Paper #767

Title:

Determinants of organizational form: Transaction costs and institutions in the European trucking industry

Authors:

Benito Arruñada, Manuel González and Alberto Fernández

Date:

June 2004

Abstract:

We explain why European trucking carriers are much smaller and rely more heavily on owner-operators (as opposed to employee drivers) than their US counterparts. Our analysis begins by ruling out differences in technology as the source of those disparities and confirms that standard hypotheses in organizational economics, which have been shown to explain the choice of organizational form in US industry, also apply in Europe. We then argue that the preference for subcontracting over vertical integration in Europe is the result of European institutions—particularly, labor regulation and tax laws—that increase the costs of vertical integration.

Keywords:

Transaction costs, governance, hybrids, transportation

JEL codes:

D23, L14, L22, L92

Area of Research:

Management and Organization Studies

Published in:

Industrial and Corporate Change, 13 (6), pp. 867-882, 2004.

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