Date Added: Oct 2010
The current competitive landscape calls for firms to consider rivals in current markets and invisible competitors across the far reaches of the globe. The playing field is increasingly more uneven as a result of structural and resource diversity across global markets. Firms have to compete with rivals that have significantly different cost structures. Economizing considerations must be embedded in strategic decisions in order to sustain competitiveness. Transaction cost economics offers a viable framework for evaluating economizing by considering internal and external dynamics while putting into context unforeseeable future events and acknowledging behavioral shortcomings of organizational actors. For small firms, economizing is an effective fundamental strategy. Market power in large firms is unsustainable in the long-run.