Effect of Network Structure on Transaction Cost of Small Enterprises in Sri Lanka: An Empirical Study
H. M. S. Priyanath

Prime objective of this study is to explore how different dimensions of network affect the Transaction Cost (TC) of Small Enterprises (SEs) in Sri Lanka. The data were collected from 376 SEs in Sri Lanka, conducting face to face personal interviews with respondents. The data were analysed using Partial Least Squares- Structural Equation Modelling. The results revealed that network density and size have significant negative effect on TC of SEs. Both have a negative significant impact on opportunism of exchange partners, positive significant effect on rational ability of the Owners of Small Enterprises (OSEs), significant negative impact on transaction uncertainty and positive significant impact on transaction frequency. Thus, the study provided sufficient evidences to conclude that network structure has a significant impact on mitigating TC of SEs in Sri Lanka. The study provides important insights for SEs and policy makers to forces their strategies to develop SEs strengthening network relationship between SEs and different stakeholders.

Full Text: PDF     DOI: 10.15640/jsbed.v5n1a3