HOW TRANSACTION COSTS AFFECT THE SALES CHANNEL CHOICE: AN EMPIRICAL RESEARCH IN THE SICILIAN ORNAMENTAL PLANT SECTOR

Abstract

This paper, based on transaction costs theory, represents a contribution to the existing literature, and a first step towards a more in depth study, aimed to identify the more important transaction costs able to influence the strategic choices of firms. In particular, this approach has been used to evaluate, through a telephone survey, the influence of transaction costs on the sale channels choice made by a small sample of Sicilian firms active in the Ornamental Plants economic sub-sector. Results show that transaction costs increase moving from direct sale to the sale to wholesalers and large scale retail (LSR) channels, confirming our starting hypothesis. In particular, information and negotiation costs are higher for those firms that sell to intermediaries and/or LSR. For this last channel results show the relevance of monitoring costs too. Our results have implications on the organizational model of firms and on the opportunity that a cooperative model is able to offer also in this economic sub-sector.