Environmental change and rational failure of the firm: application of an integrated model of transaction costs and dynamic capacities
Kenshu Kikuzawa ()
Additional contact information
Kenshu Kikuzawa: Keio University
SN Business & Economics, 2024, vol. 4, issue 3, 1-23
Abstract:
Abstract The prevailing traditional paradigm is a classic dichotomous view—firms either succeed rationally or fail irrationally. However, in today’s constantly changing environment, there may be an intermediate phenomenon in which firms fail rationally or succeed irrationally. To address this issue, we develop a new integrated model based on transaction cost economics and the dynamic capability perspective. This model provides a theoretical explanation for the existence of this phenomenon and a method to avoid it. To empirically validate this theoretical explanation, we employ a qualitative case study of film companies Kodak and Fujifilm. The findings reveal that when a firm adapts to environmental changes, it incurs transaction cost to persuade resistors and saves opportunity costs over existing assets by means of self-transformation. In a situation of environmental change, based on the cost structure, a firm could fail rationally and succeed either rationally or irrationally. This study offers a theoretical explanation for the phenomenon of rational failure from the perspective of organizational economics. It also provides a theoretical explanation for the type of rational failure treated by Levinthal and March (Strateg Manag J 14:95–112, 1993) and for another intermediate phenomenon known as irrational success.
Keywords: Dynamic capabilities; Opportunity costs; Rational failure; Transaction costs (search for similar items in EconPapers)
JEL-codes: L2 M2 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
http://link.springer.com/10.1007/s43546-024-00629-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:spr:snbeco:v:4:y:2024:i:3:d:10.1007_s43546-024-00629-2
Ordering information: This journal article can be ordered from
https://www.springer.com/journal/43546
DOI: 10.1007/s43546-024-00629-2
Access Statistics for this article
SN Business & Economics is currently edited by Gino D'Oca
More articles in SN Business & Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().