Some reflections on the transaction cost theory of nonprofit organisation

Vladislav Valentinov Some reflections on the transaction cost theory of nonprofit organisation Bounded rationality; nonprofit organisation; opportunism; transaction costsThe paper extends the transaction cost theory of nonprofit organisation by differentiating between two types of transaction costs that are reduced by nonprofits: opportunisminduced, which have been emphasised by existing transaction cost approaches, and bounded rationality-induced, which are conditioned by shortages of information and limited information-processing abilities of individuals who can contribute resources to nonprofits.By reducing these costs, nonprofits increase the total amount of resources that can be contributed to them.The significance of bounded rationality-induced transaction costs is confirmed by the fact that they often appear to be economised by nonprofits more efficiently than opportunism-induced transaction costs.