Organization Theory and Interorganizational Strategies - Essay Example

The managers of the organization would first consider the savings in the costs of the transaction of a specific linkage mechanism and compare these with the bureaucratic costs. This would go a long way in helping the organization to determine the interorganizational strategy that would help bring the bureaucratic costs and the transaction costs to the barest minimum. The organization must also consider the location of the sources of the cost of a transaction that could have an effect on the trade relationship.

This would help the organization to determine the exact cost of the transaction and would also help them to choose the organization actions that would help minimize the costs of these transactions (Jones 82-83). Organizations also take into consideration the several linkage mechanisms that would be used in estimating the costs of the transaction before choosing the interorganizational strategies. The bureaucratic costs of running the linkage mechanism are also considered before choosing interorganizational strategies.

The organization would then consider the most suitable linkage mechanism that gives the lowest bureaucratic costs and savings in the cost of transaction at the same time. These are the factors that organizations consider before choosing the inter-organizational strategies that would help reduce bureaucratic and transaction costs (Jones 83).