprises

Transaction costs and synergy effects in modern corporations

Economic Annals-XXI

Economic Annals-ХХI: Volume 171, Issue 5-6(1), Pages: 23-28

Citation information:
Lazareva, M. (2018). Transaction costs and synergy effects in modern corporations. Economic Annals-XXI, 171(5-6), 23-28. doi: https://doi.org/10.21003/ea.V171-04

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Maryna Lazareva
D.Sc. (Economics),
Associate Professor,
Professor of the Organisation Management Department,
National University of «Kyiv-Mohyla Academy»
2 Hryhorii Skovoroda Str., Kyiv, 04655, Ukraine
mglazareva@gmail.com
ORCID ID: http://orcid.org/0000-0002-7573-1268

Transaction costs and synergy effects in modern corporations

Abstract. Up-to-date integrated structures are managed from a single centre. When such a centre is established, a systemic effect shall arise due to centralisation of several functions at the level of this centre. This effect shall be positive, otherwise the question of reasonability of such centralisation arises. In the accounting system of an integrated structure, all costs borne by the managing company are transactional by nature. Hence, a systemic effect from centralisation stands for saving of those types of transaction costs that result from centralisation of every function: marketing, information, payroll (department), legal support etc. More attention should be paid to the estimation of transaction costs resulting from centralisation of functions at the level of coordinating centre, as this particular type of costs could be easily determined and estimated. In this paper, we propose a formula to estimate the synergy effect resulting from centralization of functions. The costs arisen at the level of the coordinating centre are systematised. A formula to calculate such costs with regard to the standard integrated structure is offered. Particular attention is given to the costs of decision-making: a new type of costs, called costs of consideration, is justified. A simplified procedure for transaction costs management is proposed.

The proposed approach to the assessment of systemic effects to save transaction costs is of high importance for practical activities, as it provides an opportunity to estimate the performance of the whole coordinating centre, evaluate the efficiency of assignment of each function and include positive effects regarding the managing department responsible for implementation of specific centralised functions into the incentive program.

Keywords: Corporation; Transaction Costs; Synergy Effect; Decision-making Transaction Costs; Consideration

JEL Classification: D23; P12; G39

DOI: https://doi.org/10.21003/ea.V171-04

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Received 20.06.2018

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