Transaction Costs and the Virtual Personal Assistant

10 May 2010 at 11:20 am 3 comments

| Peter Klein |

You can outsource grading, paralegal work, and other services, so why not personal assistance? Some credit cards now feature a concierge service that acts like a crowdsourced, virtual, personal assistant. By exploiting scale economies (a network of specialist assistants that can respond quickly and cheaply to specific client requests) and reducing excess capacity, such services offer dramatically lowered production costs, compared to the conventional model of one dedicated assistant per client (or small group of clients). But the lack of bilateral commitment may make it difficult to encourage relationship-specific investments, so the transaction-cost effects are ambiguous. (Thanks to Chihmao for the pointer.)

If you want to discuss this further, have your people contact my people.

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Entry filed under: - Klein -, Strategic Management, Theory of the Firm. Tags: .

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3 Comments Add your own

  • 1. Abhi S  |  10 May 2010 at 3:37 pm

    haha. Great picture choice.

  • 2. Michael E. Marotta  |  12 May 2010 at 11:27 am

    Trust is a big problem.

    Look, in retail most of your losses come from internal sources. Customers steal about 35%, employees about 45% and of the rest. some is shrinkage (floor samples, bookkeeping errors) and the balance is vendor fraud. Note that vendor fraud is tiny, smaller even than shrinkage.

    Business encourages honesty — when the relationships are, as noted, bilateral i.e, between peers. If you establish any stratification, you invite victimization from customers and (more to the point) employees.

    So, maybe a VPA will on a B2B basis be more honest than a real employee… or only be an employee without oversight…

    I did have to google this and I did have go down several screen of advertisers (aaarrrgh!!) before getting to an Austin Business article that explained it. I had no idea, really…

  • 3. Rafe  |  13 May 2010 at 12:50 am

    I don’t have any people, but if I did have some people, how would they get in touch with your people to ask them to clean up and tidy my office?

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Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
Raghu Garud, Arun Kumaraswamy, and Richard N. Langlois, eds., Managing in the Modular Age: Architectures, Networks and Organizations (Blackwell, 2003).
Nicolai J. Foss and Peter G. Klein, eds., Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization (Elgar, 2002).
Nicolai J. Foss and Volker Mahnke, eds., Competence, Governance, and Entrepreneurship: Advances in Economic Strategy Research (Oxford, 2000).
Nicolai J. Foss and Paul L. Robertson, eds., Resources, Technology, and Strategy: Explorations in the Resource-based Perspective (Routledge, 2000).

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