Transaction Cost Economics of the Boundary Spanning Roles and Activities of Procurement/Purchasing Agents in the Department of Public Works and Highways

Abstract

Organizational exchange is an activity that most organizations engage in order to operate. Since the environment has a lot of uncertainties, transaction costs economics suggests that organizations, through purchasing agents acting as boundary spanners, seek to obtain the highest quality merchandise at the lowest possible purchase cost and transaction cost for the organization. The Department of Public Works and Highways, as one of the three departments of the government tasked with major infrastructure projects, engages in organizational exchanges whenever they try to obtain goods and services it needs. This paper is a descriptive study entitled “Transaction Cost Economics of the Boundary Spanning Skills of Procurement/Purchasing Agents in the Department of Public Works and Highways.” The purpose of this research is to describe and assess the roles of procurement/purchasing agents in the DPWH, determine their different boundary spanning activities, and identify the different types of transaction costs incurred in the exchange. Through interview with the different sections of the procurement/purchasing division and counterpart suppliers of DPV/H, the researcher examined the incurred transaction costs of agents as they perform various boundary spanning activities inside and outside the organization. The result showed that the RA 9184-lmplementing Rules and Regulations followed by the procurement/purchasing agents in DPWH has yielded non-monetary costs or transaction cost. These transaction costs are mostly resulting from the decisions and behaviors of the procurement/purchasing agents in performing their boundary spanning roles in dealing with people outside their sub-unit, and even outside their own organization.