Abstract

Today, in the conditions of Internet's expansion and extensive use of information technology, many companies reconsider the way they are doing business. When designing electronic distribution channels, managers have to decide to what extent should the distribution function be performed within the boundaries of their firms. This research identifies the factors that explain such channel structure, based on transaction cost economics theoretical framework. A survey was conducted among Canadian and US firms from the semiconductor and electronic components manufacturing industrial sector (NAICS 33441). The results of the multiple regression analysis revealed that human asset specificity is marginally correlated with the dependent variable and that behavioral uncertainty is positively correlated with the degree of performing the transaction internally. In the case of other two variables (environmental uncertainty and environmental diversity), the regression coefficients had the hypothesized sign but the results were not statistically significant. Overall, the results indicate that transaction cost economics could be used to explain partially the electronic channel structure.