Effect of Transaction Costs Determinants on Livelihoods of the Members of Community-Based Organizations in Sri Lanka

Abstract

Transactions related costs are a hindrance to the livelihood success (LS) of the members of community-based organizations (CBOs). How the LS of those members get influenced by transaction cost (TC) perspective has created a gap in literature due to a lack of systematic empirical academic works. This study aimed to bridge this gap by examining the impact of TC and its determinants on the LS of the members of CBOs. Using a multi-stage sample, the study selected two provinces and collected primary data from 2123 members who were involved in livelihood activities with the assistance of CBOs. Face-to-face interviews were used to collect information for a structured questionnaire. Data analysis employed partial least square structural equation modeling. The findings showed that the exchange partners' opportunism and uncertainty have positively influenced on the TC and detrimentally affected on LS of the members. The rational ability of those members has a negative effect on TC and a positive effect on LS. Further, it has shown that overall TC has a negative relationship with the LS of the members of CBOs. Thus, the findings supported the notion that TC prevents individuals from achieving LS. Developing a mechanism to empower the members of CBOs basically to access and assess valid information averting anomalies would lead to accelerate their livelihood success by minimizing TC.