Transaction cost economics theory explains when it is more efficient for a transaction between two parties to occur across the market or within an organization. How does transaction cost economics apply in the digital economy, which relies on digital transactions? In this article, we consider how digital transactions help us probe the boundary conditions of transaction cost economics and how, despite all the changes wrought by digital transactions, transaction cost economics can still provide a useful lens to help scholars and practitioners understand and measure the organization of economic activity and make strategic decisions. We highlight several characteristics of digital transactions and discuss how these characteristics offer opportunities for future research in the fields of strategy, organizations, and economics, and lay out a research agenda for this increasingly important area.
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