The history of transaction cost economics
and its recent developments

ŁUKASZ HARDT
University of Warsaw
Polish Academy of Sciences

Abstract:  The  emergence  of  transaction  cost  economics  (TCE)  in  the
early 1970s with Oliver Williamson’s successful reconciliation of the so-
called neoclassical approach with Herbert Simon’s organizational theory
can  be  considered  an  important  part  of  the  first  cognitive  turn  in
economics.   The   development   of   TCE   until   the   late   1980s   was
particularly  marked  by  treating  the  firm  as  an  avoider  of  negative
frictions,  i.e.,  of  transaction  costs.  However,  since  the  1990s  TCE  has
been  enriched  by  various  approaches  stressing  the  role  of  the  firm  in
creating  positive  value,  e.g.,  the  literature  on  modularity.  Hence,  a
second cognitive turn has taken place: the firm is no longer only seen as
an avoider of negative costs but also as a creator of positive knowledge.