The Applicability of Transaction Costs Economics to Vertical Integration Decision: Evidences from a Brazilian Beef Processor

This article aims to explore the vertical integration decision of a beef processor from an integrated approach operations strategy andtransaction costs economic theory. In this research, vertical integration as a structural decision of operations strategy determinedby the occurrence of transaction costs. The paper presents one case study carried out in one beef Processor Company whichillustrates the main theoretical assumptions. The results suggest that transaction costs economics helps to identify key points ofmajor strategic decisions on vertical integration due to its behavioural perspective, reducing the effect of uncertainty and assetspecificity of this decision. At the end of the paper, future research is suggested.